Current Issues

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

Margin Erosion is turning the spotlight on the Warehouse

Craig explains how the next generation of warehouse operations will not only halt margin erosion but deliver new levels of retail profitability.

Margin Erosion is turning the spotlight on the Warehouse
For retailers, consumer demand for faster, more visible ecommerce deliveries and spiralling returns are creating massive downward pressure on margins. There is growing board level recognition that existing warehouse operations are simply not designed to support the challenges of omnichannel fulfilment. A highly automated warehouse is now essential if retailers are to satisfy rising customer expectation while remaining profitable.

Robotics are clearly set to play a key role in improving picking and packing processes; but automation is just part one of the equation. How can retailers create an efficient warehouse operation that supports both store and direct-to-customer fulfilment? What is the optimal balance between man and machine?

Multichannel Fulfilment Challenge

Over the past decade, retailers have made valiant attempts to fulfil customers’ evolving expectations across multiple sales channels. But with returns spiking and demand for next day delivery now ubiquitous, current logistics processes are no longer adequate: the cost of fulfilment is driving margins down to untenable levels.

Despite the huge rise in ecommerce, few retailers would claim to have warehouse operations truly optimised to support current demands. These warehouses were designed to support fulfilment to store, leveraging the ‘Wave’ approach to efficiently pick and pack big batches of predictable demand. Adding large numbers of highly unpredictable, fast turnaround, individual customer orders into the mix creates a very different, very challenging warehouse environment.

For many retailers, the only way to meet customer delivery pledges is to throw additional staff into the mix. But this is not a sustainable approach: with a tough economy, adding staff is unaffordable, eroding margins even further. With the highly publicised recruitment challenges, adding staff is often unachievable, especially during any short sale events. Additionally, the arms race in order cut-off time for Next Day fulfilment places further strain on the warehouse, leading to staffing up on expensive night shifts that only erode margins further.

How can retailers optimise warehouse operations to support the new fulfilment demands? What is the best approach to cost effectively and efficiently manage both store and customer fulfilment to address the apparently inexorable margin erosion?

Next Generation Robotics

Automation and robotics are without doubt key areas of investigation in 2019, as retailers gain confidence in the growing maturity of the technology on offer. From autonomous mobile robots (AMRs) to sorting equipment, conveyors and automated storing and retrieval systems (ASRS), there are any number of options for streamlining operations. Certainly, the productivity benefits are compelling: a recent market survey conducted at IDC found that over 70% of the time, commercial service robotic technology delivered double-digit improvements to productivity, efficiency and capacity.

While not designed to replace people, the latest generation of AMRs offers new levels of sophistication, enabling retailers to seamlessly blend man and machine to optimise efficiency. For example, mobile robots with arms can perform picking; robotic arms can be used for sorting; while robots equipped with RFID readers can automate inventory management.

The most notable step forward is that robotic technology is now designed to work with people, to collaborate with the human workforce throughout a warehouse environment. With sensors and vision, as well as artificial intelligence, robotic design includes a raft of safety features to enable effective and controlled human interaction. This level of innovation opens the door to new ‘co-bot’ workflows that offer significant improvements in flexibility and productivity to further reduce warehouse costs and increase margin.

Co-Bot Efficiency

With the ability to effectively combine man and machine throughout the warehouse, retailers have the opportunity to reconsider the most effective way a warehouse operation can handle the new demands created by a blended fulfilment model. To fulfil multiple small orders, retailers have added new areas for product packing and dispatch, affecting the design of the warehouse operation. The way order picks are prioritised within a multichannel warehouse operation is also far more challenging and complex.

The Wave approach of bundling a number of orders into one batch that is picked over longer time scale – such as two hours – works brilliantly for store fulfilment. The Waveless model, in contrast, manages every order as a discrete allocation of work, enabling fast, responsive fulfilment for small, more urgent orders and it is ideal for direct-to-consumer order fulfilment.

For warehouse operations now tasked with fulfilling these very diverse requirements, what is the optimal method for combining Wave and Waveless operations whilst still ensuring essential targets – such as hitting a courier pickup window – are prioritised? This is where order streaming is invaluable, providing a method for optimally processing orders of all types with simultaneous Wave and Waveless operations.

Using order streaming, a retailer can combine Wave and Waveless approaches to maximise both efficiency and staff/ robot utilisation, reducing costs and delivering greater product margin for both in-store and direct-to-consumer sales. As orders are fulfilled – by workers, machines or a combination of both - the use of machine learning creates a process of continual improvement. By harnessing ‘time to pick’ data, for example, the system gains a better understanding of task completion patterns, ensuring the right level of work is allocated to the right resource. Essentially, the warehouse is in a process of continual improvement and optimisation, driving down costs and enabling retailers to incrementally address margin erosion.


As the profitability of the ecommerce model comes under ever greater scrutiny, it is the way in which retailers approach the warehouse in 2019 that could separate the winners and losers. Automation technologies, including robotics, are incredibly exciting, offering significant opportunities for improvement and efficiency gain. But these technologies cannot be deployed in isolation. Creating seamless co-bot workflows will maximise the value of automation, enabling retailers to do more with less in the warehouse; but the environment must also be optimised to support the continually evolving blended fulfilment requirement.

By creating a warehouse environment where increasingly sophisticated robotics and automation can operate seamlessly and effectively with humans, whilst continuously learning to drive further efficiency and improvement, retailers will be able to fulfil ever rising customer expectations without compromising profitability.

Alex Saric
Smart Procurement Expert, Ivalua
The business impact of the new PM’s approach

Smart procurement expert Alex Saric warns that businesses trading with the EU need to urgently review supply chain operations ahead of Brexit

Guy Cuthbert
CEO, Atheon Analytics
Bring clarity of purpose to fixing food waste

Identifying the impact that waste has on sales margin and customer perception, and looking at the steps we can take to reduce total waste

David Griffiths
Senior Product Marketing & Strategy Manager, Adjuno
Putting your brand in the hands of AI

Entrusting data and brand values to Artificial Intelligence and Machine Learning could prove to be your hero, not your villain.

Andreas Koenig
CEO, ProGlove
Wearable Technology - bringing data to the user and unlocking worker potential

The rise of the machine is fuelling essential discussions about the future role of workers – not least within logistics

Mike Thornton
Head of Manufacturing , RSM
UK manufacturing downturn mirrors other developed economies

Commenting on the latest results from the Markit/CIPS PMI manufacturing survey

Johannes Panzer
Head of Industry Strategy for Ecommerce, Descartes Systems UK
Is digitisation the key to preventing cross-border landed costs from disrupting international ecommerce?

How ecommerce organisations can ride the storm of uncertainty to international retail success.

Paul Croft
Director, 3DGBIRE
Taking the Hype out of the Innovation Cycle

From disrupting supply chains to rethinking material use and ending over-engineering, innovation is gaining pace.

John Perry
Managing Director, SCALA
Companies lose millions by side-lining procurement teams, research shows

SCALA surveyed a selection of the UK’s best-known businesses and 3PLs

Richard Seel
Managing Director Supply Chain & Logistics, Delaware
Meeting the Challenge of Supply Chain Efficiency – How Manufacturers Can Achieve their Goals

The process of building efficient sustainable supply chains is becoming increasingly difficult, manufacturers must ensure they don’t fall behind.

Olivier Binet
Managing Director International Markets, InPost
How to build sustainability into last mile deliveries

Why streamlined delivery is at the heart of a green supply chain

Ron Volpe
Global Vice President Apps Business Development, Tradeshift
Under-Pressure Retailers Turn to D2C to Level the Playing Field

‘Retail apocalypse’ continues to ravage the high street - 2,700 closed UK Retailers in 2018

Simon Runc
Principal Visual Analyst, Atheon Analytics
Unlocking the Value in Data

The Science of Visualisation

Steve Purvis
Operations Director, Bis Henderson Space
Brexit Uncertainty Highlights Need for Flexible Logistics Strategy

Reassessing the balance of risk to supply chains and the potential horrors of trying to find well-located warehouse space

Alan Gunner
Business Development Director, Adjuno
Starting at the source: achieving a sustainable supply chain

Alan outlines why the key is for organisations to take control and focus on achieving full visibility

Craig Summers
UK Managing Director, Manhattan Associates
Conquering Connected Commerce

From the omnichannel dream to the retail reality, paving the way for future prosperity

Mark Jolley
EMEA Manufacturing, Transport & Logistics Solutions Sales Lead, Zebra Technologies
Augmented Reality is becoming a Retail Reality

4 ways this advanced technology is improving the shopping experience

Craig Summers
UK Managing Director, Manhattan Associates
The Cost of Doing Nothing

Retailers that continue to innovate, listen to their customers and invest in technology will reap the rewards;

Sam Ireland
International Marketing Manager, Loftware
Are You Navigating Global UDI Compliance?

If so, you won't won't want to miss this year’s European UDI Forum, taking place in Brussels, April 24-25

Stephen Cameron
Business Development Director, SWRnewstar
How the Resource and Waste Strategy Can Empower Industry

The DEFRA’s Resource and Waste Strategy sets out to reduce waste, get businesses to place sustainability higher up the priority list

David Jinks MILT
Head of Consumer Research, ParcelHero
No more fashion victims - retailers will flock to copy ASOS’ returns clampdown

ASOS’ new crackdown on ‘wardrobing’ will be replicated by most stores, says ParcelHero

Georgia Leybourne
Senior Director International Marketing, Manhattan Associates
Are we embracing the profit potential of the over 50s?

Far more demanding in their retail habits, more likely to invest in big ticket items, much more money to spend vs the younger generation.

Jon Moody
Chief Executive Officer, SSG Insight
The Future of Supply Chain Management

SSG Insight CEO Jon Moody discusses the importance of adopting a digital supply chain in a post Brexit Britain and Industry 4.0

David Luttenberger
Global Packaging Director, Mintel
Mintel announces top global packaging trends for 2019 and beyond

Mintel, the world’s leading market intelligence agency, has today announced four trends impacting the global packaging industry in 2019 and beyond

Andrew Tavener
Head of Marketing, Descartes UK
Compliance Management – it’s time for joined up thinking

How joined-up approach to compliance data transforms the overhead & provides insight that can deliver additional efficiencies throughout the business

Stephen Cameron
Business Development Director, SWRnewstar
Primark's move to 100 per cent sustainably sourced cotton should be commended

Primark is one of the latest retailers to announce new measures to become more sustainable by launching 100% sustainably sourced cotton jeans.

Marc Corriveau
Account Manager, Loftware
Changes in packaging result in ROI for F&B products

If you work for a food and beverage company, you may have noticed something about your competitors

John Perry
Managing Director, SCALA
Why an extension is best for British businesses

It is likely that the prime minister will now have to request a long extension to article 50 at Thursday's Brussels summit

Will Broome
CEO, Ubamarket
Increasing competition in the digital age will be beneficial for the high street

Increasing competition regulation during the digital age will not only be beneficial for consumers

David Jinks MILT
Head of Consumer Research, ParcelHero
Booking a courier? No printer required, says ParcelCompare

It’s a common misconception that a printer is essential when booking a courier pick-up.

John Perry
Managing Director, SCALA
Why an extension is best for food and drink businesses

Given that the Brexit referendum was only advisory, not in any way binding, there have really always been four potential outcomes open to us

Graham Parker
CEO, Gravity Supply Chain Solutions
Mitigating The Risks Of Trade Wars And Tariffs

As trade wars heat up, businesses need to protect their profit margins from increased tariffs.

Sam Ireland
International Marketing Manager, Loftware
How Brexit Will Impact Supply Chain Labeling?

The clock is ticking for the United Kingdom and European Union to finalize plans for the UK’s departure from the EU.

Sid Holian
Managing Director, Bis Henderson Consulting
Three critical steps to a hi-tech, agile supply chain

Retailers are facing a new reality and as a consequence supply chains must change.

Manu Tyagi
Associate Partner, Retail and Consumer Goods, Infosys Consulting
M&S and Ocado have signed a £750 million deal to take M&S groceries into the home delivery market

M&S’ deal with Ocado marks the high street retailer’s continued fight for survival, as it enters into the home delivery game.

Olivier Frère
Serialisaton Expert, Zetes
Understanding the Tobacco Products Directive

In a recent report issued by KPMG it was estimated that last year, counterfeit and contraband cigarette consumption was 8.7 % of total use in the EU

Dan Brown
Corporate Sector Director, SWRnewstar
Mind the gap: how the transport sector can meet targets to reduce avoidable waste

UK train companies are forever warning us to ‘Mind the Gap’.

Paul Heiden
Senior Vice President of Product Management, Ultimaker
6 overlooked benefits of 3D printing for your supply chain

Year on year, 3D printing is becoming more capable.

Dave Locke
EMEA Chief Technology Officer, WWT
Merged pharmaceutical firms seek fast-track route to savings

The pharmaceutical industry is preparing for an accelerated pace of consolidation, with the number of mergers up 39 per cent since 2017

David Jinks MILT
Head of Consumer Research, ParcelHero
Amazon and Alibaba are creating the biggest revolution in shipping for 60 years

Global e-commerce is leading the biggest shake up in international shipping since containerization

Johannes Panzer
Head of Industry Strategy for Ecommerce, Descartes
How to make international ecommerce transparent, efficient and cost-effective

Cross-border ecommerce provides organisations with, theoretically, a low-cost opportunity to break into new markets.

Stephan Buhre
Managing Director, Implico
Standardized data communication in the downstream oil and gas sector

Today’s downstream companies do no longer just trade oil and gas.

Craig Summers
UK Managing Director, Manhattan Associates
Putting the WOW in the checkout experience

Embracing technology is a prerequisite for success in the modern retail environment.

Richard Parfect
Fund Manager, Seneca Investment Managers
The cessation of Airbus A380 production

Richard Parfect, Fund Manager at Seneca Investment Managers, comments on the cessation of A380 production in 2021

John Perry
Managing Director, SCALA
What next for British business?

John Perry comments what next for British business

Chris Jones
EVP Marketing & Services, Descartes
5 Key Logistics Trends and Technology Implications for 2019

2018 can certainly be summarised as a turbulent year in logistics and transportation management

Craig Summers
UK Managing Director, Manhattan Associates
What is the Checkout of the Future?

To keep up with consumer expectations, the in-store experience, in particular, the process of checking out, needs to transform.

Jason Chester
Director of Global Channel Programs, InfinityQS
Industry pessimism could delay digital transformation and restrict growth across the manufacturing sector

Latest CBI Survey reveals spending on plant & machinery, training and innovation all expected to be lower in the year ahead

Charlie Pool
CEO, Stowga
Five key trends shaping the supply chain in 2019

2018 was a turbulent year for most industries - logistics and supply chain was no exception.

David Jinks MILT
Head of Consumer Research, ParcelHero
DIT 'Exporting is GREAT' free webinar: ParcelHero Reveals the Secrets of Getting Your Goods to Overseas

SME retailers and manufacturers can find out everything they need to know about shipping products to new markets by joining the DIT