Importance of warehouses in the Supply Chain process

The importance of warehouses in the Supply Chain process

Warehouses are a piece of the puzzle that customers often don’t see during the buying process, but everything they buy travels through the system and all counts towards their buying experience. International trade and e-commerce have been considered as the main reasons that the absorption rate of warehouse space has risen by nearly 53.8 million square feet in the US alone. This blog aims to look at the importance warehousing plays in the supply chain in this new, digitally reliant era of retail and e-commerce.

Warehouses are now opening in multiple locations in replacement of customer stores to better adapt to the new online consumer. When it comes to choosing a warehouse, managers will base the decision on location as a primary factor in order to reduce costs and shorten their delivery time to customers as online retail takes over. Customer expectations have risen fiercely with 67% of logistics companies expected to provide same-day delivery by 2023. Regular, traditional warehouse systems run primarily by labour will be unable to meet the far-reaching demands of consumers. Traditional logistic companies should be looking into automated warehouses to stay competitive.

Online shopping today

The primary source of shopping in today’s fast-paced environment has become online shopping. Almost everyone in the UK has access to the internet through multiple channels and devices. Consumers can purchase goods and services at the click of a button and the order can be sent straight to the warehouse to begin its process of delivery. In 2016 alone, e-retail sales reached $1.9 trillion with the number of people purchasing goods online at an estimated 1.61 billion. This figure is set to triple by 2020 as technology advances further and becomes the norm for purchases.

With customer service and rising expectations, location has become a primary factor in the decision making of choosing where a warehouse should be located. Companies are going for locations closer to the consumers in popular areas such as London and Manchester where they can have a central focus on the time of delivery, storing and maintaining a high source of funding for further investments.

Consumer order fulfilment is paramount to the operating of a good warehouse and managers and warehouse staff must give it their best to keep an efficient and sustainable operation. Multiple warehouse companies are investing in research into different systems and ways of working to boost their competitiveness against rivals. Technology advancements have made it possible for effective, organised order management with real-time planning and error-free monitoring which all leads to an enhanced customer experience.

Amazon

For example, Amazon is now the world’s largest online retailer. The primary reason for this achievement is it’s impeccable supply chain management system. Known for their automated technique and scientific management methods, Amazon now runs their warehouses on algorithms through an AI-based smart warehouse robotic system. They have used the technique of having multiple warehouses close to city centres and keeping staff costs at a low by replacing them with robots. The system has been considered genius as it runs fully automated with the ability to track any item’s location through a barcode at any one time.

Read more about Amazon’s Warehouse system here.

Warehousing as an industry itself

As brick and mortar stores become less and less popular, the biggest problem that the warehousing sector is facing at the moment is the lack of warehouse spaces available on the market and also the amount of land coming forward for new warehouse schemes. Ecommerce companies need more than just storage facilities, the warehouses have become a centre of fulfilment standards with plenty of management positions opening up in the UK.

41% of consumers online state they would be willing to pay extra for same-day delivery according to the Global Consumer Insights Survey 2019 (PwC). This service requires the warehouse to be absolutely perfect when it comes to tracing inventory, orders and dispatches. By 2028, it is said that 93% of warehouses anticipate that droids will be commonly used to meet these every-narrowing delivery expectations and further cut labour costs.

Of course it makes sense that as high street shopping has made its way online, warehouses and suppliers must also do the same. Customers expect to buy their goods online and therefore, they should be able to track their purchased item from their device at any time. Investment into Smart Warehouses is becoming extremely popular being connected to the internet and available 24/7 to improve overall productivity and performance.

If you’re a warehouse company looking to grow your team with some of the most effective supply-chain employees then contact us today.