Retail warehousing and distribution networks: Challenges and solutions
Written by Gursh Atwal, Sales Manager, AEB (International) Ltd
The success of online retailers has been linked to the demise of many high street shops in the UK, most recently HMV and Jessops. The remaining retailers have clear strategies which incorporate on-line shopping with home delivery and are often further supported by other initiatives, such as click and collect, where goods are ordered online but delivered to a third party address, e.g. a local garage or convenience store, to avoid the disappointment of missed home deliveries. A relatively new trend is the effect social media has on online purchases. If, for example, photographs of a celebrity’s latest outfit is ‘trending’ on Twitter, demand for that (or a similar) outfit can be expected to swiftly increase online and in-store sales. Today’s warehouse management systems (WMS) have to be flexible enough to react quickly to this unpredictable source of demand as well as face the challenge of facilitating demand forecasting, stock holding and distribution for both store deliveries and online orders.
Further to this, there is an ever growing requirement for WMS to support a number of different distribution strategies within a single facility, which requires features such as cross docking, consolidation and bulk packing, small parcel packing, expediting of urgent orders and promotion management. In addition, as more value adding services such as further processing of items – for example ironing, folding, cooling, bar-coding, mixing, re-packing, labelling, etc. - are pushed up the supply chain or outsourced, WMS have to be flexible enough to manage the process flows, tracking the movement of the goods and capturing key information while maintaining complete visibility throughout.
All of this means that WMS software solutions must be capable of managing the different workflows within the warehouse, directing resources based on priorities, facilitating sophisticated packing operations and supporting a comprehensive returns process to name but a few. Taking this one step further, integrating the WMS with the extended supply chain, e.g. suppliers and carriers, is essential to support a streamlined, time critical operation.
Managing Reverse Logistics
Retailers often see a high percentage of returns, in some cases up to 22%. Returns management is a complicated process which each retailer must manage next to their core warehousing and distribution operations, often within the same facilities and at great expense. When unforeseen circumstances occur, e.g. the recent horsemeat scandal, product recalls put a further strain on supply chains, consuming significant resources and storage space. Each return represents a value, and needs to be stored accordingly until it has been quality checked, destroyed or processed for new sales, returned to the supplier or otherwise managed in accordance to the respective retailers’ return policies. Today’s WMS must be capable of handling the various return strategies and link each returned item with its original order to trigger related financial actions in the master ERP, thus maintaining an audit trail..
Managing Complexity and Maintaining Visibility
The rise of international trade also has a direct impact on the complexity of global supply chains, which now need to support multi-layered processes across multiple supply chain partners and time zones. The longer the supply chain, the more difficult it is to control, especially if valuable transactional data is captured and stored by different systems and on different platforms. Retailers are recognising that connecting isolated systems is necessary to achieve real time transparency on stock throughout the entire supply chain and to manage their procurement and fulfilment networks more proactively. Overarching collaboration solutions that integrate all relevant systems including ERPs, WMS, TMS and external business partners systems provide full traceability and auditability, which in turn gives retailers the certainty that they know the origin of their goods and can track them through their entire supply chain.
Data capture and visibility across the entire supply chain is the key to success and competitive advantage. Without visibility, retailers are highly vulnerable to any supply chain disruption and cannot implement pro-active replenishment strategies to manage unexpected events. Collaboration between all supply chain partners is necessary to provide a comprehensive view of all goods in stock or transit, from order to processing and final delivery. The more information available to the retailer real time, the faster they can react to events ensuring they are always meeting the demands of their customers, be that the shopper in the store or the shopper at home.
Uber Freight to Acquire Transplace in $2.2bn Deal
Uber Freight is to acquire logistics technology and solutions provider Transplace in a deal worth $2.25bn.
The company will pay up to $750m in common stock and the remainder in cash to TPG Capital, Transplace’s private equity owner, pending regulatory approval and closing conditions.
“This is a significant step forward, not just for Uber Freight but for the entire logistics ecosystem,” said Lior Ron, Head of Uber Freight, and former founder of the Uber-owned trucking start-up Otto.
Uber’s Big Play for Supply Chain
Transplace is one of the world's largest managed transportation and logistics networks, with 62,000 unique users on its platform and $11bn in freight under management. It offers truck brokerage and other capacity solutions, end-to-end visibility on cross border shipments, and a suite of digital solutions and consultancy services.
The purchase is the latest move by parent company Uber, which launched as a San Francisco cab-hailing app in 2011, to diversify its offering and create new revenue streams in all transport segments.
Transplace said the takeover comes amid a period of “accelerated transformation in logistics”, where globalisation, shipping and transport disruption, and widespread volatility are colliding.
Uber Freight plans to integrate the Transplace network into its own platform, which connects shippers and carriers in a dashboard that mirroring the intuitive experience found in its consumer vehicle booking and food ordering services.
“This is an opportunity to bring together complementary best-in-class technology solutions and operational excellence from two premier companies to create an industry-first shipper-to-carrier platform that will transform shippers’ entire supply chains, delivering operational resilience and reducing costs at a time when it matters most,” said Ron.
Frank McGuigan, CEO of Transplace, said the resulting merger will offer enhanced efficiency and transparency for shippers, and benefits of scale for carriers. “All in all, we expect to significantly reduce shipper and carrier empty miles to the benefit of highway and road infrastructures and the environment,” he added.
History of Uber Freight
Uber Freight was established in 2017 and separated into its own business unit the following year. In 2019 the company had expanded across the entire continental US, established a headquarters in Chicago. Later that year it launched its first international division in Europe, initially from a regional foothold in the Nertherlands, and later moving into Germany.
The logistics spinoff attracted a $500m investment from New York-based Greenbriar Equity Group in October 2020, and launched a new shipping platform for companies of all sizes in May, partly in response to a driver shortage in Canada.