| Supply chain warehouse challengesIn recent years dramatic changes have taken place in the organization of warehousing activities, due to a number of persistent trends: An increased number of products stocked
Proliferation (e.g. increasing number of SKU for the same product) and personalization of products (e.g. customers want their name on the products), have impacted warehouse operations significantly: inventory carrying costs increase, more space required, more shelving, more "broken cases", etc…
Zero tolerance for errors
Customers have become intolerant to 'logistics errors' like incorrect picking or shipping. As shipping quantities become smaller and shipments become more frequent, the risk for errors has increased.
Operational and capital cost reduction
Many industries are under constant cost and margins pressure due to competition. In order to maintain or increase profitability they need to have continuous control over operational costs and stock turns.
Supply chain integration
Current logistics operators focus on improving customer service, by working more closely with suppliers, customers and other partners in the supply chain. This calls for intensive information exchange (e.g. Advanced Ship Notice) to keep control over the supply chain and meet customer demands more effectively.
Reduced cycle time
Customers try to reduce the amount of time that inventory is stored in a warehouse. This requires mechanisms for immediate allocation, picking and shipping.
More frequent shipments with smaller quantities
Inventory is being forced back in the supply chain. When a distributor or manufacturer can deliver smaller quantities more often, then the amount of inventory that a customer has to keep will be reduced. Reduced delivery sizes put increased demands on warehouses to ship partial pallets rather than full pallets. This requires an efficient picking operation, in order to avoid increasing operational costs.
Value added service
Customers are looking for distributors to take over many of the supply chain functions they once handled in-house. For example, quality control tasks, (re)packing, compliance documentation, labelling and kitting are some of the activities that require extra handling at the warehouse.
Increased competition
Increased competition means that customers need to maximize revenue per order, by increasing order fill rates, cutting lost sales due to out of stock situations, avoiding costly returns and re-delivery by ensuring accurate order delivery the first time.
Need for tracking and tracing
There is an increasing demand for transparency and visibility across the supply chain. It forces logistics operators to keep track of lot numbers and other quality attributes from receiving through to shipping and beyond.
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