Global Sheds: The Backbone of Supply Chain
If someone were to ask you to identify the major developments that had taken place in the global warehousing industry over the last decade, you might i...
If someone were to ask you to identify the major developments that had taken place in the global warehousing industry over the last decade, you might initially be hard pressed to think of any. After all, a warehouse is a warehouse; they store goods on their way to another destination. While the definition of the warehouse has not changed, as such, the way in which they operate has.
Global warehouses, also known as sheds, have faced increasing demands from retailers and distributors. In the last 10 years, warehouses have become automated in line with industry requirements, and there is now the issue of sustainability.
Location too has impacted the utilization of warehouses. With many Western companies outsourcing to China and India, the supply chain now covers a much larger geographical area. Warehouses are the one constant, if you like, in the supply chain.
Gursh Atwal, sales manager, AEB (International) Ltd, the supplier of global trade solutions, has observed the same trend: “The supply chain between supplier and customer has been extended and global warehousing has had to stretch to provide a robust, efficient provision for all parties.”
The rise to prominence of e-commerce has also had a dramatic effect upon storage facilities, prompting the emergence of more technologically-advanced management solutions.
Atwal acknowledges that the rise of e-commerce has placed new demands on global warehousing to supply the right range and quantity of products.
Logistics specialists SBS Worldwide has found one such solution for the book publishing industry. Company chairman Steve Walker says: “Many book publishers took the decision to shift their printing to Asia to reduce costs, but did not then take the next logical step of reorganizing the complete supply chain.”
In response, SBS Worldwide came up with eDC (electronic Distribution Centre), which organizes the worldwide distribution of books from Asia, thereby reducing costs and cutting delivery times.
The key to this solution is visibility, which is something of a buzzword in the logistics industry at the moment. “The software gives everyone who needs it – production, accounts, and sales teams – access to the information about where the books are and when delivery can be expected, right from the pre-production stage,” explains Walker.
The need for accessible information is not restricted to book publishing though. International companies also require a high level of visibility throughout supply chain management.
Atwal says: “Warehousing has to provide the visibility and control to all parties of the stock coming in, being stored, and being despatched from the warehouse. The nature of data sharing and collaboration has a truly international perspective with barcodes being generated and applied at source in China.”
According to Atwal, 2D barcodes and RFID are “gaining traction” within warehousing. Also, voice-directed picking and robot palletizing systems are becoming more familiar sites in storage units. In addition, Atwal points to motion detector lighting, low energy usage lighting, and low carbon emissions forklifts being utilized as part of a greener strategy.
Green is now also a hot topic in the industry.
“Companies are now calculating and considering the total energy consumption of automation over the lifetime of the system as part of their procurement as well as their fulfilment process,” Atwal says.
Over time, energy efficient warehousing will become ‘the norm’. While there have been suggestions that companies will start to stipulate low carbon emissions from their warehousing providers, it is still early days.
Naturally, the economic climate has had its own impact on the industry. Gone are the days when warehouses needed to be fully-manned by a skilled workforce.
Today, automation can reduce the number of workers required in a storage area; whether that is good or bad for the industry is, of course, another topic entirely.
“Now that the economic situation has started to stabilize, interest in warehouse systems has generally increased, not by a huge amount, but it is distinctly noticeable,” remarks Atwal. “Companies have started an active search for warehouse automation systems in order to expand their businesses without necessarily increasing general headcounts.”
The question now is where will the industry go next? There are certainly further significant developments to be made in automation, and green is likely to climb its way up the agenda. Atwal acknowledges that cloud computing is being touted as “the next big thing”. However, he believes that “hybrid” is an emerging trend.
There is no disputing that warehousing has come a long way. “This stable environment is the backbone of the supply chain business, and will remain so for quite some time,” Atwal maintains. It continues to be an indispensable part of the supply chain and has embraced some of the most technological advancements.
Biden establishes Supply Chain Disruptions Task Force
The US government is to establish a new body with the express purpose of addressing imbalances and other supply chain concerns highlighted in a review of the sector, ordered by President Joe Biden shortly after his inauguration.
The Supply Chain Disruptions Task Force will “focus on areas where a mismatch between supply and demand has been evident,” the White House said. The division will be headed up by the Secretaries of Commerce, Transportation, and Agriculture, and will focus on housing construction, transportation, agriculture and food, and semiconductors - a drastic shortage of which has hit some of the US economy’s biggest industries in consumer technology and vehicle manufacturing.
“The Task Force will bring the full capacity of the federal government to address near-term supply/demand mismatches. It will convene stakeholders to diagnose problems and surface solutions - large and small, public or private - that could help alleviate bottlenecks and supply constraints,” the White House said.
In late February, President Biden ordered a 100 day review of the supply chain across the key areas of medicine, raw materials and agriculture, the findings of which were released this week. While the COVID-19 health crisis had a deleterious effect on the nation’s supply chain, the published assessment of findings says the root cause runs much deeper. The review concludes that “decades of underinvestment”, alongside public policy choices that favour quarterly results and short-term solutions, have left the system “fragile”.
In response, the administration aims to address four key issues head on, strengthening its position in health and medicine, sustainable and alternative energy, critical mineral mining and processing, and computer chips.
Support domestic production of critical medicines
- A syndicate of public and private entities will jointly work towards manufacturing and onshoring of essential medical suppliers, beginning with a list of 50-100 “critical drugs” defined by the Food and Drug Administration.
- The consortium will be led by the Department of Health and Human Services, which will commit an initial $60m towards the development of a “novel platform technologies to increase domestic manufacturing capacity for API”.
- The aim is to increase domestic production and reduce the reliance upon global supply chains, particularly with regards to medications in short supply.
Secure an end-to-end domestic supply chain for advanced batteries
- The Department of Energy will publish a ‘National Blueprint for Lithium Batteries’, beginning a 10 year plan to "develop a domestic lithium battery supply chain that combats the climate crisis by creating good-paying clean energy jobs across America”.
- The effort will leverage billions in funding “to finance key strategic areas of development and fill deficits in the domestic supply chain capacity”.
Invest in sustainable domestic and international production and processing of critical minerals
- An interdepartmental group will be established by the Department of Interior to identify sites where critical minerals can be produced and processed within US borders. It will collaborate with businesses, states, tribal nations and stockholders to “expand sustainable, responsible critical minerals production and processing in the United States”.
- The group will also identify where regulations may need to be updated to ensure new mining and processing “meets strong standards”.
Partner with industry, allies, and partners to address semiconductor shortages
- The Department of Commerce will increase its partnership with industry to support further investment in R&D and production of semiconductor chips. The White House says its aim will be to “facilitate information flow between semiconductor producers and suppliers and end-users”, improving transparency and data sharing.
- Enhanced relationships with foreign allies, including Japan and South Korea will also be strengthened with the express proposed of increasing chip output, promoting further investment in the sector and “to promote fair semiconductor chip allocations”.