Size Matters (But What Else Do You Want From Your Warehouse?)
"The times, they are a-changin'."
Those famous lyrics ring around the tri-state area more emphatically than most places, but you could be forgiven for thinking a warehouse wouldn't be the first place to seek out dynamic change.
With the evolution of order fulfillment, however - and with all due respect - you'd be wrong. Since founding the company in 1999, Capacity's leadership team has seen things change at an astonishing pace, from the way we manage our passionate workforce to the technology they use to get the job done.
Throughout March, we will take a look at order fulfillment evolution from a number of different perspectives, with a view to explaining where we come from and where our industry is going. That starts today, with the surprisingly adaptive world of warehousing and the changes that affect our clients as our business evolves.
Size, Location, and Other Realities Of Real Estate
As we explained in our rundown of supply chain trends for 2016, even distribution centers can't stay in one place for too long. In response to shifting demographics and the desire of younger consumers to stay close to major urban centers, everyone from Amazon and Walmart on down must review where their order fulfillment occurs. When you need to deliver a customer within 24 hours, it doesn't pay to be more than a day away in terms of standard shipping time.
As well as moving closer to major metro areas, brands with a physical retail presence are attempting to leverage their brick-and-mortar stores as a competitive advantage. Despite the store closures that we reported on last month, retailers realize that a network of real-world locations provides a tangible pick-up point for customers. In a world where online sales are growing rapidly, getting orders into the hands of customers is one of the biggest challenges facing fulfillment managers. In-store pick-up offers a valuable option for some retailers, blending the flexibility of online shopping with the convenience of local collection.
In terms of size and storage space, the full spectrum of options is available and will continue to evolve to meet the needs of fast fulfillment.
Order Fulfillment Evolution: Space & Services
At Capacity, we always recommend adjusting the questions you ask a potential fulfillment provider on this subject. Instead of finding out how much space they have available overall, ask "how much space will you allocate for my business?"
The distinction is only slight, but it makes all the difference when you suddenly need to take in a big shipment to meet a surge in demand but your fulfillment provider has set that extra space aside for another client.
There are many other considerations as we examine how warehouses adapt to the evolving needs of order fulfillment, such as seasonal storage, handling long-term contracts, appropriate technology, and value-added services.
As we explore order fulfillment evolution this month, we'll look at all of these issues in greater depth.
Where is Warehousing Headed?
The human element of effective warehouse operations can never be replaced, but technology is quickly distilling it down to the core skills. Complex decision-making and sensitive customer communications require a person behind the process. Many of the tasks that remain are repetitive, which is the domain of drones, robots, and other automatons. This is especially true as e-commerce drives down delivery lead times to the narrowest windows imaginable.
So, expect to see more automation in and around the warehouse, with a greater emphasis on training for the operations team who must oversee it. Other areas of technology will be less visible in the physical world of the warehouse, but no less important.
Cloud computing and data transfer, for example, will continue to play a crucial role in how brands manage and track their inventory. Transparency and visibility are now as important to customers tracking an order as they are to warehouse managers tracking intake and inventory levels, so expect to see more efficient solutions emerge to organize and present the vast amount of data available in the digital age. A core focus of Capacity's service offering, EDI, will also continue to develop, driving everything from improved retail compliance to reduced delivery lead times.
In terms of physical space, industrial real estate will also have to expand to meet the increase in demand from both e-commerce and traditional retail stores. Even with the economic headwinds emanating from China and the potential for a limited downturn in the near term, the long-term forecast for global demand is strong. Real estate costs and available storage space, when and where you need it, will play an important role in fulfillment decisions over the next five years and beyond.
There's a lot to cover on the topic of order fulfillment evolution, so make sure you subscribe to our e-mail updates and stay up to speed via our social media feeds.