Warehouses Need Ecosystem Integration to Ensure Supply Chain Survival

The latest data reveals that warehouse vacancies have reached a record high, almost double those of pre-pandemic values. Meanwhile, industrial property construction starts have experienced the largest drop in year-over-year growth since 2009 and the annual change in warehouse employment has reached its lowest level in over a decade.

These economic indicators suggest there is a significant shift underway in the warehousing landscape, which stands to impact greater supply chain operations.

Fluctuations Reveal Challenges

The challenges created by these economic trends have the potential to create significant financial strain, as vacancies impact profits and increase expenses. Increased vacancies can lead to greater competition among tenants, which could drive down rental rates.

Additionally, the lack of efficiency in warehouse management could create downstream ripple effects, increasing overall costs throughout the supply chain. Not only will these trends affect the warehousing industry, but also the greater supply chain and logistics landscape as a whole.

These potential challenges present an opportunity for the warehouse industry to reevaluate the need for continued investment in large warehousing facilities. The trends indicated above point to an increased need for software integration and automation to optimize operations, reduce reliance on manual labor and ironically, potentially decrease the long-term demand for centralized warehousing.

Already, companies are using this opportunity to consolidate warehousing space and upgrade to newer buildings which can accommodate more automation and require less labor.

As warehouse capacity increases and large vacancies remain across the industry, warehousing will need to improve its relationship with stakeholders across the supply chain to reduce wasted resources and underutilized assets.

Warehousing facilities that struggle to survive this slump of activity as the economy adjusts to normalized levels of consumer spending will need to reevaluate their usage of key technologies and business-to-business integration software to ensure they are optimizing their services and working in tandem with additional stakeholders throughout the supply chain.

By improving communication and integration among wholesalers, manufacturers, third-party logistics companies and transportation enterprises, warehouses can ensure their survival in the greater supply chain.

Elements of Ecosystem Integration

To remain competitive and keep up with the advancing technology of additional supply chain stakeholders, warehouse enterprises must increase automation, improve inventory visibility, optimize purchasing and boost profitability. They can achieve this through an ecosystem integration approach comprised of the following three strategic elements:

1. Implement electronic data interchange (EDI) to support a standard for exchanging structured data with partners. Eliminate the need for manual communication, which is error prone and redundant; gain real-time visibility into orders, shipments, and inventory levels; and create better transparency and collaboration across supply chain partners.

2. Leverage application programming interfaces (APIs) to enable deeper integration with partners’ systems for real-time data exchange and visibility. Enable the automation of specific tasks—such as order confirmation and shipment tracking—to optimize workflows and eliminate manual intervention.

3. Prioritize cloud-based integration. With these tools, warehouses can easily integrate warehouse management systems and transportation management systems with various EDI and API standards to provide seamless data exchange with carriers, suppliers, and other partners.

As we turn a new page in the freshly redefined identity of warehousing, organizations that wish to remain competitive and align with the wave of automation entering the supply chain will benefit from the ecosystem integration approach mentioned above, which allows warehouses to:

• Strategically organize inventory, minimize wasted space, and create efficient packing routes.
• Increase storage capacity, streamline workflows, automate routine tasks, optimize picking routes, and reduce fulfillment time.
• Benefit from access to instant, actionable data that can streamline information gathering and reporting.
• Strengthen relationships across all ecosystem stakeholders through increased visibility and trust.

As the warehouse market begins to contract, organizations should prioritize automation and ecosystem integration software to align with supply chain partners who are incredibly reliant on technology to drive efficiency and increase the bottom line.

These solutions also provide improved scalability and adaptability to better handle economic fluctuations that may arise in the future. Improved communication and collaboration between partners ensure smooth data exchange and swift adaptation to new requirements.

Increasing efficiency and improving visibility by prioritizing ecosystem integration aims to minimize exposure to fluctuating external factors and improve supply chain partnerships.