The year is still young enough that everyone’s preoccupied with 2004 wrap-ups and what the stars portend for 2005. If you’ve begun to revamp your distribution facility—stop! Take a moment to bone up on the latest warehousing and logistics trends. The following predictions come from the logistics professionals who constitute the board of directors of the Warehousing Education and Research Council:
Companies will shift their focus from cost reduction to customer value. This means adopting a customer-focused perspective throughout the organization—distribution center included—and providing more and better services.
Globalization will take over the world. According to WERC, some 20% of the world’s gross domestic product (GDP) crossed international boundaries ten years ago, and nearly 80% will do so in the next 20 years. Prepare your logistics infrastructure to handle this situation.
International outsourcing will increase. Like it or not, the low-cost labor pool in emerging economies is a magnetic attraction for U.S. companies. But, say the WERC officers, warehousing and distribution strategies must be re-evaluated because of the resulting high volumes of product entering U.S. ports.
Port delays in Southern California will cause congestion. Expect backlogs and longer transit times, and try other options such as trans-loading freight and trucking it to other destinations.
Transportation capacity will remain a hurdle. One WERC director says, “The imbalance between supply and demand for domestic trucking has created shipping delays and increased costs for shippers.” Throw in driver shortages, higher fuel costs, and surging demand for trucks, and you have a long-term problem.
RFID will not be a non-event. It will gather momentum—after a while. The high cost of tags and readers, in addition to problems with read rates and readability, preclude its widespread acceptance in the industry this year, but don’t put off that RFID pilot. Study and experiment with the technology.
Productivity and throughput will receive much attention. They always have, but new technology and equipment now offer even more ways to enhance productivity and bolster throughput—adding dollars to the bottom line.
Supply chains will move from a “push” to a “pull” approach. Just-in-time delivery systems are now the foundation for most supply chains. More SKUs and smaller, more frequent order patterns are also becoming common.
Value-added services will increase. Warehousing operations will soon provide services that go far beyond the routine, including complex customization of products. To be able to perform these functions, warehouse personnel will need additional skills and training.
The labor force will shrink. You can handle this by sticking to your core strengths and not spreading yourself too thin, say the WERC officers. The ultimate winners in logistics, they contend, will be those companies with the best HR programs.
For more information, visit http://www.werc.org.