FIVE CHALLENGES causing sleepless nights in the supply chain
The pervasive growth of eCommerce and multi-channel retailing is accelerating the urgency for organisations to adapt their supply chain models and drive increased efficiency. After all, inefficient processes cost organisations time and money.
The increasing move towards an on-demand economy is making waves right the way through the industry, not only at a retail level but across every inch of the supply chain, right up to the point of manufacture. Everyone is looking for ways to get the end products into the hands of the consumer faster and that means driving efficiency sector wide. It’s an enormous challenge but one that can start to be addressed through the implementation of technology.
Let’s look at five key challenges we see at the front of mind for many warehouse and logistics operators and the role they play in streamlining operations to drive efficiency and profitability.
1. The devil’s in the detail
When companies don’t have full and accurate visibility of their inventory, they risk encountering two main problems, either carrying too much stock or running out. The impact of too much stock is decreasing cashflow and cost of storage. However, a lack of stock can lead to unfulfilled orders and unhappy customers.
Having read many success stories and been the instigators of successful data capture solutions yourselves, it may surprise you that accuracy of inventory still presents a substantial challenge to many organisations.
In a recent study by Zebra Technologies, respondents estimated that their inventories are only 66% accurate today.1 The root cause of this challenge is chalked up to the increasing complexity of purchase & delivery models. Retailers know that they need to offer a range of solutions to consumers from buying instore to click and collect and home delivery however, in most cases the user’s inventory management system simply can’t offer the level of granularity required to manage multiple channels efficiently.
In the same Zebra study, respondents estimated that inventory needed to be approximately 76% accurate in order to handle the rise of omni-channel retailing. When consumer tolerance is at an all-time low and the competition is only a few clicks away, the race is on to overcome this challenge and fast.
2. Location, location, location
A close cousin of inventory accuracy and another pressing challenge for the warehouse industry is inventory location. Location can have a quantifiable impact on order picking productivity and precision.
Travel time between locations can account for 50% of order 1. Statista - https://www.statista.co
m/statistics/471264/iot-number-of-connected-devices-worldwide/ Solutions in WAREHOUSE & LOGISTICS
picking hours. Depending on the size of the facility travel time can soon add up but travel time isn’t the only factor. Mixing multiple SKUs in the same location also reduces picking productivity. Operators need to search through the different SKUs to find the correct item. This opens the process up to errors but can also slow the operator down by as much as 15+ seconds per pick according to some studies.
The actual cost of picking errors is difficult to quantify and is unique to each facility however, studies suggest that distribution centres lose more than €290k a year as a result, approximately €17 per incorrect pick. This presents supply chain operators with a financial incentive to improve location accuracy but is it as easy as it seems?
With the volume and diversity of SKUs increasing and physical warehouse space being at a premium, this is one equation that will be a real challenge for companies to get right. There are several technologies that can help improve picking accuracy and volume including voice and wearable technology, we’ll talk about each later on in this brochure. In addition, we’ll look at how data analytics can be used to enhance the inventory location planning and optimisation process.
3. Racking is valuable real estate
Over the past decade, the demand for warehouse space in the UK has almost doubled. Between 2007 and March 2018, around 235 million sq. ft of warehouse space was leased or purchased across the United Kingdom, the equivalent of 3,000 Wembley Stadiums.
It is estimated by CBRE that approximately 60% of that space is used by retailers and on that basis, we can confidently expect the demand for warehousing space to continue its current trajectory.
By 2020 many experts anticipate that demand for warehouse
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