Key learnings from 2020, first debated at UKWA’s National Conference and subsequently underlined during the COVID-19 crisis, are that innovation and automation will be the twin drivers of successful warehousing operators going forward.
Value added services create competitive edge
As a UKWA survey confirmed, good old-fashioned storage charges won’t support a profitable operation. Other than in exceptional times (such as during the global pandemic!) simple storage is not what customers want. What they want is partners in innovation, 3PL providers able to share their vision and support their growth ambitions by delivering a range of value-added services that create competitive edge both for themselves and their partners.
The logistics landscape has been transformed and warehouse operators are dealing with the complexity of serving different channels on behalf of retailers, from value to premiumisation, high street store to home delivery. We are no longer sellers of space, but purveyors of diversified order fulfilment services, including personalisation, co-packing, returns management and, in some cases, managing customers’ consumer-facing social media channels.
With the proliferation of online, the new demands of Gen Z and climate change, 3PLs must be agile, innovative and flexible, with an eye on sustainability. Customers will be looking for CSR from 3PLs as climate change continues to dominate the political agenda and more sustainable practices are demanded by their younger consumers. Legislation is already driving change – larger organisations are being held to account and SMEs must prepare to be ready too – climate change legislation is coming!
Automation is becoming more affordable and increasingly necessary
The other major change ahead will be a gathering momentum towards automation. Not only are costs coming down, but if we are to address the challenges of social distancing as well as the issue of labour shortages, the rise of robotics and automation seems certain.
A recent report by PWC stated that automation is going to impact on the warehousing sector at all levels. SMEs in particular have in the past tended to be risk averse and view automation as high Capex, however as we heard at conference, this need not be the province of large companies only, as solutions for accessibility emerge, such as subscription-based services that enable companies to ‘try’ before they buy or lease technology.
Each company needs to take a view across a broader range of available technology, to identify what will be valuable to their own business. What is certain is that the future will be machines plus people, the industry will need to look to attract young people with technology skills. Simply put, data and systems will be foundational to business success and those falling behind now will find it impossible to catch up in the future.