Flexible Warehousing Market and the Pandemic Consequences – Part – I
The COVID pandemic has introduced some new and reintroduced some former rules that people stopped obeying in the last few decades. Like wearing masks, maintaining adequate distance from others, keeping proper hygiene etc. And online learning and working from home are examples of COVID components that may seem temporary but they can be permanent too. Everything looks uncertain at the moment, right? One thing that looks certain is the significant and long-lasting consequences of COVID on the warehousing market. The COVID variances and surges that continue to appear in various parts of the world are making it difficult for the global supply chain and labour pool to keep up.
Flexibility is essential for warehouses to survive in this unsteady environment. Some businesses are experiencing unprecedented demand, while demand in other industries is declining, as a result of a combination of an erratic supply chain and shifting consumer behaviour. Flexibility is becoming more and more important, both for established players looking for flexibility to scale and support targeted marketing campaigns or seasonality or disaster recovery events which generate localised spikes in the short to medium term, as well as for start-ups unable to predict volumes.
- Flexible warehousing market
- Consequences of pandemic
- Warehouse Social Distancing
- How Just-in-time is less preferable now
- Work-in-progress products in an uncertain supply chain
- How the location of warehouses is a matter of concern
Consequences of Pandemic on Warehousing
There are many, let’s discuss some in this part and the rest in the second. These consequences are important but the most neglected ones.
Consequence#1: Get out of ‘MY SPACE’
Social exclusion may persist even after COVID is no longer a danger. The mask requirements are already lifted at almost every place. Even though the distance between workers in warehouses isn’t six feet, it is still wider than it was before COVID. The sanitization stations, one-way aisles, entrance & exit, and every work area are kept cleaner than before. By taking these steps, we’re stopping the spread of viruses like the flu and the common cold as well as a potential pandemic.
Some kind of social isolation is unavoidable if we want to protect the general well-being and security of the workforce. If such a pandemic doesn’t repeat soon or spread again, maybe one day people will again stop bothering about social distancing and get close again, but currently, because its fresh in our minds, when someone gets too close, alarms go off in our mind and it starts shouting out loud “Get out of my space”. This is not going away too soon!
Consequence#2: JIT is not always a good option anymore!
Lean manufacturing was considered the best practice earlier, especially before the epidemic. Just-in-time (JIT) delivery helped improve space utilisation and reduce inventory costs. When COVID struck, things changed and in many cases, it led to production ceasing entirely.
However, lean manufacturing will continue to be a recommended practice when the world is free from any epidemic and production is not at a halt, but there will be a shift in the proportion of JIT inventory to safety stock. Manufacturers will hold additional inventory (buffer stock) to avoid future inventory shortages that result in production halts. The precise amount will depend on several variables, but overall inventories will rise. Issues with capacity and warehousing space will only get worse as a result. Many warehouses had a difficult time finding room for social distance, and now they will need more room to manage this extra inventory.
But that’s not the only reason. More storage facilities and capacity are needed to accommodate growing demand, more inventory on hand, and extra space for social isolation. The total capacity of the available warehouse space will rise, even if this extra capacity is dispersed among several smaller, more regional, or decentralised warehouses. AWL India incorporates a 10 million sq. Ft of warehousing space that offers humongous storage space for all the requirements we discussed.
Consequence#3: WIP Inventory
WIP (Work-in-progress) refers to products that are only partially finished in SCM (Supply chain Management). They could also be known as in-process stock. At a specific point in the production cycle, this includes everything from overhead expenditures to the raw components that combine to create the finished product.
Manufacturers must be ready to handle supply chain obstacles because they are frequent since COVID and they’ll need to make room for more WIP since supply channels are uncertain. Manufacturers are left with partially finished goods (WIP) that need to be finished when parts are delayed. Hence, WIP inventory increases. Manufacturing facilities will require a method for managing inventories of WIP to prevent loss or damage while they wait to be finished. Another driver for the integration of high-density automation into the warehouse will be an increase in WIP inventory.
Consequence#4: Bring that storage closer!
Another consequence of COVID on warehousing is that the manufacturers are attempting to decentralise their warehouse locations to achieve the same-day or next-day delivery that their customers anticipate. Being nearer to the market lowers transportation costs and lessens the possibility that the supply chain will be disrupted if a delay or interruption occurs in one part of the operational region but not the other.
While some firms would want to set up these decentralised warehousing facilities in strategic areas, others may seek to make use of seasoned Third Party Logistics (3PL). Additionally, as new satellite distribution centres are built, warehouses will try to use high-density automation to minimise the size of the warehouse and the initial investment as well as ongoing labour expenditures.
To achieve delivery deadlines, manufacturers will seek to decentralise warehouse locations and move them closer to the final consumer. While some businesses may concentrate on creating the infrastructure on their own, others will opt to use Third Party Logistics to take advantage of already-existing distribution networks. In the fulfilment of warehouse and distribution centre orders, 3PL agreements have become more important.
The only thing that is definitely as we transition into life after COVID is that nothing is certain. For their backup plans, businesses are developing new plans and spreading their wings and becoming open to every sales style whether eCommerce or in-store. Distribution and warehouse facilities will strive to be as flexible and adaptable as feasible in light of the uncertain future as today. Their main concern will be how to effectively manage their biggest expense, labour, and make the best use of available space. If the space is still less, then occupying a larger space is always in the strategy.
The effects on warehouses are persistent, and they are revolutionising the supply chain sector. Much of the change is permanent, whether it began with the disruption in the supply chains of protective equipment or was brought on by the e-commerce boom, employment losses, modifications to freight transportation, shifting public health recommendations for enterprises, or some other factor. In the next part, we’ll be discussing a few more consequences of COVID over warehousing and supply chain management.