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  • January 11, 2022

10 Ways COVID Will Impact the future of Warehousing

The impact of COVID on the warehouse is going to have long and lasting effects, the future of warehousing needs to be built on current effective process-driven technologies, such as widespread supply chain automation, hyper-effective robotic technologies, and, yes, plenty of drones to go around.

For warehouses to survive in this pandemic situation, flexibility is key.  Combining an unpredictable supply chain with fluctuating consumer behaviour has some industries experiencing unprecedented demand, while demand in other industries is plummeting.

Supply Chain is the most effective during this period to supply necessary commodities to the communities. Logistics are responsible for the flow of goods and particularly the warehouse in India and other countries are much in demand as they are the hubs of the flow as well as the right place to store all kinds of goods.

As we wait for the supply chain to stabilize, warehouses are making adjustments to meet customer demand as best they can. Now, it’s time to start thinking long-term. As we try to navigate our lives in today’s new “normal”, we're taking a look at 10 ways COVID will impact the future of warehousing and distribution forever.


Smaller Decentralized Warehouse Distribution

To provide same-day or next-day delivery customers are expecting, manufacturers will seek to decentralize their warehouse locations. Being closer to the customer decreases transportation costs and reduces the risk of supply chain disruption if there is a delay/interruption in one part of the country, but not the other.

 

While some manufacturers will look to establish these decentralized warehouse facilities in key locations, others might seek to utilize established 3PLs (Third Party Logistics). Further, while new satellite distribution centres are established, warehouses will seek to use high-density automation to keep the warehouse footprint as small and limit the initial investment and ongoing required labour costs.


Increase in Cold Storage Warehousing

The impact of COVID caused some sectors of e-commerce to grow at a faster rate than others. One of the fastest-growing e-commerce sectors is grocery. Consumers fought online for grocery pickup times when COVID first hit. Even now, many consumers aren’t headed back into the store, preferring online pickup to an in-store visit.

 

Increased online grocery demand combined with the decline in dining out is set to increase the demand for cold warehousing in the future. Cold storage adds significant costs to a warehouse. Thus, warehouses will look to use automation to manage smaller, more efficient temperature-controlled storage warehouses.


Fast- Track the Growth of E-commerce

 While the COVID pandemic didn’t start the e-commerce boom, it is certainly responsible for the recent surge in demand. COVID catapulted e-commerce ahead 2 years in only 10 months; realizing projected 2022 results in 2020 for a total of $4.28 trillion in global e-commerce sales in 2020. Warehouse and distribution centres aren’t new to e-commerce, but the rapid increase in demand has most struggling to keep up.

 

While some consumers are eager to return to in-store shopping, the data suggests the e-commerce boom won’t subside when COVID relents. A recent survey by Bizrate Insights found “60% of shoppers reported buying a product online instead of in-store due to COVID-19, and 32% expect to continue to shop online”.

 

The sustained impact of increased e-commerce orders has changed the order profile of the warehouse significantly. To fill these orders, warehouses will pivot from case picking to pallets destined for retail locations – to picking individual pieces into boxes to be shipped directly to end customers. This is a major change for warehouse operations – material flow, processes, and storage technologies will all be impacted as the warehouse makes the shift from full case to split case picking.


Shorter Warehouse/3PL Contracts

If COVID taught us anything, it’s that the future is unpredictable. With a possible second on the horizon, companies will demand shorter contract terms when renting, leasing, or co-sharing warehouse space. This will be the same for 3PL partnerships. Contract terms will be shortened which might also lead to longer contract terms being incentivized. Post-COVID, companies will be hesitant to sign a 3-5 year contract commitment. Standard warehouse space and 3PL partnership contract terms will be lowered to 1-2 years.


Increased Warehouse Size

Warehouses are going to need more capacity post-COVID for a variety of reasons. Increased inventory on-hand, meeting increased demand, additional space for social distancing – all lead to more storage locations and more capacity.

 

This additional capacity might be spread out in smaller more local or decentralized warehouses, but the overall capacity of total warehouse space will increase. Warehouse managers will also turn to ASRS technologies to increase capacity within one facility to keep.


Keeping More Inventory on Hand

Before the pandemic, most manufacturers had adopted lean manufacturing as a best practice. Receiving goods just-in-time (JIT) for manufacturing kept inventory costs down and utilized space more efficiently. When COVID hit, this lean strategy left many manufacturers with inventory shortages and in some cases caused production to stop completely.

 

While lean manufacturing will remain a best practice, the balance between JIT inventory and safety stock will change. To prevent future inventory shortages leading to production shutdowns, manufacturers will keep more inventory (buffer stock) on hand. Exactly how much more will depend on varying factors, but overall inventory on-hand will increase.

 

This will only escalate warehouse space and capacity issues. Many warehouses Industry struggled to make space for social distancing, and now they will need space to manage this additional inventory.


Increased Use of Warehouse Automation

Warehouse automation has been gaining steady traction for years, but like many things, COVID will speed its adoption. As warehouses cope with adjusting inventory counts, making space for work in process (WIP), speeding order delivery, implementing social distancing and decentralization they will turn to automated storage and retrieval systems to help reclaim floor space and improve the efficiencies of their workforce.

 

Automated Storage and Retrieval System (ASRS) can recover up to 85% of existing floor space when compared to standard shelving. Warehouses need this additional capacity to meet post-COVID challenges. Combined with the pick to light systems and integrated inventory management software, ASRS can help warehouses solve labour challenges and manage unpredictable spikes in demand.


New Importance on Inventory Visibility

As demand for faster delivery rises and companies decentralize their warehouses (or leverage retail stores for distribution), inventory visibility throughout the supply chain will take on new importance. The ability to know, in real-time, exactly what inventory is on hand at each warehouse is the key to assigning and filling orders efficiently.

 

Few companies have full visibility into the inventory in their supply chain. As warehouses look to decentralize operations, the need for real-time inventory visibility will increase tremendously.


Scalable Processes & Picking Strategies

While some warehouses Industries were overwhelmed with orders and facing labour and inventory shortages, warehouses just down the road saw orders dry up and we're left with an abundance of inventory. Wild fluctuations in order demand are very difficult for most warehouses to handle.

 

In the wake of COVID, warehouses will look to implement scalable processes to manage unpredictable demand. Using a combination of material handling technologies and software solutions, warehouses will deploy flexible order picking strategies allowing them to easily handle peaks (and valleys) in order demand. Warehouses will demand picking systems and processes that are able to increase or decrease picking speeds overnight - by adjusting labour requirements or adjusting the automation itself.


More Work-in-Process (WIP) Inventory

With unpredictable supply chains, manufacturers will need to make space for additional WIP. Since COVID, supply chain hiccups are common, and manufacturers need to be prepared to handle them. When parts are delayed manufactures are left with the half-finished product (WIP) waiting to be completed.

WIP inventory adds up. Manufacturers will need a solution to handle stockpiles of WIP so they aren’t damaged or lost while they wait to be completed. Increased WIP inventory will be another catalyst for integrating high-density automation into the warehouse.



Team 13SQFT

POSTED BY
Team 13SQFT

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