Throughout the pandemic, supply chains have struggled to stay aligned with customer needs.
Transportation delays, labor shortages, and inventory scarcity have plagued many industries; the consequences of such problems include customer service challenges, added expense, and lost revenues.
Amid this supply chain chaos, warehousing is the positive exception.
Warehousing has proven to be a supply chain bright spot for savvy organizations, providing critical buffers between supply and demand. As such, the historical reputation of warehouses as a necessary evil is being shed.
Warehouses are taking an elevated position within the supply chain as value-adding, agile fulfillment centers that contribute to organizational success.
Of course, not all warehouses are created equal from a performance perspective.
To effectively address existing challenges and achieve success, fresh produce companies must update their strategies and modernize their facilities. Process improvements are required.
Technology should be improved and deployed to foster efficiency and better product quality. Finally, top talent is needed to lead operations, and adequate staff is required to meet peak demand.
What are top companies doing in these critical areas of warehouse management? The Auburn University Center for Supply Chain Innovation recently conducted an extensive study of warehousing and distribution best practices.
The research report highlights what companies are doing now and what they plan to do over the next decade to meet the changing demands of customers. The results and prescriptive recommendations are highly relevant to the fresh produce industry.
Challenges and Investments
Thanks to the explosion of ecommerce during the pandemic, warehouses must support multiple channels of distribution.
Warehouse managers face growing demand from downstream customers and end consumers for faster fulfillment and more inventory variety, according to the Auburn study participants. Perfection is the priority, and there is little tolerance for fulfillment errors, product quality issues, or shipping delays.
At the same time, warehouse managers are battling operating cost volatility and the expense of deploying technology. Rising wage rates are another area of concern, along with the difficulty of maintaining a stable staff. Study participants fully expect each of these issues to linger through the current decade.
Succeeding in this challenging environment requires greater investment. Nearly 80 percent of study respondents anticipate higher spending on warehouse technology over the next decade.
Doing so will boost customer service and address the labor availability issue, suggests a warehouse director: “There’s almost no choice but to invest in automation to reduce the reliance on labor, because finding labor isn’t going to get any easier.”
Likewise, spending on facilities will be needed. Retailers are deploying smaller distribution centers (DCs) that serve narrower geographic regions.
In turn, produce distributors will need to invest in warehouse capabilities to process case-level orders, support smaller average shipment sizes, and facilitate faster cycle times. To maintain efficiency while meeting these demands, warehouse process redesign and robotics deployment will be needed.
This is an excerpt from the Supply Chain Solutions Department in the November/December 2021 issue of Produce Blueprints Magazine. Click here to read the whole issue.
