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Supply Chain Shifts From Lean Model

The last few months have put the supply chain to the test. We’ve seen strong points and weaker areas. With the supply chain’s lean model, many retailers were not able to respond to the sudden changes in demand. To prevent a similar event in the future, stock levels could rise 5%-10%.  This increase in stock means there will be an increased need for the warehouses to store it. According to a recent report by Prologis Research, in the US market 150-200 million sq. feet of new warehouse space will be needed every year for the next 2-3 years.

The study also predicts more demand as a result of shifting manufacturing locations to on-shore or near-shore. It is not likely that this will come to fruition in the short term, but will likely be a long term trend. “These changes, being more costly and complex than relatively simple distribution network shifts, are likely to be a long-term trend that plays out over years,” said the study’s authors.

Costco’s recent acquisition of logistics company, Innovel, echoes these findings. The wholesale retailer is strengthening up it’s last mile efforts, while simultaneously increasing its warehousing capacity. USB  reportedly compared the acquisition to building 100 traditional Costco warehouses.

“We have had a great relationship with Innovel and share a philosophy of taking care of our members,” Costco CEO Craig Jelinek said in a statement. “We believe the acquisition will allow us to grow our e-commerce sales of ‘big and bulky’ items at a faster rate.”

As new warehouses are developed and supply is increased, having visibility into what inventory and assets companies have, and where they are located will become even more vital. That’s where a Warehouse Management System comes in. If you have any questions about these systems, feel free to give us a call or send us a message. Our experts can help you determine the right solution that makes sense for your environment. We’re the barcode and RFID experts so you don’t have to be.