Six trends shaping the warehousing industry
How the world is buying differently— and what your warehouse can do to keep pace.
The last three years have dramatically reshaped the world of warehousing—with the COVID-19 pandemic placing additional strain on already fragile global supply
chains. At the same time, worldwide lockdowns led to a surge in e-commerce that’s permanently transformed the way consumers do their shopping.
In response to a seismic shift in spending habits, retailers have been forced to quickly pivot to online sales—typically offering customers fast delivery times and the option to return items they find unsuitable. So what does this mean for the future of warehousing? Let’s unpack the current fulfilment trends and how warehouses can effectively respond to the changing retail landscape.
Trend one
More UK consumers are doing their shopping online
The UK’s e-commerce market is expected to grow at an annual rate of 7.8% in the next four years, resulting in a market volume of US$190 million by 2027.
Since the advent of the smartphone, consumers have been steadily moving to online shopping over physical stores.
This trend was compounded by national and regional lockdowns through 2020 and 2021, with 75% of UK consumers doing more of their shopping online during the pandemic.
The rise in e-commerce poses significant challenges for warehouses. Where retail stores have limited stock and largely accurate purchase forecasts, online shoppers expect an “endless aisle” that has every product available all the time. With less predictability in forecasting demand, warehouses need to have increased stock holdings to meet customer demand, creating potential storage issues.
What does your warehouse need to respond?
Improved inventory management
Stay on top of your inventory to efficiently handle an expanded range of stock-keeping units (SKU).
Streamlined processes
Identify functional opportunities to improve efficiency as workers move around the warehouse and complete packing to reduce time spent on individual SKUs.
Improved inventory management
Stay on top of your inventory to efficiently handle an expanded range of stock-keeping units (SKU).
Streamlined processes
Identify functional opportunities to improve efficiency as workers move around the warehouse and complete packing to reduce time spent on individual SKUs.
TREND TWO
Customers are demanding faster delivery times
Sixty-nine percent of respondents are more likely to click an ad that mentions fast or free shipping, while 77% are more likely to purchase an item if it can be delivered to them in two days or less.
The growth of e-commerce has led to a change in customer expectations around the speed and cost of shipping.
With fulfilment speed increasingly critical for successful sales, the warehousing sector faces greater pressure to keep up with demand and ensure accurate fulfilment, while managing shorter delivery times.
As a result, warehouses are looking for ways to streamline their processes, enabling them to operate at maximum efficiency and reduce the risk of human error.
In order to create a seamless experience for customers, warehouses also need to provide greater visibility over when items will arrive, in the form of tracking updates and direct communications with the customer.
What does your warehouse need to respond?
Cut time on repetitive tasks
Save time and guarantee accuracy by replacing manual processes with automation, such as label generation.
Seamless inventory tracking
Ensure your website or portal ordering system is accurately synced with warehouse inventory so that orders can be fulfilled without extra delay.
Streamline your warehouse layout
Optimise the location of all necessary items such as label printers and packing materials so workers can reach them quickly and safely.
Explore alternative packing methods
New approaches to picking and packing such as smart wave picking minimise trips and effort for staff.
TREND THREE
Subscription services are changing order patterns
The global subscription e-commerce market is now tipped to reach US$904 billion by 2026.
Demand for subscription e-commerce surged during the COVID-19 pandemic, with customers preferring the convenience and predictability of recurring purchases.
Even when physical stores reopened in 2021, brands offering subscription services expanded their overall customer base by 31%, thanks to a steady influx of new subscribers and an increase in individual purchases.
For warehouses, subscription services have shaken up traditional order patterns. Instead of ordering in bulk, customers are making individual, regular purchases resulting in smaller batches of increased SKUs. These require a higher number of staff touchpoints for picking, packing and labelling, driving warehouse costs up.
What’s more, customers have become accustomed to “browse shopping” or ordering items which they can try at home, leading to more returns and restocking. In the United States, returns represented 8.6% of total retail sales in 2022, valued at $US613.94 billion.
What does your warehouse need to respond?
A better response to returns handling
Use your warehouse management system to record items in and perform quality checks. This data automatically feeds back to the customer service team to assist with returns decisions.
Optimised order scheduling
Manage workflow by placing orders on hold in your warehouse management system and setting them up for future dates.
A reduced number of touchpoints
Using methods like smart wave picking, orders are grouped by category such as delivery location or product type, then picked in batches at specific intervals throughout the day
to minimise the number of touchpoints needed.
TREND FOUR
Companies are stocking more inventory "just in case"
In Q3 2022, shipment delays at UK ports were at 44%.
The impacts of the pandemic were felt across global supply chains, with major disruption continuing into 2022 and even 2023.
Because of supply chain delays in the early days of the pandemic, around two-thirds of customers experienced stockouts, with 38% going to a different retailer for the same or similar product.
Before COVID-19, most retailers operated on a “just in time” inventory management model, where the globalised nature of supply chains made it possible to secure supplies as they were needed, reducing inventory costs and warehouse space. However, one study showed that almost half of
retailers are now worried about running out of inventory and over a quarter are concerned about raw materials shortages.
To build supply chain resilience, many companies have moved to “just in case” logistics—keeping a large surplus of inventory and raw materials on hand to avoid selling out in the event of unexpected supply chain issues. While this strategy yields greater certainty for customers and drives higher sales, it also increases storage costs and creates extra challenges for warehouse operators.
What does your warehouse need to respond?
A clearer forecast of the future
Get access to comprehensive sales data analysis via your warehouse management system to help with forecasting future demand.
Automated inventory alerts
Set up automatic alerts for when stock falls below a specified level.
Additional warehouses
Having multiple warehouses in different geographic areas helps reduce the risk of stockouts and speeds up deliveries to customers. On-demand, flexible warehousing options allow companies to find short-term storage space without being locked into a long lease.
TREND FIVE
Warehouses are facing skills gaps and labour shortages
In 2023, there was a 56.7% turnover rate across the warehousing sector.
As the e-commerce boom drives the development of new warehouses, demand for labour is outstripping the supply of available workers.
The number of warehouses worldwide is predicted to leap from around 150,000 in 2020 to 180,000 by 2025.
In addition, the demographics of the UK workforce are changing: an ageing population means that over 10 million workers are now aged 50 or older—and may not be suited to physically-demanding warehouse jobs. To fill the local skills gap, the number of migrant workers employed by the warehousing sector has been steadily increasing over the past ten years.
In a tightening labour market, businesses are finding it challenging to attract and retain the talent they need to keep warehouses operating efficiently. Smart technology, such as remotely operated forklifts, can play a major role in securing talent, as it provides opportunities for workers who may not believe they’re qualified for warehouse work—such as those who are older or have a disability.
What does your warehouse need to respond?
Easy to use systems
Ensure that casual or temporary staff are able to understand your processes so they can work at full capacity as quickly as possible.
Streamlined processes
Have efficient systems in place to reduce the time spent on administrative tasks and free up staff for higher value work.
Automation
Replace manual processes where
possible to minimise staff touchpoints throughout operations.
TREND SIX
Successful warehouses are harnessing the power of automation
Amid supply chain disruption, labour shortages and pressured delivery times, forward-thinking warehouses are taking advantage of new technologies to maximise efficiencies and boost productivity.
Long-proven warehouse automation systems that pick, pack, sort and carry packages are now becoming the standard, growing at around 15% a year. These are often the entry point for warehouses into digitalisation and automation.
More companies are pushing into newer forms of automation, such as robotic palletising which reduces the need for heavy lifting. By 2025, the autonomous mobile robot (AMR) market is expected to grow to US$18 billion—up from $3.6 billion in 2021. AMRs can replace the repetitive and time-consuming task of walking around to each shelf location, by instead bringing the shelf to the operator. By integrating automation into their systems, innovative warehouses are focusing their limited labour resources on higher-value jobs and increasing employee satisfaction.
As new technologies become more affordable, the promise of a higher ROI has accelerated their adoption in warehouses around the world—but investing in the wrong systems can still be a costly mistake.
What does your warehouse need to respond?
A robust warehouse management system
Streamline and scale processes by integrating automation with your warehouse management system.
Professional expertise
Look to partner with specialists who have the technical skills and experience needed to get the most out of warehouse automation.
Three future trends to watch out for:
Sustainability
As consumers become more engaged in how products are manufactured, there’ a push for greater transparency from brands about their environmental footprint, working conditions and animal welfare practices. While sustainability isn’t yet front of mind for most customers, it may soon become a major factor driving their spending decisions.
Shop local
With the pandemic exposing global supply chain issues, many businesses are focused on building local supplier networks. Some consumers are also turning to products that are locally sourced and produced, whether out of a desire to support local businesses through tough times or because of the shorter delivery times—and this trend is set to continue.
Voice picking
Warehouses around the world are increasingly relying on voice picking, a hands-free technique that uses simple voice prompts to direct employees to pick products from specific locations in the facility. The voice picking system imports details of customers’ orders through the warehouse management system to simplify and fast-track the picking process, while boosting fulfilment accuracy.
What does your warehouse need to respond?
The impacts of COVID-19 have created a perfect storm for warehouses in the UK and worldwide: driving a surge in online orders with smaller batches and faster delivery times, while the industry is experiencing ongoing supply chain disruption and labour shortages.
Successful warehouses view the shifting retail landscape as an opportunity to deliver to changing customer expectations and gain a competitive edge in the marketplace. By leveraging automation and technology, they’re streamlining their processes for greater efficiency and accuracy in order fulfilment. Integrated warehouse management software is also critical to manage high volumes while providing rich data insights for forecasting demand.
Although the pandemic may be a once-in-alifetime event, warehouses will need to be agile and responsive to new challenges as they emerge. Technology will be key to managing any future disruption, to ensure a smooth continuation of operations and take warehouse performance to the next level.
Thomax Technology is a leading software company specialising in industry-leading warehouse management systems. Operating internationally since 2005, Thomax develops and delivers tailored solutions for warehouses to drive efficiency and reduce costs through its end-to-end processes. Thomax’s integrated, cloud-based platforms are designed to scale from a handful of orders right through to major operations across multiple facilities.
To speak to a dedicated warehouse management system specialist, contact us