warehousing
Trends in
Warehouse
Management
Warehousing is in need of a global view, writes Gursh Atwal.
T he 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 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
36 www.scemagazine.com May/June 2011
markets, generated by the associated wealth,
which require 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 fulfil demand
for products. Simultaneously, there is a
concerted global effort to reduce both the costs
of logistics and the CO2 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 maximising service levels, demanding
proximity to ports and transport centres.

Simulations are being used to maximize
material flow and utilization of resources.
Secondly, the 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, despatch, 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
2011 May/June www.scemagazine.com
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 CO2
emissions 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
labour costs are a distribution centre’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 is, of course,
the reduction of overhead labour costs that
usually accompany manual processes and
represent the largest single cost elements in
any warehouse or distribution centre operation,
while ensuring an increase in workflow
efficiency and fulfilment 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 who
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 fulfilment processes.
What Will the Future Look Like?
The great thing about modern warehouse
management systems is that they are able
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. •
About the Author
Gursh Atwal is with AEB (International) Ltd
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