The New Logistics Part 1: Pop-Up Warehousing
In a blog post last September, I shared some insightful results from our Warehouse Capacity Trends Survey. One of the key findings was that the vast majority of warehouse and fulfillment organizations, industry-wide, experience significant fluctuations in volume at specific times throughout the year. And almost every survey participant said they expect these capacity issues to continue or become even more pronounced over time.
In our study, about 70% of the survey respondents also stated that they don’t have a viable solution when these problems arise. Organizations typically have to resort to taking undesirable steps that result in one or more of the following issues:
- Storage costs balloon because organizations have to sign expensive longer-than-necessary leases to accommodate the volume
- Organizations have to rack up additional shipping costs to shuffle and balance excess inventory between existing warehouse locations, or
- Organizations do nothing, resulting in over-loaded space and inventory management challenges
Most of the time, however, capacity issues occur as a result of specific types of situations, some expected and some unforeseen. Pop-Up Warehousing can effectively address the most common scenarios. Like the temporary Halloween store that appears in a vacant retail space over night, Pop-Up Warehousing is ability to quickly put up and pull down warehouse space when common logistics challenges arise.
Pop-up Warehousing addresses the capacity issues that arise in common peak storage and distribution scenarios.
Seasonal products like patio furniture, barbecues and lawn care products often pile up in the warehouse before they can be redistributed. Although you know it’s coming, the seasonal in-flux still exceeds the outflow. So, you still have an issue. By adding pop-up warehouse space either nearby or in markets that help you move inventory closer to its ultimate destination you can reduce costs, act quickly and maintain every-day efficiency.
Bulk buys and regional promotions:
Bulk incentive buys aren’t always predictable. While it may make good financial sense to take on a larger-than-expected amount of inventory for a reduced price, the additional volume can pose a capacity problem. The same goes for promotions. Running a promotion in a particular market often requires greater quantities of product on-hand to adequately support the program. In both cases, the volume can be disruptive to normal business, but only temporarily. Pop-up warehousing makes good business sense because it provides temporary storage at rates that preserve the bottom line benefits of those large buys and promotional programs.
Testing new products or markets:
Testing a new product or a new market can require a significant amount of storage for inventory you may or may not need to plan for in the future. Pop-up warehousing sets up a warehouse in a location where you don’t already have one. That reduces cost and risk by providing a flexible, temporary storage and distribution center closer to your customers. It enables you to effectively test and evaluate the results without making significant investments or sweeping changes.
Re-thinking shipping costs & services:
Your distribution strategy includes warehousing and shipping. The more warehouses, the shorter your shipping distances (most likely). And shortening shipping distances reduces shipping costs. To keep shipping costs as low as possible while staying competitive with your delivery promises, it may make sense to test out the benefits of moving inventory to different regions in order to reduce the number of shipping zones crossed in final destination deliveries. Pop-up warehousing offers the flexibility to test different shipping scenarios without making long-term commitments. And, in turn, that can help your business grow.
In part 2 of this article, I’ll dive deeper into how pop-up warehousing works and introduce the warehouse network strategy that makes it possible, especially in these types of scenarios.