Across the world, one thing that is uniting the business community everywhere is its universal focus on recovery. No longer simply battling a crisis, attentions are now turning towards the future and how to succeed in what is being described as our ‘new normal’.
Some countries are inevitably farther on than others in terms of the recovery phase, according to when their cases of COVID-19 peaked. In China for example, 80% of companies who were forced to close have restarted operations, according to recent McKinsey reports. Now in Europe, the wheels of recovery have also started to turn after governments have invited everyone who cannot work remotely to return to their workplaces.
For warehouse managers, this ‘new normal’ is an environment that requires greater investments in technology, increased risk management and real time supply chain visibility. Basically, the faster and better a business – and its supply chain – is at adapting and innovating, the better its chances of not only surviving, but thriving.
2/3rds companies working in the dark
It is almost impossible to achieve this without using appropriate technology. Warehouse managers are under huge pressure to reduce costs, digitise their operations, integrate siloed systems for improved visibility – and yet they are working in the dark. It’s shocking how many companies operate using just email and spreadsheets. This is evident in the BCI’s Supply Chain Resilience Report 2019, which found that 63% of companies do not use any technology to monitor their supply chain performance.
Supply chain networks will become more complex
In the future, supply chains will become even more complex and networked, as manufacturers who, fresh from being ‘burned’ for relying on a single country for sourcing their inventory, will be casting their nets wider. In the future we can expect manufactured goods to be arriving from suppliers in many different geographical regions. For the ASEAN community, like Malaysia, Philippines, Thailand and Vietnam this is good news, as much as 90% of their economies are comprised of SME businesses – they are their country’s economic backbone, generating up to half of annual GDP.
Industry 4.0 tech increases protection against crises
One of the most striking things to emerge across the world as companies work to restore their operations, is the renewed importance of digitalisation as a means to thrive. It was very evident that the businesses most able to sustain their operations during the early days of the COVID crisis were the ones that were already involved in e-commerce and had implemented one or more forms of Industry 4.0 technology. These included advanced analytics, artificial intelligence (AI), automation, robotic process automation and knowledge-work automation. By using these Industry 4.0 tools, McKinsey estimates that businesses are able to benefit from 15 – 30% improvements in labour productivity; up to 30% more throughput; and a 10 to 20% decrease in the cost of quality.
One lesson that companies who had a harder time during the COVID crisis can takeaway from their experience, is the importance of digitalisation. E-commerce will become the norm compared with physical stores or traditional ordering methods like phone and mail order. Companies that have not yet embraced technology and who rely on paper-based methods are unlikely to survive the recovery period. In the ASEAN region, this is at least a quarter of businesses, who should now be reviewing how to embrace digital and technology systems in their warehouse, like a Warehouse Management System (WMS).
The shortcomings of an ERP
Some businesses reading this will already use an ERP system to control their order processing and inventory management. They may also be starting to become aware that their legacy ERP software’s warehousing functionality falls well short of what they actually need. It is time to review what a best of breed WMS solution can deliver in terms of real-time inventory management and visibility.
Automation relies on the right infrastructure
A smaller proportion will be ready to move onto the next phase of digitalisation and be considering introducing some partial automation – AGVs or packing robots for instance, to enhance workforce efficiency. Having a WMS in place prior to investing in automation like this is a pre-requisite, since it is the only way to remove paper processes and provide the data analytics needed for successful introduction of AI based automation. These systems need to learn in an iterative way and require the data captured by a WMS to provide the relevant foundations from which to reach peak effectiveness.
70% lack full visibility
In addition to supporting AI systems, a WMS will provide the real time visibility that customers have come to expect from suppliers. Supply chain visibility is a key driver to a company’s success, yet it continues to be a top challenge, with 70% of procurement professionals admitting that they lack full visibility of their supply chains, according to the Business Continuity Institute (BCI).
Matching competitors for service
By using a WMS, these manufacturers will benefit from a deeper understanding of their supplier networks, stock inventories in warehouses and physical stores, plus sales to gain much deeper insights into the purchasing patterns of buyers. In turn, businesses will become more agile, avoid overspending on inventory and ensure stock is in the right place at the right time, to maximise sales opportunities and keep the customer delighted with service levels. Keeping up with what competitors are doing and the service they can offer for a similar price has never been more important.
Right partner for ‘new normal’ operations
The starting point for a successful digitalisation programme is to identify the right technology partners to work with. Ideally these should be specialists who have real world experience of your industry sector, so they can help advice on process improvements to be introduced before the technology roll-out begins and in terms of the technology itself, try to adopt a ‘granular’ solution, to minimise wastage and avoid paying for functionality that is unnecessary.
Whatever happens over the coming months and years, we can be sure that businesses everywhere are now reaching a crossroads and a new era in lean and efficiency. They must either adapt and evolve towards embracing digitalisation and the ‘new normal’, or they will cease to be relevant. Having the right infrastructure in place, one that is flexible enough to expand as your business needs evolve, means you will be better equipped to deal with whatever new challenges present themselves in your warehouse or DC. It starts with the introduction of a WMS.