Automated distribution centres are becoming a very big part of large-scale companies’ supply chains. The benefits of automation are really around efficiency and speed.
Structuring supply chains for the shift to e-commerce
With e-commerce expected to grow 70% over the next five yearsi, and consumer expectations for faster delivery also growing, Travis says it’s really important for retailers to think about that platform and how they're going to support those e-commerce channels.
One way to structure your supply chain is to use a hub and spoke model. It’s where a large-scale hub is based in traditional industrial areas and acts like a distribution centre delivering to smaller centres, called spokes that are located closer to the end consumer. “Typically it’s modelled to work out where population centres are to deliver to people’s houses,” says Travis.
Automation improving efficiency and speed
Automated distribution centres have now become a big part of large-scale companies’ supply chains. Around the world, robots have become essential to warehouse design, and this automation is greatly improving efficiency and speed. “We're seeing automatic warehouses and distribution centres happening now, it’s not in the future, it'll continue to evolve and change into the future, but a lot of customers are doing it right now,” says Travis.
Evaluating the whole supply chain
Whether the supply chain incorporates the popular hub and spoke model or automated distribution centre, Travis explains that the challenges are very similar. He says you need to look at the entire supply chain to understand how to cut costs, and most importantly, serve the end customer efficiently. This means looking at how you source the product right through to how it’s delivered to the shelf. “Whether this is through an e-commerce channel, click and collect, or a store channel, they all have challenges which can affect the total cost of operating.”
Property will only be 30% or less of that total operating cost. 70% of their annual operating cost is operations, freight, and people. So, it's very important that customers actually understand what the 100% cost is before they come up with their property solution to maximise results for both the property development and also for their supply chain,” concludes Travis.
i Source: Euromonitor
