E-commerce Challenges Headline Factors Driving Warehouse Management System Growth

Meagan Douglas
Fri, Jun 16, 2017
Distribution and fulfillment process updates are becoming key as the e-commerce sector evolves.
Distribution and fulfillment process updates are becoming key as the e-commerce sector evolves.

Innovation across e-commerce is emerging as a primary driver for growth in warehouse management systems.

Essentially, retailers are facing pressure to establish multi-channel experiences that create consistent, positive customer experiences across digital and physical ecosystems. This requires considerable operational innovation in fulfillment and distribution settings as supply chain, warehouse and delivery processes have a huge impact on organizations. Furthermore, the added complexity of managing product inventories across multiple locations makes it especially important that businesses maintain visibility into all assets.

The need to understand asset dispositions at all times and ensure operational flexibility is contributing to rapid growth in the warehouse management sector. A study from MarketsandMarkets found that the global warehouse management system market, which reached a total value of $1.32 billion in 2016, is projected to grow to $3.21 billion by 2023. The rapid expansion of the e-commerce industry and the need for distribution networks that extend across multiple channels represent the major factors behind expansion in the market. All told, the WMS software industry will rise at a compound annual growth rate of 14.1 percent from 2016 through 2023.

Looking at the Changing E-commerce Industry
With WMS software industry growth coming in response to changes in the e-commerce sector, warehouse decision-makers looking to plan ahead must seriously consider the way online retailers are changing. According to Lexology, it is time to start planning for disruption in the last mile of the fulfillment process. E-commerce companies have been feeling growing pressure to ship items out more quickly and inexpensively than ever. Consumers increasingly expect free shipping and want items delivered in one or two days. While organizations have been able to control many warehouse operations and accelerate operations, there are still numerous struggles happening in the last mile.

Getting goods from the shipping line to a person's front door presents a variety of problems, the report said:

  • Clogged up residential lanes in urban centers that make it difficult for delivery trucks to get to buildings.
  • Multi-unit dwellings that are not equipped to handle a large volume of shipments.
  • Theft, damages and similar problems that arise as packages are left out on doorsteps or otherwise exposed.

These issues are driving changes in the distribution ecosystem, and many of those adjustments add more complexity when it comes to supply chain management. A growing number of e-commerce companies have started creating formal fulfillment centers that allow customers to visit physical locations in their area to collect packages. In some cases, local branches of stores may serve as pickup locations. In others, they could simply provide storage. Some e-commerce brands have developed dedicated physical stores for the primary purpose of eliminating the need for last-mile delivery. Regardless of strategy, however, the point is that brands are learning that customers want rapid delivery and don't mind going to a convenient location to get a product.

"We're finding that customers don't really care from where we pull the goods, as long as we fill the order accurately and the delivery is timely," Macy's CEO Karen Hoguet told Lexology. "We expect these fulfillment locations will be key to offering faster and even same-day delivery, and also will enable the customer to buy online and pick up in-store."

Responding to Emerging Fulfillment Centers
The new fulfillment center model creates an added layer of complexity for warehouse and supply chain managers. How will the organization track when goods have been picked up by customers? How will they fit shipments to the new facility into their delivery schedules? What will be done to ensure quality control at the location? Which parts of the workforce will be devoted to loading goods at the new fulfillment center? Dedicated shipment pickup centers effectively act like mini warehouses where goods are stored for a short time until authorized individuals come in and pick up what they need. This results in more management overhead for distribution and fulfillment teams, and technology plays a critical role in this process.

Warehouse management systems offer organizations an opportunity to gain a clear view of their inventories at all levels, incorporating multiple locations and parts of the supply chain as necessary. Creating such a robust degree of oversight is increasingly necessary in the e-commerce sector. Without it, organizations will be left guessing about their inventory levels, hoping customers actually pick goods up or that staff properly monitor and track operations at fulfillment centers. But even in such an environment, data from different locations and facility types must integrate to ensure visibility throughout the full scope of distribution and fulfillment. This is where mobile data collection is so critical in the sector.

Using Mobile Data Collection to Simplify Fulfillment
Imagine your organization has just opened a new last-mile fulfillment center where products are stored. Perhaps you have one or two workers there dedicated to documenting shipments when they arrive, distributing packages and tracking when customers pick them up. How are those users documenting those processes? If you have a siloed warehouse management system that isn't optimized for mobile devices, users will have to track operations on paper and then re-enter the data when they have time back at their computers. This can create errors and lead to delays that disrupt operations in other parts of the supply chain.

Giving fulfillment center employees mobile devices that can integrate with warehouse management software, on the other hand, allows those workers to quickly update project status and asset disposition during their everyday operations. When a customer picks up a package, workers can simply scan a barcode with their smartphone and have the warehouse management system identify the transaction. The same goes for confirming receipt of packages and tracking which items have been picked up and which haven't by the ends of their shifts.

Documentation processes are becoming more complex in the changing e-commerce world, but the growing warehouse management system market shows that technology offers potential to alleviate many challenges. Gaining transparency into all phases of operations is critical in this evolving environment, and mobile data collection tools that integrate with a WMS are essential.

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