The High Street retail world may be reeling under a variety of pressures, particularly from ecommerce, but there has been a boom in new warehousing as mega sheds take shape to fulfil the consumers’ online shopping needs. This is a reflection of what the Internet of Things (IoT) has wrought, which sees the disintermediation of traditional supply chain players like retailers and wholesalers, who are left with too much invested in costly real estate assets like shops, and about which this writer commented would happen over 30 years ago. The brave new world means the warehouse is now the lynchpin that will decide the victors from the vanquished.
This shows the vital importance of stock levels and their turnover rates, because as one former Toyota Vice President pithily commented: “Warehouses put money to sleep.” The key exercise for many warehouses, therefore, will be an optimal design that balances capacity and operational efficiency. Seeking this Holy Grail can be a fiendishly complex task, so no matter what size your business why not consider engaging logistics consultants with a good track record? Or alternatively offload the warehouse function to a 3PL with the right kind of experience in your products field, because as logistics specialists they have the right kind of experience, leaving you to concentrate on your core functions of production and marketing. Their experience has been known to lower their clients’ logistics’ costs through efficiency gains.
If thinking of going down the consultancy route there are a number of questions to ask. What is their implementation experience? Investigate the consultant’s methodologies to see if they are proven to deliver robust, evidence-based recommendations. Quiz them on their knowledge of MHE suppliers’ offerings, particularly important if there is to be any significant level of automation planned. Ensure that they are not tied in any way to such equipment suppliers. Be wary of yes persons and try to establish a trust-based relationship so that the consultant is honest about the value of the project, because its overall cost will weigh heavily on the board’s approval decision. Are they independent of software companies and 3PL providers. If feasible, try to visit other companies who have chosen the consultancy route to see how their consultants performed. A good consultant will recognise the issues that add risk to projects and work with the client to minimise these even before they are engaged. E-commerce warehouses are a breed apart in that they need more careful optimisation beyond that needed for fulfilment of traditional, order delivery profiles. This is because mainly single item orders are being placed 24/7 within tight delivery constraints to customers, i.e. 24 hours or sameday delivery. Difficulty is added when special promotions lead to huge, sudden demand increase. In this situation one would expect to see much higher investment in automation, like fast sortation conveyors and various goods-toperson order picking systems. It requires careful synchronisation of warehouse operations and sales order processes to ensure orders can be shipped on time and in full.
Size, they say, matters but in warehouses that does not mean oversized, though it would be prudent to have some undeveloped land handy in case business growth rockets. Getting the overall size right can be helped with stockforecasting programs that allow total stocks to be trimmed by up to one third without harming customer service levels.
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