As the year comes to a close, it has undoubtedly been a time of significant change and upheaval within the warehousing industry. Embrace the 2021 trends as warehouse and distribution centers better prepare for what the new year has in store.
The role of third-party logistics companies has shifted in the past 20 years, but even more dramatically in 2020—the year of COVID-19. Against that backdrop of consistent disruption and game-changing technology, what can we expect to see as we move into 2021?
Times have changed. Leading warehouse and distribution centers like Fulco Fulfillment Inc (FFI) have seen trends developing in 5 district areas over the next year and beyond:
- Supply Chain Integration
- Outsourced Delivery Services
- Warehouse and Distribution Services Will Go Green
- The Amazon Effect
- E-commerce Will Accelerate
1) Supply Chain Integration
Technology helps to improve many tasks throughout logistics. One of the growing challenges, however, is how to best utilize technological advancements to simplify and streamline the communication process. There are several Warehouse Management Solutions that utilize API electronic data exchanges that not only improve communication, but increase transparency.
Proactive fulfillment centers and 3PLs understand the importance of having the best communication platforms available. They can support customers, provide real-time updates on order fulfillment, package tracking, inventory levels, historical data, and more.
Warehouse and distribution centers will look to leverage integration to build the value-added services within their fundamental workflows and software. Consider this: integrated picking, packing, using barcode scanning technology communicating directly to shipping software. This reduces the costs and eliminates the lost time and inevitable errors. API integrations automate order fulfillment workflows leading to improved communication. Supply chain integration through data sharing encourage visibility, transparency, and accountability by all parties involved.
2) Outsourced Delivery Services
Focusing on Core Competencies
The power of third-party delivery services is basically an opportunity for warehousing and distribution centers to quickly deliver products to customers using independent contractors. This outsourcing eliminates the responsibility of maintenance of a fleet of trucks with potential of breaking down, insurance costs, and all around increased capital. While several 3PLs and fulfillment centers are expanding their fulfillment and distribution platforms to smaller, regionally focused networks, hiring and building their in-house delivery network takes time and money. To ensure they can deliver to customers quicker, many warehouse and distribution centers are contracting delivery services.
3) Packaging Supplies Will Go Green
Customers Reduce their Impact on the Environment
Many businesses are reviewing every aspect of their supply chain to reduce its environmental impact. To be eco-friendly, 3PLs have been integrating environmentally-conscious practices into their operations. Optimization of packaging supplies has become an imperative eco-conscious strategy for shippers.
They are now improvising with new ways of designing and producing their products, attempting to lessen their carbon and environmental footprint, while simultaneously saving on costs. Consumers rate sustainability important when making a purchase and millennials find it trendier to continue choosing companies supporting green initiatives. Trends have shown an overall shift among the broad customer base today towards a more eco-aware business model.
Green packaging has led to a wave of new eco-friendly alternatives to traditional packaging materials. Here at FFI, we see a rise in biodegradable packing peanuts, corrugated bubble wrap, and air pillows made of recycled materials.
Sustainability is essential for success moving into 2021, from recyclable plastics to cornstarch and even seaweed packaging. There is seemingly no end to the options available to the environmentally conscious business.
4) The Amazon Effect
Warehouse and Distribution Centers to the Rescue
“The Amazon Effect,” which has ushered in the expectation of rapid delivery with minimum effort and the desire for a seamless order experience, is one that every customer has the right to expect. The stranglehold that Amazon has on the US e-commerce space isn’t without its pitfalls. Shortly after the pandemic started, Amazon temporarily prioritized inbound shipments of household staples, medical supplies, and other high-demand products for both Amazon Seller and Vendor Central. As a result, Amazon sellers experienced major delays of their shipments and often experienced out of stock items in their Amazon store leading to loss of sales or a poor customer experience.
Amazon sellers scrambled and found alternative options like relying on warehouse and distribution services like FFI to prepare their goods for Fulfillment by Amazon and allowing them to live up to their brand promise. This meant developing closer relationships with their outside fulfillment team; warehouse and distribution centers rescued them. We can expect to see more brands turning from basic service providers to more comprehensive fulfillment partners. The latter will offer a wider range of services and take the time to understand individual businesses, which puts them in a better position to bend to the needs of that brand and help it to scale more effectively.
5) E-commerce Will Accelerate
The global pandemic caused extended lockdowns and accelerated the trend of moving from brick and mortar stores to online. Major brick and mortar retailers are declaring bankruptcy and some may not survive. Smaller stores may have even less resilience.
COVID-19 has caused an accelerated evolution of e-commerce to such a degree that consumers can shop almost anywhere, anytime. The pandemic has turbocharged a shift to e-commerce for many Americans. Once again, supply chain trends intersect with the wider need to respond more quickly to consumer requests without disrupting the flow of products or services.
The increase in demand will continue to put pressure on warehouse technology. We’ve already seen shipping times grow at major e-commerce retailers, and the postal service burdened as smaller retailers try to pivot to online. Additionally, this will result in an increased demand for warehouse space that will likely result in more refurbishment of older buildings. Being able to build and flex warehouse capacity to support customer demand is a strength FFI offers our customers.