Warehousing predictions for retailers in 2015 and beyond

By Tom Kozenski, VP Solution Strategy, JDA.

This article is brought to you by Retail Technology Review: Warehousing predictions for retailers in 2015 and beyond.

Retail warehousing operations are coming under mounting pressure to become faster, more accurate and more efficient to support the growing demands of the omni-channel shopper. As a result, the warehouse is now witnessing a radical evolution as it starts to adopt new measures to try and curb these challenges. So what are the trends that are emerging and what will be their impact?

Legacy supply chain execution applications will be put to bed

Many retail warehouses are still running on older, legacy Warehouse Management Solutions (WMS) that have been developed and deployed nearly a decade ago. This is because the functional requirements for WMS have not changed much until now and that WMS upgrades have historically been very expensive. However, the current approach to warehousing will require dramatic changes to support the fulfillment of smaller orders, compliance with government and industry regulations, and the need for more intimate integration between critical business applications. Cloud technology is making this transition from old to new much easier by allowing retail warehouses to better utilise technology and computing capacity to meet these range of challenges.

Omni-channel will not be just for retailers

The buying behaviour of the shopper is moving towards omni-channel at a rapid pace. Vertically-integrated retailers will want to expose their products in such a way that they can maintain and perhaps increase the overall market-share of their brands. In order to do so, they will have to retool their warehouse operations to better execute the fulfillment of these smaller, less predictable order flows. To succeed at this, retailers need extended visibility of their inventory and orders across their supply chains. Doing this in the past was costly. However, due to the heightened requirements for order fulfillment and traceability, visibility has now become essential. Retailers can't effectively execute without it.

In-store fulfillment will complement fulfillment from the distribution center

There is a relatively new supply chain term known as 'order from anywhere / ship from anywhere'. The latter applies to the new concept of in-store order fulfillment, where shopper orders are processed within stores instead of a warehouse; either because the warehouse is out of stock, or the store is closer to the consumer's home. This will require that each store has a simple variation of warehouse fulfillment logic, such as click-and-collect or ship-from-store. Brick and Mortar retailers will need to be able to use their store inventory and store personnel to do this more efficiently to better compete with the pure-play online retailers that just offer on-line ordering and shipping.

Product safety will be deeply embedded into supply chain execution

The level of product recalls and product quality complaints has never been higher. This applies to not only to the food and fashion sectors but to virtually every type of product that is processed or assembled today. As a result, retailers will be required to be more accountable for the quality of products and responsible for tracking when and where they have been distributed. In order to achieve this level of control, every customer transaction needs to be kept in a database that is readily accessible. This database must have the capabilities to enable users to create queries to find out which customers may have purchased tainted goods. From here, an automated recall notification process should be put in place to swiftly notify customers of any issues and what they should do about it.

Automation is playing a larger role in the retail warehouse

Automation has always been an important aspect of many retail supply chains. It has a long history of providing value in warehouse operations that require a large amount of human labour and/or large amounts of travel time in a warehouse facility. With the emergence of a tremendous volumes of small, single, on-line ordering, each company must evaluate how the proper use of automation can complement their workforce whilst improving throughput and lowering overall operational costs.

Mobility will be prevalent

Tablets and smartphones will be the computing tools of choice for retail users of WMS applications. The adoption of mobile solutions will benefit from the supply chain executives that will want real-time access to overall supply chain execution performance data across an extended network of facilities; the warehouse supervisor that needs to monitor the status of outstanding tasks within the facility while out on the floor; the inventory control clerks that maintain location-level inventory accuracy; and quality control clerks that ensure product quality and/or order accuracy through auditing.

Engineered Labour Management will become mainstream

Engineered Labour Management standards enable retail warehouses to have their workforces perform the right tasks in the right way. Currently, they are not widely used in warehouses or distribution centres, though grocery retailers have benefitted from them for decades. Research shows that the average warehouse without formal labour management capabilities operates at about 65-70% of its total efficiency, meaning that it is possible to improve workforce productivity by 30-35% without increasing capacity. By studying operational processes, use of warehouse equipment and the environment of the warehouse, businesses can develop totally efficient processes around each task. Furthermore, deploying labour management processes alongside adequate training and change management procedures ensure warehouses will reach maximum workforce productivity.

Big Data has its place in warehousing

Without question, there's a lot of talk regarding the business value of Big Data. Each point mentioned above will require some form of storage and access to large amounts of supply chain data. This data includes the order information prior to the orders being fulfilled, so that alternate fulfilment decisions can be made throughout the day. Order history information is also required so that the right customers can be notified if there are any quality or recall issues; it can also be used to track consumer buying patterns.