ON DEMAND, IN DEMAND
…FLEXIBLE WAREHOUSING

The multi-user warehouse model is nothing new. 3PL has been part of the supply chain for as long as it has existed, although there has inevitably been development over the years.

Despite a wobbly year in terms of longstanding retailers going into administration, those companies who have mastered e-commerce have never seen better times. But, the phenomenon of ‘The Amazon Effect’ – consumers wanting and expecting next-day or same-day delivery – means that logistics carriers are looking for more flexible warehousing solutions which can address demand for speedy shipping. As a result, shippers are looking for warehousing that is closer to the buyer and can offer a dynamic solution for inventory storage and distribution, but isn’t necessarily tying them into lengthy, expensive contracts.

Companies which can offer flexible warehouse storage include FLEXE and Stowga, the likes of which have been around for a few years offering optimisation of the supply chain. Both operate a little like Airbnb, with users of the service able to rent as much or as little warehouse space on a flexible contract. The benefits of this fluid model are reaped particularly well by those companies with seasonal space requirements: think about the peak time for a company selling barbeques, versus one selling Christmas decorations. Traditional leasing does not always work for these companies, and so working on-demand provides a ‘warehousing AirBnB’ which complements business peaks and troughs.

A study which was distributed by FLEXE in the US reported that approximately 30% of warehouse space is being underutilised at any time. This, despite reports which show that 2.1 percentage points of the 3.5% third-quarter U.S. GDP growth was made up of inventory expansion, and that warehouse vacancy is at an all-time low – warehouse space is in high demand, but not necessarily being utilised efficiently.

This flexible warehousing option could also attract small e-commerce retailers who don’t have their own storage facility, as well as companies that want extra-fast delivery for a special offer or expect high demand for promotional and featured items.

One problem with this – particularly in the short term – is interoperability. Interoperability is essentially the way in which different digital systems ‘communicate’ with each other and share data – if you’ve ever tried to transfer files from an iPhone to a Samsung Galaxy, you may understand how difficult this can be. But there are business reasons for this. With early integration of digital systems into our pipelines, a number of companies are battling to be the ‘go-to’ brand in the market – the Apple of the on-demand warehouse, if you like. But there’s no guarantee that all of these different pieces of software and digital technology will work in tandem, meaning that the system could remain disjointed. On the flip side, this risk of creating disjointed processes rather than streamlined ones should 
mean that companies which are designing new systems ensure that they have a complete, end-to-end software solution, making life easier for both shippers and warehouse operators.

Whilst the industry is undergoing a digital transformation, this is one more product that is not only taking over from current processes but is enabling completely new business avenues. Ultimately, the winners in this game are going to be those who prove that it truly can be a seamless option in the fast-paced market of logistics and transportation. The ultimate goal, no matter the warehousing and storage model, must be more-efficient, faster order fulfilment.  

Sarah O’Connell, Senior Editor, FORWARDER magazine  

The multi-user warehouse model is nothing new. 3PL has been part of the supply chain for as long as it has existed, although there has inevitably been development over the years.

Despite a wobbly year in terms of longstanding retailers going into administration, those companies who have mastered e-commerce have never seen better times. But, the phenomenon of ‘The Amazon Effect’ – consumers wanting and expecting next-day or same-day delivery – means that logistics carriers are looking for more flexible warehousing solutions which can address demand for speedy shipping. As a result, shippers are looking for warehousing that is closer to the buyer and can offer a dynamic solution for inventory storage and distribution, but isn’t necessarily tying them into lengthy, expensive contracts.

Companies which can offer flexible warehouse storage include FLEXE and Stowga, the likes of which have been around for a few years offering optimisation of the supply chain. Both operate a little like Airbnb, with users of the service able to rent as much or as little warehouse space on a flexible contract. The benefits of this fluid model are reaped particularly well by those companies with seasonal space requirements: think about the peak time for a company selling barbeques, versus one selling Christmas decorations. Traditional leasing does not always work for these companies, and so working on-demand provides a ‘warehousing AirBnB’ which complements business peaks and troughs.

A study which was distributed by FLEXE in the US reported that approximately 30% of warehouse space is being underutilised at any time. This, despite reports which show that 2.1 percentage points of the 3.5% third-quarter U.S. GDP growth was made up of inventory expansion, and that warehouse vacancy is at an all-time low – warehouse space is in high demand, but not necessarily being utilised efficiently.

This flexible warehousing option could also attract small e-commerce retailers who don’t have their own storage facility, as well as companies that want extra-fast delivery for a special offer or expect high demand for promotional and featured items.

One problem with this – particularly in the short term – is interoperability. Interoperability is essentially the way in which different digital systems ‘communicate’ with each other and share data – if you’ve ever tried to transfer files from an iPhone to a Samsung Galaxy, you may understand how difficult this can be. But there are business reasons for this. With early integration of digital systems into our pipelines, a number of companies are battling to be the ‘go-to’ brand in the market – the Apple of the on-demand warehouse, if you like. But there’s no guarantee that all of these different pieces of software and digital technology will work in tandem, meaning that the system could remain disjointed. On the flip side, this risk of creating disjointed processes rather than streamlined ones should 
mean that companies which are designing new systems ensure that they have a complete, end-to-end software solution, making life easier for both shippers and warehouse operators.

Whilst the industry is undergoing a digital transformation, this is one more product that is not only taking over from current processes but is enabling completely new business avenues. Ultimately, the winners in this game are going to be those who prove that it truly can be a seamless option in the fast-paced market of logistics and transportation. The ultimate goal, no matter the warehousing and storage model, must be more-efficient, faster order fulfilment.  

Sarah O’Connell, Senior Editor, FORWARDER magazine  

2018-11-01T16:53:44+00:00November 1st, 2018|Categories: FORWARDER Focus|Tags: |
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