“We have learned to pioneer”

Jeroen van den Berg Consulting turns twenty. In the last decade, warehouse management expert Jeroen van den Berg saw more changes than in the first ten years: “You don’t compete just by reducing costs.”

Initially, the focus in consulting assignments was almost exclusively on cost reduction. Think of implementing paperless order picking. “Back then, I regularly had to explain to people what a barcode scanner was,” laughs the anniversary celebrant.

Today’s challenges

Today, companies come with different questions. They want to prepare their warehouse for new sales channels, new business models, or simply for future growth. Van den Berg advises them on the design of the organization, processes, and systems. “It’s about making the company more competitive. You don’t do that just by lowering costs, but also by broadening assortments and shortening delivery times. E-commerce in particular has had a gigantic impact on how we run our warehouses.”

From mail order to e-commerce

Van den Berg remembers a project at ECI, the book club that twenty years ago tried to make the transition from mail order to e-commerce. “We introduced several concepts there that are now commonplace in e-commerce warehouses. We split orders to shorten walking distances. We sent all single-item orders directly to the packing machines. And we installed ‘pigeon holes’ to merge items collected by different order pickers per order into a shipping box.”

The work becomes more complicated, including for middle management. They need insight into processes, be handy with systems, and also be flexible.

Enormous changes in warehousing

A revised edition of Van den Berg’s book Highly Competitive Warehouse Management has now been published. The previous edition was published in 2012. That was the time when V&D was still opening stores and Wehkamp was the largest online store. V&D has since been declared bankrupt and Wehkamp has been overtaken by bol.com. ECI didn’t make it either. “Warehouses have changed enormously over the past decade. In the past, they had all the time to execute their processes as efficiently as possible. Orders received on day one were prepared on day two and collected on day three. Transport was already planned, so collected pallets could be placed directly at the right truck.”

Speed is crucial

Today, all of that must happen within 24 hours. Or even faster. “You start order picking while orders are still coming in and route planning is not yet finalized. Those shorter lead times with continued pressure on costs pose major challenges for warehouse managers. At the same time, the consequences of a hiccup in the process have become much greater. If you can’t deliver tomorrow, that leads to an empty store shelf or missed online orders.”

Pioneering

Over the past ten years, we have learned to pioneer, says Van den Berg. New parties like Amazon, bol.com, and Coolblue showed how it’s done. “It’s a matter of trying, testing what works and doesn’t work. And if it works, scale up as quickly as possible.” In the revised edition of his book, Van den Berg explains how companies can make the warehouse agile and scalable. “Of course, IT systems play an important role in that.”

Warehouse managers must constantly keep their eyes and ears open to signal what can be done better.

“With software in the cloud, companies can set up a new warehouse much more easily, for example. With smaller specialized systems instead of one large system for all business processes, they can upgrade and innovate faster. With APIs and web services, it has become easier to connect those systems. In addition, the software itself has become more flexible. Through the use of business rule engines and low-code, companies can bring in their own business logic.”

For an agile and scalable warehouse, the organization must also change. “Warehouse managers must constantly keep their eyes and ears open to signal what can be done better. They need their own staff to implement changes. And employees on the floor must learn to deal with changes.”

Virtual warehousing

An important change is virtual warehousing. Many orders are no longer delivered from one warehouse but from a network with multiple stock points. That network can consist of warehouses and stores, but also suppliers who deliver orders directly to customers. This leads to new questions. Where is which item in stock? What is the shortest delivery time? Which delivery option is cheapest? Meanwhile, warehouses face new challenges. They have difficulty finding people with the right competencies. “The work becomes more complicated, including for middle management. They need insight into processes, be handy with systems, and also be flexible. Those are the competencies we need. After all, we can’t automate everything away.”

Main photo: Pixabay

Author: Marcel te Lindert