Not long before the Covid-19 pandemic, warehousing played the role of providing storage space to businesses, behind the scenes. Inventory costs were considered bad for margins, resulting in strategies that encouraged the use of enormous, centralised, regional Distribution Centres (DCs) and just-in-time methodologies.
In February 2020, however, 94% of Fortune 1000 supply chains were obstructed by lockdowns and other pandemic related disruptions. With stores shutting down, demand patterns changing in unpredictable ways, and an increasing number of consumers turning to e-commerce, warehouses quickly moved to the forefront of business, directly affecting the consumer experience.
In recent months, European countries have seen a positive response to the reopening of non-essential stores. The UK recorded an 88% jump back in retail footfalls in April, far exceeding expectations. Despite the encouraging increase that led to shoppers having to queue up outside of their favourite stores, UK retail footfalls remained 25% lower than the same period in 2019. Many of the consumption trends that arose from the fallout of the pandemic appear to be here to stay with 10% of European consumers now continuing to shop online for their food and groceries despite the lifting of restrictions.
Logistics teams have come to realise that change truly is the only constant. But traditional warehousing and distribution facilities are primarily designed for storage, and not yet equipped to handle the complexity that comes with channel and demand uncertainty.
What must businesses do now to stay ahead of the next big change?
Build smarter inventory management systems
There’s much anticipation regarding the future of warehousing. For a lot of businesses, nearshoring and re-shoring are doing the trick. Many are thinking of building dedicated fulfilment centres for e-commerce. Some are experimenting with drop-shipping.
Depending on the business task at hand, all these strategies could work, but only if inventory is connected and visible across the entire supply chain. Whether a business needs to scale e-commerce capabilities, provide an omnichannel experience to consumers, reduce product release cycles and product lifecycles, or expand into emerging markets, a gap in the supply chain can lead to challenges and missed opportunities.
As new inventory management models unfold over the next few months, we can be sure that decision making will be guided by:
How much change is too much?
No matter how necessary, change is intimidating. In the case of warehousing, it could mean significant investments and the complex task of balancing inventory, transportation, and labour costs.
Here’s where a partnership with Maersk can help. Rather than create a solution from scratch, supply chains can leverage our expertise, relationships, and our growing network of warehouses, to get closer to the end consumer. Using our existing resources creatively will also make supply chains truly resilient in that they will have the freedom to go back to older models of operation. As consumers return to the aisles of retail stores, our partners’ supply chains will be able to stay ahead of demand and keep their shelves fully stocked.
Maersk has warehouses in 20 locations in Europe. Lean, highly compliant, and customisable with a host of value-added services, these warehouses are often strategically located between a main Distribution Centre and a regional facility or the end consumer. This means businesses can store goods provisionally and move them ‘on-demand’ as and when consumers order them.
Integrating our warehousing solutions with other Maersk services such as Ocean, Inland, Customs, and SCM facilitates end-to-end visibility that enhances flow control in a manner that can minimise dead stock. In other words, with Maersk, you can bring more opportunities within reach and reduce waste, turning your warehousing strategy into a key competitive advantage.
Our experts are here to discuss your warehousing & distribution needs with you.