What Will the DC of the Future Look Like?

August 16, 2016 BY Guest Blogger

distribution center supply chain

It’s no secret that today’s supply chain is ruled by the customer. Thanks to ecommerce giants like Amazon, personalized, efficient customer service is no longer a luxury – it’s quickly becoming the status quo for manufacturers and distributors.

In this Guest Blog Scott Stone, Director of Marketing at materials handling provider Cisco-Eagle  looks at the many factors influencing the evolving distribution center: trends in technology, workforce demographics, and more.

Amazon and other online retailers have set the bar high, promising next-day and even same-day customer deliveries.

The end result? Customers who want what they want – when they want it.

As noted in Manufacturing.net, the next generation of digitization and personalization will put pressure on manufacturers and distributors to reevaluate their existing processes and business strategies. It is, in fact, essential for delivering the services customers expect to outpace competitors.

During the recent Modex supply chain expo in Atlanta, GA, we got an insider’s look at the future of the distribution center, through educational sessions and discussions with other distributors.

Let’s take a closer look:

Trends in Technology

We’ve all been hearing (and writing!) about robotics and automation for some time now, whether it’s as a means to drive efficiency, increase productivity, combat the increasingly large talent gap, or provide any number of other warehouse benefits.

There’s a reason for that: The results – and the financial payback – are significant. Amazon’s Kiva robots, for example, have led to 20 percent savings in the company’s operating expenses, not to mention $22 million in savings for each of the 13 Amazon distribution centers that currently use the robots.

But what about some of the newer, cutting-edge technologies (e.g.,3D printing, Google Glass, wearables) that are no longer on the horizon – but here now, and promising to disrupt the entire supply chain in a very significant way?

As outlined by Fortna in their Modex session “The Distribution Center of the Future: Disruptive Technologies & Justifiable Solutions,” the key is for manufacturers and distributors to watch for trends in technology before they become a reality. The penalty for slow adoption can be steep.

With the Internet of Things, for example, companies can leverage unrelated devices that are sending data via sensors, and use that data to make intelligent decisions that drive further warehouse efficiency. Amazon is already capitalizing on this, having recently launched a one-hour shipping service in Manhattan that comes as a direct result of its growing network of fulfillment centers, where it has added new technology to quicken delivery time.

Shifting Workforce Demographics

Research from the Manufacturing Institute and Deloitte indicates there could be as many as 2 million unfilled manufacturing and distribution jobs by 2025, up from initial estimates of 600,000. As noted in a Huffington Post article on the research findings, retirement and rapid industry growth are the two driving factors contributing to the skills shortage.

But, with Baby Boomers retiring at an unprecedented rate, the question then becomes: How can distribution centers find ways to replace them that will drive the even higher levels of warehouse efficiency needed to compete in today’s customer-centric marketplace?

For one, companies will need to stay focused on millennial workers, attracting and retaining the type of talent that, as of 2015, already made up the largest generation in the U.S. workforce.

In that sense, technology advances and the rise of millennial workers are two trends that go hand-in-hand. Millennials offer the unique skills (fresh ideas, adaptability, and technology prowess) that business will increasingly need in order to innovate and remain competitive.

Steps for Success in the Distribution Center of the Future

In order to be successful in a rapidly changing, technology-driven world, distribution centers must remain nimble, staying on the front lines of innovation and acting on – instead of reacting to – industry-wide changes.

Distribution center operators should consider the following in the coming years:

  • Stay educated: Stay on top of the latest and greatest in technology.
  • Think outside the box: Think beyond the world of supply chain to keep a pulse on how the consumer landscape is shifting.
  • Look broadly for a return on investment: ROI goes beyond the DC.
  • Develop a roadmap: The DC of the future won’t happen in one or two years – there is too much change, and too much work to be done – so think beyond the here and now.

Final Thoughts

There are many factors influencing the future of the distribution center, including trends in technology, shifting workforce demographics, and more. To remain competitive in the years to come, DCs must stay one step ahead of technology advances, attract and retain millennial workers, and ultimately plan for an increasingly complex – and consumer-focused – supply chain.

Scott Stone is the Director of Marketing for Cisco-Eagle, Inc., a provider of integrated material handling and storage systems for industrial operations. Scott has 25 years of experience in industrial operations and marketing.