The coronavirus pandemic is an unprecedented event that occurred in the year 2019, putting global supply chains (SCs) into the focus of a wider public. The main concern for food warehouse managers was the well-being and safety of employees. After observing the effects of a global shutdown, food warehouse managers have proven themselves resilient in the face of disruption. They have learned how to effectively adjust workflows to ensure safety and manage an influx in online consumer demand. Proactive companies were fortunate enough to leverage Food ERP. The advantage of digital infrastructure via Food ERP on their side made it relatively easy to respond quickly, accelerate operations, and pivot business models while the others had to take a detour.
No industry will emerge from 2021 unscathed. The way companies manufacture and distribute goods and services will never look the same as years prior, but businesses that take on reactive approaches to their risk management strategies and adapt accordingly will collectively help shape the next normal.
Warehouse changes aim to be all about the employees. Tempering in design has been implemented to transform the layout of fulfillment centers to address growing concerns of social distancing. The layout design is radically changing to eliminate chances of contracting the virus including new additions such as floor markers and plexiglass barriers.
The warehousing market is set to undergo a transformation. Some of these changes will be driven specifically by Coronavirus; others will be trends that pre-existed the pandemic but which will be accelerated by the social and economic changes which it wrought.
Benefits of Produce ERP Amidst Covid-19
Owing to the pandemic companies have had to change their warehouse management and designs with the help of food ERP. To speak volumes of which let us dig deep into what produce ERP has got to the table to counter the pandemic:
- Lean to Higher Productivity
Warehouses are nodes in the supply chain where inventory builds up as an insurance policy against unforeseen peaks and troughs of demand. The more uncertain the market or the external environment, the greater the need for buildings in which to store goods and the services required to process, pick, pack and dispatch them. In the future, there will be less LEAN and more safety stock. The increased levels of inventory will need more warehouse capacity in which to store them. This additional capacity may come from larger warehouses or from more warehouses or both ending up being managed by Food ERP with a warehouse management feature.
- Inventory on Hand
Before the pandemic, most food warehouse managers had adopted lean manufacturing as a best practice. Receiving goods just-in-time for manufacturing kept inventory costs down and utilized space more efficiently. When COVID hit, this lean strategy left many manufacturers with inventory shortages and in some cases caused production to stop completely. To prevent future inventory food manufacturers need to equip Food ERP. For shortages will be leading to production shutdowns, hence with food ERP food warehouse managers will keep more inventory (buffer stock) on hand... Exactly how much more will depend on varying factors, but overall inventory on-hand will increase. Produce ERP will play a pivotal role by predicting the demand-supply cycle to equip food manufacturers to prepare for the buffer stock.
- Shorter Warehouse Contracts
If COVID taught us anything, it’s that the future is unpredictable. With a possible second on the horizon, food warehouse managers will demand shorter contract terms when renting, leasing, or co-sharing warehouse space. Contract terms will be shortened which might also lead to longer contract terms being incentivized. Post-COVID, food companies will be hesitant to sign a 3-5 year contract commitment. Standard warehouse space and contract terms will be lowered to 1-2 years.
- Accelerated Growth of E-COMMERCE
According to Forbes, COVID accelerated e-commerce growth for 4 to 6 years. Total online spending in May 2020 was up 77% year over year making food ERP’s worth weigh in gold. Warehouse and distribution centers aren’t new to e-commerce, but the rapid increase in demand has most struggling to keep up. While some consumers are eager to return to in-store shopping, the data suggests the e-commerce boom won’t subside when COVID relents.
The sustained impact of increased e-commerce orders has changed the order profile of the warehouse significantly. To fill these orders, warehouses will pivot from case picking to pallets destined for retail locations – to picking individual pieces into boxes to be shipped directly to end customers. This is a major change for warehouse operations – material flow, processes, and storage technologies will all be impacted as the warehouse makes the shift from full case to split case picking. Hence making food ERP with an efficient warehouse management system will be the make or break factor moving forward.
- From Centralised to Fragmented
Centralization of warehousing has many benefits, not least the reduction of the overall inventory requirement within a supply chain by reducing levels of safety (buffer) stock required in individual distribution centers. However, by consolidating stock in a single (or at least fewer) warehouse, levels of external risk increase. These risks include:
- Fire or flooding
- Industrial action
- Natural disaster
- Disruption of transport and, of course,
The latter has had a major impact on many warehouse operations throughout the world. The food-producing industry is highly labor-intensive and therefore susceptible to an outbreak of disease, especially in crowded warehouses. ERP for food has helped to develop an effective reaction for warehouse operators which has been to segment workforces and keep shifts separate as well as a host of other hygiene initiatives. However, as a response to Coronavirus, many may prefer to migrate to a greater number of smaller warehouse operations where outbreaks of disease can be contained and limit the impact of the spread of contagion on entire operations within the supply chain node.
As we settle into our post-COVID lives the only certain thing is that nothing is certain. Food manufacturers are creating backup plans for their backup plans. With an unpredictable future, warehouse and distribution centers will look to be as adaptable and flexible as possible with the help of a warehouse management system enabled in Food ERP. The main focus will be on how to best utilize space and efficiently manage their biggest expense - labor.