FEATURE u Storage Optimisation
Could your Autumn peak be riskier than usual?
84 per cent of UK businesses are planning on moving from Just-In-Time to Just-in-Case supply chain models. What will this mean for pre-Christmas planning? By Matt Whittaker, Commercial Director at Bis Henderson Space
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any retailers depend for their profits on the ‘golden quarter’ at the end of the year. To meet demand, many businesses
require space for warehousing, order picking and dispatch over and above their normal needs. Depending on the trade and the characteristics of the supply chain, the requirement may be short and sharp or more ‘shouldered’ over several months – but in a tight warehousing market companies will have to act now to secure the space they need. Unfortunately the coming season is more than
usually difficult to predict and companies are reluctant to commit, lest the ‘golden quarter’ turns out to be fool’s gold. There are real uncertainties on the demand, supply and logistics sides of the equation.
On the demand side, the ‘cost of living crisis’ is becoming a reality. Will this result in a general tightening of belts, or will consumers enjoy one last splurge? And supply side problems are well known – the Ukrainian war, semiconductor (and many other) production lines, fuel prices, and rail strikes.
It is suggested that the value of consumer goods sold in this year’s ‘golden quarter’ will increase, volumes – which are what matter for warehousing – will be down, compared with 2021. A recent survey by SAP reveals 84 per cent
34 September 2022 Irish Manufacturing
of UK businesses, manufacturing and retail, are planning to move from Just-in-Time to Just-in- Case supply models, likely increasing demand for warehousing as they stockpile critical inputs as and when they are obtainable (or affordable) and increasing competition for quality space. So predicting a company’s need for short-term
space over the quarter, and then securing it, could be a nightmare. But we suggest a number of principles that businesses could follow – and not just this year. Firstly, it is almost never advisable to scale permanent warehousing and associated capacity for a single seasonal peak (although there are firms that have successive peaks, perhaps in different lines, for which this may not be true). But generally, the business is committing to a continuing expense which for much of the year is not producing a return. It might also be claimed that excessive space availability simply encourages lax inventory management, which can have a negative impact on cash-flow and even stock redundancy. Second, it’s vital that businesses contract for the right type of space. Storing pallet loads in a bulk store, or even in the container in the yard, may be reasonable when they arrive in August, but if they can’t be accessed to pick and dispatch on demand as the orders come in over the Autumn, there are likely to be lost sales. Facilities that enable efficient,
perhaps automated, picking and packing, are more costly so it’s financially sensible to restrict hiring these facilities to when they are needed, at peak. Thirdly, location is key. Bulk storage and distribution, perhaps somewhere in the Midlands, works very efficiently in times of normal, steady demand. At peaks, a model which holds more stock closer to the end user, whether retail store or e-commerce consumer, may be much more appropriate. But again, this isn’t necessarily a facility that makes sense to operate all year round. Fuel costs and driver shortages are also impactful considerations in peak season distribution planning. Using an independent warehouse space consultancy that has extensive in-house expertise – and a wide network of contacts with available space – can pay significant dividends and can help a business ‘right size’ its warehousing needs to meet seasonal patterns of supply and demand. Through tapping into an ‘off-grid’ database
of unused or underutilised warehousing space, suitable available facilities can be found on a short- term rental basis… And, short-term rates can often be highly competitive. Creating a flexible space strategy for a potentially difficult Autumn peak season is a great way to mitigate risk.
Bis Henderson Space
www.bis-hendersonspace.com
www.irish-manufacturing.com
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