Are manufacturers investing more in temporary storage?
The supply chain has undeniably undergone something of a transformation since the rise of eCommerce, and the changes look set to continue.
Mostly up until the last decade, traditional wholesale and ‘bricks and mortar’ retail was an essential link between manufacturers and consumers. The infrastructure, sales workforce and retail outlets had credibility with the customer. Stock purchased in bulk achieved economies of scale, before individual units were sold on at a premium. Many manufacturers lacked the size and scale to reach consumers directly and relied heavily on wholesalers and retailers, who made the lion’s share of the profits.
More recently the price wars have shifted to online retail platforms – Amazon, Etsy and Wish to name a few. Although selling directly to the consumer side-steps the cost of retail space and wholesaler fees, it’s the brands that still tend to hold power over the rest of the supply chain. Smaller manufacturing businesses have responded by setting up their own eCommerce websites, investing in their own brands and selling products directly to consumers. Benefits of the do-it-yourself approach can include smoother order fulfilment, more flexible product test runs without the need to maintain inventory, a trackable customer base and ERP system efficiencies.
Wholesalers have also gained from shorter supply chains and selling directly online. Boohoo.com for example, began as fashion wholesaler supplying high street stores such as New Look and Primark. The company is now a multi-billion British success story. Through selling own-brand items online, they were able to quickly produce ‘fast fashion’ – small product batches at low cost. The brand was boosted by a high-profile social media presence and continues to achieve rapid growth and record profits.
As the sight of boarded-up shop fronts in town centres becomes commonplace and major high street chains fall casualty to changing consumer buying behaviours, manufacturers are increasingly turning to direct online retail. Coping with fluctuations in demand and satisfying customer expectations for super-fast delivery however, remains a challenge. Then there is the impact of reverse logistics and sustainability targets to consider – the shorter the links from returns to resell, the better. In the UK there is very limited space available in the big hubs which has led to small, strategically-located satellite warehouses appearing. Bonded warehouses are also becoming more commonplace as businesses implement their Brexit planning strategies. While large fulfilment warehouses might be a viable option for some e-commerce sellers, the answer to increasing capacity for many manufacturers could be much closer to home.
Hazel Lowe, marketing manager at Aganto urges manufacturers to take advantage of the opportunities brought by relocatable industrial buildings.
“We’ve seen a clear increase in the uptake from manufacturers over the last 12 months, which is an interesting development considering the effect of Brexit and reports of a slow-down in the sector. Traditionally a larger proportion of our business comes from logistics and the supply chain, so this may reflect a larger-scale change across the market. The key strength of our temporary buildings is their flexibility. They are available to rent or purchase, and the fact they can be easily dismantled, moved and extended makes them an ideal solution in times of economic and political uncertainty. By utilising all available existing on-site space, the high cost of off-site storage can be avoided.”
