Supply Chain Evolution Creating Demand for Regional Warehouses

Meagan Douglas
Wed, Aug 2, 2017
Mobile data collection capabilities are becoming vital in an increasingly geographically diverse warehouse sector.
Mobile data collection capabilities are becoming vital in an increasingly geographically diverse warehouse sector.

An increasingly complex supply chain is combining with technological change to create new challenges in the warehouse industry. Data is at the center of these difficulties, and businesses that get their data collection, management and integration systems ready for an influx of information can set themselves up for success.

Geographical Diversification Ahead
The e-commerce industry has been facing considerable disruption as leaders such as Amazon establish practices and capabilities that let them deliver goods to customers much more quickly than has been traditionally possible. To a great extent, this move has been made possible through a combination of backend technical updates that allow for rapid order processing and a distributed warehouse model that spreads the supply chain out over a greater geographical area.

This distributed model championed by Amazon is having an influence across a wide range of sectors. For example, the manufacturing industry is exploring just-in-time part and supply delivery, spreading out warehouse across multiple locations to allow for easier deliver to the production line. These types of trends are creating a framework for supply chain diversification, leading to the rise of the regional warehouse.

According to research from CBRE, the supply chain modernization process has initiated a chain reaction in the distributed warehouse market. Initial efforts to modernize led to the creation of streamlined, efficient primary distribution centers in major geographical markets. With those systems established, the warehouse industry has come to recognize a need for a more diversified supply chain model, leading to demand for regional warehouses. Geographic diversity creates new opportunities for efficient supply chains, but it also generates technical and management complexity that must be dealt with.

Responding to the Regional Warehouse Movement
Diversifying a company's warehouse footprint can have sweeping implications for the supply chain. Organizations can use a more varied warehouse setup to gain greater control of the supply chain, apply sophisticated sourcing strategies and adjust how they manage their goods. However, these types of benefits hinge on a business' ability to manage the data generated across multiple facilities. In large, monolithic warehouses, all of the information resides within a common system that is relatively easy to control. With geographic diversity in place, organizations must develop strategies to interconnect data and prevent information from various facilities from becoming siloed. This is where such solutions as mobile data collection and ERP integration become vital. 

As organizations work to wrangle the data spread out across a network of warehouses within their supply chains, they must consider how they are going to keep up with the growing quantity of information in the modern enterprise and the increased variety of data types emerging as part of everyday operations.

A Changing Data World
The early part of the 21st century has been a period of technological disruption in which widespread internet access and evolving data center models have transformed how businesses and consumers use data. Now, we have a world where Internet of Things devices are generating huge amounts of information with minimal human input and mobile data collection tools are allowing users to gather and update data as they work, without having to report back to a desktop PC. Robotics are extending the reach of human workers, automatically collecting and updating information as needed. On top of all of this, businesses are becoming more dependent on their ERP and warehouse management systems to make sense of all of this information and deliver it to users in actionable ways.

This digital convergence is set to transform how businesses and consumers interact in the next few years, leading to a huge escalation in the extent to which organizations become dependent on data to get the job done. According to an IDC study, there were approximately 16.1 zetabytes of data created in 2016. By 2025, that figure will climb to 163 zetabytes. Furthermore, we aren't just dealing with more data in the world around us, but a greater proportion of essential information. By 2025, approximately 10 percent of all data will be classified as hypercritical, with 20 percent more being critical.

A data revolution is underway, with embedded systems, the IoT and mobile data in the vanguard. IDC anticipates that the average person in 2025 will interact with connected devices approximately 4,800 times daily. The increased accessibility and sophistication of connected devices, particularly embedded and IoT devices, will allow businesses to transform their processes and procedures in light of the easy access to large amounts of real-time data.

Mobile devices will remain at the center of this data ecosystem, IDC explained, because data will need to be available instantaneously for users, meaning they will need continual access to systems that allow them to interact with information.

The warehouse and supply chain sectors are already showing signs of this change. As more organizations adopt regional warehouse models to reach customers more effectively, they are also embedding computing devices into a wider range of operations. Emerging solutions in the sector include:

  • Computerized lift trucks that allow organizations to apply lift truck fleet management and telematics capabilities to everyday operations. With the lift truck sharing data with other systems in the warehouses, underlying technology systems can calculate optimal safe routes through the warehouse and improve efficiency.
  • Voice picking solutions that provide hands-free data logging and inventory tracking functionality, allowing users to interact with backend data systems without the safety risk of carrying around an extra device.
  • Augmented reality glasses that integrate with safety goggles to provide a heads-up display giving users direct access to key data and allowing them to interact with backend information systems.

These types of features are coming together to transform how users access and interact with the huge quantities of information being generated in more complex warehouse environments. With data collection and integration being streamlined within central IT systems, organizations can employ remote management of facilities and allow users to log data regardless of their location. This makes it easier to manage a distributed warehouse environment.

The supply chain is becoming more complex as organizations embrace regional warehouse models, but the data revolution underway in the technology world is helping organizations deal with this complicated operational climate.

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