The author of this article is Prof Dr Julia Arlinghaus (pictured above), the Director of Fraunhofer Institute of Factory Operation and Automation IFF.
Digitalisation provides both industrial and retail companies with excellent capabilities for service orientation.
The coronavirus crisis has advanced e-commerce even further. As a result, expectations on multi-channel management and delivery service necessitate rethinking conventional approaches to supply chain and warehouse management.
Many manufacturing and retail companies have been able to enhance their market reach in Europe in recent decades.
At the same time, expectations on customer service have grown in both B2B and B2C businesses.
This has resulted in a rush on real estate as well as ideal locations, infrastructure and logistics facilities near larger urban areas.
Smaller warehouses with increasing densities require efficient warehouse and picking strategies.
New delivery concepts, such as next day, same-day and even same-hour delivery, are shifting the focus from inbound to outbound logistics.
In the past, manufacturing and retail companies focused on optimising incoming shipments and upstream supply chains.
Today, closer proximity to customers is the factor crucial to reducing last-mile delivery costs. Companies are focusing on optimising outbound logistics to supply their downstream supply chains optimally.
The growing skilled labor shortage necessitates new approaches to warehouse management as well.
Facility logistics and flexibility, warehouse logistics, and equipment and picking strategies are becoming key factors in smaller warehouses with increasing densities and fewer employees.
Automation is the basis for managing fluctuating customer demand for more and diverse SKUs.
The growing number of SKUs and diversity of size, volume and format constitute an additional challenge for outbound logistics and order picking, in particular.
Conventional warehousing and picking concepts are often incapable of meeting the new demands for warehouse lead times for additional SKUs.
Automation, distributed replenishment and picking and meticulous peak management must go hand in hand.
The best way to approach the improvment of established warehouse design is by understanding your needs and expectations or of your customers'.
Retailers have to understand how warehouse and transportation lead times, SKU portfolios and information demand have changed.
It provides a starting point for an efficiency-driven assessment of automation capability.
Information on the extent to which a fraught logistics real estate market and skilled labour shortage affect a company enables a resource-driven assessment of automation capability.
Understanding flexibility in terms of SKU assortment and demand dynamics serves as a foundation for a flexibility-driven assessment of automation capability, bearing in mind that human workers are the most flexible and valuable and the most expensive resource in the warehouse.
The next step is modular automation systems that progressively upgrade the section of your warehouse with the greatest capability to generate positive momentum and enable integration as you continue operating your warehouse.
Prof Dr Julia Arlinghaus is a leading academic running Körber Supply Chain Master Class Series.
Click here to register for Master Class Series: SKU Proliferation in FMCG: How can automation help?
Image Courtesy for Prof Dr Julia Arlinghaus : Andreas Reichelt