Mitigating the cost impact of labour, fuel and space are immediate pressures being felt by the warehouse management industry.
A mindset of continuous improvement must be adopted in order to offset higher costs and retain a keen competitive edge.
That’s according to B Sundarrajan, Regional Logistics Director at Unilever. Sundarrajan was a speaker at the marcus evans Warehouse Management Excellence Conference that was held on 9-10 May in Singapore.
In response to the global financial crisis which has touched all areas of business, warehouse managers must do more with less, he says.
“The key challenge is how do we reduce costs while being more responsive and flexible? The customer’s requirements are getting more demanding in terms of lead times getting shorter and the order complexity is increasing. In addition there is a lot more customisation required in terms of customer-specific packaging and customer-specific loading.
“The complexity in terms of flexibility and responsiveness is increasing. Input costs such as land, labour and fuel are all adding to the cost pressure. Connecting the two ends and achieving both is a key challenge. The trick is not to be silo-focused and go after only one driver but look at how we can achieve overall optimisation.”
Sundarrajan believes a specific challenge lies in the D & E markets (developing and emerging) as wages escalate.
“The Asia/ Africa region is going to be the highest growth region in the world in terms of economic activity. What that means for the warehouse managers is we are going to create and run warehouses which are much bigger than warehouses that are anywhere globally today. The wage cost in the D & E markets has increased hugely and are now 1/10th of US wages. This is a dramatic increase from the 1980s where wages were 1/80th of the US wages. This will go further up and soon the wage parity will shrink quite a lot.
“Also, space today in the D & E countries is costing about 1/3rd of the cost of the developed countries. That means that we need to focus on a lot of warehouse designs and automations which we were not learned in the past but going to be increasingly important in the future. There will be a need for more innovative solutions when it comes to structuring an ideal warehouse.”
He concludes that operating in today’s tough conditions will continue to be a challenge for warehouse mangers.
The marcus evans Warehouse Management Excellence Conference took place on 9-10 May in Singapore.
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