It’s been 18 months since the World Health Organization (WHO) declared COVID-19 a pandemic, and the world is still trying to adapt to the changes and uncertainties associated with it, even causing a domino effect in some cases. . The pandemic disrupted many supply chains last year, closing factories and stores and limiting manufacturing and distribution operations. Many workers have decided to retire, relocate or consider new occupations. Construction of manufacturing plants and new warehouses has also been postponed or canceled entirely due to market uncertainty.
Today, a year and a half after the start of the pandemic, activity has resumed, but the disruption has created a shortage of 80,000 drivers in the US trucking industry, according to the American Trucking Association. Along with the lack of drivers and trucks for picking up cargo, this is also causing a backlog at US ports. Construction arrears also take 18 to 24 months to clear up.
Meanwhile, e-commerce is booming more than ever. According to the CBRE Global E-commerce Outlook 2021 report, the growth of e-commerce will require an additional 330 million square feet of warehouse space in the United States by 2025. Although more and more physical stores begin to open , e-commerce is here. to stay, recording a growth of the order of 30 to 40%. High e-commerce buying rates combined with construction delays are causing strain in the supply of new warehouse space, especially as companies shift their inventory management strategies from just-in-time inventory management. (JIT) to larger safety stocks for better responsiveness. Online shopping has also led to an increase in product returns, which would require additional space for processing and storage.
But customers don’t care about supply chain issues that can arise without their knowledge. They care about getting their products on time, which has now become a more important factor in determining brand loyalty and preference. 84% of people say delays would cause them to cancel their order, and 80% say it would cause them to stop buying from a brand altogether, according to a new study from Oracle. If businesses don’t prioritize their supply chains and prepare for disruption, they risk losing valuable customers.
With transportation delays already reducing turnaround times, businesses need efficient, technology-driven distribution networks that outperform traditional linear supply chains. The challenge is to be able to maintain enough warehouses to meet this growing market and to have distribution networks agile enough to cope with unpredictable and disruptive events. But the question is where and how are you going to build these facilities and create a more flexible distribution network? There will be situations where a traditional warehouse will not work. Existing warehouses may be located too far from the market or require a dependence on strong transportation networks. This is where the flexibility of a cloud-based warehouse management system (WMS) and the ability to quickly set up “pop-up warehouses” can benefit your warehouse operations.
Consider these four essentials when evaluating your warehouse facilities:
- Do you have the ability to distribute anytime and anywhere? Businesses need to be able to operate adaptive distribution networks that easily respond to changing order conditions. Warehouses are now processing smaller and more frequent orders, and consumers expect delivery within 1-2 days.
- Do you have real-time visibility into your orders, stocks and shipments? Having visibility into your entire supply chain is important to avoid stockouts and provide excellent customer service.
- Can you easily and quickly deploy distribution centers if needed? Businesses should have the flexibility to convert any space into a warehouse when needed. With changing demand requirements, the need for seasonal products, as well as customer expectations for faster delivery times, you sometimes need to set up ‘pop-up warehouses’ closer to delivery locations rather than to delivery locations. ‘have a large warehouse further away.
- Can you meet and respond to changing business demands? Having a cloud WMS gives warehouses the ability to deploy flexible order picking strategies that allow better management of market changes and fluctuations in demand. The safety and efficiency of workers are also crucial. This means being able to integrate easily with automated warehouse systems, have minimal downtime and react quickly to any factor that could disrupt operations.
Customer experience is the key. While supply chain disruptions are nothing new, the pandemic has caused dramatic changes in consumer behavior and expectations, forever altering the retail landscape. With their brands and businesses at stake, companies need to assess their current distribution process and network models, find ways to successfully meet customer needs, and prepare their warehouses for the long haul.
Joan Lim is Director of Product Marketing at Oracle and leads the go-to-market strategy for Oracle Cloud Logistics solutions, spanning transportation, global trade and warehouse management. Prior to Oracle, Joan held product marketing and strategy positions at Unilever, Qualcomm, Amadeus IT Group and various cloud application and supply chain start-ups. Joan holds a master’s degree in digital marketing strategy from Georgetown University and a master’s degree in commerce from ESSCA Business School in France.