The repercussions from the Covid-19 pandemic have drastically impacted warehouse logistics for both B2B and B2C operations. Besides global product supply constraints, we have seen a dramatic increase in B2C e-commerce sales and a decrease in B2B sales through closings of brick and mortar stores. This leads to logistics volume uncertainty, as countries and their brands continue to adapt to the repercussions from the pandemic.
According to Shopify, nearly 40% of e-commerce brands say they’re experiencing virus-related shipping issues because of international border closures and lockdowns affecting warehouses. Some brands are having capacity issues in their warehouse, due to the constraint in labor capacities, caused by the pandemic. Supply chain resilience and risk mitigation in supply chains has always been on the agenda of supply chain executives. However, the pandemic showed that most were still focusing on short term cost-optimization rather than long term risk mitigation.
Working with third party logistics providers (3PLs) for warehouse operations can help to adapt to the fast-changing requirements (e.g. B2C is increasing – B2B is decreasing) and to manage capacity constraints or excess capacity according to current demand. By having multiple locations, a 3PL is able to assist with business continuity and risk mitigation, that is increasingly important in the Covid Era. If there is only one location and the transportation shuts down or the labor market is impacted, the supply chain is negatively impacted.
3PLs focus on flexibility and are continuously adapting to e-commerce end-customer needs to meet and exceed brands SLAs, during this pandemic.
Brands are now seeing their supply chains aren’t as resilient as the thought they were, due to the Covid-19 pandemic. From different peak days, to changing end-customer profiles; everything is continuously changing for brand supply chains in this new economy. 3PLs can be more flexible to adjust their processes to those changing needs and different end-customer profiles, leveraging their multi-client setups, flexible labor management and operational experience.
“Within days, we quickly adjusted our warehouse operations and procedures to ensure the safety of our Associates and continue to meet the dynamic nature of our customers’ expectations as they adjust product mix demand. In addition, we are proud to support the new work-from-home workforce by delivering essential items that are indispensable for their make-shift home offices.”
Abby Meave, Site Director at Arvato Supply Chain Solutions
In order to provide the required flexibility to support brands during these troubling times, 3PLs need to be ready for a series of challenges:
3PLs are have to able to deal with increasing volume fluctuations:
As mentioned in an another article from Arvato, called “New Era of E-Commerce Logistics”; capacities in the market have been heavily impacted, especially in airfreight. 3PLs need to be prepared for the fluctuations in inbound processes, due to the changes in shipping methods by land, air and sea caused by the pandemic.
Sales and operations planning is critical to inventory supply. 3PLs often use solutions, such as full time and temporary labor to manage operations. However, it is advantageous to automate solutions to manage demand fluctuations.
Warehouse labor and space capacities as well as final mile deliveries capacities are also being stretched. Due to the influx of smaller parcel volume, caused by the dramatic increase in demand from e-commerce end-customers, capacities cannot keep up. At the same time, warehouse managers are struggling to fulfill increasing demand for temp labor.
“A quality 3PL has to have strategies in place with multiple temp agencies and multiple carriers and be proactive in communications to anticipate bottlenecks”, explains Andreas Podwojewski, Site Director at Arvato Supply Chain Solutions.
“The 3PL can then react quickly and deliver faster end-customer satisfaction.”
3PLs need to adjust labor capacity needs continuously throughout the pandemic:
With the shift in B2B to B2C discussed above, 3PLs have to be able to provide a dynamic and flexible process in how they approach their daily operations. Having the appropriate tools and defined staffing processes in place to fulfill the changing labor requirements, is one of the ways 3PLs can make certain all orders are fulfilled and a brands SLA is followed.
To further account for the changes in volume caused by the pandemic, 3PLs should make certain warehouse staff are cross trained for both B2B and B2C pick, pack and ship processes and consider adjusting shift times to accommodate the different B2C and B2B demands.
From forecasting, to different picking or forklift operators, to hiring more workers for the picking and pack tables, to the different working standards caused by the pandemic, a 3PL should take everything into consideration. By having workforce management tools in place and consistently sharing information with temp agencies, 3PLs can effectively manage the upscaling and downscaling of labor.
By using advanced planning tools 3PLs can get a clear view into the data needed to plan for labor needs and recourses. They can plan accordingly in shorter more frequent timeframes on receiving, VAS, returns, outbound and shipping capacity requirements.
3PLs have to be able to adopt operations quickly to the changing warehouse requirements:
Before the lockdown, caused by the pandemic, many warehouses typically received the majority of their order volumes from B2B orders. B2C still represented a relatively small share of the overall shipping volume for many operations. With the lockdown we experienced a new surge in e-commerce orders. 3PLs have to deal with that by changing labor focus to B2C and partially also change material flows and picking, packing & shipping strategies. This might include two-step picking, adding pack tables and push out carrier cut-off times, to accommodate B2C fulfillment needs.
Digital transformation can help manage unexpected volume increase and social distancing guidelines:
The need to adhere to the social distancing requirements within warehouses and logistics operations, drives the need for digital transformation and automation. By utilizing innovations, such as, automated picking via Autostore, auto pack, AGV’s, IoT, sensors, wearable devices and autonomous vehicles, 3PLs are able to facilitate human machine collaboration and keep human workers safe, during this pandemic.
With the increasing volumes from e-commerce orders, 3PLs often look at scalability that can only be reached by automation in certain areas of your warehouse. For example, a modern 3PL manager may find that an autonomous shuttle system can reduce the labor-intensive task of picking and processing orders.
3PLs can offer another level of transparency to operational processes with videos:
Brand teams are cautious about going onsite at warehouses to review operations and facilitate their new go-live launches, due to the pandemic.
By providing live virtual tours of warehouse functional areas, 3PLs are able to guide brands through warehouse processes. This can be especially helpful in providing info for new colleagues and processes. By offering brands outside of the box options, such as the ability to watch live videos of warehouse processes, 3PLs can add a level of transparency to their operations.
The e-commerce fulfillment provider, Arvato Supply Chain Solutions, recently performed a Customer Communications in the Corona Crisis analysis of large online retailers and evaluated what actions top B2C brands are currently taking to deal with the corona crisis. They discovered, among other things, that many of the brands analyzed will be adapting planning in their warehouse logistics, due to the pandemic. The brands will be forced to operate with a smaller staff than usual, for health, as well as cost reasons. This will cause delays in processing returns and thus, late reimbursements
The logistics world is evolving towards the need to fulfill the increasing B2C e-commerce needs, caused by the pandemic. 3PLs can leverage their expertise and industry knowledge to anticipate what brands need throughout this pandemic.