In today’s consumer-driven world, buyers are becoming increasingly demanding. We not only want the ideal product, but we want it for the right price and we want it now!
In order to stay competitive, retail companies across a wide range of industries are now offering a greater assortment of products with more variety. While more options for consumers, such as colors, packages, sizes and more, may lead to higher sales, it also increases the complexity of the supply chain.
Increased consumer demand for a wide assortment of products
With the influx of new products and item variations, warehouses and distribution centers often find themselves struggling to accommodate for the proliferation of SKUs. To keep up with the ever-changing preferences and tastes of consumers, warehouses now need to store and manage a higher volume and variety of goods, some of which may move at different rates than others. Distributors then need to pick and handle more specialized items, and do so while retaining speed and accuracy.
Distribution centers are handling up to 5X more SKUs
In a fluctuating market, many companies are looking to either grow or consolidate their distribution centers, rapidly increasing SKU variation from several hundred to several thousand units. Distribution centers equipped to handle 400-500 SKUs are suddenly required to manage 2,500. In many of these cases, distributors cannot keep up the storage and order processing complexity and its associated costs through manual labor alone. To get the product to the customer, an automated solution may be the best option for many companies to efficiently and cost-effectively store, handle, distribute and restock their goods.
Warehouses need to do more in less space
A major issue warehouses face with the proliferation of SKUs is space. Where are they physically going to put this new inventory? With storage space at a premium, and many existing centers designed decades ago with lower SKU quantities in mind, companies need to maximize the space they have with the right equipment. When updating existing warehouses and planning new builds, distributors can automate to save space and increase productivity. Implementing automated storage and retrieval systems and gantry robot technology can condense products and achieve much higher densities, making the best use of the available space in the warehouse. In addition, choosing a modular, scalable system leaves room for expansion as SKU quantities grows.
The competitive landscape is forcing more distribution centers to handle direct to customer ordering. The older systems designed to handle pallets and cases may not have the capabilities for piece picking and custom orders, while manual processes can be too costly and inefficient to be a viable option. With the rise of e-commerce, the ubiquity of online marketplaces to accompany brick and mortar stores and the demand for direct-to-customer shipping, many warehouses need to function as omni-channel distributors. Picking low-volume custom orders for multi-channel distribution can be big a challenge, but it is one that can be simplified and streamlined through automation.
Automated solutions can be up to 6X more efficient
An automated goods-to-person solution has the ability to handle an almost limitless variety of products from storage, to picking through to shipping, and it can be up to six times more efficient than a manual process. Automation can also provide the speed necessary to keep up with next-day delivery schedules demanded by consumers.
An effective WMS can also mitigate the challenges that come along with the influx of SKU data. It can track every move of each case and report all data back for more accurate inventory counts, replenishment, and even KPI tracking. With greater visibility, warehouses can employ a just-in-time order fulfillment strategy for inventory and deliveries, making management of SKU volume much easier.
By automating storage, picking, packing and shipping processes, warehouses and distribution centers can keep up with consumer demand for a product variety and on-demand delivery without increasing labor costs. The reliability, accuracy and speed afforded by an automated warehouse system can optimize productivity, increase customer satisfaction and loyalty and give your company a competitive edge in the marketplace. Learn more about Cimcorp’s automated order fulfillment solutions.
Author Derek Rickard