The warehouse of the future

At a time of massive change in the way the world does business, Supply Chain Management Chair Dale Rogers is working to find out what fulfillment centers will look like tomorrow.

It’s not a question that many consumers likely spend much time mulling over, but make no mistake, it is one that some of the nation’s largest companies most certainly do. That question is this: What will the warehouse of the future look like?

On its face, it may not seem to be all that interesting of a question. After all, how complex can a warehouse — or even a network of warehouses — really be?

But at a time of massive change in the way the world does business, this seemingly innocuous question is one of the most complex, most pressing, and most important facing industry today. Supply Chain Management Chair Dale Rogers is working to find the answer.

Last year, Rogers launched an in-depth and ongoing new research project focused on the fast-changing dynamics in warehousing strategy in partnership with Scottsdale-based software and consulting firm JDA Software, a company that — like many others today — is working to restructure its supply chain infrastructure at a time of massive disruption and seemingly unyielding change.

The reasons for this mad scramble, of course, are multifaceted. But they all boil down to major factors: competition and innovation. Led by such leaders in supply chain management as Amazon, companies large and small have over the past decade almost completely upended the traditional supply chain, changing the way consumers find and buy goods while simultaneously upping their expectations for service, fulfillment, and ease of transaction.

Speed, agility, and accuracy — all of these factors are all more important than ever before, and as consumer expectations change, companies are being forced to change, too. The trick is, they don’t actually have any time to play catch-up; the industry leaders are already pulling away, which means everyone else needs to adapt, and they need to adapt now.

In other words, long gone are the days when a warehouse was just a large building to store inventory; today, and in the future, these facilities will in many ways serve as the lifeblood of some of the world’s most successful companies — not just stops along the supply chain, but crucially important links in complex systems that move goods quickly and easily, while keeping customers happy — and the profits flowing.

“The simple fact of the matter is that there is just so much disruption right now,” says Steve Simmerman, a senior director at JDA. “You can call it the Amazon effect if you want, but let’s face it, we are all buying all kinds of things online every day, and it’s really causing havoc in the marketplace. Given that disruption, then, what are the trends that we are seeing going forward? And in response to those trends, what should supply chain practitioners be looking to do as a result?”

To find those answers — and, more broadly, to get the big answer as to how the warehouse of the future must work — JDA turned to Rogers, a longtime expert in supply chain management who during the course of his work has thus far spoken to leaders from 40 different companies about their supply chain challenges, the trends they are seeing in the marketplace, and where they believe the industry is headed in the years and decades to come.

“The questions we asked them ran the gamut,” Rogers says. “Are you changing the way you look at your warehouses? Are you configuring them differently than you had in the past? Are you using different new technologies? And what we found was that the answer was ‘yes’ to basically all of those things.”

Rogers says the trends that emerged from the interviews were clear: Change is rampant, and cuts across all industries and sectors; there is unquestionably a huge rush to catch up to the big players out of concern out of being left behind; and perhaps most importantly, there is now a broad understanding that the way things used to be done simply isn’t good enough anymore. Warehouses can’t just be warehouses; they need to be thought about in a much more complex manner.

“Warehouses are going to be most strategic than they used to be,” Rogers explains. “It used to be a place, literally, where you just stored some stuff. Now it’s an intelligent node on the supply chain. The technology that is being used in these warehouses is increasing dramatically, from robots to automated arms to even more sophisticated warehouse management systems and execution systems.”

But while technology is clearly playing a huge role in all of these changes, even some of the most fundamental operational structures of supply chains are being challenged as well. For instance, Rogers notes that for decades, the prevailing trend in the industry saw large companies and retailers pulling back their warehouse facilities, whittling down their national footprint from, for example, 20 large facilities to maybe four of five massive ones, each one serving a much larger area. Now, that trend is reversing, with forward-thinking companies seeking out a broad variety of warehouse facilities, big or small, that can serve the new realities of the retail and business world.

The driving force here, Rogers notes, is a growing recognition among companies and executives that they must be more nimble and flexible than their old infrastructure would allow.

“We’re seeing companies look at a bunch of different kinds of facilities,” Rogers explains. “They’re not all going to be the same. You’re probably going to have to place warehouses or warehouse-type facilities closer to the customer. You’re going to ask these facilities to do more things than in the past. You might see companies running pop-up facilities where you’ll put them up for the holidays, then take them back down again.”

While his work continues, Roger — and, for that matter, his colleagues at JDA — says if there’s one takeaway so far, it’s simply the fact that companies that fail to adapt to the new landscape will probably be left behind.

But as Simmerman notes, it’s one thing to recognize that change needs to happen. But it’s another thing entirely to actually implement those changes — and then make them work.

“It’s extremely difficult,” Simmerman says. “Listen, we always talk about people, processes, and technology. Those are common themes across most industries and most companies. But the reality is that for many companies, their facilities and technologies are not currently geared to support this new reality. They’re out there trying to adapt to the Amazons and others that are ahead of them, but they’re not organized in a non-siloed manner, so they can’t adapt quickly enough. Basically, trying to get those three things — people, processes, and technology — working in this new way is a monumental task. It’s a huge challenge in the marketplace.”