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Warehouses & Distribution Centers Grow in Leaps & Bounds

Surveys sometimes surprise me. A recent one from Motorola Solutions Inc., for instance, got me thinking about what lies ahead in a part of the supply chain that often isn't considered sexy, but is important from a cost and inventory management standpoint.

Motorola Solutions' Future of Warehousing Survey indicates that mounting market and corporate pressures, plus a push to capture new opportunities, could lead to significant expansion in the number of warehouses and distribution centers companies operate. By 2018, more than a third of the 328 survey respondents in manufacturing, retail, wholesale, and third-party logistics markets said they plan to increase their warehouse and distribution operations. That would be a 71 percent increase from current expansion plans in action today, the report notes.

Here are a few other key stats and findings that could influence what the warehousing and distribution scene looks like for the next five years:

  • Company management views warehouses and distribution centers as assets that can drive growth for the business, according to 26 percent of respondents.
  • A mix of cost-savings and revenue-growth initiatives are the most commonly cited reasons for the expansion of storage and distribution networks, generally with a focus on: Lower transportation costs (36 percent), shorter delivery times (35 percent), new suppliers and trading partner locations (31 percent), and heightened omni-channel pressures (11 percent).
  • Approximately two-thirds of respondents plan to increasingly automate processes and equip staff with new technology solutions during the next five years.
  • To help reduce order fulfillment costs, and to increase worker efficiency and productivity, the picking and replenishment solutions of the next five years are expected to shift towards more multimodal operation. This could lead to a 142 percent increase in the integration of voice-directed and screen-directed picking on flexible mobile devices along with a 113 percent increase for voice-, scan-, and keyed-response workflows.
  • Only 67 percent of items received at warehouses are bar-coded today. Survey respondents expect supplier management initiatives and trading partner compliance requirements to drive higher utilization in the coming years — reaching an estimated 84 percent by 2018.

So what does that mean for the supply chain and logistics group? The surprising part of this is that there could be significant changes ahead for the everyday routine of moving parts from Point A to Point B.

Think about it. If distribution centers and warehousing operations are increasingly seen as an important business-growth assets by C-level executives and there's a parallel investment being made to automate processes, increase bar-coding and comply with trading partner requirements, it won't be long before we're hearing these same executives talk up ROI goals, bottom-line savings, and other money-saving distribution strategies. All of that will come full circle back to the supply chain group to manage — and excel at.

Mark Wheeler, director of Warehouse Solutions at Motorola Solutions echoes this sentiment in a written statement as well:

Warehousing and distribution have not traditionally been the most celebrated functions within leading businesses across manufacturing, retail, and wholesale industries. But Motorola Solutions' Future of Warehousing Survey revealed that these functions are playing a more important role as businesses in these industries face new pressures to cut costs to enhance profitability and free up capital as well as drive competitive differentiation and business growth.

Is your company re-evaluating its warehousing and distribution strategy? How will you and your team prepare for this shift?

7 comments on “Warehouses & Distribution Centers Grow in Leaps & Bounds

  1. Hailey Lynne McKeefry
    September 23, 2013

    The automation piece of this is interesting… i would think that staffing would be a huge part of the expense and trouble in expanding distribution cetners. Does anyone know how far down that road we are in warehouses and distribution centers? And how much do these efforts reduce the need for employees? Does it just mean they need different skills?

  2. ahdand
    September 23, 2013

    @Hailey: This sounds amazing but according to my knowledge I feel this does carry some sort of a risk as well. Automating upto this much is a bit of a risk at this stage. It will leave the people in distress and will cause many issues.  

  3. jbond
    September 24, 2013

    In many instances having warehouses and distribution center stocked before they have the orders to fill can back fire. I know a very large semiconductor company that has had hundreds of layoffs over the last 2 years because they were over producing and now they are looking for places to store the entire product until they can get their sales back up. You have to be careful and do all of your homework before you move forward.

  4. FLYINGSCOT
    September 24, 2013

    As we move more to a service based economy, warehousing and distribution becomes more of an asset.  I reckon most companies can leverage a lot from better use of barcoding (conventional and RF tag).

  5. Hailey Lynne McKeefry
    September 25, 2013

    @jbond, demand planning is no easy task…I know that we are getting better at it, but it reamains more of an art than a science.

  6. 3plhelps
    May 13, 2014

    The skill requirements of the staff, like any profession, are always evolving in a Darwinian game of survival of the fittest. With an industry like warehousing and large scale distribution, efficient technology is obviously a dominant focus on the entire 3PL and order fulfillment business model… because after all, a successful business is an efficient business. One 3PL and order fulfillment company that I've worked with in the past is SP Express out of Los Angeles, CA. They have an impressive operation not only with their technology, but with their staff. Their team members all have a well rounded knowledge of all things involving third party logistics and distribution. So someone specialzing in online order fulfillment can work smoothly with someone in the warehouse doing the actual online pick and packing. I think it is important for anyone in the fulfillment services industry to have a good understanding of the entire field and nature of the warehousing servicing business.

  7. Hailey Lynne McKeefry
    May 14, 2014

    @3plhelps, thanks for weighing in and sharing yoru experience.  What do you see as some of the critical technologies on the adoption curve currently?

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