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Warehousing: Function,
Benefits and Types of
Warehousing
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Warehousing: Function, Benefits and Types of Warehousing!

A warehouse may be defined as a place used for the storage or accumulation
of goods. The function of storage can be carried out successful with the help
of warehouses used for storing the goods.

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Warehousing can also be defined as assumption of responsibility for the

storage of goods. By storing the goods throughout the year and releasing
them as and when they are needed, warehousing creates time utility.
Functions of Warehousing:
1. Storage:
This is the basic function of warehousing. Surplus commodities which are not
needed immediately can be stored in warehouses. They can be supplied as
and when needed by the customers.

2. Price Stabilization:
Warehouses play an important role in the process of price stabilization. It is
achieved by the creation of time utility by warehousing. Fall in the prices of
goods when their supply is in abundance and rise in their prices during the
slack season are avoided.

3. Risk bearing:
When the goods are stored in warehouses they are exposed to many risks in
the form of theft, deterioration, exploration, fire etc. Warehouses are
constructed in such a way as to minimise these risks. Contract of bailment
operates when the goods are stored in wave-houses.

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The person keeping the goods in warehouses acts as boiler and warehouse
keeper acts as boiler. A warehouse keeper has to take the reasonable care of
the goods and safeguard them against various risks. For any loss or damage
sustained by goods, warehouse keeper shall be liable to the owner of the
goods.

4. Financing:
Loans can be raised from the warehouse keeper against the goods stored by
the owner. Goods act as security for the warehouse keeper. Similarly, banks
and other financial institutions also advance loans against warehouse
receipts. In this manner, warehousing acts as a source of finance for the
businessmen for meeting business operations.

5. Grading and Packing:

Warehouses nowadays provide the facilities of packing, processing and
grading of goods. Goods can be packed in convenient sizes as per the
instructions of the owner.

Importance of Warehousing In the Development of

Trade and Commerce:
Warehousing or storage refers to the holding and preservation of goods until
they are dispatched to the consumers. Generally, there is a time gap between
the production and consumption of products. By bridging this gap, storage
creates time utility.

There is need for storing the goods so as to make them available to buyers as
and when required. Some amount of goods is stored at every stage in the
marketing process. Proper and adequate arrangements to retail the goods in
perfect condition are essential for success in marketing. Storage enables a
firm to carry on production in anticipation of demand in future.

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A warehouse is a place used for the storage or accumulation of goods. It may

also be defined as an establishment that assumes responsibility for the safe
custody of goods. Warehouses enable the businessmen to carry on
production throughout the year and to sell their products, whenever there is
adequate demand.

Need for warehouse arises also because some goods are produced only in a
particular season but are demanded throughout the year. Similarly certain
products are produced throughout the year but demanded only during a
particular season. Warehousing facilitates production and distribution on a
large scale.

Benefits from Warehouses:

1. Regular production:
Raw materials need to be stored to enable mass production to be carried on
continuously. Sometimes, goods are stored in anticipation of a rise in prices.
Warehouses enable manufacturers to produce goods in anticipation of
demand in future.

2. Time utility:
A warehouse creates time utility by bringing the time gap between the
production and consumption of goods. It helps in making available the goods
whenever required or demanded by the customers.

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Some goods are produced throughout the year but demanded only during
particular seasons, e.g., wool, raincoat, umbrella, heater, etc. on the other
hand, some products are demanded throughout the year but they are
produced in certain region, e.g., wheat, rice, potatoes, etc. Goods like rice,
tobacco, liquor and jaggery become more valuable with the passage of time.
3. Store of surplus goods:
Basically, a warehouse acts as a store of surplus goods which are not needed
immediately. Goods are often produced in anticipation of demand and need to
be preserved properly until they are demanded by the customers. Goods
which are not required immediately can be stored in a warehouse to meet the
demand in future.

4. Price stabilization:
Warehouses reduce violent fluctuations in prices by storing goods when their
supply exceeds demand and by releasing them when the demand is more
than immediate productions. Warehouses ensure a regular supply of goods in
the market. This matching of supply with demand helps to stabilise prices.

5. Minimisation of risk:
Warehouses provide for the safe custody of goods. Perishable products can
be preserved in cold storage. By keeping their goods in warehouses,
businessmen can minimise the loss from damage, fire, theft etc. The goods
kept in the warehouse are generally insured. In case of loss or damage to the
goods, the owner of goods can get full compensation from the insurance
company.

6. Packing and grading:

Certain products have to be conditioned or processed to make them fit for
human use, e.g., coffee, tobacco, etc. A modern warehouse provides facilities
for processing, packing, blending, grading etc., of the goods for the purpose of
sale. The prospective buyers can inspect the goods kept in a warehouse.

7. Financing:
Warehouses provide a receipt to the owner of goods for the goods kept in the
warehouse. The owner can borrow money against the security of goods by
making an endorsement on the warehouse receipt. In some countries,
warehouse authorities advance money against the goods deposited in the
warehouse. By keeping the imported goods in a bonded warehouse, a
businessman can pay customs duty in installments.

Type of Warehouses:
There are three types of warehouses as described below:
Private Warehouses:
The private warehouses are owned and operated by big manufacturers and
merchants to fulfill their own storage needs. The goods manufactured or
purchased by the owner of the warehouses have a limited value or utility as
businessmen in general cannot make use of them because of the heavy
investment required in the construction of a warehouse, some big business
firms which need large storage capacity on a regular basis and who can afford
money, construct and maintain their private warehouses. A big manufacturer
or wholesaler may have a network of his own warehouses in different parts of
the country.

Public Warehouses:
A public warehouse is a specialised business establishment that provides
storage facilities to the general public for a certain charge. It may be owned
and operated by an individual or a cooperative society. It has to work under a
license from the government in accordance with the prescribed rules and
regulations.
Public warehouses are very important in the marketing of agricultural products
and therefore the government is encouraging the establishment of public
warehouses in the cooperative sector. A public warehouse is also known as
duty-paid warehouse.

Public warehouses are very useful to the business community. Most of the
business enterprises cannot afford to maintain their own warehouses due to
huge capital Investment. In many cases the storage facilities required by a
business enterprise do not warrant the maintenance of a private warehouse.
Such enterprises can meet their storage needs easily and economically by
making use of the public warehouses, without heavy investment.

Public warehouses provide storage facilities to small manufacturers and

traders at low cost. These warehouses are well constructed and guarded
round the clock to ensure safe custody of goods. Public warehouses are
generally located near the junctions of railways, highways and waterways.

They provide, therefore, excellent facilities for the easy receipt, despatch,
loading and unloading of goods. They also use mechanical devices for the
handling of heavy and bulky goods. A public warehouse enables a
businessman to serve his customers quickly and economically by carrying
regional stocks near the important trading centres or markets of two countries.

Public warehouses provide facilities for the inspection of goods by prospective

buyers. They also permit packaging, grading and grading of goods. The public
warehouses receipts are good collateral securities for borrowings.

Bonded Warehouses:
Bonded warehouses are licensed by the government to accept imported
goods for storage until the payment of custom duty. They are located near the
ports. These warehouses are either operated by the government or work
under the control of custom authorities.

The warehouse is required to give an undertaking or Bond that it will not

allow the goods to be removed without the consent of the custom authorities.
The goods are held in bond and cannot be withdrawn without paying the
custom duty. The goods stored in bonded warehouses cannot be interfered by
the owner without the permission of customs authorities. Hence the name
bonded warehouse.

Bonded warehouses are very helpful to importers and exporters. If an importer

is unable or unwilling to pay customs duty immediately after the arrival of
goods he can store the goods in a bonded warehouse. He can withdraw the
goods in installments by paying the customs duty proportionately.

In case he wishes to export the goods, he need not pay customs duty.
Moreover, a bonded warehouse provides all services which are provided by
public warehouses. Goods lying in a bonded warehouse can be packaged,
graded and branded for the purpose of sale. Price stabilisation Sufficient stock in

warehouses is required to keep a sensible level of the price of the goods. If the goods are in scarce

supply the price could be increased. If there are too many goods the prices may need to fall to move the

goods. Warehousing allows the price to be stabilised.

Quick supply Industrial and agricultural goods are often produced in specific areas and then sent

throughout the country. These goods need to be stored near where theyre consumed so there isnt a

delay getting them to the consumers.

 Seasonal demand Goods are only demanded seasonally such as arm clothing during the winter.

Storage allows these goods to be produced during the year so theyre ready when theyre needed.

Seasonal production his is when the seasonal commodities are harvested at set times of the

year but are purchased and consumed throughout the year. Storage allows the commodities to be

supplied when needed

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1. Small Business
2. Advertising & Marketing
3. New Product Marketing

The Importance of Warehousing in a Logistics

System
by Jackie Lohrey
 Related Articles

1Outbound Vs. Inbound Logistics

2Importance of Warehousing & Inventory Control
3The Importance of Business Logistics
4The Importance of Personal Selling

Warehousing and warehouse management are part of a logistics management

system, which is itself a component in supply chain management. Although viewed
by some as simply a place to store finished goods, inbound functions that prepare
items for storage and outbound functions that consolidate, pack and ship orders
provide important economic and service benefits to both the business and its
customers

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Central Location

A warehouse provides a central location for receiving, storing and distributing

products. As each inbound shipment arrives, responsibility for the goods transfers to
warehouse personnel, products are identified, sorted and dispatched to their
temporary storage location. Storage isnt a static thing but rather a process that
includes security measures and maintaining an environment that preserves the
integrity and usefulness of the items. Once its time to move items, each order is
retrieved, grouped, packaged and checked for completeness before being
dispatched to their new destination.

Value-Adding Operation

The objective of a logistics system is to reduce cycle times and overall inventories,
lower costs and most importantly, improve customer service. Warehousing
increases the utility value of goods by providing a means to have the right products
available at the right place in the right time. Operations such as order consolidation,
order assembly, product mixing and cross-docking that take place within the
warehouse structure also add value to the overall logistics system.

Economic Benefits

Warehouses provide a economies of scale through efficient operations, storage

capacity and a central location. Economic benefits are realized, for example,
through consolidation and accumulation operations. Consolidation operations cut
outbound delivery costs for both the business and its customers. Instead of shipping
items individually from multiple sources, items are delivered to a central warehouse,
packaged together and shipped back out as a complete order. Accumulation
operations allow a warehouse to act as a buffer, balancing supply and demand for
seasonal and long-term storage. This can be vital to business profitability when
demand for a product is year-round but the product may only be available at certain
times of the year.

Service Benefits

Warehouses can serve as part of a contingency plan to ensure outbound orders are
filled in full and on time. A practice called safety stocking allows businesses to
maintain a predetermined number of inventory items at its warehouse. On the
inbound side, safety stocking means that an emergency such as a transportation
delay or a shipment containing defective or damaged goods wont delay filling and
shipping customers order. On the outbound side, safety stocking is insurance
against out-of-stock items.

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 Latest trends in ware housing

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E-Commerce Fulfillment: The
Evolution from Warehouse
and Distribution Centers to
Mega Fulfillment Centers
Published on September 18, 2015
LikeE-C ommerce Fulfillment : The Evolution from Warehouse and Distribut ion C enters to Mega Fulfillment C enters

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ShareShare E-Commerce Fulfillm ent: The Evolut ion from Warehouse and Distribution Centers to Mega Fulfillment Centers
 4

Victor Coronado
FollowVictor Coronado

Director of Supply Chain and Operations at The Onyx Company

Have you ever wondered to what degree the e-commerce

revolution has changed traditional warehouse and distribution
center operations? The emerging demands of retail cross-channel
fulfillment are driving an environment characterized by increasing
consumer expectations, volatile demand and increased cost

pressures on logistics and transportation. Consumers want plenty

of choices including when, where and how their orders will be
fulfilled. The line between distribution and the store is blurring as
stores are being asked to perform new processes traditionally
reserved for the distribution center, which is now Omni-channel
(but Omni-channel is a whole new post).
The growth in e-commerce has transformed warehouse and
distribution centers to mega fulfillment centers. The global shift
toward e-commerce is changing how the retail and logistics
industries operate. This trend affects all aspects of the retail
industry including the strategic location of fulfillment centers and
total real estate footprint. E-commerce sales are growing
15% annually and are expected to reach $750B
globally this year. This growth is an important new driver of
demand for logistics real estate as traditional distribution activities
(to store) transition to fulfillment centers (direct to customer). As
e-commerce retailers seek to drive profitability, to differentiate
their offerings and to improve time to market, logistics facilities
are increasingly viewed as revenue drivers.
As e-commerce logistics models develop, they will drive huge
changes in physical distribution networks comparable in many
respects to previous changes generated by the rise of global
sourcing, or the earlier centralization of deliveries to retail stores
via retailer-controlled distribution centers. This will give rise to a
new class of logistics and distribution properties including mega
e-fulfillment centers, parcel hubs, delivery centers, local urban
logistics depots for rapid order fulfillment, and returns processing
centers.
E-commerce sites such as Amazon allow individuals to order a
huge variety of goods with the click of a button or the tap of a
smartphone screen. Distribution of those goods has been the
subject of much debate lately with self-driving cars & GPS
enabled drones potentially being able to deliver an order within 30
minutes. Did you know that e-commerce has changed supply
chains because distribution centers have to be able to ship
individual products directly to customers instead of shipping
pallets of goods to brick & mortar stores? E-commerce logistics
represents the latest big driver of change in logistics and physical
distribution networks.

The operational requirements behind a successful fulfillment

center are also different than for a distribution center, it is the
business and operations strategy that drives the order fulfillment
network. The capabilities needed for each companys e-commerce
strategy are customized and include developing flexible solutions
for shorter time horizons, understanding the balance between
automation and constraints, and properly sizing the packing
operation. Peak shipping times are more intense in fulfillment
centers, orders sizes are smaller, but volume is very high.

Developing a functional system design for goods-to-person order

fulfillment systems can be a complex undertaking, but proper
planning results in a full understanding of the justification and a
solid business case for their implementation. Goods-to-person
order fulfillment systems have evolved over the years and will
continue to change with customer expectations and developing
markets. With picking labor requirement reductions up to 50%, the
popularity of these systems is dramatically increasing. This is also
due to improved space utilization and flexible designs.

All of these changes increase the complexity of the fulfillment

center. Constant change calls for much more flexibility in
distribution networks. At the same time, companies are
introducing speedy replenishment services as a strategic
differentiator to set themselves apart from their competition.
Examples of this can be seen across a variety of industries; not
only in retail and consumer packaged goods, but in manufacturing
industries, as well as among the service providers that run the
logistics business for others. These major trends require
businesses to adapt their supply chains and transform them into
demand networks that are all about the customer, the partners
involved to fulfill demand, and the speed of that fulfillment.

For logistics, this means that service levels and cost need to be
balanced constantly by considering global trade, sustainability,
and multi-mode transportation and distribution. Short-term
planning has to match logistics demands and capacities, while the
entire distribution network needs to be considered in the
optimization of goods flowing in the network, all with full cost
transparency. For a network to be able to respond to changes and
provide the required flexibility, processes need to be closely
integrated to enable the fast exchange of exceptions and provide
insight into plans, operations, and inventory. Finally, this requires
visibility into the logistics network and traceability of material
flows.

Customers increasingly expect not just endless choices, but also

instant gratification. It is not enough to carry an item; a vendor has
to be able to deliver it quickly, too. E-commerce fulfillment
centers will play a key role in meeting this demand. They are
geared not to replenishing brick-and-mortar stores but instead
satisfying online orders, often for a single item, which typically
are smaller than those for traditional distribution centers. In this
work, speed is of the utmost importance. The current wisdom is
that anyone wishing to do retail business online must be capable
of same-day order fulfillment, which means that multiple sort
points have to be built into facility design.

Goods-to-person order fulfillment systems have evolved beyond

the single operator station per module concept. Todays systems
often allow multiple stations per module or can extract the load
from the system for conveyance to another location. They are no
longer handcuffed to either perform picking or replenishment;
both can be performed simultaneously with little impact on
picking productivity.

So, what were some of the top issues typically encountered in

previous goods-to-person fulfillment systems? And how do they
apply to fulfillment operations today? Consider these challenges:

Space Requirements: While storage capacities

were more efficient than static systems, the
utilization of facilities full clear heights (the
space from the floor to the ceiling) often
required additional capital and space for
mezzanines and order routing conveyance in a
pick-and-pass process environment

Fixed Throughput: The systems were often

limited by the capacity of the picker, which
meant the storage capacity needed to be
designed so that demand from the system would
not exceed throughput

Lack of Staffing Flexibility: Systems either

required constant staffing (regardless of
volumes) or required operators to float between
systems. This increased cycle time and created
operational bottlenecks
 System Balancing: Product placement or
slotting was a constant consideration to
ensure that systems were being maximized but
not overloading capacity during peaks. The
systems provided little to no opportunity to
increase system throughput for periods as
needed.

Replenishment: The process of replenishment

utilized the same station as picking, either
reducing the pick rate or pushing replenishment
to off-shift hours.

In the past, even with these limitations, goods-to-person order

fulfillment systems made sense and provided a solid business case
for straightforward order fulfillment applications. While these
systems still have their applications, more often the requirements
of todays business customers and consumers push these systems
beyond their capabilities.

In todays environment of Stock-Keeping Unit (SKU)

proliferation, multichannel fulfillment centers, and enhanced data
capture and manipulation requirements, goods-to-person
technologies have been forced to evolve as well. They now
incorporate improved controls and software, robotics with real-
time reporting, and better data capture to provide a more flexible
alternative at a competitive investment. The traditional goods-to-
person order fulfillment systems are often seen as relics of the past
by many in the distribution field seeking to automate their
operations. Compared to new systems that have debuted over the
last few years, it is easy to understand this opinion.

Todays systems offer considerably more compact design, faster

operation, and provide a much higher level of flexibility. The new
systems offer some big advantages:

Operator Productivity: The main goal of all

goods-to-person order fulfillment systems is to
improve operator productivity. This was
previously accomplished almost entirely through
elimination of travel time. But todays systems
take this to the next step. They begin by better
positioning both the product and the order
container for easier, faster picking. Next,
through the use of intelligent, real time decision-
making by the system, product position is vastly
improved and reduces cycle times. They better
incorporate lights, displays, and voice direction
to provide a more efficient method of
communication and verification to and from the
 picker for improved order accuracy. Finally,
todays systems are faster and provide
enhanced queuing to ensure operators are rarely
idle between picks

Ergonomics: As an added benefit to better

positioning of the product and the order
container, ergonomics for the picker are
significantly enhanced. Both the pick from
container and the pick to container can be
placed at a height and angle that minimizes
strain and movement while often completely
eliminating handling of containers.

Space Reduction: Todays systems are sleeker

and more compact, and also minimize any dead
space between storage locations. They are also
are capable of improved utilization of clear
height. Combining these design aspects
significantly improve the storage cube capacity
over the previous systems. In addition, with the
improved productivity, each aisle within a
system can support more pick locations to
increase overall capacity.
 Improved Operations: Depending on their
design and operational requirements, goods-to-
person order fulfillment systems still provide a
definitive volume. However, with todays higher
throughput capacities, improved controls and
material handling integration capabilities, these
systems can be better leveraged to intelligently
prioritize workloads, provide improved planning
capabilities, and route orders efficiently through
an entire operation.

Flexibility: One of the main disadvantages with

goods-to-person order fulfillment systems has
been their lack of flexibility. When treated as a
standalone fulfillment, this has been true, but
todays systems can be better integrated into
the entire operation so that picking capacity can
be balanced with system throughput. When
integrated into a hybrid solution, the pick
stations are eliminated as system bottlenecks.

Scalability: Growth in storage capacity and

throughput is no longer an obstruction with
todays systems. They now offer an easier path
 to increasing both with more scalable designs,
often with minimal capital investment.

Product Characteristics: The size and types of

product to be stored and picked are the first
considerations to be reviewed. Begin by
collecting item characteristics such as
dimensions, weight, and quantity to be held, as
well as any unique handling requirements, such
as lot control separation. All information must be
compiled to allow for an analysis to eventually
determine the proper sizing and throughput
requirements of a good- to-person order
fulfillment system, as well as identify which
items are best suited and provide the best
payback.

Storage Capacity: Using the information

collected, the cubic storage requirements for
each item under consideration needs to be
developed. Important elements to this analysis
include the critical dimension of the items
(longest of length, width, or height) and whether
it is better to store them in their original carton,
or if it is possible to place these into a uniform
 container or tray. If the original carton size
varies, it is likely that the uniform, sectioned tray
will provide a much better cube utilization. Once
compiled, this is the information needed to
develop the storage requirements.

Throughput Requirements: The next

consideration is to determine peak throughput
requirements. This is based on the maximum
number of picks and replenishment that are
required over an allowable cycle for completion.
For instance, there may typically be a set
number of replenishment or put-away moves
required that can be completed over the course
of the day, which allows for smoothing out this
required rate. However, there may also be a
large push of outbound orders in the afternoon
that must be completed in a short time window.
These factors must be considered when
developing the overall throughput requirements.

System Sizing: The system sizing process can

begin based on the storage and throughput
requirements. The key is to balance storage
capacity with the number of aisles or modules in
 order to meet the minimum requirements. All of
the SKUs may not have profiles that are
beneficial to goods-to-person order fulfillment
systems; some may require too much cube
given their limited activity, therefore not
providing a justification. In these instances,
hybrid designs that incorporate other order
fulfillment technology may provide a better
solution.

System Integration: A strategy must be

developed that integrates the goods-to-person
order fulfillment system into the entire
operation. This should be completed regardless
of the need for a standalone aisle or module, or
if multiple aisles or modules are required. In the
event of multiple modules, a strategy includes a
decision to pick and pass the order containers
between modules or to extract the pick from
container to a central picking/replenishment
station. The later strategy overcomes the
module balancing and staffing issues of static
workstations, but may require an additional
investment in conveyance. If the pick from
 containers are captive to the system, additional
staffing may be required to ensure that all
modules are appropriately staffed. Several other
considerations must be kept in perspective to
ensure a complete functional requirement
design. These include available space and clear
height, overall maintainability and access to key
system components for repairs and preventive
maintenance, as well as fire suppression design
requirements. An equally important factor is
including the contingency planning into the
design process to ensure that disruptions to
operations are minimized in the event of system
down time.

Theres a whole new world of automation options available from

robots roaming warehouses and distribution centers to highly
automated conveyors and equipment that assist staff with faster
fulfillment processes.

While goods-to-person order fulfillment systems are not new, the

applications for these systems were never overly widespread in the
past due to limited benefits and functionality. In the right
situations, justification for more common systems could be made
(e.g., horizontal and vertical carousels or lifts), although many
operations found it difficult to successfully maintain the system in
order to reach the projected benefits.

Todays automated goods-to-person order fulfillment systems

have evolved into a variety of configurations and forms. They can
use cases and cartons, and the load can be a pre-configured tote or
tray.

Below are other automated systems that are playing a big role in
fulfillment centers, these automated systems are as follows:

Mini-Load ASRS (Automated Storage and

Retrieval Systems): Mini-load ASRS were
traditionally valued for their ability to reduce
footprint versus providing an efficient method of
bringing goods to an operator. However,
manufacturers have continued to speed up their
delivery cycles, which increase the number of
loads being handled while lowering costs. Mini-
load ASRS can be a competitive option,
especially for heavier load requirements and
dual usage as a high speed buffering system.
Manufacturers of these systems include Daifuku
Webb, Westfalia, and TGW.
 Carousel ASRS: Carousel ASRS extend the
functionality of the traditional horizontal
carousel systems by adding a robotic extractor
to the front end. By doing so, they are also
capable of stacking multiple units to capture the
full clear height of the facility. These systems
can handle both cartons and containers, but
require the load to be extracted and conveyed to
another location for picking and replenishment.
Manufacturers of these systems include System
Logistics and Integrated Systems Design

Shuttle-Based ASRS: By replacing the ASRS

crane with multiple shuttles that operate
simultaneously within an aisle, these systems
have greatly increased the flexibility and
throughput of the traditional small load ASRS
systems. They are capable of handling either
cartons or trays, and can be designed to be
captive within the aisle or extract the load for
processing elsewhere. Additional shuttles can be
added based on the throughput requirements.
Introduced just a few years ago, these systems
have gained significant recent traction. A variety
 of manufacturers have introduced their products
to the market including Dematic, Opex
KNAPP, Symbotic, and Vanderlande

Robotic Rover Systems: This technology uses

a fleet of nomadic units on a two dimensional
plane to shuffle and access unit loads to a
processing station. These systems can either be
top down or bottom up. Hatteland Logistics is a
manufacturer of the top down, dense bin stack
system called Auto Store. Kiva Systems (note:
kiva systems was acquired by Amazon on March
19, 2012) provides a bottom up style system
that moves the entire shelf to the processing
station.

The art and science is to properly assess size

and design the system to ensure that benefits
are maximized and the correct technology
application is a fit to the operation. Eliminating
walk and travel time has been met with limited
success in the past however, with the recent
evolution of goods-to-person order fulfillment
technology, your operation may be in a better
 position to incorporate these systems now than
in the past.

If you are in supply chain, you are likely aware of the ongoing
changes in this sector. But a closer look at the challenges, such as
increasing logistics costs and increasing customer expectations
that supply chain professionals are facing in their distribution and
logistics operations reveals that the entire discipline is evolving.

Currently, it remains the case as e-commerce continues to grow,

most fulfilment centers, particularly multi-channel shippers, are
still only just beginning to work out what this will entail for their
distribution network infrastructures. Traditional retail and
wholesale distribution centers will need to evolve into flexible,
multichannel fulfillment centers. Companies that provide the best
customer experience and deliver the right products, at the right
time, and in the right quantities and condition, will build customer
loyalty. This will determine the winners in the new e-commerce
world.
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Commentary | Viewpoint

Maximizing Productivity in E-
commerce Warehousing and
Distribution Operations
253
By Jeffrey B. Graves

Tags: Warehousing, E-commerce

Jeffrey B. Graves is President, Sedlak Management Consultants Inc.,

216-206-4700

As e-commerce continues its rapid growth into virtually every market sector,
retailers are anxious to expand their presence online to capture this market share.
Between 2006 and 2010, global online retail sales grew by 16.3 percent annually,
according to Global Online Retail 2011, published by Datamonitor.

Online retail sales for 2010 alone showed an annual growth rate of 17.8 percent on
total revenues of $434.6 billion. This level of expansion of Internet sales is
fundamentally changing the nature of the retail supply chain.

E-COMMERCE CHALLENGES
For decades, consumer products have been distributed to retail stores in bulk, via
pallet loads and cases. Now, online ordering is pushing brick-and-mortar retailers
beyond this traditional supply chain infrastructure.
Traditional fulfillmentencompassing receiving, putaway/storage, picking,
transport through the distribution center (DC), sortation, value-added services,
packing, and shippingis a poor option for handling the needs of e-commerce. To
compete in this virtual arena, picking, packing, and shipping single items and small
volume orders to consumers is the name of the game. Orders require delivery to
customersnot weekly or bi-weekly as with retail stores, but typically within 24 to
48 hours.

Add to this complex fulfillment environment the demands of continual stock-

keeping unit (SKU) proliferation. Internet retailers need to support an ever-
increasing selection of merchandise that typically includes fast-moving items and
many very slow-moving items. How these SKUs are picked and handled can present
two very different operations.

From the moment the online order is placed to when it is picked, packed, and
shipped, every step in the process must be handled efficiently, consistently, and cost-
effectively. In e-commerce, the distribution center provides much of the customer
experience. Simply delivering the goods is no longer an adequate mission for the
fulfillment centercustomer satisfaction has to be a critical priority. The typical e-
commerce consumer expects a wide selection of SKU offerings, mobile-site ordering
capability, order accuracy, fast and free delivery, and free returns.

Understanding how online consumers shop and purchase across channels is critical
to the success of online fulfillment. More consumers are browsing the Internet for
features and selection, testing products at brick-and-mortar stores, acquiring
discounts through social media, then purchasing the product online through the
convenience of their mobile device.

Some retailers,including those that also sell through catalogshave been in the
direct-to-consumer marketplace for some time. These companies have fulfillment
facilities established and information technologies in place to manage orders with
speed and efficiency, doing it well and profitably. But to many distribution
executives, online fulfillment poses a significant challenge to their existing
knowledge, experience, and resources.

SMARTER 3PLS IMPROVE E-COMMERCE FULFILLMENT

As an alternative to in-house fulfillment, a large number of retailers have turned
over Internet order processing to 3PLs that are equipped and experienced to handle
these online needs. Retailers whose online orders are growing at an accelerated rate
often prefer the flexibility of working with a 3PL that can help them continue to
expand.

In fact, 3PL usage is experiencing rapid growth, expanding at a rate of 12 to 15

percent annually. This outsourcing growth is clearly influenced by the corresponding
increase of online purchasing.

But 3PLs are also continuing to gain acceptance by online retailers because of the
sophisticated software engines they have put in place to capture orders on the front
end, and process these orders through their warehouse management systems
(WMS). On the front end this includes managing the Web portal and site, updating
content, and supplying telephone call centers with live operators that take orders,
dispense product information, provide technical support, and process return orders.
Efficient returns processing becomes a major benefit in e-commerce, considering the
much higher number of returns compared to brick-and-mortar sales.

Because of the digital nature of e-commerce, its infrastructure permits integration of

systems that help unify information across multi-channel inventory, order
management, promotions, merchandising, and distribution systems. The most
advanced 3PLs operating within e-commerce provide this capability.

These systems allow 3PLs to record the relevant details of each item and parcel being
shipped. Parcel shipments can be tracked, and proof of delivery quickly confirmed. A
customer's transportation costs and performance can be analyzed, thus helping 3PLs
to negotiate rates and improve service.

Integrated ordering and parcel tracking is made possible through the 3PL's WMS,
which is an ideal system for the precise and efficient tracking of products. The WMS
communicating with the ERP, along with sensors in the pick-and-pack systems
and conveying equipmentis capable of monitoring individual SKUs as they are
stored and moved through the facility.

3PLs now also have the opportunity to record every customer transaction, and track
consumer behavior and sentiment. Forwarded to their clients, this data makes
possible the ability for retailers to analyze millions of pieces of data, resulting in a
real understanding of what its consumers are purchasing, how to get into their
online carts, and how to become part of their repeat purchase cycle.

This level of supply chain analytics allows 3PLs to maintain precise control of
products through every stage of supply chain handling, from receipt of products to
storage and picking, through shipping.

PICK, PACK, AND SHIP

E-commerce fulfillment is basically a piece-pick operation, which is historically a
hands-on procedure. The right automation facilitates the minimization of manual
touch, resulting in more accurate orders, improved ergonomics, lower labor costs
and worker travel time, fewer returns, and space saved by operating in a smaller
footprint.

Much of the recent investment in automation by e-commerce 3PLs has been driven
by a desire to improve order picking, packing, and shipping processes, with a focus
on picking. And the most basic form of automation for e-commerce in 3PLs is the
augmentation of manual order picking with IT support, such as pick-to-light, hands-
free voice systems, zone routing, or dynamic slotting.

In most distribution centers, picking is the most labor-intensive DC function, and

usually can provide the most cost-savings when automated. IT-based picking options
exist that have significantly lowered capitalization costs, and can exert a sizable
positive impact on a DC's throughput efficiency, while reducing operating costs. For
many distribution centersand especially for e-commerce 3PLsIT-based picking
options can provide the ideal automation solution to streamline their throughput
cost-effectively, while realizing a short-term ROI.

E-commerce 3PLs are finding that their clients are progressively requiring shorter-
term contractswhere once five-year and 10-year contracts were typical, now three-
year to five-year contracts have become the standard. 3PLs need to factor their
automation investment for a much shorter ROI, which makes heavily capitalized
equipment a poor option.

For dynamic e-commerce picking, highly automated robotic and shuttle-based

systems provide accurate and rapid goods-to-person solutions. These systems can
achieve performance levels of many hundreds of order lines per hour with precision
accuracy. For e-commerce fulfillment within 3PLs, however, it is difficult for these
organizations to factor the capital equipment ROI over such a short three-to-five-
year span.

Equally important is the scalability of the automation as a 3PL's client needs

increase or decrease, and the flexibility to move the automation for use in a new
location, when and if the contract does terminate. This is further pointed up by the
fact that e-commerce retailers can fluctuate in their use of 3PLs. Having retained a
3PL to handle their e-commerce fulfillment for several years, a retailer can pull the
fulfillment back in-house, then several years later put the fulfillment back out for
3PL bid consideration again. From the perspective of the 3PL operator, the more
flexible and scalable the pick, pack, and ship equipment, the better the possibility of
achieving their return on investment on that equipment.

The focus on automation for any e-commerce 3PL should be to easily increase
fulfillment throughput and SKU density over time. Such a system should enable e-
commerce 3PLs to pick, pack, and ship orders and handle returns quickly and
accurately, while reducing labor costs and shipping errors, and realize equipment
ROI over the life of the contract.

ASSESSING 3PL CAPABILITIES FOR E-COMMERCE

Within e-commerce, unpredictability is a constant factor. Flexibility in the 3PL
supply chain, therefore, becomes critical. This can be derived from implementing the
right software and automated systems that can support the fluidity that e-commerce
requires.
3PLs under consideration for handling a retailer's e-commerce fulfillment should be
assessed against the following criteria as to their performance capability. These
points represent potential trouble areas in e-commerce fulfillment:

Large SKU counts, with a high percentage of slow movers.

Small number of pieces per order.

Extreme peak season volumes.

Under-stocking due to unpredictable changes in market demand.

Front-end order processing.

Fast 24 to 48 hour delivery.

High volume of returns from end consumers.

High potential for brand damage from poor fulfillment performance.

Real-time, accurate inventory and order visibility.

These points can best be addressed in concert with an independent logistics

consultant, who can provide considerable value to logistics executives at both the
retailer and 3PL.

The methodology of independent logistics consultants permits an objective

examination of all e-commerce options, helping both parties determine underlying
costs and design for facilities, automation, and labor within the 3PL. Consultants
size the facility based on the retailer's requirements, the anticipated level of operator
cost, and what the 3PL plans to invest, factoring in the optimum level of automation.

Independent consultants draw on solutions from many e-commerce 3PL options

used in different applications, thus providing a broad perspective on potential
solutions that might otherwise not be considered. This depth of experience can make
the critical difference in selecting the right 3PL and equipment that will meet
retailers' requirements for throughput and efficiency, and the 3PL's need for
minimized capital outlay that will deliver the expected return on investment 253
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Will Robots Take Over Ecommerce

Warehouses?
SEPTEMBER 10, 2015 MARCIA KAPLAN

Robots have always played a prominent role in movies, television, and

childrens toys. They are now navigating a new arena warehouses
and changing the way businesses handle their fulfillment.

Manufacturers have been using dumb robots for repetitive tasks in

product assembly for years. With advances in technology, especially
in artificial intelligence, the era of the smart robot is expanding the
range of tasks that robots can perform. Robots are now collaborating
with humans and in some instances working autonomously.

Warehouse Robots: Early Adopters

Amazon was a pioneer in using robots in fulfillment centers. In 2011
Amazon started using 1,300 robots from Kiva Systems, a Boston-
based robotics start-up. Amazon liked the robots so much, it bought
Kiva Systems in 2012. There are now 15,000 Kiva robots spread
across 10 of Amazons warehouses. Drugstore retailer Walgreens and
office product retailer Staples also used Kiva robots at that time.

Amazon liked the robots so much, it bought Kiva

Systems in 2012.
Using a collaborative approach, Kivas squat orange robots pick up
shelves of products from the warehouse floor and bring them to a
human employee who picks items and then packs them into individual
boxes for shipping. Kivas robots avoid running into each other by
using sensors. Amazon also uses an algorithm to determine which are
the most popular items and situates these goods closest to the
pickers.
Kiva enables Amazon warehouse workers to pick items two or three
times faster than filling orders manually, and the system, when more
broadly implemented, could result in the retailers reducing fulfillment
costs by $450 million to $900 million in North America, according to
Janney Capital Markets. Amazon has estimated that the average
amount of time it takes to pull an item from a shelf and put it in a box
is now 15 minutes per order, down from an hour and a half.

Other Warehouse Robots

When Amazon bought Kiva Systems (now Amazon Robotics), most of
Kivas other customers eventually moved to alternative robotics
systems. Fetch Robotics, founded in 2014 in the Silicon Valley, saw an
opportunity. The company manufactures Fetch and Freight, a
complete pick and pack system. Fetch can select the items from the
shelf (up to 13 pounds), while Freight provides transit through the
warehouse. They can work in tandem or customers can use just one.
The system includes software to support the robots and integrate with
the warehouse environment. Both robots are built upon the open
source robot operating system, ROS.

Another robot manufacturer, Singapore-based GreyOrange, focuses

on streamlining order handling in the warehouse, specializing in
ecommerce logistics. It works mainly with Indian ecommerce
merchants such as Flipkart, Amazon India, and Jabong. Its Butler
robot is designed to help ecommerce and logistics operations
efficiently deal with high-mix, high-volume orders by moving around a
warehouse and collecting the products that are being shipped.

The companys other offering, Sorter, is a high-speed sorting system

that scans and sorts parcels for shipping. The system has eight
components, including dimensioning and weighing, sorting conveyor
and arm, and a bagging unit.
Hitachi has developed a two-armed robot that it says can pick up
items from shelves in less than half the time required by existing
robots. The camera on its arm can locate the requested item while the
machine is still moving, which enables it to work more quickly. It
should be commercially available in 2020.

Total Warehouse Automation

Amazons next foray is robots, like Fetch, that can grasp items with
the objective of eliminating human pickers. In a new book, Machines
of Loving Grace, New York Times reporter John Markoff writes that
Amazons Kiva robots are clearly an interim solution toward the
ultimate goal of building completely automated warehouses.

Complete automation of the pick-and-pack process could solve a

public relations problem for Amazon, which built at least some of its
warehouses without air-conditioning. During summer, temperatures
reportedly stay at over 100 degrees all day. Not until this received
negative publicity from a Pennsylvania newspaper did Amazon start
retrofitting warehouses with air-conditioning.

However, another issue may arise. When Amazon negotiated

agreements with several states to delay the collection of sales tax in
exchange for locating warehouses and providing jobs, nobody
presumably contemplated total warehouse automation. It will be
interesting to see how states respond.

The price of robots is decreasing rapidly and robots that can act
autonomously without human intervention are helping in fields such as
medicine, search and rescue, and agriculture. Many drones can fly
autonomously and Amazon has stated its intent to use them for
package delivery.

Robot Advantages
 Robots dont require health insurance, lunch breaks, or vacations.
They can work 24/7 and dont call in sick. They dont require training.
This is particularly useful during the holiday season when ecommerce
merchants typically hire additional warehouse workers. Robots can
reduce logistics costs substantially with minimal human intervention.

Robots dont require health insurance, lunch breaks,

or vacations. They can work 24/7 and dont call in
sick. They dont require training.
Ecommerce companies are under pressure to reduce fulfillment costs
and send orders to customers more quickly. Any merchant that ships
in substantial volume and wants to stay competitive will likely have to
use robots. Third-party logistics providers are also converting to
automation. The courier firm DTDC in India, for example, uses a 25-
arm robot to pick orders at a rate of 3,500 orders per hour, about one
per second.

The average cost of a Fetch warehouse robot is $35,000 and that

price is certain to come down as more are sold. In five years a robot
will be less expensive than a human employee with benefits,
especially if the effort to implement a $15 minimum wage succeeds.
Within the next five years, robots will likely replace humans who are
performing simple, repetitive tasks in many industries.
011-30018133support@shiprocket.in

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Top 10 supply chain and

warehousing trends in 2016

OCTOBER 8, 2016 Posted by Shalini Bisht / in eCommerce Shipping

Trends category
4

In every industry, there are certain trends and patterns that keep changing
every year. For the year 2016, there are some special trends as well. The
complete industry has become more efficient and inclined to technology. We
can also predict the future of this industry through the trends that we see in
the current year. These trends comply to an economic as well as
technological perspective. Lets see the Top 10 supply chain and
warehousing trends for the year 2016.

Strategies have become Omni channel

Omni has been derived from the word Omnis that means universal or all. So,
Omni Channel means a multi channel approach to sales which aims to
provide the customers with a seamless shopping experience irrespective of
where the customer is shopping from. Meaning, whether the customer is
shopping from a brick and mortar store, a mobile application or a desktop
website, the experience he gets ought to be flawless. So, in an Omni channel
environment, the customer gets a unified customer experience and it is also
easier to manage them. All the strategies that the companies are applying
comply to being Omni channel as it is the approach that they are taking
towards the market. An Omni channel strategy shall ensure proper inventory
optimization, product availability and timely fulfillment.
 Reduction in labor to cut costs
This is a trend that is growing in all the industries. Technology has become
more prominent and it is leading to reduction in labor. It also facilitates
cutting of costs and which in turn makes the final product available to the
consumer at a lower price. This trend shall continue to grow in the
foreseeable future until technology has the upper hand. Minimum wages
keep increasing due to new regulations and hence, lower the number of
labor, lower will be the cost of handling and managing them.

Smartphones dominate big time

Smartphones are like portable computers in our pockets. They have the
power to handle multiple vital tasks simultaneously. The shipping and
warehousing industry is moving towards smartphone applications instead of
traditional tools that are outdated. This was a much needed change that we
can see happening this year. It can also help track individual performance
metrics and provide solutions to complicated situations.
 Big data analytics have helped in
planning and optimization of the
inventory
Big data analytics has become an important resource to plan and optimize
the complete inventory in the warehouse. With the help of big data, one can
create lean and balanced supply chain that will be highly efficient. It also
helps in improving workflow and ensure better floor space utilization which is
quite important as well. The technology of big data analytics is improving
and we will hopefully see big changes in it in the coming years.

Electronic Data Interchange is still a

growing trend
More and more people are subscribing to Electronic Data Interchange and
thus it continues to be a growing trend. In the past, many companies didnt
use EDI and they did face consequences. Most of the companies are now
resorting to EDI as it is difficult to exist without it. It will also be a huge trend
in the future and many companies will start depending on it.

Security of the data has become

important
Security is of prime importance no matter which industry it is. Top notch
organizations have made their data security quite strong so that no
malpractices happen. Data plays a huge role in supply chain and
warehousing management thus its security is of great importance as well.
Companies have also introduced new levels of data encryption for the same.
 Traceability is on the rise
FDA and government regulations have become stricter. In the
pharmaceutical industry, too several policies and regulations are enforced
and this trend will go on for several years to follow. There thus needs to be
perfect traceability of where the product exactly is on real time basis.

Collaboration is influential
Organizations believe that collaboration and working together will benefit
both the parties and it will be a win-win situation for all. Due to collaboration,
efficiency improves in a significant way. The systems will become fully
integrated which will also help in reducing the overall time and costs. This
trend is just getting started and hopefully, with more knowledge of it,
companies will start adopting it.

Cloud infrastructure is gaining

importance
Cloud computing has been one of the best innovations in the recent times. It
facilitates real-time syncing of all the data to everyone involved. Even in the
supply chain and warehousing industry, cloud infrastructure is getting more
importance compared to the previous years. Many large and small
companies have started using it for the benefits it provides.
 Complexity is increasing
Even though big data analytics is solving a substantial problem, the levels of
complexity in the supply chain and warehousing industry is increasing
rapidly. Due to this, companies have to become more creative and make
each and every process understandable to the people working there. Only
when everyone can understand the process without any hassle, the
complexity will be solved. This trend will most probably keep growing in the
near future.

Final Say
These are the top 10 trends that have been noted in the supply chain and
warehousing. In case, there is anything else that you think is more important
than what is listed here, do let us know in the comment box below.

ShipRocket is Indias first automated shipping software that aims reduce

eCommerce shipping to its bare bones. We have taken a step forward in
simplifying eCommerce for Indian merchants and saving their precious time
and money.
The Top 5
Warehouse
Management
Trends Of 2015
11/19/2015 - 9:15am

1 Comment

by Denny Hammack, President, Patterson Pope

The
warehouse industry is never a static player in the order fulfillment
process. As customer demand rises, distribution logistics have to be
changed to conquer the challenges created by fluctuating product
markets and shipping schedules. Warehouse operations are adopting the
latest innovations to keep up and stay competitive in such a demanding
economic environment. Management trends are being evaluated,
streamlined and consolidated to develop efficient processes designed to
create the most exceptional customer experience. From adopting
automation technologies to creating multichannel solutions, the five
following trends speak of just a few of the initiatives that warehouse
management operators have explored in 2015.

1. Increased Protocols for Product Recalls and Warehouse

Employee Safety

The number of product recalls over the past few years has been
staggering. Warehouses are deemed responsible for product quality
complaints and are held accountable for tracking tainted distributed
products. Increased protocols regarding product recall procedures and
compliancy for auditing agencies require accurate databases to handle
queries. Warehouses must also institute an instant product notification
process to inform customers of the recalled products.

Another aspect of warehouse accountability involves an increase in safety

procedures for warehouse staff to prevent accidents. Forklift motion
sensors, pedestrian motion sensors, and automated gate systems at
crossing points are becoming instituted. Safety equipment adoption also
involves the use of vision-guided tow vehicles in place of forklifts to
lessen the chances of damaging products while increasing the amount of
safety around moving warehouse vehicles.

2. More Acceptance of Third-Party Logistic Solutions

Third-party outsourcing logistic solutions erupted into the market over a

decade ago, as a warehouse manager couldn't turn around without
finding a host of third-party logistics provider (3PL) companies offering
their business cards. While this industry has dwindled in recent years as
smaller 3PL companies are being devoured by larger competitors, their
services are growing and becoming more sophisticated. Intermodal
services are starting to be the norm, as these companies are offering a
more full-service alternative. Warehouse managers are taking full
advantage of this growing trend, shipping products to customers and
stores at faster speeds and lower prices.
3. Mobility Devices for More Accurate Order and Shipping
Fulfillment

We live in the age of mobility, and warehouse management has taken

notice of this budding technology trend. Operators are using barcode
scanners, RFID readers and other types of handheld devices to better
streamline the shipping and inventory process. Several warehouse areas
where mobility can benefit operations and processes include:

Inbound Products Processing: Mobile devices can provide real-

time schedule updates, product shipment scanning, and cross-
docking solutions.
Product Inventory Management: Warehouse operators are
recognizing the benefits of mobile devices that can provide accurate
inventory management information, cycle count orders and
materials allocation handling.
Outbound Products Processing: Mobile devices can be used to
view directed pick lists, dispatch plan tasks, and shipment tracking
data.

4. Unique Warehouse Management Systems for Multichannel

Solutions

Companies are no longer

relying on just their own brick-and-mortar stores to entice customers with
their products. E-commerce retailers are using multiple online buying
channels to reach customers and fulfill orders. These companies require
more scalable warehouse management solutions to ship products in the
fastest time possible along the shortest shipping routes. An efficient
warehouse management system (WMS) application has become vital for
warehouses to stay on track with their inventory. This WMS can provide
the right functionality to organize the fulfillment processes for multiple
warehouses, oversee the distribution processes for drop ship partners,
and help stores improve their overall product delivery times.

5. Automation Improvements for Enhanced Operational Processes

Another popular trend this year has been the initiative of implementing
more automated technology into warehouse management. Operators are
evaluating operational processes to determine the best areas where tasks
can be automated with the use of automation, and then moving
warehouse personnel to other key areas where their skills and talent can
lessen the burden of fulfillment processes. Mobility technologies, data
systems, conveyor belts and other automation and technology
improvements can change lead times and increase delivery satisfaction.

Denny HammackWarehouse
management processes are becoming more complicated, and require
increased strategic solutions that allow for efficient operations. The above
trends are being adopted and refined to meet the growing logistical
challenges. In this changing industry, it is also showing the outdated and
 slow processes that need to be addressed for companies to survive and
thrive against competitors. Order fulfillment and distribution logistics can
no longer be ignored or placed on the back burner for companies.
Operational obstacles must become addressed in a timely manner for
solutions to be effective.

Denny Hammack is the current President of Patterson Pope. He has a

background in storage that spans more than 20 years. Patterson Pope is
the industry leader in storage systems and shelving solutions.

Business Technology

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Top 10 Supply Chain and
Warehousing Trends for
2016
Submitted on Tue, 2015-12-01

By Upp Software

Peter Drucker once quipped that the best

way to predict the future was to create
it. Given that, who better to explain
expectations in the supply chain and
warehousing sector than someone
involved in shaping it going forward?

We sat down with Jim Laverty, managing partner of Upp Technology, to see what
was in his crystal ball as he looked at supply chain and warehousing trends for
the coming year.

We expect 2016 to be a very good year in the business sector, notes Laverty.
A couple of developments weve observed will continue to be important themes
in the year ahead. One, outsourcing will continue to increase to meet supply
chain and distribution demands for resources across the chain. Despite the
conversation about re-shoring or nearshoring, we expect more organizations to
use manufacturers overseas or outside the United States. Two, transportation will
remain stressedreally pushed to its limitsin 2016.

View the Infographic " 2016 Supply Chain Trends"

From a technology perspective, Laverty sees mobility and the Internet of Things
(IoT) as principal drivers of development in the sector. We see everything going
in the direction of the Internet of Things, he says. From ERP to WMS and TMS,
the way we work and the way we communicate is rapidly transitioning to a
network of connected devices. These tools are delivering immediate access to
performance data, as the theoretical promises of real-time visibility, transparency,
and pervasive connectivity are becoming not only reality but necessities to
compete in todays marketplace.

The Top 10 Supply Chain Trends

for 2016
See the Infographic "Top 2016 Supply Chain Trends"
From this broad economic and technological perspective, Laverty posits 10
specific supply chain and warehousing trends we should see in 2016:
1) Omnichannel strategies proliferate.
More organizations want to support an omnichannel environment with real-time
demand fulfillment and provide a single, unified customer experience across all
channels. Expect to see the trend of more items purchased outside of brick and
mortar stores propelled by a strong online showing in Q4, says Laverty. As
omnichannel becomes the de facto approach to market, inventory optimization
will take on greater importance, as product availability and timely fulfillment
become essential across all channels.

2) Big data analytics improve demand

planning and inventory optimization.

Big data analytics will

drastically improve planning and replenishment, creating lean and balanced
supply chains with sophisticated inventory systems. These tools will maximize
workflow, increase efficiencies, and directly impact revenue by optimizing
warehouse inventory and floor space utilization. Demand planning and
forecasting is an area where many organizations lack tools and process
expertise, comments Laverty. Forecasts are based off of snapshots of past
requirements, and then people guesstimate how much is needed for the coming
year. More and better data analytics are changing the landscape, says Laverty.
We see people trying new methods and tools as they seek smarter solutions to
get the right data to create better forecasts. They will look for additional
resources and systems of information.

3) Mobile continues to dominate.

Warehouse management continues to move away from traditional tools to tablets
and smartphones. Mobile requirements from solution providers, partners,
vendors, and clients are increasing as the expectation that all work functions can
and should be completed from smart phones and other mobile connected
devices. Within a warehouse, whatever the function and whatever the role, we
have to put money into supporting a total mobile experience for the workers,
says Laverty. This includes individual performance metrics and the ability to see
roadblocks or interruptions in real time to solve them in real time.

4) Labor looms as a challenge and cost-

cutting target.
In 2016, we see all organizations looking at labor as the primary area where
they can reduce costs, says Laverty. Labor costs will be an even bigger
challenge as the minimum wage increases through new regulations. A primary
concern will be a shortage of warehouse and transportation labor. Shortages will
continue as the labor market tightens, something else likely to drive up hourly
wages. Being able to track productivity and forecast where labor is going to be
needed and how it is going to perform is going to be a critical need, predicts
Laverty. Programs that tie compensation to labor production will be a solution
that more companies will look to implement. Labor retention will also be a major
concern; in states where minimum wage increases are mandated, expect to see
advances and investment in warehouse automation. Material handling systems
will be prominent in this development.

5) Demands for traceability will be on the

rise.

Requirements for traceability continue to be important as FDA and

government regulations on food and medicine increase and as stronger
pharmaceutical requirements will be enforced in 2016 and beyond. We see a
growing trend of requirements for tracking chain of custody that flows with the
product, rather than just what is in your facility, notes Laverty. Traceability will be
essential not only where the product is in real time as it moves, but also relating
to its pedigree: where it came from, how did it get here, how long has it been in
route, was it modified along the way. All that information needs to be passed
downstream.

6) Data security requirements become

more rigorous.
Organizations will become more demanding of top-of-the-line data security and
will begin creating more strategic plans about destroying data and monitoring
what they are capturing, since the more they capture, the more liable they are. It
will become very important to be able to offer the highest level of data security
and encryption possible, says Laverty. People want to know what contingency
plans are in place for data security and how they are administered. Those
storing data within a multi-tenancy community want assurances that their data is
never mixed with another clients data.

7) The cloud transition continues.

 In 2016, costs will prove to
be a huge driver to the cloud for those organizations that are still running legacy
applications. The challenge of infrastructure, maintenance, and labor costs will
necessitate their transition to the cloud. Four out of five new buyers are looking to
the cloud simply because they dont want to deal with the infrastructure, labor,
and additional layers of responsibility and risk. A big trend we see right now is
that many organizations are transitioning to the cloud due to an aging workforce,
adds Laverty. A lot of really talented technology professionals are leaving and in
most cases these people are irreplaceable. How do you compensate for losing
people that you cant replace? You put in a system that doesnt ever need to be
replaced.

8) Collaboration is king.
Organizations now expect things to work together and collaborate; full integration
of all systems is the goal and there will be lower tolerance for cost and time in
realizing this need. This collaborative orientation will drive more people toward
Platform as a Service (PaaS) offerings, where they have pieces of a platform
rather than dealing with systems as separate entities. This shift will require
additional understanding of how they all work together.

9) Coping with complexity will be vital.

 Perhaps one of the biggest trends of the year will
be complexity. The supply chain and warehousing industries are adding more
levels of complexity. Taking complex issues, making them easily understandable,
and then breaking down that information into packets that are easily consumable
will become a major need and driver for creative thinking within the sector. One
practical example: instead of making you dig down through a 350-page
guidebook, Upp Technology now offers videos, tutorials, audio podcasts, and
quick guides in order to break down the complexity of each subject and make it
easily understandable for everyone.

10) EDI persists.

Electronic Data Interchange will continue to be an important trend, with more
people subscribing. Companies that havent used a formal process in the past
are going to find it harder to exist without using EDI. In the 3PL and wholesale
distribution world, its obviously a huge trend, says Laverty. Organizations must
adopt EDI to stay compliant with their vendors. We see more partnerships
occurring to embed EDI in applications. We also believe that the adoption of AS2
as a communication platform will only increase because its free.
About Jim Laverty

Jim Laverty is a Managing Partner at Upp Technology and brings more than 20
years of warehouse management technology, sales, development and
deployment experience.

Jim has a J.D. in Law from Thomas M. Cooley Law School and an MBA from the
University of Notre Dame.

SPECIAL REPORT
Logistics executives and supply chain managers have long
considered the idea of swapping out expensive mobile computers for
less expensive, easier-to-use tablets that have more robust
functionality.

With a Cloud WMS, it is not only possible to run warehouses on tabletsit makes running them
on older mobile devices a dubious practice for anyone looking to maximize their profitability. The
top benefits of moving to tablets for warehouse operations are compelling. Download our Special
Report on Mobile Warehouse Technology to learn 6 reasons to switch.

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Just in Time Inventory Definition

by Neil Kokemuller

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 1Advantages & Disadvantages of Just-in-Time Inventory
2The Advantages of Just-in-Time Inventory Systems
3What Is the Purpose of Just-in-Time Inventory Systems?
4"The ""Just-In-Time Method"""

Just in time (JIT) inventory is a management system in which materials or

products are produced or acquired only as demand requires. This approach
to managing inventory has become increasingly popular in the early 21st
century as suppliers and retailers collaborate to try to control inventory costs
while still meeting customer demands.

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Purpose

Just in time inventory is intended to avoid situations in which inventory

exceeds demand and places increased burden on your business to manage
the extra inventory. Manufacturers using JIT processes want to use materials
for production at levels that meet distributor or retailer demand but not in
excess. Retailers only want to acquire and carry inventory that meets
immediate customer demand. Excess inventory requires storage and
management costs.

Manufacturer JIT

For manufacturers, using materials and producing products in excess of what

distributors and retailers demand means you have to hold onto the inventory.
This requires warehousing of finished goods to go along with already taxing
costs to manage raw materials inventory. Extra space requires utilities costs
and employees to store, organize and retrieve goods as needed. Additionally,
excess production runs the risk of the business ending up with unwanted
products and having to sell them at auction or let them go to waste.
 Retailer JIT

On the demand side, retailers want to have just enough inventory to avoid
stock outages, which can alienate customers. However, having significantly
more inventory than is needed on the sales floor again requires significant
storage space. Every foot of storage area in a retail store is space unused for
sales. Additionally, retailers also pay utilities for storage areas and pay
employees to organize and move extra inventory. They also have to discount
excess inventory when demand really falls and even potentially throw out
wasted or expired product.

Risks

Just in time inventory is generally regarded as an efficient inventory

management system. Many suppliers and retailers partner in the early 21st
century to coordinate their JIT efforts. This benefits both as the end customer
gets the best value for the money. However, JIT is not without risks. The
major risk is that a simple glitch in the supply system can cause stock
shortages. A supplier facing erratic weather or transportation problems may
have delayed shipments, causing inventory to run dry. The more critical the
products are to the end buyer, the more sensitive they are to this precarious
situation.

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