John Lowe, is principal, supply chain and consulting services, at supply chain consultancy Tompkins International in Raleigh, N.C. He spoke to Aftermarket Business World about the challenges his company’s clients face in managing their logistics operations.
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What do you see as the key logistics related challenges that companies face right now?
I think the number one challenge is the entire “Amazon effect.” Service, speed, cost – all of the things that Amazon has raised the bar on are being pushed out into the industry across every client we deal with.
The second big challenge is the shrinking of the available labor pool. With the proliferation of e-commerce and the convergence of DCs in a lot of prime areas, the cost of land and labor has gone up. You need to be in a location with a good infrastructure, with access to UPS or FedEx hubs, major airports, etc., and everyone wants to be in those locations. There’s a lot of competition for labor and space.
The growth of e-commerce in general is also a challenge. Companies are struggling with their material handling processes in terms of shifting to piece picking and shipping eaches. The last challenge would be the move to an omnichannel model. How do we get to the place where we can buy online and ship from the store, or allow customers to return items anywhere and then handle the reverse logistics? Do you do that on your own or through a partnership? It’s a huge challenge.
How are your customers adjusting their logistics networks to meet these challenges?
One thing we’re seeing is that companies are leveraging stores as fulfillment centers. They are closer to the customer, and there tend to be more of them. They are thinking of them as nodes on the network, as opposed to a hub-and-spoke model.
They are looking at the network from a perspective of driving speed and getting closer to the customer. The idea is to have rapid deployment DCs for fast-moving SKUs, but still have that make sense economically.
What technologies do you think have the most potential for helping to improve logistics operations moving forward?
We’re seeing a trend toward goods-to-person technology in the distribution center. It takes walk time out of the pick process. You automate that so that you are brining goods to an operator on the material handling system, versus walking with a cart. We’re seeing robotics get more traction for the same reason. It’s more predictable in terms of the pace of goods moving through the facility. That also helps address the labor availability issue.
When we talk about technology with different companies, they not only want technology to be flexible and scalable, they want it to be portable. If you are leasing a building, you may need to move that technology at some point. We’re seeing a lot of interest in table top systems.
On the software side, the line between warehouse management systems and warehouse control systems is starting to blur. Companies are more focused on execution systems, not just transactional systems. You need to get people to where the work is in the DC.