Working out warehousing challenges to face demand volatility and fast delivery expectations

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At LogiMAT 2019, Raffaele Destro, industry manager at TGW Logistics, spoke about the need for analyzing challenges that companies – both retail and ecommerce – struggle with while gauging consumer expectations and the resulting unpredictability in product demand.

“It is important to have flexibility in the supply chain, and we need to be able to address it across both short-term and long-term horizons. Companies dealing with the short-term horizon need to look at a lot of different influencing factors while making decisions – be it seasonality, promotional offers or market competition,” said Destro. “The big companies though, are focusing on taking advantage of analyzing big data and predictive analytics. This is a way forward for complex decision-making processes.”

Destro insisted predictive analytics can help companies determine customer expectations in the short-term. However, predictive analytics need to be complemented by a different approach when looking at the long-term horizon, as even data analytics would fail to accurately predict how the retail or ecommerce ecosystem will look in a far distant future.

“It is difficult to predict as we cannot possibly know for sure if the future would be about the direct-to-customers system or the wholesale retail system. Supply chains are designed to either suit retail and wholesale distribution centers or to stand alone. Though the two systems are connected, they work independently, and there is less flexibility across both these operations,” said Destro.

The issue is not about dealing with the end consumers, but about how to run warehouses for both ecommerce and retail, while taking advantage of automation. Destro believed that the way forward is to deploy omni-channel solutions inside distribution centers, which according to him, can efficiently cope up with both retail and ecommerce demand volatility.  

“When we talk about service levels in distribution centers, we refer to the speed of processing orders, which if fast enough, enables consumers to place orders late in the day and still get their products delivered the next day,” said Destro. “In this new world of logistics, it is not about the big fish and the small fish anymore. It is about the fast fish and the slow fish – speed and responsiveness is everything.”

A recurring headache today, however, is that companies find it hard to get human resources to run the distribution centers efficiently. An aging population in the U.S. and Europe, along with record low unemployment rates mean that people are not interested in taking up labor-intensive warehousing jobs, which is forcing businesses to look at automation to fill the gaps.

Destro lined up unpredictable demand, expectations of a high service level, and labor scarcity to be the most significant challenges that face logistics today. And there always is the conundrum – solutions that are flexible across different channels have problems finding labor resources, while solutions that use automated robots are rigid and find it hard to shift between channels.  

“We at TGW Logistics have developed two core solutions called FlashPick and OmniPick, that can meet all three challenges simultaneously. FlashPick is a piece picking, goods-to-person solution that is ideal for businesses that experience frequent changes in their stock-keeping units (SKUs) and product lines, while OmniPick is a smart person-to-goods or goods-to-person order fulfillment solution for zero-touch operation,” said Destro.

FlashPick leverages warehouse automation and order picking strategies to handle orders, thus yielding short lead times and increasing labor productivity. Destro mentioned that quick lead times make it easier for businesses to accept orders late in the day and deliver them the next day without hassle.

OmniPick, which TGW Logistics unveiled at LogiMAT 2019, is a system that allows for changing sales channels and can adapt to new business models, while providing a high throughput via an advanced pocket sorter technology and powerful overhead conveyor system.

“With the productivity levels that we provide through robotics, we are really capable of solving the labor shortage problem by applying these solutions at distribution centers,” said Destro. “This is why we say we can master the unpredictable, and make businesses move forward – even if situations and customer demands change, our solution is flexible enough to address it.”