Turning Pain into Gain for the Supply Chain

Recent months brought a sea change in consumer retail habits, with COVID-19 leading to a sustained rise in online shopping for everything from food to clothes and electronics. 

Certainly, retailers who put their digital houses in order early were able to cater best to their customers and also won over new customers, while those who remained tied to a traditional bricks-and-mortar approach suffered, particularly during the lockdowns.

But what does all of this mean for the less glamorous parts of the supply chain such as warehousing? We have seen and heard much about the challenges presented by the black swan event of COVID-19. And just as we saw in retail, it is those warehousing providers who embraced digital transformation and in particular the cloud, who have been able to rise to the challenge most effectively.

In truth, COVID-19 has acted as a catalyst to trends that were already well underway in the warehousing sector, but it has done so with a force few could have reckoned with at the beginning of the year. Such unexpected events present various challenges to warehouses including capacity disruption, with many forced to cope with a sudden rise in volume and throughput for certain types of products such as masks and medical supplies and equally sudden declines in others. 

Meanwhile, the abrupt rise in e-commerce also had a significant impact on warehouses. Indeed, from a warehousing perspective, the way e-commerce and traditional orders are handled is completely different, and this causes shifts in the size and frequency of warehouse orders. E-commerce orders are typically smaller, whereas traditional store fulfilment orders are larger but less frequent. The way warehouses process these in terms of the allocations and picking is completely different. Yet these are all changes that warehouses must take in their stride.

So how can warehouses adapt to these sudden changes, and how can they be better prepared for a world in which demand may be more sporadic? The answer is that warehouses need to digitally transform and place the cloud at the heart of their transformation plans. Increasingly, warehouse management systems (WMS), need to be automated and cloud-based, allowing for rapid and seamless upscaling and downscaling of computing capacity – as is all too often required during times of sudden change or close to large events that have the potential to cause capacity fluctuations.

Indeed, while traditional on-premise WMS usually involves costly and time-consuming provisioning of hardware and calibration of software, cloud-based WMS can be installed rapidly – in days rather than weeks or months – and also receives upgrades automatically, with no need for manual installation. All of this has the effect of helping warehouses raise their game, while also saving time and money.

There are other benefits too, especially for those warehouses that adopt a holistic cloud-based system from a single provider, rather than trying to operate a patchwork of competing systems that will never fully add up to the sum of their parts. Indeed, the ‘patchwork’ scenario often causes challenges with training staff, who must learn how to use various interfaces in addition to getting to grips with the type of idiosyncrasies that are all too often inherent in solutions stitched together from multiple vendors. In such situations, it’s quite common to see warehouses face challenges when those members of staff who are most familiar with the system are off-site, on holiday or sick leave, and there is nobody left to take up the mantle.

Conversely, by adopting a modern cloud-based WMS, with an intuitive interface, warehouses can simplify the technical aspects of their operations, which also helps with staff training and can allow a far larger pool of employees to be trained to use the system. 

So what, if anything, is holding some warehouses back? In the past, there were some fears among warehouse owners and managers that cloud-based solutions could leave them vulnerable, for example in the event of an internet outage or a data breach. These fears were heightened for warehouses in a more remote location, where internet services once lacked the levels of redundancy required by industry. But today the situation is very different with world-class fibre-optic networks and 5G networks poised to transform mobile data services.  

Similarly, cloud-based WMS can also help warehouses to improve their cybersecurity rather than leaving them more vulnerable. Public cloud providers have invested heavily in cybersecurity, and security is increasingly built into WMS systems. In addition, unified solutions can also help to reduce the type of vulnerabilities that can arise in more complex, multi-vendor solutions.

The warehousing sector was later than many verticals to embrace automation and the cloud, but in the current time of uncertainly and sudden change, the benefits are becoming difficult to ignore. Just as retailers who embraced digital transformation have proved most adaptable, so warehouses must also seek to leverage the latest digital and cloud solutions to ensure they remain at the vanguard of this essential industry.