With the constantly evolving landscape of consumer demand, Vocollect asks what the future of the warehouse will be – and what measures companies need to take to meet forthcoming requirements.
Introduction
Not so long ago the warehouse or distribution centre was little more than a huge shed, where the warehouse manager’s role was that of a facilitator of the distribution process.
Now it sits at the hub of any retail operation. It’s where the battle for business is fought – rather than on the shop floor or website. Why? Because these days price, service and value are pointless without stock visibility and availability. Today, the warehouse manager is often key to the strategic planning process of the entire business.
The reasons for this are increasing all the time. According to figures from eMarketer,
B2C worldwide e-commerce sales will reach $1.471 trillion in 2014 – an increase of 20% over the previous year. Although this trend will almost certainly continue, bricks and mortar shops seem unlikely to disappear altogether. Instead they may become leisure destinations designed to engage and immerse customers in the brand.
Dovetailed with this is the rise and development of ‘click – and – collect’ – the term was almost unheard of a short while ago, but now it rolls off the tongue like any other everyday expression. Such is the current speed of change.
So how do retailers and other warehousing and distribution businesses cope with this shifting landscape? It’s clear that flexibility is paramount. So it means investing in light, agile and scalable forms of technology, but also investing in the workforce. Despite the move towards automation in some areas, many other businesses are discovering that people are still the strongest, and also the most adaptable resource ever.
1. A case of location, location, location?
Multi-channel buying patterns, high SKU churn and fluctuating business volumes mean that the one huge repository dedicated to single product lines is no longer adequate. Consequently, warehousing and distribution is becoming more complex and fragmented to mirror this.
Of course the exact template for this depends on the product and its life-cycle. Fresh produce needs to be housed close to its market, but for some non time-dependent products such as white goods, it’s a delicate balance between speed and costs.
Dark stores and small satellite distribution centres are filling this gap to a certain point. However the landscape is changing. Click –and-collect and indeed an increasing amount of on-line B2C business being fulfilled from a retail outlet (shop floor or back of store) as opposed to a distribution centre, which further emphasises the need for agility and enterprise visibility. It’s also increasing the pressure on the ‘back room staff’ to execute faster to shorten fulfilment times even further and promise a sub 24-hour service.
No wonder more and more retailers are turning to 3PLs to create innovative solutions to help address this challenge.
2. 3PLs – the pressure to deliver
Increasingly 3PLs are expected to be centres of excellence, bringing game-changing solutions to a contract. It’s true that the very nature and focus of their business means they are able to run a more dynamic operation, segmenting and sharing shelf space across multiple clients giving them the flexibility to utilise their capacity.
But, let’s not underestimate the planning and forecasting headaches involved here.
The level of innovation required to be successful takes both time and money. Yet, at the same time, contract lengths are getting shorter – Historically terms of up to ten years were common-place, this has shortened over the years to terms of 3-5 years but today they can be as brief as six months.
Such a complex operations need optimised, yet standardised processes to manage all these scenarios (different customers, multiple products (with varying sales volumes) differing materials handling, various health and safety needs) and all in one concurrent workflow whilst offering real Value- add services.
3. One system – but flexibility is paramount
People remain at the forefront of the solution – Staff who are equipped with one technology that can be used for any customer, any product and in multiple locations and environments. It shouldn’t matter whether the product is headed for a shelf in a retail space or into a bag or box, to be collected outside in the car park or couriered to its destination. If the same processes and interface can be used in any situation, by any member of staff, it will provide the flexibility demanded in today’s supply chain.
However let’s not forget that whilst the execution would be satisfied with this technology the businesses demand so much more, this solution must also give warehouse managers, analysts, buyers and consumers transparency and control. It comes down to:
• Agility
• Speed and
• Clarity
4. Where’s the smart investment – man or machine?
A few years’ ago budgets were often being spent on automation. Whether the story about Amazon investing in drones to actually fly through the air and deliver to customers was a PR stunt never became clear. But the online megastore certainly introduced robots into some of its warehouses to fetch stock for its workers to select from.
However, this idea didn’t appear to catch on with only a few implementations across all of Northern Europe, although it’s not clear whether it was due to the capital cost, the results and ROI, or perceptions around suitability and social impact –Automation may be applicable for businesses with predictable levels of businesses, largely standardised SKU’s and limited exposure to trends but few will be prepared to wait for at least a decade for a return on their investment.
Most businesses caught up in the maelstrom of today’s markets, recognise that humans can be far more adaptive and, when looked after, and motivated, will do a far better job. With the right tools, they can execute nigh-on perfectly every time.
Plus they can contribute with their on-the-job knowledge, which can then be used to build further efficiencies. You can’t build on automated systems in the same way - which means there’s problem if anything changes – which of course it will.
5. Could that one system be Voice?
Voice-directed pickers wear headsets, leaving eyes and hands free. They are fed instructions – one simple command at a time - from the warehouse management system (WMS) or Enterprise Resource Planner (ERP). These instructions are sequenced into the most efficient order.
The picker confirms each instruction as they go by simply saying ‘yes’ or ‘no’ or by reading back check digits , which means they no longer have to spend time reading, understanding and deciphering written or displayed text. A simple spoken word is validated before the next instruction is given. As instructions are given on an as-needed basis, pickers can concentrate entirely on each action without distraction or delay and only receive the next instruction when they are ready
This step-by-step mentoring means that staff receive real time on the job training and guidance. This ensures that staff can be easily re-assigned to other tasks without the need for intense training. This provides the real flexibility and scalability needed by high-volume, multi-channel retailers who typically experience fluctuating demand and changing order profiles.
Shift managers get a real-time view of progress through current workloads so that they can easily manage resources, moving staff and planning labour. Initial training usually takes only a couple of days.
6. The added extra
Experience has shown that once people are ‘onside’ they will outperform any automated system. And Voice is a great way to empower staff to do their work better and to run a fairer, safer and more harmonious workplace.
Using the system workers are given simple, clear and stage-by-stage instructions to carry out any task. This means they can change roles during the day according to demand, relieving the monotony of repetitive workflows and enabling them to become multi-skilled.
Voice also helps protect workers’ safety and wellbeing. For example, it can warn them of the size and weight of certain products, it can advise the use of protective clothing or ask them to check a detail carefully if handling chemicals or other potentially dangerous substances just before they start that activity.
The system also helps managers to allocate tasks in a fairer way, eliminating the any suspicions of favouritism which can sometimes impact morale and productivity. No more grounds for the ‘why do I get all the dirty jobs?’ type of comment!
7. Looking ahead
To conclude let’s briefly consider the main trends over the next five years:
• Further consolidation is likely as we, consumers, demand cheaper products, with higher quality and better faster service.
• Realistically this can only be achieved with investment to redesign the supply chain or by utilising specialist 3PLsto provide more value add for many more customers. They will be driven to become even more flexible and take their place as the discreet expert that sits behind every brand.
• Buying channels will continue to evolve as further electronic systems and the Internet of Things develops. For example, commuters may be able to scan a QR code with their smartphone at the station on leaving work and collect their goods as they arrive at the station near their home. The possibilities are almost endless, but the end result will need further innovation and, once again, flexibility.
• Some brands may decide that a traditional warehouse will no longer work for them and instead they will concentrate on developing and expanding a network of back of store stock rooms. If a product is unavailable in a local store it can be sourced from the next nearest outlet. Even if it has to be shipped, say half the time, at least this means it’s immediately available the other half. This will all be part of the ongoing fragmentation of distribution and further underline the need for consistent and agile systems across the overall operation.
• Warehousing and distribution will become even more of a pivotal topic at most board meetings with warehouse managers engaging in high-level strategic planning. Their expertise will become increasingly valuable as they make key decisions – where to hold stock, whether to engage a 3PL and so on – which have a bearing on the overall business.
• As retail operations continue to evolve, people using Voice technology will be seen as an increasingly important resource providing the adaptability needed for such a fluid and dynamic environment. A more fragmented distribution and storage network will demand a more mobile and multi-skilled workforce who are able to work wherever they are needed within the enterprise.
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