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Trends in warehouse management: warehousing is in need of a global view, writes Gursh Atwal.

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The major developments in global warehousing during the past ten years have reflected changes in global trade, the biggest of which is the emergence of the East--in particular China and India--as the principal manufacturing base for the global economy, serving a pool of mostly Western customers. The consequence of Western companies choosing to outsource to China and India has been the proliferation of supply chains that cover a much larger geographical area. This shift in the manufacturing base has led to an extension of the supply chain between supplier and customer, meaning that global warehousing has been forced to stretch to ensure a robust, efficient provision for all parties. Further pressures are applied to global warehousing by the emergence of new Asian markets, generated by the associated wealth, which requires new, reverse supply chains for products supplied by the West.

Nations that have previously relied on indigenous industries, such as petrochemicals in the Middle East, are now moving away from industries with a finite life span and creating a sustainable economy by focusing on sectors such as tourism and international trade.

This in turn creates new demand for global warehousing.

The shifting manufacturing base combined with the increase of e-commerce and the prevalence of Internet use has revolutionized the retail markets, vastly increasing the range of choices available to customers and creating further pressure on global warehousing to supply the correct range and quantity of products while avoiding a rise in wastage. To address this drive to minimize stocks and associated costs, logistics providers and their clients are employing sophisticated algorithms and simulations to forecast and fulfill the demand for products. Simultaneously, there is a concerted global effort to reduce both the costs of logistics and the [CO.sub.2] emissions caused by shipping goods around the world.

How has Warehousing Adapted to the Changing Needs of Industry?

First, let us examine the infrastructure: an increasing number of warehouses and storage facilities are being constructed with their specific purpose in mind, ensuring that they provide the required efficiencies. The choice of location is aimed at minimizing road traffic and maximizing service levels, demanding proximity to ports and transport canters. Simulations are being used to maximize material flow and the utilization of resources.

Secondly, technology has changed. The extension of global supply chains requires warehousing to provide visibility and control to all parties, which is achieved by the use of systems designed to control these environments. The nature of data sharing and collaboration now has a truly international perspective; for example, barcodes that were generated and attached at source in China are eventually scanned at a checkout till in the UK. Other technologies, such as 2-D barcodes and RFID, are also gaining traction within warehousing to provide additional visibility and control. The use of collaborative data sharing also provides cost savings and improved traceability for all supply chain partners, including the warehouse.

The third change is that in today's world warehousing may well be a service provided by an external company that can be embedded into existing manufacturing sites. Third-Party Logistics providers (3PL) have been around since the first van moved stock for a client. Today 3PLs are also offering minor manufacturing and assembly services to provide the most effective solution for their clients. They also utilize a variety of charging methods--including storage, receipt, handling, dispatch, high point level of pallet/cartons, and value-added services--to charge clients for the use of their warehouses.

Today, international warehousing is the buffer stock for the global supply chain, allowing manufacturers to cope with regional variations of demand and optimize the movement of goods. Stock holding is one of the greatest financial burdens for any manufacturer: the key objective is to optimize stock levels without compromising customer selection and service. International

warehousing is a key element of the supply chain, without which the supply would cease to function and is therefore continually

evolving and adapting to market changes.

The Most Significant Developments in Warehousing during the Next 5-10 years

There are a number of technologies in the pipeline that will impact supply chain execution. Future transport management solutions, for example, will help to ensure sustainable supply chains by providing the data necessary to inform the making of 'green' decisions.

This will be facilitated by displaying the [CO.sub.2] emissions are associated with different modes of transport or transport strategies alongside the focus on costs and service levels. Supply Chain Management (SCM) solutions will have to support various SCM strategies, such as those aimed at the use of slower modes of transport, the decentralization of inventory, avoiding unnecessary

transport or optimizing transport capacities.

During the downturn, many companies were forced to streamline their supply chain and become more efficient and in many cases, labor costs are a distribution center's largest overhead. Unsurprisingly, the stabilizing of the economic situation has caused companies to begin resurrecting suspended projects; they are actively searching for warehouse automation systems that allow business expansion while avoiding the associated increase in headcount.

The key benefits of automation are, of course, the reduction of overhead labor costs that usually accompany manual processes and represent the largest single cost elements in any warehouse or distribution center operation, while ensuring an increase in workflow efficiency and fulfillment performance. The financial market is supporting the renewed interest in automation by increasingly offering leasing options that enable businesses to fully benefit from available price-benefit packages without the immediate full investment impact.

Another trend is the increasing awareness of the need to reduce the carbon footprint and increase energy efficiency. Companies that are about to invest in warehouse automation are now also requesting energy ratings on the desired equipment as part of their sourcing process. Requests for quotation (RFQs) now also demand details on the supplier's internal processes to reduce the carbon footprint on their side of the supply chain. Companies have begun to factor the total energy consumption of automation over the system's lifetime into their procurement and fulfillment processes.

What Will the Future Look Like?

The great thing about modern warehouse management systems is that they are able to manage the entire warehouse process, from goods receipt to stock putaway, and from complete freight document preparation to loading. By standardizing and automating business processes in supply chain execution, logistical processes become more reliable and efficient, assisting companies to reduce costs and remain competitive. Any modern supply chain management solution must offer large firms visibility and control that extends beyond individual warehouses. It is important that companies are able not only to view all their warehouses in a single system but to manage all logistics processes outside these warehouses, whether relating to the inbound or the outbound supply chain.