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The New Complexity of Warehouses
The world of e-commerce has rapidly and completely altered how we as consumers think about shopping. Massive retailers like Amazon offer almost every conceivable product, and most of them can be at your front door within two days, or sometimes the very same day you place your order. The way we shop, what we buy, when we buy it, what we’re willing to pay and how long we’re willing to wait, has forever been changed.
At the same time, ask any Amazon, Target or Wal-Mart online shopper what they think of when they picture a warehouse and they’ll likely give you an outdated outline. The days of enormous retail distribution centers, filled with workers moving pallets of goods by forklift, are disappearing. Warehouses and supply chains are becoming more complex to meet the demands of consumers, and their ability to do so is what continues to drive growth and innovation across the board.
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It’s a bit of a chicken-and-the-egg situation: Which came first, the customer demand for two-day shipping, or the warehouse capability to make consistent and accurate yet speedy delivery possible? About 40 percent of warehouse managers around the world polled in a 2015 survey said that demand for shorter delivery times was “a driving factor” in warehouse transformation.
Regardless of the origin of these changes, it’s clear that now that retailers have proven to consumers that expedited shipping of even basic items like a single t-shirt is possible, there is no going back. Two-day shipping is now the benchmark, rather than a luxury. Warehouses must continue to improve, and in recent years we’ve seen the level of complexity at this stage grow to impressive heights.
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The new complexity: How warehouses have stepped up
One telltale sign that warehouses are becoming more complex is simply that it’s taking companies much longer to train new employees how to be fully productive. According to a report by Zebra Technologies, it took warehouses an average of 60.4 hours to train new staff, up 26 percent from two years earlier. That’s almost a week and a half dedicated exclusively to training, which is a substantial investment of time and money for any company.
The main reason warehouse complexity has grown is because warehouses and supply chains are now expected to collect, organize and analyze “big data” via a number of different devices, including dedicated barcode scanners, smartphones, mobile computers, machine vision equipment and more. While tracking inventory with manual hand counts and Excel spreadsheets in this day and age is just about impossible, it doesn’t make the technologically savvy alternative of a cloud database that can be updated on the fly with barcode scanners easy, just necessary if you want your warehouse to keep pace.
Take Amazon’s “chaotic storage” inventory management system as an example. The company’s reported method of essentially placing new inventory in any available shelf space, regardless of its similarity to the items around it, may seem counterproductive at first. The traditional idea of a warehouse is rows and rows of uniform inventory, easily located if you know the space’s layout. Amazon has actually seen increased efficiency with their system, which relies on barcoding every item and scanning it so the database, accessed anytime, anywhere by any employee with clearance, knows its location. Chaotic storage actually helps increase accuracy in its orders as well, another crucial element of keeping customers satisfied and returning for more. Its complexity, however, cannot be denied.
Even warehouses that don’t use this method understand that they are likely part of a supply chain system in a global economy that now demands traceability and clear provenance. While barcodes make tracking inventory from its origin as raw materials to its final destination in the hands of a customer easier than ever, more than five billion are scanned every day. The amount of data that needs be kept secure yet accessible is staggering and only continue to grow.
Future complexity: How warehouses will continue to evolve
Looking ahead, warehouses are dealing with increased complexity in a number of ways. The first and perhaps most surprising is that they may be paring down size (though not in scope). From a Chicago Tribune article on transforming warehouses:
One way to do that is to put fewer items in smaller warehouses that might be easier for workers to navigate… workers must be able to quickly and accurately identify the specific T-shirt a customer ordered, in the correct size. That requires detailed inventory management that starts when goods arrive at the warehouse and continues until they're shipped out. Smaller warehouses could make that easier, Chamberlain said.
As the physical architecture of warehouses change, so too does the architecture of data warehousing, essentially, the technology used to house and analyze data about inventory, not just the inventory itself, as it is received by the warehouses. Options include Hadoop, NoSQL DBMS, Columnar DBMS and DW Appliances. The trick for warehouses will be to standardize and create rules for the collection and disbursement of data, so that complex analyses and business processes (such as proactive responses to dwindling inventory and advanced customer service) will be accessible and even automated when possible.
According to the survey conducted by Zebra technologies, many warehouses plan on making changes on the ground as well. By 2020, 75 percent of the IT and operations decision makers polled planned to move to a “more modern, full-featured warehouse management system.” Already more than half expect increased investment in systems that track inventory and assets in real-time, and that number shoots up to 76 percent when asked about 2020. A monster 82 percent expect an increase in inbound items that will be barcoded by the end of the decade, and most expected investments in increasing the volume of items shipped, the use of barcode scanning devices, tablets and the “Internet of Things.”
To that point, while “wearable technology” has mostly fallen flat as a consumer item so far, many expect that wearables such as smart glasses, smartwatches and voice control headsets to make a major impact on the efficiency of warehousing in the future. Being able to communicate and transmit data seamlessly through these devices from the warehouse floor may increase productivity by as much as 30 percent, via step-by-step manufacturing instructions, pertinent notifications and updates and even tracking of employee stress and fitness levels to ensure peak efficacy and health.
Warehouses are entering a new era, in which much of what is possible from a manufacturing and retail standpoint depends on how quickly and effectively warehouses can receive, store and deliver their goods and data. While technology is in many ways making some processes easier and more efficient, the level of complexity is increasing due to the globalization of our economy and the rising need to communicate throughout the supply chain at a moment’s notice.
The only question for many businesses is whether they are teamed up with warehouses that can scale to their needs, because no company can afford to have a faulty supply chain, utilizing outdated technology or assets, stand in the way of their success.
How does your company track inventory in the warehouse?
