E-commerce boom means extra 28,500 warehouses needed globally
Learn how we have worked with leading e-commerce vendors, to help create a robust, resilient and high performance e-commerce supply chain.
Available warehousing space has been in short supply in recent years and the e-commerce boom triggered by the global Covid 19 pandemic has made the vacancy situation worse. In the US for example there was an additional $105 billion in online spending in 2020 according to Digital Commerce 360 estimates. Sustaining sales at these levels will need an awful lot of new warehousing to satisfy demand.
According to global research conducted by Interact Analysis, there are currently 150,000 warehouses in the world representing roughly 25 billion square feet of space. Now, thanks to a wholesale shift to online shopping plus increased consumer goods demand from the growing numbers of middle classes in developing countries, Interact Analysis has predicted another 28,500 more warehouses will be added globally in the next five years. All this is making investment funds show greater interest in the logistics real estate market than ever before.
It also means there is a greater appetite for warehouse automation, especially for solutions that help increase supply chain resilience. Prologis is forecasting that a large number of these new warehouses will be direct-to-consumer fulfilment, with significant labour and automation investment required.
One challenge of operating a direct-to-consumer warehouse is coping with the large volumes of sales orders received on a daily basis. Consumers today want to place an order one minute and know their goods are out for dispatch almost immediately. Some people may be prepared to pay extra for faster delivery, but regardless of the exact shipment terms, they will all expect their goods to be on time and as promised.
Fulfilling e-commerce orders on time and as cost efficiently as possible is very different to traditional bulk order fulfilment. It ideally needs these key things to be in place:
- A direct real-time link or integration between the business’ e-commerce front end and the back-end warehouse operation. This is important to ensure that stocks are actually available to buy as advertised and also to ensure efficient order fulfilment.
- Forecasting of future inventory requirements and automated replenishment triggers. A Warehouse Management System (WMS) will record historical sales data and use this to help anticipate future demand. Armed with this information, warehouse managers can predict order volumes and ensure they have adequate inventory and very importantly, enough pickers and warehouse operatives on hand to cope with busy periods.
- A well organised warehouse with a clear layout and well-marked locations for every item’s SKU. The warehouse should be organised with the fastest moving lines in multiple aisles, to make stock picking as swift as possible.
- Order pickers equipped with mobile devices and ideally, voice enabled headsets, to process sales orders with maximum efficiency. Using voice technology, workflow automation is built into every pick process, so pickers simply listen to commands directing them to set locations for each order item.
- Returns management processes to ensure a rapid turnaround for the process of receiving back unwanted stock, checking it and re-listing it for sale again.
- Reporting to support continuous improvement. E-commerce is a very dynamic sales channel and the most successful companies use data insights to beat the competition. Faster, better, cheaper solutions can be identified using technology like a WMS to model the optimum processes.
E-commerce may be booming and full of opportunity, but it is challenging to get right. More challenging in fact than any other sales channel, because competitors are just a click away and consumers typically expect perfection.
Using a WMS will go a big step towards achieving this end goal, ensuring stock availability data is available in real time, orders are fulfilled on time and in full each day, and management can achieve the profit margins desired.
When researching a warehouse management software solution, talk to Indigo Software to learn how we have worked with leading e-commerce vendors, to help create a robust, resilient and high performance e-commerce supply chain.