WAREHOUSING, HANDLING & STORAGE
E
fficiency is a UK-wide problem. Not only is the workforce unproductive and unable to complete tasks as quickly
as our international peers, but the decline in manufacturing output is leading to unfulfilled orders and downtime. Some have sought to reverse this by selling directly to consumers, but this just adds complexity to the supply chain. This situation has led to the advent of the
smart factory and warehouse operations – taking advantage of major industry trends such as enhanced connectivity, digital transformation and more efficient processes. Capgemini’s Smart Factories @ Scale report released just weeks ago predicted that smart factories could add between $1.5 trillion to $2.2 trillion to the global economy per year by 2023. If you apply this to the warehouse also, this would provide a welcome lift – but becoming a digital centre of excellence is easier said than done. Without the right processes in place, inefficiency will continue to rule.
The problem manufacturers face is that like many businesses, they don’t have the right infrastructure in place - some operations are still performed manually and tracked with paper. Picking, packing, deliveries, returns etc. is an area which exemplifies this, and magnifies the chance of mistakes. This manual approach has clear downsides, making it inefficient as there is no system bringing it all together (such as using mobile devices to help feed into inventory systems).
As mentioned above, with increasing numbers of manufacturers now selling directly to consumers (D2C makes up 16 per cent of all UK manufacturing sales), the need for a coherent system which can
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accurately manage and forecast orders, deliveries and returns will become ever greater. Ideally, the system needs to be able to manage both the bulk orders sent directly to retailers, but also the individual D2C orders – a difficult balancing act to manage. Considering D2C is already worth £13 billion, there is clear opportunity – but only if everything works together, as digital infrastructure will need to be up to scratch to meet consumers’ ever-increasing expectations. Very few retailers have operations which are completely joined up, and this will be one of the biggest challenges manufacturers face (feeding returns back into stock levels in real-time to influence front-end operations) but should become more feasible if a coherent system is adopted.
We all know that selling directly to consumers has some very clear benefits. For a start, it allows manufacturers to gather better feedback on their product. This includes garnering a better understanding of end users through direct relationships, and control over the end to end experience, instead of handing this opportunity to an intermediary. In terms of product design, data gathering and post-purchase service, these insights can be invaluable in terms of new product concepts, marketing or sales channels. This can then help fuel the potential to reach larger audiences and market share, as understanding what consumers want can inform more strategic decisions. However, this insight needs to be co-ordinated, and this multi-channel operation become more complex and challenging to manage. The result? Problems with stock can manifest in customer delivery shortfalls. For those scaling up their digital operations, without
FEBRUARY 2020 | FA2020 | FACTORY&HANDL NGSOLUT ONS ORY&HANDLINGSOLI UTIONSI
the right warehouse and logistics operations in place, they are unable to manage inventory and delivery, and run into issues that ASOS recently encountered. Having a real-time view of product availability will prevent disappointment and poor customer reviews, leading to a better retail experience and increased likelihood of customer retention – tying the whole process together. Data is what will drive operations. This means feeding Order Management Systems (OMS) and warehouse operations into one platform so supply and demand can be accurately tracked, as this is one of the issues hurting manufacturers currently. Therefore, a key aspect of becoming ‘smart’ will mean back-end integration and efficiency. Forecasting what is coming will be vital in helping manufacturers stay nimble, and adapt more easily than is currently possible. Having this foresight can help with component ordering and labour costs, which helps drive efficiencies and starts joining up previously siloed processes.
Manufacturing is evolving, and if we as a country are to realise the panacea that we all talk about, then changes have to be made. This means moving with market trends and getting the right infrastructure in place to help deliver a more profitable business model. The smart factory and warehousing operation is likely years away, but manufacturers starting to deliver products directly to consumers need to start adopting retail practices – which means better forecasting and a nimbler approach, driven by data.
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