In this episode of Logistics 2.0, we discuss the survey commissioned by FLEXE and the resulting white paper. We'd love to hear from you about Logistics 2.0 and how we can make the content more valuable. Please let us know in the comments, or by connecting with us on Twitter!
Welcome to Logistics 2.0, I'm Karl Siebrecht. Every day businesses come to FLEXE because they either have more inventory than they have warehouse capacity, or they have more warehouse space than they need. As a result, we hear lots of stories about underutilized warehouse capacity, about seasonal peaks, and about the quest to find the ideal overflow warehouse space. As a result of this, we wanted to learn more, we wanted to understand how broadly these needs and these conditions were held in the industry. So this summer we commissioned a survey. The results are in and I wanted to share the highlights from the survey with you here.
To start with, as we suspected, our clients aren't the only ones seeing these trends. In the survey, 75% of respondents reported what they consider significant inventory fluctuations throughout a given year. What's even more interesting, and surprising frankly, is that a full 90% of respondents reported that they felt the trends driving these fluctuations in inventory were either going to stay the same or increase. So that means this problem is very widely held, and most people see it as only getting more dire. We were also interested in what's driving these inventory fluctuations. Overwhelmingly, survey respondents reported that the number one driver was seasonality, but that other factors also drove the fluctuations, including product promotions, forward or bulk buying, lead time variability, and other factors as well.
The survey also sought to understand what kind of solutions were brought to bear on these challenges. Perhaps most alarming is that a full 70% of respondents who had excess capacity at some point throughout the year, simply had no solution. They accepted the excess capacity as a sunk cost. For businesses that have inventory peaks and need to find overflow solutions, the most common answer by far was going out to find a short-term lease to match that peak, although as you probably know and certainly we do, it's very difficult to find a short-term lease where the term matches up nicely with the overflow.
Other solutions for the excess inventory included shifting inventory around the distribution network, selling off inventory, or even settling for a long-term lease. These data points are really just a quick look at what we learned from the survey. It was so interesting and compelling that we decided to take the results from the survey and incorporate them into a white paper that also includes economic modeling to understand what the impacts of over- and underutilization are, and compare the economic impact of the various solutions that you and respondents are using today. If you're interested in learning more, click on the link and download the white paper here.
It was an eye-opening summer. Much of what we learned in the survey were things we already knew and realized from working with our clients day in and day out, but we also learned things that really pushed and advanced our thinking. When you marry together these survey results and the drivers behind inventory fluctuations with the economic modeling to understand the economic impact of the way distribution networks are designed today, and how generally speaking their fixed and rigid nature really leaves economic opportunity on the table, you start to understand the real importance of a more dynamic, adaptive warehousing model.
If you're interested in learning more and reading the white paper, click on the link in the description below, and also don't forget to subscribe to our channel and our email. We'd love to have you continue to be part of the conversation with us. That's it for this week, I'm Karl Siebrecht with FLEXE, thanks for watching Logistics 2.0.