15 Jan 7 Wholesale Distribution Trends for 2018
This time last year, we were predicting that the trends in distribution in 2017 would include the rise of drop shipping, process automation, reverse logistics, exports and unified commerce. All of these predictions have been realised and 2017 has seen the supply chain landscape radically changed. But what’s to come in 2018? Read on for our predictions of the wholesale distribution trends for 2018.
Warehouse and Logistics Technology
Our first four predicted wholesale distribution trends for 2018 fall under the main category of warehouse and logistics technology. There have been considerable leaps in technology over the past years, which are producing profound transformations in many industries. The big players in the warehousing and logistics sectors are already capitalising on these technological developments, and more and more wholesale distributors will benefit from them during 2018.
1. Warehouse Robotics
One of the biggest developments is in the use of robotics in the warehouse. Ecommerce giant Alibaba – China’s biggest online commerce company, and the world’s largest retailer – runs a smart warehouse. Sixty robots pick and move the goods, transporting them to the operatives, who then pack and distribute the orders. These labour-saving robots undertake around 70% of the work in the warehouse, using WiFi to receive instructions and employing laser sensors to avoid collisions. Their use has increased output three-fold at the company’s Huiyang warehouse.
Similarly, in Amazon’s Manchester warehouse, the use of robotics has allowed the company to process more orders. A fleet of robots moves shelving units around the million square foot warehouse. The automated storage and retrieval systems were manufactured by Kiva Systems, which is now owned by Amazon and called Amazon Robotics. Robots transport the shelving units, bringing the stored items to workers for picking, and then return them to their storage location.
In a different use of robotic technology, Fetch Robotics has created robots that collect items from human pickers and move them to packing areas. By combining their systems with SAP Extended Warehouse Management software, 3PL providers, such as RK Logistics Group in the US, can manage high volume warehouse operations and simplify their logistics. Fetch Robotics estimate that most of their customers see a return on their investment in three to six months.
2. Warehouse Automation
Full warehouse automation is the holy grail of the wholesale distribution industry as it not only reduces costs and improves efficiency, but also makes warehouses entirely safe. Without the human errors involved with people operating forklift trucks, or moving amongst material handling equipment or the towering racking units of stock, the danger to human safety – and even life – is eliminated.
One hurdle that has always prevented the creation of a fully automated warehouse has just been solved. A company called RightHand Robotoics has developed a solution that can recognise and pick up items from storage, matching the capabilities of a human. This breakthrough will no doubt soon be realised in warehouse systems that can manage inventory putaway, and also pick, fulfil and pack orders without any human intervention whatsoever.
3. Voice Technology
It’s nothing new for a warehouse to use voice picking, but it’s certainly increasing in popularity as a picking method and we’re seeing more and more warehousing operations deploying it. Distributors are choosing it because of the productivity gains it brings. Because it enables hands-free operation, it can reduce the time it takes for operatives to do their work. Without the need to put down a clipboard or scanner, and the actual picking process is speeded up. While the initial capital outlay is often considered to be quite high, technological advancements will reduce this over time, making voice picking very attractive to warehouses of all sizes.
Voice technology – such as that seen in home assistants like Google Home and Amazon Alexa – has proliferated during 2017. It has applications beyond the home though. Even with its current functionality, Amazon Alexa can be integrated with an ERP or WMS, allowing users to perform simple tasks such as making a stock enquiry for a particular product SKU. However, the use of such systems may be limited to non-restricted tasks until issues around user permissions can be addressed. Once these have been successfully tackled, there is scope to build applications that utilise Artificial Intelligence (AI), whereby information is not just presented but also acted upon.
4. Artificial Intelligence
There is increasing adoption of AI within the supply chain. Those companies with large logistics operations already employ AI for intelligent optimisation of delivery routes. And carrier integration systems allow companies to choose the most appropriate carrier based on cost and service level.
There is also an evolution from conventional Business Intelligence (BI), where data analysis supports a job role, to a scenario where AI is enabling autonomous decision-making. The preliminary applications of AI technology are only hinting at far more widespread adoption across the supply in the future.
The final three predicted wholesale distribution trends for 2018 concern customer centricity. Many industries are benefitting from putting the customer at the centre of operations. Mass customisation, delivery transparency and the continuing emergence of omni-channel commerce will continue to be of prime importance in driving the distribution sector in 2018.
5. Mass Customisation
At its most basic, business success can be defined as providing goods or services to customers at a profit. Historically, it has been easiest and cheapest to sell to just to the larger segments of a market, without tailoring products according to all the varying needs of smaller segments of that market.
But, with mass customisation, goods and services can be customised to very specific – sometimes individual – needs. Mass customisation combines the low costs of mass production with the flexibility to personalise custom-made products. This gives customers a greater choice of products, meaning dramatically higher numbers of SKUs for wholesale distributors.
Personalisation is very much a current trend within marketing, with brands personalising online experiences for their users, delivering dynamic content according to past purchases, browsing habits, social profiles and more. That trend is set to cross over to the manufacturing and distribution disciplines as companies see the benefits of providing a greater range of customised product choice.
6. Delivery Information Transparency
Rising online sales have brought a sharp upsurge in the value of the home delivery market. With increasing ecommerce, customers have come to expect more and more value from their online purchases. Not only do consumers want to receive their goods quickly, they also want the ability to track deliveries.
Surprisingly, some of the big retailers are still lagging behind when it comes to providing delivery information transparency. Amazon, for example, provides only basic tracking that lets consumers know that an item has been shipped. But other companies, including logistics providers such as Yodel, provide very detailed tracking, including revealing to customers how many deliveries are in front of theirs. This transparency engenders customer satisfaction and trust and ultimately drives repeat business.
Of equal importance to an enterprise is the ability to speed up the delivery process. Providing a fast, low-effort method of obtaining proof of delivery can reduce the time it takes a driver to administer each delivery and really accelerate the whole delivery process.
7. Continued Emergence of Omni-Channel Commerce
The drive from multi-channel to omni-channel commerce is nothing innovative. But it will have growing importance in 2018.
Omni-channel retail gives users a cohesive experience across channels, and it’s an experience they have come to expect. Propelling a company’s ability to deliver a truly omni-channel capability is the software technology that drives business operations. ERP packages work as the core of an integrated system into which other apps and product suites can be incorporated to give a 360 degree view of the customer. Then, at each touchpoint, the company can see an optimal view of its customers, allowing for better personalisation of marketing, sales offers and customer service.
Increasingly sophisticated methods will allow retail businesses to recognise their customers across channels and to deliver a unified experience to them.
What do these 2018 Trends Mean for Wholesale Distribution?
These wholesale distribution trends for 2018 will continue to bring improved efficiency for the warehouse and the supply chain. Those distributors that innovate and embrace these new methods and technologies will be the ones that see the greatest business success.
If you’d like to kick start 2018 with a review of your ecommerce, ERP system, or warehousing management, please call us for more information on 020 8819 9071 or contact us using the website form.