Impact of Covid-19 on the Warehousing & Supply Chain Industry
The impact of covid-19 on the warehouse is still being felt today, it is going to have a long and lasting effect and is having a transformative effect on the supply chain industry.
An outbreak or transportation delay in one part of the world would have a devastating impact across the globe, causing shutdowns due to warehouse closures or missing or delayed supplies.
The country’s warehousing sector gained prominence in the last 4-5 years. Consumers now count on supply chains, not only for necessary items but like food, medicine, personal protective equipment, and hand sanitizer, but for every good that brings them comfort, satisfaction, and even joy.
Impact of COVID-19 Pandemic on the Warehousing & Supply Chain Industry -
- The Need to keep more inventory on hand, expanded the use of safety stock
Pre-Covid times, the manufacturers use to adopt just-in-time manufacturing practices to keep inventory costs lower. This also helped the warehouse to better utilize space. But after covid-19, many manufacturers had to reduce staffing due to the need to social distance or even suspend operations entirely for a period of time. This resulted in inventory shortages.
Manufacturers will need to keep more inventory, known as buffer stock/safety stock on hand to forestall shortages and minimize supply chain risk. This will lead to changes in the amount of available warehouse space and capacity issues.
- Pandemic forced lockdowns, accelerated online shopping, e-commerce, and last mile delivery and dramatically impacted warehouse operations
The use of online shopping has dramatically increased. In fact, Forbes estimates that Covid accelerated the growth of e-commerce approximately 4 to 6 years. Because many warehouses were only handling goods by the pallet, it has been a significant change and added cost to adopt cost the needed processes and technology to be able to service pick and pack operations needed for D2C e-commerce order fulfillment.
Having a top-notch warehouse management system designed to help ensure high volume, fast, accurate fulfillment for e-commerce operations is essential. These features optimize labor resources, increase operational efficiency, and seamless work with other critical system such as shopping carts, online marketplaces, other technologies, and more.
- Inventory Visibility Takes Center Stage
As consumers order online, they come to rely on clear, accurate, timely inventory visibility. With the increasing number of orders, this has become more complicated. Now, because of the speed factor, companies choose to leverage third parties, such as 3PL’s, to decentralize their warehouses and use their retail stores for distribution. And this why, it became essential to know in real-time exactly where inventory is in each location in order to ensure fast, accurate order fulfillment.
Consumers getting mad for stock outs is more annoying, it can also damage a brand’s reputation and its future business. So, having the right technology to provide inventory visibility in real-time is crucial, including hardware and warehouse management software.
- Labor Shortages and Social Distancing Requirements Demands Adoption of Technology Solutions
Last year during the pandemic, businesses across the supply chain suffered from work stoppages, disruption in labor, and shutdowns. One of the impacts of this is the acceleration of the trend towards the adoption of material handling solutions, automated storage, voice technology, and light technology solutions. With warehouse operations already experiencing labor shortages, warehouse operators were often forced to replace human labor with robotics and sophisticated technology systems.
- Escalation in Need for More Cold Storage Warehouses
Online orders were not limited to apparel, electronics, and home goods, but also food. When restaurants were shuttered, there was a noticeable shift in the food supply chain. The trend towards meal kit subscription boxes increased during covid-19. Consumers ordered more fresh foods, frozen foods, and prepared foods. This altered warehouse operations with many 3PL cold storage warehouses for production and speedy delivery to consumers.
Top Factors to stimulate growth and recovery of the warehousing segments are:
- E-commerce boom
With restricted mobility, many first-time customers experienced with purchase on e-commerce channels.
- Robust Cold chain network
With covid-19 pandemic induced slowdown in economic activities, with supply chain segment has taken a big hit, essential supplies segment has emerged a ray of hope with its sustained business performance even during the health crises and peak of lockdown.
- Investing in warehousing real estate
Warehouse lease tenures are getting longer, ranging from 6-9 years and longer still in some cases. With increasing interest from global investors, the size of investment per deal has witness an increase of 25%.
Warehouse management was becoming very popular before the covid-19 hit, and now it’s even more crucial. It helps businesses meet the high expectations of customers. Automation can increase and improve optimize of space utilization which can decrease the delivery time. In addition, it can reduce labor costs as well.
- Third Party Logistics (3PL) segment to be the forefront for warehouse demand
3PL segment taking the largest share in the warehousing demand. Its share of space take-up across 8 cities, increased from 35%.
- Warehouse footprint to expand in smaller cities
Rising consumerism and the emergence of ecommerce has created a need for faster delivery even in the smaller cities.
Global supply chains certainly took a hit during the covid-19. The impact of Covid was widespread because the world is still early in the digital transformation of supply chains and distribution networks, the logistics and supply chain challenges were highly disruptive, especially as some data centers and warehouses have been slow to adopt technologies and still largely operate manually.
Perhaps, the impact of Covid-19 was positive as complex problems could arise and be solved by adopting new strategies and innovative emerging technologies. From artificial intelligence to material handling equipment, supply chains, and warehouses can be made more efficient.
Not all change is bad, after all.