The responses from our warehouse practices survey have been compiled and the results analyzed. This year’s survey of logistics executives evaluated the future direction of warehouse fulfillment practices. It captured the profile of today’s fulfillment environment and obtained insights into the pressures and priorities of practitioners, and how they are responding by adjusting processes and investing in technology to align their operations with changing requirements. Our research is a follow-up to a similar study we conducted in 2016. However, this year’s study dug deeper into processes used to meet the pressing demands of today’s market. ARC Advisory Group clients will receive a copy of the full report in September. In the meantime, this Logistics Viewpoints article will provide an executive summary of the executive summary.
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This research confirmed most of the longer-term trends that were in place at the time of our preceding survey in 2016. Namely, e-commerce and direct-to-consumer growth continue to transform the fulfillment operations of not only retailers, but also manufacturers, wholesalers, and 3PLs. Many manufacturers and wholesalers have disintermediated their retail partners, choosing to build up their direct-to-consumer channels. And logistics service providers/3PLs are increasingly obtaining business from retailers that are looking to outsource some of their direct-to-consumer fulfillment.
We also uncovered what appear to be some accelerating trends. For example, our results indicate that direct fulfillment of retail partners’ orders (drop ship) is expected by a large percentage of respondents to increase substantially over the next three years. The prevalence of this expectation is also greater than it was three years ago. But the most notable change in findings is the degree to which respondents expect the importance of fulfillment responsiveness (time from order receipt to delivery) to increase over the next three years. This is indicated by the 77 percent of respondents (see Exhibit 1) that expect it to increase in importance, which is substantially more prevalent than the results from the same question in 2016. The result is further supported by qualitative feedback provided by respondents to this year’s inquiry. I attribute this increasing importance to consumer expectations for next day delivery, driven the new “Amazon Effect.” Fulfillment responsiveness is now a high-profile way in which Amazon is differentiating itself from competitors, capturing additional market share, and continuing its role as the primary driver of retail’s current shift from the old to the new. After all, fulfillment accuracy is a necessity. But widespread responsiveness such as that provided by Amazon is difficult and costly to replicate. Consequently, these are the most distressing pressures felt by today’s fulfillment executives.
Warehouse Practices at Work
This year’s research also included content on practices that help support today’s fulfillment requirements – such as waving/batching, the use of put-walls, and system directed waveless fulfillment. System directed wave release (order batching) remains in high use and has been increasing. However, the use of put-walls to support methods such as zone picking appears to be used only selectively. Those that use put-walls tout the practice for its support of zone picking and order accuracy. In contrast to waving, system directed waveless fulfillment is in limited use, but appears to be growing quickly due to its alignment with the demands placed on operations. Those who use it expressed its usefulness for enabling responsive operations and maximizing resource utilization. Finally, the technology investment priorities of warehouse executives show that tried and true technologies such as WMS and conveyor/sortation systems remain top priorities, while other supporting technologies such as labor management systems, voice recognition, AGVs, and palletizing are also given widespread consideration (see Exhibit 2).
ARC Advisory Group created a web-based survey and distributed it to ARC Advisory Group and DC Velocity contact lists. We removed unverifiable and unqualified responses, and conducted our analysis based on a sample of 46 qualified responses (see Exhibit 3 for Industry Sector). ARC Advisory Group clients will receive a copy of the full report in September. and should contact me (firstname.lastname@example.org) for any additional insights about the research results. Survey respondents will receive a copy of the results in September as well.