In the absence of a dominant home delivery provider, warehouse operators are forced to ensure that new technology platforms can easily integrate, as consumers have come to expect visibility to their orders from end to end.
For a decentralized and broader inventory management, we are seeing warehouse operations rapidly evolve. They are implementing technology to accommodate the changes in demand. For example, warehouses can take advantage of the Automated Storage and Retrieval Systems (ASRS) to recover up to 85% of existing floor space when compared to standard shelving. This will help increase their warehousing capacity. In the absence of a dominant home delivery provider, warehouse operators are forced to ensure that new technology platforms can easily integrate, as consumers have come to expect visibility to their orders from end to end.
Change is inevitable, and the future is unpredictable
One thing that Covid-19 has taught us is that change is inevitable, and the future is unpredictable. Post-Covid, companies will be hesitant towards contract terms for 3-5 years. The expectation will be lowered to 1-2 years to stay adaptable and react to changes in consumer demand. This means shippers would miss out on the cost incentives that longer term warehouse contracts would provide.
With all this dependence on warehouses, and the warehousing capacity scarcity along with automation inclusions, the leases for warehouse spaces have skyrocketed. Warehouse operators are raising their 2021 rent forecast to 6.5% YoY in the US and 6% YoY globally.
5 Tips to Overcoming The Warehouse Capacity Shortage Using Technology
1. Flexibility and Leveraging Technology
Moving towards flexible plans with high technology dependency seems to be the only way to adapt in an ever-changing supply chain. Technology can enable businesses to have a solid plan A, and quickly implement plans B, C, and D if the disruption from 2020/2021 continues.
While implementing technology in your warehousing capacity planning strategy, you can take the benefits of developments and applications found within the ‘BIRD’ options. BIRD technologies include Blockchain, Internet of Things (IoT), Robotic Process Automation (RPA) and Data Science.
As labor shortages have continued to plague supply chains, implementing automation in order picking will reduce lead times. There are numerous technology options to identify the lead times required to meet delivery deadlines.
Further, by using trusted blockchains and advanced data analysis, one can identify demand requirements.
4. Batch Size and JIT
Manufacturers have also shifted to running smaller batches with adjusted schedules to meet the ever-changing demand. Implementing JIT (just in time) programs have been common practice recently.
5. Businesses can Partner with 3PLs
Technology, if implemented correctly, will help create less wastage and minimize delays. Businesses can partner with 3PLs and identify the specific markets where they require last-mile delivery and invest only in specific targeted regions.