The COVID-19 outbreak has doused global supply chains in cold water, with disruptions of declining supply followed by demand contraction forcing stakeholders to revise their logistics strategies, including sourcing, inventory management and distribution.
Luckily supply chains had gradually been shoring up to change over the last decade, brought about by the rise of e-commerce that now takes up a significant chunk of the retail market — a chunk that has only grown bigger during the COVID-19 pandemic.
The pandemic has led to seismic changes in consumer behavior, as consumers who have never shopped online were forced to try e-commerce under lockdown. It is now expected that a sizable part of the population that was exposed to e-commerce for the first time during the quarantine would not go back to shopping from storefronts. With the pandemic refusing to die, consumer foot traffic in stores can be anticipated to be lower than before over this year.
The increasing relevance of e-commerce has led to the need to expedite supply chains, as evolving consumer expectations have made one- and two-day delivery schedules a market norm.
Warehouses and their functioning cannot be overlooked in the pursuit of expedited logistics. Conventional warehouses are not built to be flexible, making them incapable of handling frequently changing demand patterns based on consumer preferences.
Visibility is another issue. Warehousing data does not get integrated within databases in real time, reducing efficiency. Opacity within operations also stops stakeholders from being proactive with their inventories based on expected demand.
Macro trends within the warehousing market cannot be ignored either. E-commerce growth and tight delivery schedules have pushed companies to look at building inventories closer to their customers. Warehouses are now being built on the outskirts of cities to ensure products reach customers faster.
Rising commercial real estate prices near cities are a deterrent to this behavior, forcing companies to find a balance between moving too close to their customers and paying exorbitant rates for stocking their inventories as they move closer.
Automation within warehouses is now on the increase. The warehousing robotics space is replete with startups that have developed warehouse robots that can fulfill orders faster and more efficiently than human workers. Drones are also being introduced as a bridge between warehousing and last-mile logistics, flying products from the warehouse directly to the customer’s doorstep.
Warehousing will eventually move from having stagnant, data-averse operations to being more digitally present and flexible to handle the burgeoning demand of the future. Aside from technology, it would involve stakeholders to work together, collect, analyze and share data to gain insights on improving efficiency within supply chains.
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