The U.S. supply chain is squeezed, with industry reports stating that the country needs to add at least 330 million square feet of warehouse space dedicated to e-commerce by 2025 in order to keep up with the current rate of demand.
As brick-and-mortar stores shuttered at the onset of the pandemic and consumers moved online, the e-commerce industry boomed. Over a year and a half later, it appears the trend could be permanent, as e-commerce continues to thrive despite restrictions being lifted and stores reopening.
To keep up with new demand, many retailers had to scale up operations by expanding and building out their own warehouses or leasing additional space from third-party logistics (3PL) providers, which in turn maxed out all available warehouse inventory. Now, alongside the warehouse shortage, companies are also experiencing a nationwide labor shortage, making it increasingly difficult to secure space and staff. As both remain scarce and demand increases, warehousing costs are on the rise, as is the price of third- and fourth-party logistics (4PL) services.
In order to stay competitive with e-commerce giants like Amazon.com and Walmart, business leaders need to prepare now by investing in outside expertise, which can give them access to space and labor, as well as innovative technologies capable of integrating with these providers. Not only are these solutions necessary in a highly competitive market, but they can help companies do much more than survive in a shifting economy — they can unlock opportunities to stay ahead of the game now and thrive well into the future.
Invest in Integrated Technology
In order to work with and lease space from 3PL or 4PL providers, companies first need the necessary software and technologies to enable seamless collaboration and end-to-end visibility of all products moving within the warehouse and along the supply chain. As logistics providers become the norm, this technology is no longer an option but rather a necessity to stay competitive.
All-in-one, cloud-native warehouse, order and inventory management applications are highly popular options for organizations that are just beginning to implement technology, as well as those that already have a system in place but are looking to upgrade or switch providers. Cloud-based systems are highly adaptable, allowing organizations to scale quickly and pivot operations at the flip of a switch.
Integrations within these all-in-one platforms are essential, as they give organizations access to countless applications such as 3PL providers, payment platforms and marketplaces, all of which can be adapted to the company’s unique needs.
Turn to Outside Providers
Most small- to medium-sized businesses aren’t able to build out their own warehouses due to the current squeeze and the amount of resources required. Furthermore, larger companies like Amazon, which have easier access to those resources, often claim coveted real estate the moment it comes to market. Smaller companies trying to maintain a competitive edge in this environment will need the help of an outsize provider.
By investing in warehousing-as-a-service from outsourced logistics providers, companies gain access to both employees and state-of-the-art warehouse technology, allowing them to outsource supply chain operations for a fraction of what it would cost to build out their own warehouse. This allows companies to focus their time and efforts on business objectives rather than on managing their own facilities.
Many 3PLs are also finding solutions in automation. With the help of machines, warehouses can make the most out of their limited square footage by tapping into vertical space. Self-driving robots and automated picking are even driving the movement toward warehouses that can operate with little to no human intervention. Using these tools, companies can optimize operations and get products into the hands of consumers faster than ever, despite environmental and economic hurdles.
Many of the supply chain challenges exacerbated by the pandemic are here to stay, and may only become more difficult in the years to come, as factors such as climate change, global regulation and shifting economies come into play. Having a plan and the necessary tools in place will encourage supply chain resilience, and allow companies to stay agile in a volatile and competitive environment.
Samuel Parker is a product evangelist at Cin7 Ltd.
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