Redefining the e-commerce industry …
The evolution of e-commerce in the retail omni-channel age requires a viable solution to meet the immediate challenges facing next-generation warehousing.
In order to improve customer service expectations while managing cost structure, today’s e-commerce retailers must possess extensive insight and comprehensive data to emerge as leaders. By identifying the needs, understanding the implications and generating protocol designed to increase labour productivity while reducing modern warehouse costs, our vanguard next-gen warehousing approach, for example, utilises cutting-edge technology, such as artificial intelligence (AI), to provide solutions for our global partners.
With the integration of a new-age business model that merges online orders with massive automation, we have observed innovative applications at their finest — generating unparalleled back-end efficiency.
To appreciate these advances requires understanding the growth of e-commerce and how this entails an increase in cost while labour productivity declines, and the inevitable proliferation of stock keeping units (SKUs).
Here, we explore next-gem warehousing in terms of the following key attributes, including warehouse design and automation, labour productivity and picking accuracy, returns management and inventory visibility, “endless aisle” impact and flow through, food safety and optimisation of human resources.
By way of collectively addressing and improving modern warehouse design from A to Z, quality and innovation are paramount features required by e-commerce retailers who recognise the importance of meeting future demands. This discussion seeks to elucidate new best practice models that are vital to future success.
Key factors driving next-gem warehousing
The three key components — right automation, labour productivity, and throughput improvement — collectively contribute to the vital evolution of warehousing.
Right automation requires decision support for right automation (AI, robotics and low-cost automation) — imperative to improve functionalities applicable to warehouse design. Equally important is the warehouse command centre, which houses real-time visibility of warehouse operations while possessing the capacity to provide quality check automation and cold chain contributions.
Labour productivity is impacted by technology adoption in the areas of RFID, scanners, beacons and biometrics. In addition, palletisation and basic warehouse operation analytics allow for the incorporation of optimal technological advances, which are all enhanced by the aforementioned.
Finally, throughput improvement completes this first section through the use of picking and putting away design optimisation and warehouse layout design — racking system design, inventory accuracy and omni-channel process design. The result of these categories’ simultaneous improvement is the next-gen warehouse model being the efficient and futuristic answer to the modern warehouse experience.
Implications of the new business model
Omni-channel commerce is no longer an innovation. Rather, it is the norm. As such, millennials are driving the competition between Amazon and the rest of the world, leading to stringent delivery timelines for meeting online orders.
Massive automation is thus emerging as the innovative way of optimising warehouse efficiency, while ultimately increasing the pressure on reducing back-end and warehousing costs. The implications of next-gem warehousing will redefine the e-commerce industry.
Given the design effects that proper warehousing requires, vast attributes are required to achieve optimal technical functionality. By introducing and observing interactions within the following categories, optimal effects may be formally recognised.
Warehouse design: Within the world of warehousing, network planning is vital and best practice models demonstrate that planners must bear in mind the complex omni-channel movement requirements round-the-clock — to create minimal structure with maximum efficiency.
For example, executing the proper degree of right automation without impacting merchandise flow becomes key. Moreover, with the deployment of advanced robotics and completely automating warehouse floors, retailers increase production with minimal human intervention in terms of inward goods, put-away, and picking and sorting.
Labour productivity: The single largest item in expenses, at 55%, is that of labour employees, and it is projected to increase by at least 5%-10%. Meanwhile, according to the 2015 US Labour Census, actual labour productivity steadily declined by more than 4.4%.
A variety of factors contributing towards this decline include a lack of training leading to poor productivity, picking inaccuracy and even a high BMI index. AI easily becomes the optimal choice to avoid complications due to the lack of accuracy of picking.
Return management: A key factor retailers face is return management. The industry estimate within e-commerce suggests 24% in the US alone, which is approximately 262 billion items being returned for a variety of reasons.
Obviously, this leads to massive challenges in warehousing space and design. Many warehouses are ill-equipped to navigate this task and therefore contribute towards high risk to manufacturers as well as unacceptable turnaround times for consumers. Thus, the benefits of a streamlined next-gen warehouse increase exponentially as they solve all current categorical challenges facing brands.
Impact of endless aisle and inventory visibility: Another interesting component of today’s effective warehouse applies an “endless aisle” concept to ensure clear inventory visibility — the advantage of which is that it allows multiple order channels to be executed efficiently, despite a lack of real-time visibility.
By streamlining IT systems, we remove the pressures upon human systems responsible for ensuring a 100% fill rate on e-commerce items — an otherwise impossible task that leads to wrong picking and packing, and pilferage. With this information, next-gen warehousing is poised to reduce multi-million-dollar risks as it increases international margins.
Food safety: The ability to accurately monitor necessary temperature control while providing safety to consumers has always been problematic at best. However, future-forward warehouse concepts such as UST’s have produced solutions that not only improve warehouse flow but also answer some of the largest concerns facing food transport companies.
With the development of cutting edge temperature tracking systems inserted into trucks, we are now able to safely monitor the cargo of warehouses and trucks, eliminating the risks associated with not dealing with food safety correctly. This thereby eliminates compliance issues of warehouse operators and reduces liability for corporations.
Human resource: The next few years will revolutionise retail through e-commerce, with an accelerated adoption of technology across the board; the implementation of which will bring about an end to warehousing as we know it — by reducing the roles human beings previously held.
Moreover, with AI being implemented, improving both consumer and manufacturer experience, the cost of traditional labour cannot compete with modern automated warehouses designed to provide frontline e-commerce exposure.
The ability to analyse the productivity of warehouses built to meet modern demands has arrived. Tools such as Virtue Sense, which monitors worker productivity at a granular level, give complete control and visibility to the warehouse manager to train and re-train the workforce more effectively and bring transparency in worker productivity-linked wages. Virtual reality (VR) devices such as Intel Head Gear, which works with small handheld scanners, ensure picking efficiency is the highest or is error-free.
The combination of all these efforts will lead to significant changes to the way warehouses are managed and operated.