How are logistics operations adapting to the increased popularity of Internet shopping?

How are logistics operations adapting to the increased popularity of Internet shopping?

24 January 2018

  • Warehouse management

Q&A interview with Mark Wilkinson, Indigo’s supply chain consultant specialist and an expert on the food and drink sector.

 

1.    What has been the impact of Internet shopping on logistics operations?

Today it is more important than ever to be in a position to meet consumer demand without having to bear a significant cost increase. Logistics operations have needed to evolve quickly to satisfy the expectations of online shoppers who want almost instant gratification and expect to have high quality at a reasonable price, delivered swiftly and right first time. Achieving this often comes at an additional cost for the manufacturer and logistics provider, which can only be avoided by making the right investments in technology, therefore increasing efficiency and accuracy. It’s all about doing more for the same or lower costs to be as competitive as possible.

 

2.    With space at a premium in the UK how can warehousing companies offer the most cost-effective solutions?

The increasing cost of warehouse space has forced manufacturers and their logistics partners to identify ways to utilise their available space as efficiently as possible. A Warehouse Management System (WMS) is key to achieving this flexibility by allocating pre-identified warehouse locations. This affords greater flexibility to cope with peak periods because all available space can be utilised to the full according to short-term demand. In addition, for manufacturers with a highly seasonal product or where an opportunity to sell greater volumes due to an unforeseen event like a heat wave occurs, it can also mean significantly improved profitability levels. This is because a good WMS will allow manufacturers to forecast the impact of extra production levels on warehouse resources and identify additional storage facilities.

 

3.    How is technology helping food and drinks companies to resolve the competitive challenges they increasingly face?

Two key trends are having a significant impact on the food and drinks sector. Firstly increased competition from food discounters like Aldi and Lidl has eroded market share for traditional supermarkets and made consumers more price driven. Secondly, shopping habits have changed away from a large weekly shop in favour of smaller, more frequent grocery purchases. Combined, these changes mean food manufacturers are now shipping orders of lower volumes, which need to be replenished more frequently, yet also having to absorb any cost increases. Technology that helps manufacturers to improve efficiency by improving automation, reducing the incidence of errors and ensuring warehouse operatives are fully utilised and productive, is essential to the ability to meet these new shopping habits without a dip in profitability levels.

 

4.    How does forecasting contribute to effective warehouse management?

Improved forecasting capabilities within WMS technology has created an opportunity to take better advantage of seasonal demand for products. A market leading WMS should have the ability to conduct ‘what if’ scenario planning and to monitor the impact of additional production on warehouse resources. Take sudden hot weather as an example and the opportunities this presents to sell barbeque related products that will inevitably peak in demand. Having the ability to forecast likely resourcing requirements, including the potential to expand warehousing capacity offsite temporarily, ensures manufacturers can meet additional product demand whilst maintaining business as usual.

 

For more information on how food and drinks manufacturers can improve warehouse efficiency, email: indigowms@indigo.co.uk.