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Importance of Warehousing in Logistics Trends

Logistics and warehousing have become areas of increasing importance and relevance worldwide in the 21st century due to the following trends. Let’s look at the importance of warehousing in logistics trends:

1. Space Crunch
2. Customer-Centered Warehousing
3. Value-Added Services
4. IT Usage Increase
5. Paperless Warehousing
6. Need for Skilled Workforce
7. Reverse Logistics
8. Third-Party Warehousing
9. Consolidation in Warehouse Function
10. Stock Control
11. Order Picking
12. Materials Handling
13. Outward Transport
14. Physical Distribution Management
15. Recycling and Returns

Space Crunch

The increasing need to differentiate, for meeting customer choices means an ever-increasing number of SKUs, which puts pressure on warehouse space. Added to this is the growth of the market into newer markets which calls for increased stocking and storing at newer places.

Thus, the requirement to increase storage locations as well as increasing the space in existing storage locations needs to be carefully balanced against the cost incurred for the same.

Customer-Centered Warehousing

The expectations of the customers are constantly on the rise. The competitive market ensures that organizations strive to meet these rising expectations, which besides the choice of products also pertains to making the right product available at the right place and right time.

Properly planned warehousing helps in meeting these myriad customer expectations and thereby helps in retaining the market share of the organization.

Value-Added Services

Specialized warehousing organizations now offer value-added services such as specialized packaging, delivery in store-ready form, and special labeling to gain an edge in the competitive market space.

However, what had started as specialized services have now become the standard practice, further increasing the importance of warehousing.

IT Usage Increase

With an increased variety and volume of products, it has become a prerequisite to garner support from IT for smooth warehousing and delivery functions. For example, barcoding has become quite prevalent and it will be no surprise if radio frequency-based identification software also becomes a norm in the future.

Paperless Warehousing

Thanks to the inculcation of IT in manufacturing industries and the proliferation of newer software applications, warehousing activities such as storing, tracking, picking, labeling, and despatching are steadily being automated and the trend is moving towards paperless actions slowly.

Need for Skilled Workforce

Unlike the operations of warehouses in earlier times when unskilled manual labor was sufficient to perform all tasks, the new technology-driven warehouses require a skilled workforce.

Reverse Logistics

Increasing awareness to protect the environment is the main driver behind the reuse and recycling of products and packaging materials. Besides this, increasing customer satisfaction levels call for defective and damaged products to be taken off and sending them to the production plant for suitable disposal.

These movements back to the plant require a system of reverse logistics to be in place wherein returned materials need to be inspected, suitable disposal actions recommended, customer accounts credited for the value of the returns, packaging materials suitably recycled or scrapped, etc.

Third-Party Warehousing

This is an evolving phenomenon driven by the need of reducing warehousing costs. The science of warehousing has evolved to an extent where organizations need to deploy significant resources for establishing cost-effective and customer-focused warehousing.

On the other hand, the need to focus on core business activity is crucial for success. These factors enable the emergence of third-party warehousing as a growing function. The advantages of improving customer service whilst reducing cost are the prime focus behind all such moves.

Consolidation in Warehouse Function

The increasing requirement of warehousing on one hand and the requirement to reduce costs on the other is also leading to the consolidation of warehouse functions in some cases.

In some cases, the organizations are grouping together and also reducing product lines in other instances all driven from the cost perspective. Shrinking order size and the advent of e-shopping are also responsible for this consolidation to an extent.

Stock Control

This is a vital logistics operation wherein the controls of the stock received and delivered are carefully monitored and the resultant inventory is recorded on an ongoing basis, which is necessary for smooth operations.

Order Picking

The physical act of locating (in the warehouse), picking, and processing the product for despatch against an order is termed the order picking process. This is usually a manual and labor-intensive process and therefore various time and motion studies have been carried out to increase its efficiency and output.

The order picking time is the sum of the travel time (time to reach the location where the product is stored), processing time (time spent in searching for the product at the location and other tasks), administrative time (the time spent for locating the trolley or cart on which the product will be brought to the despatch point), and waiting time (time between two pickups).

Materials Handling

This pertains to the movement of goods within the plant. In the case of raw materials, this refers to their movement from the storage area to the production machines. In the case of finished goods, it means the movement from the storage area to the dispatch location. The key is in the efficient, damage-free movement of products for smooth operations.

Outward Transport

This involves the physical movement of goods from the plant to the warehouse or customer location.

Physical Distribution Management

Physical distribution management is concerned with all the systems pertaining to the movement of finished goods to the customer and making the entire process a smooth and integrated one.

Recycling and Returns

As mentioned earlier, this reverse logistics process is garnering increased importance in the context of environmental management. Defective goods, packaging materials for reuse, disposal of waste packaging materials, and recycling of old products are the reasons why the reverse movement of goods is initiated.

Establishing a proper system for this reverse movement has become part and parcel of regular logistics functions and can no longer be treated as a separate one-off activity.

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