Shantha Martin

Warehousing – Emerging Trends

16Written by: Shantha Martin
About the author: Chief Executive Officer at PENTAGON Group


Warehouse management continues to evolve. Now, that we are in 2020, the warehouse is a carefully managed control center. It is a strategic hub of e-commerce within an overarching supply chain. Exciting as it, the business landscape has transformed, with the arrival of many different challenges, some of which depend on where in the world the warehouse operations are located.

While in Europe and the US, priorities are ‘’automation’’ to achieve order fulfillment targets and retaining the workers needed to sustain growth objectives, in Asia and developing countries, attentions are directed towards ensuring “infrastructure”, such as reliable Internet connectivity and efficient transportation.  One key trend that every region shares, is the arrival of social commerce and digital transformation, with business transactions at all levels continuing to migrate online, albeit at very different rates.

With Geographic and Demographic demands some common and some differing across the regions of the globe the current status of “Warehousing” can be analyzed as below and its future emerging trends envisaged.

Drop shipping

E-commerce and direct-to-consumer growth continue to transform the fulfillment operations of retailers, manufacturers, wholesalers and 3PLs. Many manufacturers and wholesalers have dis-intermediated their retail partners. This trend allows the seller to improve profit margins and create direct customer relationships, by building up their direct-to-consumer channels. This trend will benefit Logistics service providers / 3PLs as the manufacturers and wholesalers will outsource some of their direct-to-consumer fulfillment.

This will pave the path for Commodity Specialization of Logistics/3PL  offerings by the warehouse operators as clients will require not just specialized infrastructure and customization but will require scale , agility and flexibility .

Delivery becomes a key competitive differentiator – Price vs Time

“Price” is no longer the main competitive differentiator. The “time” it takes to receive an order once it is placed assuming great important; let’s call it the “Amazon Effect” Fulfillment responsiveness (the time it takes from order receipt to final delivery) will be the key to customer delight and this will increase over the next three years.

In the current pandemic scenario too DIGITAL CHANNELS like Amazon assume a center stage. Perhaps this will lead the path to “Satellite micro warehousing” or “Distribution Depot’’ to enable a quick and timely access to the hinterlands.

Social media commerce returns and reverse logistics

Reverse logistics has always been an issue for many sellers and will become even more so in the future, thanks to the so called ‘Instagram effect’. Research into online shoppers shows 34% will make more impulse buys as social media sites make it easier to buy products directly, through built in selling tools. Once Instagram launches a ‘Buy on Instagram’ or ‘Instagram Checkout’ tools, these impulse shoppers will end-up be sending more of their purchases back. Perhaps the envisaged “Satellite micro warehousing’’ or “Distribution Depot” will act as a “Receiving Depot” as well.

Social media buyers are expected to account for a fifth of all online shoppers who make returns.

Flexible pick methods for multiple order profiles

As multiple order becomes a norm “batch picking” and “sorting” will become more common. These are ideal for cost efficiency of processing “high volumes of small orders as quickly as possible.” Multiple orders or shipments can be picked simultaneously and then grouped into individual orders, greatly increasing the throughput possible in a warehouse by reducing travel times to gather stock items. Social or e-commerce orders can then be released in the “shortest possible time at a best rationalized cost”, same can be applied when it comes to returns management.

New workarounds to overcome labor shortages

In certain developed countries a tight labor market remains one of the overriding challenges for warehouse operations. In a recent study, 50% of respondents said that an inability to attract and retain a qualified hourly workforce was a critical issue.

2020 and beyond, multiple methods of strengthening warehouse workforces will be necessary, like rationalization payrolls, enhanced training and benefits. Investing in operatives, for instance, offering personal development and soft skills training opportunities, will be essential for companies to attract and retain the workforce needed to achieve their e-commerce and omni-channel expansion goals.

Investment in WMS

An efficient warehouse runs on technology and the investment priorities of warehouse executives show that tried and tested technologies – such as a warehouse management system (WMS) and partial automation using conveyors or automated sortation systems remain top priorities. Once these essential items are in place, other supporting technologies including transport management systems, voice recognition for picking and put-away, AGVs, and palletizers will become investment priorities.

To summarize

With the advent of e-commerce, the demand for faster response, and the need to manage a larger number of SKUs with fewer errors, warehouses are vying to meet the standards of intelligence, efficiency, and automation. Looking ahead to the next decade, preference for digital transformation will bring fundamental changes in warehouse operations leading to “Disruptive Warehouse Digitization

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