Innovative storage logistics for decentralized and smaller needs
Faced with growing competition and the resulting universal trend toward optimizing logistics processes, even companies with small storage needs and volumes must confront these challenges. While Amazon, Zalando, and the rest are gaining ever larger market shares, they are simultaneously investing massively in their logistics infrastructure. This is partly happening in order to meet growing demand. However, they are also expanding, modernizing, and further automating their distribution centers in order to streamline processes and thus make savings. As a result, local businesses or smaller online retailers face pressure from two sides. A precise analysis and possible reorganization of their storage strategy is unavoidable for remaining competitive.
Warehouse optimization measures
Obviously the design and layout of large distribution centers are on a different scale to the planning of a warehouse for storing the goods of a medium-sized retailer or a start-up in the e-commerce sector. The same rules nonetheless apply, albeit to a lesser extent: In both cases there is a desire to optimize storage and retrieval processes within the available space at a reasonable cost, while ensuring a high level of precision. This starts even on a small scale – for example, when a storage space occupying ten square meters with a ceiling height of 2.5 meters has to be used more effectively in future. Here, items were previously removed manually from two shelves that provided storage volume of 12 cubic meters. However, only 70 percent of the room’s capacity was used due to the differently sized goods as well as ergonomic considerations. A dynamic storage system can store three to four times the quantity of goods thanks to its highly dense storage concept with tray heights precisely adapted to the dimensions of the items and a unit that makes use of the entire room height. This gives smaller retailers the option of storing a larger inventory using their existing capacity, which can be critical to the success of a company. That’s because it is the availability of goods in particular that is increasingly becoming a key competitive factor in the retail sector.
Automation of processes
Larger quantities of goods can be stored and retrieved more quickly and precisely with the aid of automated storage systems, significantly increasing process productivity. Other advantages include:
- Less space required due to the highly dense storage concept
- Optimal use made of the existing space by individually adapting the units
- Picking accuracy of up to 99.9%
- More precise inventory management – negative balances and shortages are identified more quickly
- Returns are reincorporated into the inventory more easily
- Software-controlled machines provide better monitoring opportunities
- Ergonomics in the workplace are improved by retrieval in line with the goods-to-person principle, resulting in no lifting and bending movements
Another advantage over conventional solutions lies in the variability when storing fast movers and less frequently sold goods that are still important to the product range. With the ABC strategy, the items that are sold less often are stored somewhere at the back of the warehouse, whereas in an automated storage lift they are literally just inches away from the fast movers, minimizing the otherwise longer travel and search times. This is of particular importance to small and medium-sized retailers because they are quickly stretched to their limits with the often wide range of products that they have to keep in stock and the resulting high proportion of shelf warmers.
Another important factor is having efficient software for managing the warehouse processes. Although simple pick lists may sometimes still be sufficient if the warehouse has conventional shelving, it is worth switching to the manufacturer’s latest software version when automated systems are installed. That’s because it is optimally geared toward the machines, allowing the greatest possible progress in terms of productivity and profitability.
In classic warehouse logistics, the inventory costs and transport costs must be constantly weighed up. While the running costs of storing goods in a central warehouse can generally be kept down, the transport costs tend to be higher than those for decentralized storage due to the greater distance to the customer. Accordingly, online retailers and chains also have to consider similar questions in relation to optimizing their warehouses. Amazon is once again leading the way and is demonstrating how it wants to get closer to the customer with its Amazon Go stores . A sophisticated, decentralized storage strategy is an essential detail when it comes to the profitability of this approach.
A similar strategy is needed for multichannel, click and collect, etc.
Although the signs may be different, the aforementioned points apply in a similar way to multichannel retailers that make it possible for customers to pick up goods purchased online in their stores. If these aren’t delivered from a central distribution warehouse, optimal use must be made of the storage capacity in the local stores in future to compensate for the additional space needed for the goods purchased online that are being picked up in-store.
The success of the so-called click-and-collect service is based on the fact that many shoppers find it convenient to search for and buy items online and then pick them up in local stores later on. This allows them to avoid the unpopular and not always reliable parcel delivery service. In addition, the option to try on a new item of clothing in-store makes exchanges and returns easier, which isn’t always that straightforward with online retailing. For the retailer, besides the extra income, this has the additional advantage of allowing them to establish a personal relationship with the customer – which isn’t possible with e-commerce – and set themselves apart from the purely online players by having trained staff who offer professional advice in-store. In terms of the storage strategy, it means that more goods have to be kept in rooms with often limited space. As such, the same measures as those outlined for the above-mentioned small and medium-sized companies are a good idea in order to increase the storage density.