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31.03.2021

Meeting new challenges in FMCG: Understand your automation capabilities in warehouse management

Digitalization provides both industrial and retail companies with great capabilities for service orientation. The Corona crisis has advanced e-commerce even further.

 

As a result, expectations on multi-channel management and delivery service necessitate totally rethinking conventional approaches to supply chain and warehouse management. Many manufacturing and retail companies have been able to enhance their market reach in Europe in recent decades. At the same time, expectations on customer service have grown in both B2B and B2C business. A rush on real estate as well as ideal locations, infrastructures and logistics facilities near larger urban areas has been the result, not only in Central Europe.

Smaller warehouses with increasing densities require efficient warehouse and picking strategies 

New delivery concepts, such as next day, same-day and even same-hour delivery, are shifting the focus from inbound to outbound logistics. In the past, manufacturing and retail companies focused on optimizing incoming shipments and upstream supply chains. Today, closer proximity to customers is the factor crucial to reducing last mile delivery costs. Companies are focusing on optimizing outbound logistics to supply their downstream supply chains optimally. The growing skilled labor shortage necessitates new approaches to warehouse management as well. Facility logistics and flexibility, warehouse logistics, and equipment and picking strategies are becoming key factors in smaller warehouses with increasing densities and fewer employees.

Automation is the basis for managing fluctuating customer demand for more and diverse SKU

The growing number of SKUs and growing diversity of size, volume and format constitute an additional challenge for outbound logistics and order picking in particular. Conventional warehousing and picking concepts are often incapable of meeting the new demands for warehouse lead times for additional SKUs: Automation, distributed replenishment and picking and meticulous peak management must go hand in hand. What, however, is the best way to approach improving established warehouse design

Understand your needs and then start with small steps

Selecting the right level of automation and automated system is a highly individualized task. The key to success is understanding your own needs and expectations (or your customers’). You have to understand how warehouse and transportation lead times, SKU portfolios and information demand (e.g. availability information) have changed. This provides a starting point for an efficiency-driven assessment of automation capability. Information on the extent to which a fraught logistics real estate market and skilled labor shortage affect you enables a resource-driven assessment of automation capability. An understanding of your flexibility needs in terms of SKU assortment and demand dynamics serves as a foundation for a flexibility-driven assessment of automation capability, bearing in mind that human workers are the most flexible and valuable but also the most expensive resource in our warehouse. Once you understand, your own needs and capabilities, modular automation systems that progressively upgrade the section of your warehouse with the greatest capability can generate positive momentum as well as enable integration as you continue operating your warehouse.

Join Prof. Julia Arlinghaus and learn more about SKU proliferation in FMCG and how can automation help you overcome FMCG biggest challenges.

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