2017 Warehouse Capacity Economics and Trends Report
In mid-2015, FLEXE conducted a survey of supply chain professionals across multiple industries to identify and understand what key industry trends affect inventory and capacity fluctuations. We conducted the same survey, which closed in early 2017 and targeted the same audience to see how and if conditions have changed.
The rise of eCommerce and omnichannel shopping has disrupted traditional buying experiences and linearity of supply chain operations.
Increasing demands to be more responsive have forced businesses to reconsider the supply chain and challenge the traditional approach. Every day, organizations are faced with seasonal swings, return issues, opening new markets, and rolling out new products. Being responsive means addressing the dynamics that cause the variability. To do that, solutions must be scalable, secure, complement existing structures, and deliver cost efficiencies. Nowhere is this more evident than the warehouse.
The key findings of the 2017 survey revealed:
- Inventory continues to fluctuate and remains a challenge for supply chain professionals. Between 2015 and 2017, there was only a 1% improvement with 74% of respondents citing fluctuation as a key challenge throughout the year.
- The way in which businesses are managing fluctuations has improved. More businesses expect variances and said they are more prepared to manage the changing conditions.
- More businesses are faced with inventory exceeding capacity than they are with excess space. The new survey results revealed a 20% increase in respondents saying they’re in need of more space to store inventory.
- The movement away from traditional solutions for managing fluctuation continues. Fewer respondents are relying on short- and long-term lease agreements, 3PLs, and re-allocating inventory.
- Of the respondents having to manage excess capacity, 51% accept extra space as a “sunk cost.” While that’s a vast improvement from the 71% in 2015, it’s still too high.
Inventory fluctuation lives on. More than 50% of respondents that have excess capacity are willing to accept it as the cost of doing business. In fact, repurposing assets has decreased since our first survey in 2015. In 2015, 12% or respondents reported subleasing space. Now, it’s only 7%.
On the other hand, for those with excess inventory in need of more space, it’s surprising how many respondents have to rely on traditional methods for procuring space. This problem isn’t a new one, but it’s been a difficult one to solve. Because the inventory is coming no matter what, there’s no “non-option” equivalent for accepting these conditions as “sunk costs.” Space and resources have to be found.
The 2017 survey illustrates that solutions for managing excess inventory are changing. More and more businesses are turning to off-site storage options to manage inventory.
Download the 2017 Warehouse Capacity Economics and Trends report to learn more about:
- How conditions have changed for businesses that have excess capacity and for those that have excess inventory, including what the key drivers are behind variations
- Why more respondents are finding themselves in need of more capacity than ever before
- What the economic impact is of under- and over-capacity to the business
- How a more dynamic warehousing solution can help solve for both under- and over-capacity