Help From Your Warehouse
Your warehouse and fulfillment operations—and the people, partners, and processes that make them run—have just gotten monumentally more important, because a series of convergent events are raising national supply chain costs at every touch. Let's unpack the why.
In the industrial and manufacturing sectors, added costs on materials and products impacted by ongoing trade friction have filtered all the way through to various demand points, often increasing incrementally at each supply chain waypoint. Prices will heat up this summer as tariff increases—as high as 100% in some cases—are imposed on hundreds of inbound items from at least 28 European Union states. Experts estimate this import value may exceed $21 billion of products—everything from helicopter parts to grape brandy.
Unlike grape brandy, many popular consumer products are experiencing cost increases not directly related to trade issues. In the household goods sector, companies are finally passing rising supply chain costs on to end consumers. With the economy as hot as it is, Procter & Gamble reports its strongest quarterly sales growth in eight years. Unilever, Kimberly-Clark, and other CPG leaders also report solid sales gains due to price increases. With raw material costs rising and increasing fuel prices impacting transportation expenses, it is clear the era of keeping costs low is at last over.
Other factors that increase costs are also in play. For example, what word appears in every business opinion piece written these days but is so far missing from this one? You guessed it… Amazon! One-day warehouse delivery! "Our goal is to evolve the two-day free shipping program into the one-day free shipping program, and we're making strides on that," proclaimed Brian Olsavsky, Amazon's CFO, on an analysts call reporting record earnings during the last quarter. "We feel like we are doing something very important for the customer."
Amazon may be doing something very important for consumers, but anyone competing with its warehouse operations (anyone with a warehouse at least indirectly competes, based on Amazon-amped fulfillment expectations) will be faced with having to increase warehouse efficiency—read: costs. Amazon is initially investing $800 million to make one-day delivery a reality.
Help Me Help You
What can you do to face and offset the risks of these externally driven convergent trends, increased costs, and Amazombie-like customer fulfillment expectations? You'll find an important part of the answer in your warehouse operations. Invest now in processes and people, and align with phenomenal logistics partners to offset a portion of the costs and increase your customer satisfaction measurements. That's how your warehouse can help.