Current Issues

Regular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.

Panicking over peak?

Panicking over peak?
As we head into the final quarter of the year we enter the season where most retailers pin their hopes on generating the lion's share of their annual income. 2018 has been a rollercoaster year for the sector; it seems that almost every week another household name goes into administration. It has not been easy, there is a lot to play for and hopes are high for the Christmas season.

Despite all the bad news from the high street and the uncertainty of Brexit looming in the background, fundamentals for the logistics industry are very positive. The economy remains in relatively good shape, consumer spending is high and there is one area of retail that is booming: ecommerce. The high street retailers may be in trouble, but things have never been better for those that have mastered online sales. Ecommerce continues to grow at a relentless pace, and this, of course, results in more packages being shipped and put through logistics networks.

Most retailers made their preparations for the peak season earlier in the year, but it is impossible to get predictions 100% right. Regardless of how well laid out plans are at the outset inevitably some last minute adjustments need to be made. This time of year can make or break companies so it is critical to get it right. Retailers can not afford to have sales hampered by supply chain constraints so they need to make sure they have a back up plan.

Enter on-demand warehousing…
Technology is increasingly becoming part of this story and over the past two years, we have seen the massive growth of on-demand warehousing. On-demand warehousing platforms match warehouses that have spare capacity with customers looking to take additional space for short periods of time. It is the perfect solution to peak seasonal storage requirements. It is inefficient for retailers to have warehouses that are designed for peak times because most of the year they will be operating half-empty warehouses.

The alternative is to switch on additional capacity when it is required at peak times, but the problem is it is not very easy to find space. There is no national database of warehouses and warehouses do not have websites so there is no quick way to find them. This is where on-demand comes in. Now a retailer can search for warehousing in seconds and book a warehouse in a few clicks. The speed with which it can be done is game-changing for the industry.

Ironically, the biggest users of on-demand warehousing are ecommerce companies. These businesses are almost by definition the forward-thinkers. They are agile by design so the concept of finding and booking warehouse space online makes perfect sense to them. On-demand simply further increases their advantage over the traditional high street players.

However, that is starting to change and this year for the first time some of the traditional players are dipping their toes into this new world. The driver? Emergency peak requirements. There is no better way to innovate than out of necessity and these companies are finding themselves in a whole new world. Once they convert there is no going back. Retailers are free from being constrained by their supply chains and left to get on with what they are good at - selling.

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