By Megan Doyle
To that end, experts say many warehouse operators are looking to new techniques and technologies. But even with new developments like distributed warehousing, warehouse management systems, automation, and more, many warehouses are still challenged to overcome a tight labor market, according to those experts.
Warehousing and warehouse management, in its simplest definition, is the storage of goods until they’re needed. Warehouse operators are tasked to manage space, equipment, goods, and labor effectively, efficiently, and safely.1
Some of the duties involved in warehouse operations management include2:
With so many aspects—and customer expectations growing higher all the time—warehouse operations management challenges are becoming more complex.
According to a 2018 survey by publication Logistics Management, the top challenge faced by warehouse operations is the “inability to attract and retain a qualified hourly workforce.”3 This labor shortage was cited by 55 percent of warehouse and logistics professionals, an increase of 6 percent from 2017.
At the same time, room for error appears to be shrinking. “Even if you can get orders out the door on time, that’s not good enough,” says Don Derewecki, senior consultant at St. Onge Company, a supply chain engineering consulting company that partnered with Logistics Management on that survey. “It really does have to be a perfect order that gets done under a narrower time window with scarcer resources of all types throughout the network.”4
To keep up with customer demands, every aspect of a retail business—right down to warehouse operations—requires flexibility and agility, say experts.5 Many warehouse operators are looking to new technologies and techniques to improve operations and make their people and processes more efficient and productive.
In the past, many organizations consolidated warehouses to one or two centralized locations to improve efficiency. But direct-to-consumer deliveries were far less common then. Today, it can be very difficult to enable fast, inexpensive delivery from only one or two warehouses.6 Instead, distributed warehousing—more warehouses spread apart to reduce the “last mile” distance to consumers—could help warehouse operations fulfill orders quicker. Distributed warehousing could also cut fuel costs, emissions, and reduce driver hours.7
But it can be hard for businesses to acquire additional warehouse space, and it typically requires a long-term commitment. A 10- or 15-year lease, for example, might not offer the flexibility needed to keep up with an ever-evolving e-commerce landscape.8 More warehouses could also increase a business’s operating costs.
Instead, some organizations are turning to an on-demand warehousing model.9 On-demand warehousing, or warehousing as a service, can help businesses quickly locate short or long-term warehousing. A potentially more cost-effective alternative to third party logistics (3PL) providers, on-demand warehousing can be especially helpful during busy seasons when warehouse needs are at their peak. In such situations, a company can use on-demand warehousing simply for extra space, or to temporarily outsource warehouse operations.
Warehouse Management Systems (WMS) are now widely used in warehouse operations, with 93 percent of warehouse operators using a WMS of some sort, according to the Logistics Management survey.
WMSes focus on enhancing the productivity of workers—especially considering the labor shortage.10 Using software, big data, the cloud, and automation, WMSes can manage supply chain operations, increase inventory visibility, and integrate with transportation management solutions to streamline warehousing and supply chain operations. This can also cut costs and improve just-in-time inventory capability.11
WMSes can also collect data and provide data analytics to help warehouse operators gauge productivity.12
Automation is already improving warehouse operations for many, with capabilities like automated guided vehicles that move cases and pallets, autonomous forklifts, and robots that move stocked shelves to picking stations. Similarly, drones are being used to monitor warehouses 24/7.13
In fact, McKinsey Global Institute estimates that the transportation-and-warehousing industry is one of the top three industries in terms of potential for improvement through automation.14 But McKinsey research also estimates that the warehousing industry will see the slowest growth in investment. Many warehousing and logistics companies have yet to take full advantage of automation.
McKinsey suggests this hesitance is due to things like uncertainty about which technologies will be successful, the unusually competitive nature of e-commerce, and trouble getting new technology and updated equipment. Still, the same research suggests that by 2030, automation and artificial intelligence could take on many of the common, repetitive tasks that are at the core of warehousing and logistics.
Warehouse operations play a critical role in keeping international trade running smoothly. But, like all stakeholders in the global supply chain, warehouse operators are facing a number of challenges from the rise of e-commerce. Technological advances and new techniques could eventually cause a shift in how warehouses are managed, increasing their efficiency.
Megan Doyle is a business technology writer and researcher based in Wantagh, NY, whose work focuses primarily on financial services technology.
1. “Warehouse Operations,” Princeton University AAUP Wiki; http://aaupwiki.princeton.edu/index.php/Warehouse_Operations#Introduction_to_Warehouse_Operations
2. “What is Warehouse Operations?,” CamCode; https://www.camcode.com/asset-tags/what-is-warehouse-operations/
3. “2018 Warehouse/Distribution Center Survey: Labor crunch driving automation,” Logistics Management; https://www.logisticsmgmt.com/article/2018_warehouse_distribution_center_survey_labor_crunch_driving_automation
5. “Location, location, location: How distributed warehousing can secure the future of the supply chain,” PrivSec Report; https://gdpr.report/news/2018/05/01/location-location-location-how-distributed-warehousing-can-secure-the-future-of-the-supply-chain/
9. “On Demand Warehousing Ready to Be a Game Changer,” Logistics Management; https://www.logisticsmgmt.com/article/on_demand_warehousing_ready_to_be_a_game_changer
10. “2018 Warehouse/Distribution Center Survey: Labor crunch driving automation,” Logistics Management; https://www.logisticsmgmt.com/article/2018_warehouse_distribution_center_survey_labor_crunch_driving_automation
11. “10 Warehouse Management System Software Benefits,” SelectHub; https://selecthub.com/warehouse-management/warehouse-management-system-software-benefits/
12. “2018 Warehouse/Distribution Center Survey: Labor crunch driving automation,” Logistics Management; https://www.logisticsmgmt.com/article/2018_warehouse_distribution_center_survey_labor_crunch_driving_automation
13. “Automation in Logistics: Big opportunity, bigger uncertainty,” McKinsey & Company; https://www.mckinsey.com/industries/travel-transport-and-logistics/our-insights/automation-in-logistics-big-opportunity-bigger-uncertainty