Market drivers
Over the last decade, customers have grown more powerful, requiring more from manufacturers. Customers want orders delivered more quickly, more accurately, and specifically tailored to their needs—all at lower cost. Manufacturers and distributors are expected to turn around orders on shorter notice than in the past. According to Capgemini:
“The rise of next, same-day, and few-hours delivery has created a standard of demand that puts a new kind of pressure on businesses. Because of this increase in expectations on the demand side, the entire supply chain is rapidly evolving from having a functional orientation to a global and interconnected network of data and processes."
Companies can even be punished with fines and chargebacks if orders are improperly labeled, packaged, or delivered. More elaborate packaging has become common as retailers require more in terms of boxing and delivery formats. Unfortunately, heavy competition and big-box retail power mean that suppliers are unable to pass on the added costs associated with these added demands. To add further complication, the exact definition of these customers is also rapidly changing.
Manufacturers and distributors are scrambling to keep up with expanding reaches to markets they might not have previously served, such as online, counter sales, mobile apps, crossindustry, electronic data interchange (EDI), and even business-to-consumer (B2C).
Meanwhile, supply chain management has grown more challenging as companies source products, components, and materials on a global scale. Manufacturers that once sourced their materials regionally or nationally, now turn to Asia, Latin America, Eastern Europe, and other overseas locations. Similarly, companies are distributing their goods more globally as they seek to penetrate new and growing markets. That means products must travel far greater distances and be stored in more locations, increasing the challenges of visibility and threatening “perfect order” delivery. This has been exacerbated further by the challenges caused by the pandemic.
Regulatory challenges also loom. With high-profile recalls on everything from toys to dog food to peanut butter, manufacturers are clearly under growing pressure to track their products with even greater precision. They must have immediate access to data on everything from lots to serial numbers to shipping locations if they are to avoid crushing costs—and legal penalties, in the case of a recall. Lengthening supply chains further contribute to the risk of expensive recalls.
Given these factors, manufacturers and distributors are faced with escalating costs and complexity, which drive demand for greater productivity in warehouse operations. For these companies to remain competitive and profitable, they must find ways to increase warehouse performance to new levels. However, their existing ERP systems often lack the automated capabilities necessary to increase visibility into operations, enhance market agility, and boost warehouse productivity.