This will dominate distribution this year

From component shortages, to bottlenecks at ports, to the outlook brought about by inflation, supply chain issues are constantly front page news. It’s been the case over the past few years and will continue to be the case moving forward. As supply chain professionals, whether you’re working on the front lines or in the executive suite, you’ll always find yourself in the spotlight – good or bad.

To circumvent these common but potentially catastrophic issues, many executives are opting for holding more inventory. However, the resulting low storage capacity availability in their distribution networks is starting to show negative impacts, from detention fees to low productivity, to product damage and longer order shipping times.

These capacity issues usually fall into one (or more) of the following buckets.

OPERATIONAL

Your current infrastructure has the square footage and cube capacity that you need, but it’s not being utilized properly. This could be due to any number of reasons but the one we notice the most is slot locations being larger than they need to be for the items they’re carrying. In the absence of proper slotting maintenance tools, operators typically opt to slot items in larger slots to avoid unnecessary replenishments, putaways, and fingerprinting tasks. While this can be a good strategy (if you have the room and aren’t willing to adjust pick paths to uncover potential selection travel savings, it does oftentimes create an illusion of a lack of storage capacity that an influence expansion decisions prematurely, throttle productivity and most importantly, create unsafe working conditions.

TACTICAL

Seasonal changes in SKU variety and/or shipping volumes are temporarily increasing handling requirements during busy periods. This issue is primary faced by seasonal environments, but no business is truly immune these days. On the retail side, operators often find themselves at the mercy of the buyers and merchandisers and on the wholesale side, operators have to constantly adjust to company growth.

When it comes to seasonal businesses, we’ve seen businesses experience a 10x increase in shipping volumes during the holiday season. An increase of that magnitude cannot be adjusted to by adding temporary labor. It requires tactical thought. And, let me tell you, when you’re competing with one-day shipping from a lot of the larger e-commerce retailers, you can’t afford to compromise on service level.

STRATEGIC

This is where rapid / continuous growth is expanding beyond your network’s infrastructure and handling capabilities. Although this sounds like a problem every business wants to have, it doesn’t mean it doesn’t present many critical challenges for the distribution network. Unlike the operational and tactical challenges discussed above, this issue can happen to even the most optimized distribution center. The key is proactivity. Those who can leverage data analytics and the right tools to see this coming ahead of time will give themselves the time to adjust to the changing conditions, without having to compromise efficiency, service levels or safety. Finally, if you’re not giving yourself at least 12-18 months to properly plan a new site activation – if that’s what your growth requires – you’re asking for trouble during implementation.

Now, dear readers, the million-dollar question is: to what degree do each of these apply to YOUR situation?

Want to get more in-depth? Check out our free Strategic Decision-Making Framework today!

If you have any specific questions or comments, please feel free to reach out through the form below, or at info@syncontext.com. Someone from our DC Optimization Team will be happy to help! We have helped hundreds of organizations just like yours optimize their operations and we are passionate about it.

Additionally, check out our free resources below:

Free Opportunity Estimate – Compare your warehouse productivity to your industry peers

Strategic Opportunity Assessment – See exactly how much time, movement, space, equipment and resources you’re wasting, and what you can do to stop it.