Fewer industries have evolved at as fast a pace as warehousing. From the early days of storing grains for use during famines to the high-tech Kiva systems at Amazon’s warehouse today, there’s no doubt about it that warehousing techniques have changed a whole lot in the past few decades alone. We have technology and eCommerce to thank for the new dawn of the warehouse.
Before we dive into the specifics of how warehousing techniques have changed, let’s take a broader look at the history of the warehouse and its specific role. As you might have guessed, the evolution of the warehouse directly correlates with the needs of the consumer. And the needs of the consumer dictate that products arrive faster than ever with minimal damage.
Perhaps the most important way that warehousing techniques have evolved in the past few decades is that they’ve become significantly more agile. Where facilities were once built with limitations—one warehouse for one type of goods, another for others—now they are equipped to handle ever-changing quantities, sizes, and types of goods within the same facility.
A BRIEF HISTORY OF THE WAREHOUSE
The origins of warehousing date all the way back to ancient Egypt, when storing foodstuffs through famines helped early civilizations endure. But the kind of warehousing we’re used to—storing goods that come from all around the world in a way that’s efficient and organized—didn’t really get off the ground until the advent of major transportation systems. As you know from history class, the geographic points where ships stopped became hubs of civilization. These ports also became early warehousing hubs.
Warehousing centers cropped up along the coast of Europe, with a major one emerging in Venice. There, merchants–known as trade guilds–operated the warehouses for profit. Some even offered warehousing space as collateral for loans. In the earliest days of the United States, warehousing too planted its roots along the coastline. That is, until the railroad system was implemented. By then, American businessmen learned that they needed plenty of warehousing space inland, too. Of course, this spurred a whole new industry.
Interestingly, the traditional warehouse remained largely the same for the majority of the 20th century, besides the whole invention of the automobile, and thus, the semi-truck. With a complex, modern highway system and global use of automobiles, businesses set up shop just about anywhere, even in rural locations where land was cheap. The biggest shift in warehousing came, of course, alongside the most significant shift of culture at large: the advent of the internet and digital technologies.
FROM WAREHOUSES TO FULFILLMENT CENTERS
One of the primary ways warehousing has changed significantly in the last century is through actual, basic function. According to Dr. Larry Lapide, the director of Demand Management at the MIT Center for Transportation and Logistics, the warehouse’s role has evolved from a traditional stocking warehouse to a much more dynamic fulfillment center over time.
According to Lapide, this shift is mostly thanks to the warehouse’s role in shipping (and the vital need to better prevent damage in transit) and the higher customer expectations set forth by eCommerce. Early on, warehouses served primarily as hubs for receiving, storage, picking, packing, and shipping. The problem with that model is that it wasn’t accommodating for the fact that the warehouse is customer facing. It’s the last stop on a product’s journey to the consumer, after all.
Today’s most efficient warehouses are much more customer-centric and dynamic, offering mixed-mode fulfillment that’s agile enough to change with a wide range of products and goods. They’re also equipped to handle many different kinds of shipping containers—whether a facility uses pallets, stacking totes, wire baskets, or plastic containers—without swapping out any picking equipment.
- Warehouses—The warehouses used since biblical times primarily focused on picking, packing, shipping, and storage. Generally speaking, with traditional stocking warehouses, businesses amassed warehousing expenses because they were forced to produce excess supply, even if it wasn’t in demand. In simple terms, the basic goal of the traditional warehouse was to store the maximum possible quantity of every product. Now, orders are much more agile and demand-based, so manufacturers only make what they need.
- Distribution Centers—You might think that if companies can make exactly the right amount of stock, what’s the point of having a warehouse at all? That’s where the distribution center warehouse comes in. These next-level warehouses typically implement cross-docking—the process of unloading materials from one truck and loading them directly onto an outbound truck with no storage in-between. Distribution centers, of course, also still deal in storage. But their storage capacity is significantly more demand-driven than the traditional warehouse. They might also provide packaging, special handling, kitting, and returns handling.
- Fulfillment Centers—Full-line fulfillment centers are distribution centers with even more to offer. They bring many more options in terms of, well, fulfillment and processing. In some cases, fulfillment centers offer everything from dynamic cross-docking and pick-and-pack storage to packaging and shipping goods. Of course, the demand for this type of center—whether in-house or through a third-party logistics company—has grown significantly in the age of eCommerce, since it takes much of the burden of shipping and storage off individual retailers.
NEW TECHNOLOGIES AND HOW THEY CHANGE WAREHOUSE TECHNIQUES
You simply cannot talk about modern-day warehousing, distribution and fulfillment techniques without talking about technology. Amazon doubled its fleet of warehouse robots in 2016, and all of the eCommerce giants are quickly following suit. Let’s take a look at how these new technologies affect warehousing techniques, the role of the worker, and the efficiency of the modern supply chain.
- Automation—According to warehouse automation thought leaders, the goal of automating certain tasks within a warehouse environment—primarily picking, for now—is to lessen the burden of the human worker and increase efficiency. The primary way automation has changed warehousing techniques is that it’s pushed the industry towards “lights-out” automation, meaning it lays the foundation for full operation with minimal human intervention. Automation has improved piece picking (rather than pallet picking) and has allowed managers to offer smaller, more frequent deliveries.
- Order Fulfillment Optimization—Back in the day, warehouse managers had to write down logistics on a piece of paper and mentally think through exactly how to make storage and processing as efficient as possible. Now, there are a wide range of order fulfillment optimization products and services that help supply chain managers optimize every single pallet. That means that techniques have shifted from strategy and implementation to finding the right digital tools to do the strategy and implementation for you.
- Voice-Tasking—It’s all about efficiency and worker safety in the contemporary warehouse. Voice-tasking technology—hands-free tools that allow you to use your voice to control picking, receiving, and more—is being implemented in warehousing at lightning speed. This technology allows workers to focus on their work without being distracted by handheld devices, which equals a safer work environment. It also eliminates the need for micro-management on the warehouse floor, since the worker is accounted for all the time through a small, voice-operated headset.
- Real–Time Location Systems—Before the dawn of warehouse automation, there were roles dedicated to tracking and recording inventory. A good amount of old-school warehouse optimization techniques focused on how to make this process more efficient. Now, location systems using barcode, or RFID technology, and other tagging systems allow managers to keep tabs on every single item, from where it’s stored at any exact moment to how long it took to get from truck to storage rack.
THE PHYSICAL ENVIRONMENT AND WAREHOUSE SUPPLIES
The rapid rise of technology in storage and fulfillment has led to a change in the warehouse’s physical environment as well. If you take a stroll through YouTube to see some of the most high-tech warehouses and fulfillment centers out there, you’ll see no shortage of robotics, digital systems, and software at every juncture.
New advancements in technology inform the physical environment, although sometimes it’s the other way around. For example, it’s not likely that automation will phase out pallets anytime soon. What is likely is that more automated systems will adapt to work within traditional and challenging environments.
- Warehouse Containers—The role of pallets has evolved just as much as the warehouse itself. In basic warehousing, large-scale, pallet-based picking, packing, and shipping were the norm. Now, the most high-tech warehouses implement picking, packing, and shipping techniques that can handle both pallets and individual goods. As Lapide puts it: “Products might come into warehouses to be stored on pallets, but they need to be picked as a single unit, packed as a single unit, and shipped (by parcel) as a single unit.” Today’s warehouse management systems (read: automated systems) address that problem.
- Data, Paperwork, and Waste—Nowadays, it’s all about the “paperless” warehouse. At one time, warehouse workers, on almost every rung of the ladder, were forced to fill out some kind of paperwork during their shift. That paperwork then had to be physically filed and entered into a system manually. Today, warehouse management systems make paperwork almost obsolete in the warehouse setting. The technology helps organize and strategize, which equals more efficiency across the board.
- Warehouse Racks—What was the most limiting part of the warehouse pre-automation? Ask any supply chain expert and they’ll tell you: storage space. Before high-tech automated systems were the norm, warehouses were limited by height, as it just wasn’t feasible for workers to risk retrieving pallets from all the way up the wall. Go to any post-industrial town in America and you’ll find plenty of (sadly) abandoned single-story warehouses. Now, advanced picking systems can safely retrieve goods from floor to ceiling, which means modern-day warehouses take much more advantage of airspace with stack racks and floor-to-ceiling storage systems.
THE WAREHOUSE OF THE FUTURE
But is the current climate of all things automation the final word for warehousing? Definitely not. According to senior architect Brook Melchin, winner of the Commercial Real Estate Development Association’s Distribution/Fulfillment Center of the Future competition, the current warehouse is in a constant state of flux. And, Melchin says, there’s a good chance that fluctuation won’t slow anytime soon.
You might picture the warehouse of the future as one devoid of people, but Melchin’s view is just the opposite. He proposes that warehouses become part of efficient, mixed-use facilities, with housing and offices in the same building. If workers don’t live on campus, they’ll surely live nearby. That’s because companies are likely to move distribution and fulfillment centers closer into populous areas. Why? To ensure faster shipping, of course.
Most importantly though, the modern warehouse will be 100 percent agile. That means that it must be set up to adapt to the changing climate no matter what. Visionaries like Melchin suggest building physical facilities that are easy to repurpose—the building itself could be used as a warehouse one decade and a luxury apartment complex the next, for example—and designing the interior with flexible technologies that can accommodate constant change.
WHAT WE CAN LEARN FROM THIS LESSON
When you zoom out and see the many ways warehousing techniques have evolved over the past several thousand years (but primarily in the past two decades), you can see a broad theme emerge: Consumers dictate the way warehouses, fulfillment centers, and distribution centers operate, and it’s been that way since the dawn of time when these facilities siloed foods for retrieval during famines. The key to a foolproof warehousing strategy is to remain on your toes and agile, making swift changes alongside market demands.