Although many industries are seeing a decline due to the recent COVID-19 events, the warehousing sector of the supply chain looks to be positioned well to handle disruptions from the current effects of the coronavirus. This is because of the commonality of long-term contracts between shippers and third-party logistics companies and a shift towards regional supply chains. Regional warehousing services refer to having multiple distribution centers to best serve your customers with expedient shipping—often an East Coast and a West Coast warehouse, as well as smaller facilities located near larger metropolitan areas. Although current events may cause short term investment in warehousing and storage to slow, the industry has the insulation to stay afloat and recover quickly.
Increasing demand for ecommerce
Due to social distancing measures across the world, experts are predicting an increase in ecommerce as people are shopping online in order to avoid going to the store. Ecommerce increased by 16.7 percent globally in 2019, and experts are expecting this to grow even more this year. As people are required to stay in their homes, they are also getting used to the concept of buying more items online, including household necessities, pet food, home improvement items, and even groceries. Because of this, it’s likely that ecommerce will continue to rise in importance in the basic functioning of everyday life—even after social distancing is over.
Ecommerce increased by 16.7 percent globally in 2019
Review supply chain and inventory levels
It is typical for supply chain managers to maintain lower inventory levels to avoid storage fees and items that sit for long periods of time, however the shortages of household essentials like food and cleaning supplies might lead these managers to rethink the optimal inventory levels. Studies show this could cause an increased demand for more warehousing space in case of a surge in goods, and to build up resiliency against future supply chain disruptions.
The need for regional 3PLs
The increase in ecommerce could lead supply chain managers to take a look at their physical footprint in addition to inventory levels. This supply chain disruption from the coronavirus could cause shippers to prioritize a more regionalized approach with distribution centers closer to key urban centers that allow more flexibility. A key area for West Coast 3PLs is Reno, NV where ITS Logistics is located. The distribution benefits of Reno and Sparks start with the fact that they are located in an area that allows overnight delivery to nearly every major western US city. It is the center of an extensive transportation network on Interstate 80 and Highway 395 and is served by the Union Pacific and Southern Pacific railroads, each with intermodal yards and container freight facilities in the area. Reno NV distribution centers are also just a few hours from the international and domestic shipping hub of Oakland. Combining a distribution center in Reno with one on the East Coast is a great way to be able to reach everywhere in the continental US in two days.
Auditing your supply chain to increase efficiency
Online shopping and omnichannel distribution continue to push innovation into the supply chain, but recent events have amplified the need for risk management and supply chain flexibility. There is not one catch-all answer for running an efficient operation and you’ll need to audit your entire supply chain to find areas for improvement. Take a look at your services and channels to see if you would benefit by augmenting your own delivery or warehouse network with an outsourced, third party solution. This may help you save money in certain regions, depending on demand. You also need to ensure that your shipping options align with your customers’ needs. Free two and one-day shipping are essential for many consumers now, you need to be able to offer these options without spending a fortune on shipping. If you are not, it’s time to see where you can make adjustments. Maybe you only offer free shipping to certain areas in the country if you don’t have a regional warehousing set up, or you could only offer free shipping when customers spend a certain amount of money.
“There is not one catch-all answer for running an efficient operation and you’ll need to audit your entire supply chain to find areas for improvement.”
Kasia Wenker, Director of Distribution Sales at ITS Logistics
Another common demand for both customers and any other partners you may have is tracking technology. The increased visibility of being able to see when packages will be delivered is very important to everyone across your supply chain. Look at whether tracking is something that can be integrated into your shopping cart system. If you use a 3PL, they could have a development team that could help you with this integration. Next, look at the types of items you are selling online. Is it mostly small parcel because you’re nervous about shipping bulky items? Take a look at shipping alternatives for less expensive options to find a better solution and increase your revenue. The last aspect is customer loyalty. Look at your customer base to determine how to keep them loyal to your brand and your products. Maybe that means offering free, cheaper or faster delivery, or it could even be as simple as a handwritten, personalized thank you note. By performing an in-depth audit, you’ll be able to prepare your company, increase flexibility and hopefully avoid any additional upcoming supply chain disruptions.
“Look at your customer base to determine how to keep them loyal to your brand and your products. Maybe that means offering free, cheaper or faster delivery, or it could even be as simple as a handwritten, personalized thank you note.”
Kasia Wenker, Director of Distribution Sales at ITS Logistics
Get started with ITS Logistics
If you’re looking to review your supply chain or for regional warehousing solutions, give one of our supply chain experts a call today at (775) 353-5160 to learn more.
