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The Evolution of the Warehouse: How Innovation is Changing the Supply Chain – Part 1 of 3

Evolving customer behavior is causing many changes in the supply chain industry, and the pace of change is happening so fast that it’s dislocating many established companies and portions of the economy. These changes are impacting workplaces around the world, and distribution centers (DCs) aren’t exempt. Supply chain managers are under pressure to focus on increasing efficiencies out of their distribution networks and make the simple become an intelligent, strategic portion of the supply chain, while simultaneously taking care of environmental effects and shrinking labor availability. There’s also a need for supply chain managers to focus on revenue growth and margin improvement, leading to the need for developing improved logistics solutions. In order to achieve these objectives, innovation is going to be key.

This 3-part blog series takes a deeper dive into the report by JDA and Arizona State University’s W.P. Carey School of Business, “The Warehouse of the Future.” The series will go into more detail around what’s changed or changing in the warehouse, the evolution of warehouse types, technology within the DC and how integrating supply chain planning software and execution solutions such as warehouse management systems (WMS), can better optimize the supply chain.

What’s Changed or Changing within the Warehouse

Enterprise resource planning (ERP) solutions have become an important part of how companies are run, but these systems haven’t generally been strong on execution involving demand planning or WMS tasks. Therefore, companies started implementing WMS systems, first focusing on warehouse accuracy and traceability. And nowadays, since DC’s are considered an essential part of the entire supply chain, there’s much more of a focus on the planning aspects of goods movements, people, orders, etc. In order to determine the best WMS to meet their supply chain objectives, companies need to decide if they should install a best-of-breed (BoB) solution or only implement solutions from their strategic ERP partner. Many companies interviewed for The Warehouse of the Future report said the problem with only implementing solutions from a strategic ERP partner is that they really don’t provide the capability or rich functionality on the execution of warehousing tasks.

Increasing Complexity in Retail

The move to e-commerce has been disruptive because of the complexity that it brings to retailers. Consumers are buying items online every day, and it’s causing havoc in the marketplace. Given the disruption, companies are feeling pressure to move to e-commerce, change their operations and increase the number of facilities, all while the labor market is becoming more competitive. Also. With this move they must keep efficiency and productivity as well as environmental responsibilities in mind as they move more aggressively. Because of “the Amazon effect,” consumers’ expectations are rising and most companies are also feeling pressure to move to 1 or 2-day delivery and, in some cases, same day delivery.

The Evolution of Warehouse Types

There are many different types of warehouses that are emerging and may play a larger role in the future. Some of the different types of warehouses are listed below, though this isn’t a complete list.

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This is an important time in the warehouse industry. The simple warehouse, which was always a small portion of the supply chain, has become more strategic and complex than it used to be. Executives are working quickly to change their networks, including distribution center locations, to reflect the fluctuating demands of their customers. Having warehouses that are agile and can adapt to changing conditions in the marketplace and in the supply base is critical. The marketplace is changing at a pace not seen before, and at the same time there’s much uncertainty regarding regulation and the simple DC is being called on to handle more complexity than it ever has before.

The next two blogs in this series will dive deeper into the technology within the DC and how integrating supply chain planning software and execution solutions such as warehouse management systems (WMS), can better optimize the supply chain.

For more details around what’s changed or changing within the warehouse and the evolution of warehouse types, read the full report: The Warehouse of the Future.

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