Post-Pandemic: How Distribution Strategies Will Shift Going Forward
Although the fallout from the COVID-19 pandemic remains to be seen, it does seem safe to say that life — along with warehouse operations and distribution — as we’ve known it will likely be different going forward.
Thanks to social distancing mandates and personal desires to remain healthy (and not infect others unknowingly), millions of people worldwide have adapted to living and working in isolation at home. As a result, shopping habits have changed.
Consumers who previously shopped Amazon.com routinely for hard and soft goods, but were reluctant to let someone else pick out their meat and produce at the grocery store — or pay for grocery delivery — have changed their minds in the past few weeks. With customers quickly overcoming their previous hesitations, buy-online-pick-up-in-store (BOPIS) offerings and third-party delivery services have exploded in popularity, vastly exceeding what many stores can handle.
While that might seem like a financial boon to retailers of food and other essential items (think toilet paper), any joy at the shareholder or C-suite level has been tempered by struggles to keep store shelves stocked and customers happy (something that’s been widely covered by local and national news outlets).
New Normal for Warehouse Operations
Ultimately, as the grip of the pandemic relaxes and our lives slowly return to normal, retailers’ inventory woes will ease as well. But, as I see it, customers will continue to embrace their new habit of online shopping for food, enjoying the convenience and the ability to bypass the brick-and-mortar crowds.
So how will retailers big and small cope with what’s bound to be a significant uptick in online grocery shopping? By making adjustments within their warehouse operations and distribution strategies — specifically within their supply chain networks — to accommodate this shift in consumer demand.
The largest retailers, with multiple, large distribution centers located throughout the country and staffed by as many as 2,000 people, have found it particularly difficult to keep up with the much faster pace of demands to replenish regional brick-and-mortar stores with pandemic-related, sold-out items. As you no doubt recall, U.S. warehouses were already struggling with staffing issues due to record low unemployment prior to COVID-19. Implementation of social distancing restrictions and challenges with maintaining headcounts — as employees dealt with childcare issues, self-isolated for 14 days after suspected exposures, and cared for ailing family members — slowed fulfillment processes down even further.
While it might seem like the available labor pool has expanded a thousand-fold in the past month, as a staggering number of persons found themselves without a job, the majority of them previously worked in service and hospitality industries — and they liked it. As the country begins to reopen for business, the chances of them joining the ranks of warehouse order pickers now, or in the future, are low.
The Future In Warehouse Design
All these reasons contribute to why I believe that, moving forward, it’s highly likely that largest national retailers will shift from a network of mega-DCs (Distribution Centers) to multiple, smaller facilities placed closer to their retail outlets and customers. These fulfillment centers will deploy more semi-automated and automated conveyor systems and automated warehouse operations and require fewer associates to staff — perhaps 50 or so. Equipped with putwalls, light- and/or voice-directed picking, and other wearable technologies, these smaller facilities will also utilize fully warehouse automated systems, including compact, highly dense shuttle-based goods-to-person shuttle systems, to support a reduction in staffing. These new Warehouse designs and strategy enables larger retailers to service both brick-and-mortar replenishment needs, as well as to fill orders for direct consumer deliveries, quickly and efficiently. It also reduces their dependence on labor to serve both channels.
I also expect increased investment in conveyor systems and automation for the backroom of retail stores. Installing compact goods-to-person automated mini-shuttle storage systems and conveyors in these areas will facilitate building of BOPIS (Buy Online, Pick-Up in Store) orders for customers who wish to pick up their purchases curbside. It also eliminates the need for associates to pick orders from store aisles — which can obstruct the path of traditional shoppers. This approach further enables a retailer to leverage their existing investment in brick-and-mortar locations for material handling solutions and fulfillment support.
What do you think? We’d love to hear your thoughts on this topic. Connect with us.
Curt Kincaid, Vice President of Solutions, email@example.com
With nearly 20 years of experience in supply chain, warehouse operations and distribution center design, engineering and management, Curt Kincaid brings a background in mechanical engineering and hands on expertise from all sides of the industry: as an operations manager for shippers and third-party logistics (3PL) solutions providers, and with two systems integrators.