The Status Quo
The market is experiencing a transition of sales from brick-and-mortar to e-commerce, as evidently shown in the annual compounding growth of online sales. And by looking at the success of one of the biggest e-commerce platforms, Amazon, the future of the market is likely to shift on platforms that are easily accessible and open 24/7/365.
Retail e-commerce sales in the United States from 2017 to 2024 (in million U.S. dollars)
This market transition brings with it an opportunity for the warehousing industry to grow and thrive. Compared to traditional brick-and-mortar stores, e-commerce requires an average of three times the size of distribution space to operate, according to Prologis, a real estate investment trust.
Although, this opportunity is fraught with challenges for warehouse businesses. E-commerce demands fulfilment that is more accurate, faster, and cheaper than traditional retail. These are the qualities that have led e-commerce to its success in the marketplace we see today. A possible solution to meeting these qualities is hiring more workers. However, for the past consecutive years, hiring workers has been one of the main problems of the industry. The US unemployment rate is at a 50-year low, sitting at 13.3% in 2020 while job opportunities keep increasing. This creates a very tight labour market, which will likely result in an upward trend in wages – a cost that the warehouse cannot commit to.
Solutions to these warehouse challenges
Another solution could come from the closure of some physical locations of certain retailers in urban cities. Online retailers saw these prime locations as an opportunity to expand their fulfilment or distribution centre network. By opening a warehouse in a densely populated area, they can meet consumer demands, such as one-day or same-day shipping. However, combination of high real estate costs and limited space in urban cities creates challenges for warehouses.
These scenarios are driving warehouses to find alternative and innovative solutions that will allow them to fulfil orders efficiently while factoring cost-effectiveness. And we believe, much like every other industry lately, the solution that warehouses should invest in is technology.
The Era of Warehouse Digitization
Technology is an effective, sustainable, and cost-efficient solution to address the challenges of the warehouse. The implementation of technology will move warehousing from relying too heavily on costly human labour to a more automated and technology-focused operation, a transition we call “Warehouse Digitization.”
The effectiveness of this transition is reinforced by MHI’s 2020 annual survey, which reported that 80% of their respondents believed that digitization has the power to disrupt the industry – while 16% of the remaining are convinced it is happening now.
Warehouse Digitization is a transition that goes beyond just management systems and barcode scanners. This evolution is aimed at achieving a fully automated warehouse that can run 24/7/365. Emerging technologies empower warehouses with the capabilities to ship orders anytime, any day, all year round. Consumers today also expect their packages to be delivered on time. Soon, warehouses will be equipped with the best technologies designed to fulfil orders accurately and efficiently.
List of Emerging Technologies
Internet of Things
A network of interconnected objects that are capable of capturing and exchanging warehouse data in real time.
Business Intelligence and Predictive Analytics
Technologies that organize warehouse data into easy-to-understand reports and dashboards. It also analyzes the data to determine patterns and trends to predict possible outcomes.
Robotics and Automation
The design, construction, operation, and use of robotics and machines with the purpose of automating warehouse operations.
Automated Guide Vehicles (AGV)
Autonomous vehicles that can navigate themselves and/or move cargo through the warehouse using floor markers, wires, magnets, lasers, or computer vision.
Wearables and Mobile Technology
Small computing devices that are worn or carried by a user to conveniently send and receive information anywhere in the warehouse.
Blockchain
A distributed ledger technology that exchanges recorded transactions securely among relevant parties while increasing visibility and accountability.
Artificial Intelligence
A technology that enables machines to perform human-like tasks such as decision making, speech recognition, spatial awareness, and visual perception.
These technologies enable warehouses to fulfil orders autonomously, be smart in space management, predict consumer demand, lessen operational costs, increase safety, transparency, accountability, and more.
Overall, these are most likely the key technologies that will represent the future of warehouse. We at TEMPO stay ahead of the curb consistently keeping ourselves abreast with the latest in the industry. This is how we are able to proactively help our clients keep pace with the growth in the market and remain relevant in a hyper-competitive landscape.
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