Small businesses must continue to adapt by providing services in a high-demand, constrained-capacity supply chain world impacted by rising logistics costs. Using logistics parks as ideal locations for small businesses doing light assembly, processing, and packaging is the perfect solution for saving money, enhancing operations, and simplifying storage and shipping.

Saving money with logistics parks

The pandemic reshaped how consumers make purchases, boosting e-commerce by over 30 percent, according to CSMP’s 2020 State of Logistics Report. This demand for goods affects logistics costs by leading to high transportation fees, delayed arrivals at ports, delayed deliveries to consumers, and increased warehousing expenses. With their all-in-one method of streamlining small business needs, logistics parks offer solutions that reduce such expenses and enhance customer service.

The reason logistics parks naturally help businesses save money

One main advantage of logistics parks is their strategic location. They directly connect to multiple modes of supply chain transportation, including seaports, international airports, freeways, and railways. This allows businesses to connect easily to local, regional and international networks of suppliers and customers,  which can significantly reduce logistics costs.

Direct connectivity to transportation along with extensive trucking space also means small businesses can eliminate or marginalize costs of using transportation middlemen. The result is that assembly, processing, and packaging sectors can focus on and better control output and distribution.

Ready-built warehouse design is another advantage of logistics parks and makes them ideal for saving money while still meeting a variety of storage needs. The large, well-managed, on-site warehouses promote optimized use of resources and eliminate the expense of building or renting external warehouse space. Furthermore, with optimal layouts, ideal methods for picking and moving goods, and superior inventory management, they significantly improve warehousing efficiency and processing.

The fiscal relationship between logistics parks and small businesses

With ample storage unit space, direct transportation connectivity, increased employment opportunities, and increased efficiency, logistics parks come with a multitude of financial benefits. Located in the centers of industrial areas, near capital cities and growing companies, logistics parks attract business and promote economic development. The convenience of managing processing, packaging, storage, and distribution all in one space boosts productivity while minimizing costs. Small businesses can assemble, sort, store, and manage their product fulfillment process from a single hub, allowing them to efficiently serve local, regional, and international markets.

Logistics parks also offer small businesses the capability of organizing and managing operations from a central location, which lowers costs and improves communication among suppliers, consumers, and staff. What’s more, logistics parks create employment opportunities by providing light assembly jobs, retailer and convenience store space, office space, and data centers with specialized software.

Additional financial benefits of logistics parks via sustainability practices

With an over 70 percent increase in consumer interest in sustainability, according to BRINK News, consumers challenge industrial businesses around the world to minimize their carbon footprints. Sustainable logistics parks meet this consumer demand by operating with low emissions and incorporating eco-friendly features such as LED lighting and solar panels. They also reduce toxic odors, sounds, and vibrations. By following sustainability practices, logistics parks also lower costs for water and energy and fulfill international environmental standards, helping to minimize compliance fees and reduce CO₂ emission taxes.

The convenience of storage and shipping at logistics parks

The efficient flow and storage of goods is paramount for any business. Logistics parks reduce the need for overhead in setting up a storage facility and provide efficient transportation connectivity. With simplified storage and shipping, logistics parks reduce delivery times, optimize costs for storage and transport, and improve quality of operations.

How logistics parks simplify storage

What better way to simplify storage and inventory management than by having on-site warehousing with open layouts, flexible sizing, and the option to expand? From a centralized hub, small businesses in the light manufacturing industry can plan out inventory, operate and move equipment efficiently and safely, and easily adjust storage space.

A company in light industry can use the convenient on-site park warehouses not only for storage but also for processing, assembly, maintenance, and distribution. For businesses requiring outdoor space, logistics parks provide open storage, truck parks, and repair yards adjacent to wide roads for practical distribution.

How logistics parks simplify shipping

Multimodal access to shipping ports and direct connections with distribution centers make logistics parks ideal for simplifying shipping. According to a comprehensive analysis of port economics by Theo Notteboom and Jean-Paul Rodrigue, one key element of supply chains is their relationship with seaports. With a seaport-centric logistics park, a business owner can streamline supply chain management and operations by centralizing their activities near seaport terminals.

Traditional seaport-based parks accommodate pre-container material input and are within free trade zones exclusive of strict customs regulations. Container-oriented parks are adjacent to storage warehouses and feature container freight stations for consolidating and separating cargo for export and distribution. The central, all-in-one nature of park hubs enhances dock management and the movement of cargo. Such attributes of logistics parks promote accessibility and speed and minimize receiving and shipping cost.

Logistics parks that are close to airports, and national hubs that are located near freeways, are also prime real estate, simplifying shipping by air and land. Because they are concentrated in urban locations near capital cities, logistics parks facilitate the transfer of goods between local industrial businesses.

Enhancing operations management at a logistics park

Another reason experts see logistics parks as ideal locations for small businesses doing light assembly, processing, and packaging is the primary function of streamlining and enhancing operations. The comprehensive and all-inclusive nature of logistics parks expedites and smooths functions across all areas, including processing, assembly, packaging, and distribution.

Operations management inside and outside of a logistics park

Designed for integration and cooperation among all areas of management, operations, production, and distribution, logistics parks boost internal productivity and enhance organization. Rather than dealing with external service providers and middlemen, small businesses in light industry can focus on planning, the management of daily activities, and order fulfillment. They can also control inventory management, warehouse management, and self-storage.

Businesses in light industry must also keep sanitation, security, and safety in mind. Working with reliable and proven outside companies, logistics parks come ready-built with waste collection services, camera monitoring, fire sprinklers, and controlled entry.

How operations management is conducted for small businesses in logistics parks

With Agility’s logistics park 2PL services, small businesses focus on their operations and leave security, waste management, maintenance and overall facilities management to Agility.

Any successful business pays attention to value—the value of the goods or the service they provide to consumers and the value of their place in the industry. Because each logistics park is its own regional distribution network, value-added logistics services become vital contributors to effective operations management. Notteboom and Rodrigue note that these services provide connectivity between production and transport, are a prime source for revenue generation, and facilitate strategy planning for locational value and market impact. Combined, such factors enhance operations through consolidating a supply chain’s production and distribution divisions.

Locating logistics parks for the needs of small businesses in the light assembly, processing, and packaging industries

When choosing a park location, businesses in light manufacturing industries must understand the nature of their business and recognize their main sources of spending. Does the business require offices, IT infrastructure, retailer space, a showroom area, employee amenities, data centers, special software, assembly equipment, open floor space, or outdoor yards? Where is the majority of logistics spending going? The answer to such questions determines the size and characteristics needed for the facility and its operations.

Finding the best possible location and recognizing what to look for in a logistics park

The fluctuating nature of e-commerce and the economy requires businesses to remain flexible; accordingly, businesses must consider facilities that give them the opportunity to quickly adapt. Ideally functioning logistics parks offer flexible sizing and ready-built, move-in-ready space as well as  custom built-to-suit facilities. They provide flexible leasing and include open layouts with ample space for Class A warehousing. Layouts, office spaces, and warehouses have an expandable design, allowing the facilities to adjust or grow with shifting supply and demand.

Businesses in the light assembly, processing, and packaging industries must also ensure the logistics park is connected to the modes of transportation that best suit their needs. The most successful parks offerconnections to freeways, railways, airports, and seaports. Additionally, they must have sufficient space for docking and loading.

Light industrial businesses have other special considerations, such as natural lighting, secure workspaces, and safety features for assembly, processing, and packaging work. Finding a logistics park that meets these needs is essential.

Negotiating with logistics parks when interested in relocating

When considering a move to a logistics park, businesses and park developers must clearly define their expectations and negotiate for each party’s needs. Both need to define transport procedures and determine the shipment volume the park can handle. Does the business need sea, air, or ground transport, and how will the park accommodate this?

Of course, parties need to discuss operational costs, be explicit with the terms of the lease, and agree to the responsibilities of each side. They must also review procedures regarding damaged freight, customs brokerage, and operational reviews. If business managers believe they might need to expand, they need to negotiate time frames and the terms of expansion costs. Ensuring both parties understand each other’s expectations and needs increases the chance for a successful move and acclimation to a logistics park.

Logistics parks: Supporting worldwide small business growth and productivity

By nature and design, logistics parks come with a variety of benefits. While reducing risk, they help businesses save money, enhance operations, and simplify storage and shipping.

Small manufacturers reach consumers around the world and often provide specialized products that larger manufacturers are unable to produce profitably. Logistics parks, as ideal locations for small businesses doing light assembly, processing, and packaging, support such businesses and promote their growth.

See all the logistics park solutions Agility has to offer small businesses worldwide, and chat with a representative today.

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• Access to a greater number of consumers
• Access to a larger labor market and lower labor costs
• Potentially less corporate regulation
• Potentially lower corporate taxes

Furthering investments in emerging markets can create additional growth; however, investments in emerging markets also come with additional risks that must be evaluated and addressed. The use of logistics parks as ideal for de-risking emerging markets for multinational corporations is one innovative solution to mitigate risk in emerging markets and gain rewards from investment.

Risks for multinational corporations in  emerging markets

Investing in emerging markets offers further opportunities for growth but has increased risks.

Advantages of investing in emerging markets

In recent years,  economies in the Middle East, Africa, and Asia have been growing  much faster than those of the United States, European and other Western nations. According to Ameriprise Financial, from 1969 to 2019 the US GDP increased by a factor of only 3.8 in comparison to India’s 14.1.

• Emerging markets often emerging affluent and middle classes with additional buying power and an interest in luxury goods. This provides an opportunity to introduce new products into the market. Being one of the first to offer a product allows a company to acquire a significant market share.
• Emerging markets are likely to have a growing infrastructure system. As infrastructure is built in these communities, businesses enter the market to provide services. Being one of the early businesses fosters the creation of lasting relationships with customers.

Investing in emerging markets also offers access to less costly labor and raw materials and helps diversify a company’s portfolio to balance economic downturns in one region with growth in another.

Political, economic, and currency risk

Emerging markets offer unique opportunities for growth. However, there are a number of risks associated with emerging markets. These risks pose potential problems for a multinational corporation’s global expansion strategy and may deter a company from investing.

Though investors in emerging markets have seen evidence of a favorable risk-to-reward ratio in their investments, it is imperative to consider potential risks when making investments in these markets.

Political risk

Political risks of emerging markets are major contributors to hesitancy toward investing in emerging markets. According to a 2006 Economist report, 65 percent of respondents have had to cancel plans to invest in emerging markets due to political risks.

These risks are created by unstable governments or political unrest and have consequences for the economy. Two of the most highly noted risks are corruption and instability of the political regime. An unstable government is at risk of being replaced, which can lead to significant policy changes affecting the economy. A regime change in an emerging market could be hostile to foreign interference, making multinational business particularly difficult.

According to an article by S&P Dow Jones Indices, political instability in Brazil in 2014 caused a drop in Brazilian equities. The underlying causes of this were uncertainty of the incumbent administraton’s stability and shortcomings of an economic policy called the New Economic Matrix. Another example cited by the same article is a drop in equities in Russia in 2014 caused by several risk factors. These are examples of political risks that must be taken into account when investing in emerging markets.

Economic and currency risks

Economic risks also play a significant role in deciding whether to invest in emerging markets. These risks come in the form of insufficient labor and materials, high inflation or deflation, and unregulated markets. The instability creates challenges for investors.

Currency risk relates to valuation of currency. Emerging markets’ currencies can be much more volatile than those of established markets. Investment gains can drop if the local currency drops significantly in value.

Despite this, multinational companies venturing into these markets have been able to see growth. They continue to invest in these markets, proving that it is possible to mitigate these risks.

Finding innovative approaches to alleviate risks can contribute to increased growth when making investments in emerging markets.

Innovations in emerging markets that attract multinational corporations

A logistics park is a defined industrial area that is home to warehousing and other logistics and distribution activities. Logistics parks offer real estate and services to help streamline supply chain management for multinational companies venturing into global markets. These parks help reduce the risk associated with entering an emerging market.

Research and development

One area of promising activity in in emerging markets is research and development (R & D). Performing R & D work in emerging markets with pools of talented, skilled workers is beneficial because of the reduced costs associated with labor and laboratories, and the innovations that come out those laboratories.

Emerging markets allow companies to have state-of-the-art facilities that are not as easily or affordably built in established markets. This reduces cost in real estate and labor while improving the quality of the laboratories.

R & D facilities in emerging markets also give companies access to the best talent from top universities around the globe, some of which are in emerging markets. In 2021 Brazil and China alone were home to over fifty of the top 500 universities in the world, as ranked by U.S. News.

These well-educated graduates are recruited to work in R & D to develop innovative solutions and technologies. According to Reuters, in 2019 and 2020, China surpassed the United States in the number of patent applications. China’s rate of increase was also higher from 2019 to 2020, at 16.1 percent versus the United States’ 3 percent.

Innovation, as displayed by the growth in patents throughout the COVID-19 pandemic, remains resilient and crucial during times of crisis. This resiliency is another reason investing in R & D in emerging markets can be beneficial to multinational corporations.

Direct investment

Emerging markets, investors, and multinational corporations alike can benefit from direct investment. Foreign direct investment (FDI) occurs when a company domiciled in one country establishes lasting interest, through investment, in an entity that resides another country. This normally involves an ownership threshold of 10 percent or higher. FDI stimulates economic growth by building stable links between economies and promoting international trade.

• Increased employment: Investments in the economies of emerging markets create jobs and increase employment.
• Human resource development: FDI often promotes a stronger workforce, providing training and development to increase the skills and knowledge of employees. This creates a ripple effect in the economy.
• Industrial development: Creation of industrial centers in underdeveloped parts of a country can boost the social economy by providing jobs, building infrastructure, and bringing formerly unavailable resources to the area.
• Provision of finance and technology: FDI often allows emerging markets to gain access to financial and technological innovations that were formerly unavailable.
• Increased exports: Many goods produced through FDI are intended for international consumption.

How logistics parks can assist multinational corporations with distribution and compliance in emerging markets

The benefits of investing internationally are abundantly clear, and those of investing in an emerging market can be exponentially greater. However, the risks of those markets need to be addressed. Logistics parks offer a solution for multinational corporations so that risk in the supply chain is minimized. They:

• Lower the cost of market entry for multinationals
• Preserve working capital for multinationals’ expansion and operations
• Allow multinationals to enter markets quickly — without the hassle of buying and securing title to property
• Let multinationals scale and flex operations without having to undertake construction themselves
• Help multinationals concentrate on their core strengths while leaving security, maintenance, waste management, utilities and other functions to a logistics park operator

This is why logistics parks are ideal for de-risking emerging markets for multinational corporations.

Supporting distribution through location

Logistics parks are located in transportation hubs of major cities in emerging markets. They are near urban centers, road networks, seaports, international airports, rail lines, and other national hubs. This provides quick access to domestic and international transportation and export facilities.

Logistics parks are dedicated to supply chain support. They are designed specifically for warehousing and light industrial activities so that companies can handle warehousing and distribution from a centralized location. This facilitates clustering equipment and services for shipping and allows consolidation of trucks or shipments required.

There are many direct benefits of the strategic locations of logistics parks:

• The requirements of demand and supply are met on time.
• Large amounts of space are available, with state-of-the-art storage facilities for goods and products.
• Wide roads enable free-flowing traffic at all hours of the day and night.
• The sites are highly secure.
• Site management and maintenance, including services like landscaping and waste removal, are provided.
• Ample truck and office parking space is available.
• Space for amenities like banking, insurance, office space, catering, and other services is available.

Supporting local economies

In addition to the direct benefits, there are economic and environmental benefits that contribute to the future success of the emerging markets logistics parks are located in. In the long term, this will pay off for the multinational companies investing in these markets and doing business out of these logistics parks.

Having a consolidated location where multinational corporations are storing and distributing goods as well as using the space for other business needs draws local companies to the area. The convenience of logistics parks allows local construction and transportation companies to operate at lower costs. Jobs are created in the logistics park itself, both with multinational companies and with local companies that have been drawn to provide services for the park and its businesses.

All of this generates economic growth in the market and benefits the surrounding community. In some cases this even creates social benefits by improving infrastructure and education.

Supporting distribution and compliance through innovation

Containing the storage and distribution of goods within a logistics park can be considered an innovation in itself. However, the dedication of logistics parks to improving distribution has also allowed the introduction of technologies that support the goal of streamlining the supply chain.

Many automated technologies have been designed and implemented to improve logistics in the supply chain. Advanced robotics and artificial intelligence technologies have allowed for the creation of reliable and efficient solutions for warehouses, factories, and supply chain management. Technology companies are continuing to improve these solutions.

Logistics parks are in a unique position to take advantage of these automation solutions for all parties involved in the logistics process. This further increases the efficiencies embedded into the functions of the logistics park.

Supporting compliance

Logistics parks can also offer support with compliance. When entering the global market, multinational companies must be compliant with the laws and regulations of the foreign countries in which they are doing business. Not only does operating out of a single facility make it easier to manage these regulations, but many logistics parks also offer services to assist with these compliance issues.

Strategies that fit logistics parks in emerging markets

Globalization has made international trade increasingly more streamlined. Supply chain consolidation in the form of logistics parks and technological advances in logistics management are two innovations that have already been touched on. However, innovations in e-commerce have further propelled globalization and can make investing in emerging markets increasingly rewarding.

E-commerce

The innovations of technology and e-commerce have made it possible to handle logistics virtually and for consumers to purchase products online from around the world. The COVID-19 pandemic accelerated the shift to online purchasing, with global retail e-commerce sales increasing 27.6 percent, according to Oracle NetSuite. The same report estimates that by 2023, e-commerce will account for 22 percent of all global retail sales.

Logistics parks can help with this rapid transition to online sales with the built-in efficiencies and ability to take advantage of innovative automation and virtual logistics technologies.

De-risk with logistics parks

Experts see logistics parks as ideal for de-risking emerging markets for multinational corporations because they reduce costs, increase efficiencies, and contribute to global infrastructure.
Contact Agility to learn how Agility Logistics Parks in Africa, South Asia, and the Middle East can help your company with a logistics infrastructure that meets or bests international standards.

Contact Agility to learn how Agility Logistics Parks in Africa, South Asia, and the Middle East can help your company with a logistics infrastructure that meets or bests international standards. 

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1. China decelerates

China’s e-commerce sector is experiencing a slowdown in growth as the market matures and policymakers shift their focus to the rural economy. Over the next five years, e-commerce is expected to grow 23.6% from 2020 levels. That’s still healthy, but nowhere near the 70.6% growth rate for the previous five years.

Slowing growth rates are already apparent. Alibaba sales for 2021 Singles Day, the mammoth annual shopping event, were $84.5 billion – a record and up 8.5% from 2020 – but the smallest increase in growth since the start of the festival in 2009.

2. 10 Years of Growth in 3 Months in the U.S., but …

At the outset of the pandemic, the United States witnessed a decade’s worth of growth in e-commerce penetration in just three months’ time, according to McKinsey. Consumers continue trying new stores, websites, brands and types of shopping experiences.

Globally, though, the 2021 e-commerce growth rate is unlikely to match the pace set in 2020. Oberlo forecasts a 17% increase in global e-commerce sales for 2021 vs. nearly 26% in 2020.

3. Emerging markets outpace others

“India, Brazil, Russia, and Argentina are all projected to post at least 26% growth in retail ecommerce sales this year,” says eMarketer.

The Brookings Institution says the “latent demand for e-commerce in emerging markets remains large.”

Changes in the Warehouse

4. Smarter robots

Gartner predicts that warehouse automation and digital transformation will reduce inventory carrying costs by 30% in North America and Europe by 2024. Driving much of that reduction will be the arrival of upskilled, multi-skilled or dual-purpose robots to replace robots that specialize in a single task. The next generation of machines will be able to perform more than one job. Imagine a smart machine that could conduct warehouse inventory, replenish the shelves — and clean the floors.

5. AI-led warehouse configuration

Amazon’s new fulfillment center in Sydney, Australia will use artificial intelligence to store 50% more per square meter, accelerating shipping times and allowing for greater product selection.

6. More micro-fulfillment

Retailers everywhere are experimenting more with micro-fulfillment centers – small, on-premise spaces devoted to processing online orders intended for pickup by customers or third-party delivery specialists. Walmart is among the many companies expanding the use of micro-fulfillment, which typically allows shoppers to drive up and scan codes to receive their orders.

Investment in businesses such as Fabric, a U.S.-based company that provides automated micro-fulfillment technology for grocers and general merchandise retailers, is surging along with growth in the same-day delivery market.

Look for more retail lockers – known in the business as Forward Deployment Fulfillment Centers (FDFCs) — in supermarkets, malls, office buildings, and other public places.

Changes in Delivery

7. Low-emissions and no-emissions delivery

B-Line Urban Delivery in Portland, Oregon, has two revenue streams. One is its last-mile logistics delivery business, which delivers using large custom cargo bikes mounted with boxy containers that carry parcels. The other stream comes from selling advertising on the visually striking containers. B-Line and others are meeting the desire of cities and businesses to find ways to cut emissions and vehicle congestion.

8. Creative sell-deliverer partnerships

Bed, Bath & Beyond is going to Uber Eats to launch a baby and kids vertical that will sell and perform same-day delivery of diapers, wipes, baby food and other items to new parents. Products from 750 Bed Bath & Beyond stores are available for on-demand delivery through the Uber and Uber Eats apps.

Changes in Customer Experience

9. Increased use of voice search

E-commerce sellers need to optimize their sites for mobile voice search, which has grown in use as voice assistants on mobile phones and smart devices have improved. The number of voice shoppers is expected to grow 55% in 2022, according to Entrepreneur.

So sellers need to make sure that voice search makes commonly requested information – web address, physical address, contact number and business hours – easily accessible via voice. Entrepreneur recommends online sellers adopt strategies that identify and rank keywords and phrases most likely to be used in voice searches.

10. Augmented reality (AR) to “see” what you’re buying

Up until now, AR has been of greatest interest to apparel brands because it allows consumers to virtually try on garments they are considering for purchase. But Oracle Netsuite urges companies with other types of businesses to take note of the rapid advance of AR technology.

Consumers doing home remodeling, for instance, will want to use AR to “see” what that new room will look like before they agree to remodel. AR can show them the flooring, wall colors, furniture, artwork and more.

11. Personalization on steroids

Online sellers are relying more on artificial intelligence and machine learning to predict individual shopping habits based on their customers’ browsing and shopping histories. At the same time, Deloitte says, consumers are increasingly willing to share their personal data in return for the prospect of customized or personalized products and services. “Mass personalization” is how Deloitte describes it.

One example: Enfamil, which asks expectant mothers for their babies’ due dates and sends them personalized information throughout their pregnancies.

In one study, retailers that were able to scale personalization boosted revenue by 25%, according to Big Commerce.

On the Back End

12. Open source e-commerce

Open source software systems have been popular with smaller e-commerce players, but larger companies have tended to favor proprietary solutions. That’s changing, particularly when it comes to user interface features (marketing, product catalogs, cart & checkout, order status, chat and support, account management) and a smaller set of APIs.

McKinsey says open source software typically provides more speed and flexibility, and that large e-tailers have overcome most of their doubts about scalability, security, and support requirements.

“Open source for e-commerce is an increasingly viable option for large companies, especially for those that have the requisite engineering talent and regard e-commerce as an important strategic consideration,” McKinsey says.

Read the original article by Hassan Mikail, Head of Shipa Ecommerce, at https://www.globalbankingandfinance.com/12-top-trends-in-2022-e-commerce/

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How logistics parks work as regional distribution hubs

Logistics parks are ideal for all distribution companies throughout the supply chain. Your logistics park should provide a strategic location close to multiple transportation methods and the workforce population to satisfy your customers. When your logistics park is designed to meet the supply chain demand and accommodate your employees’ needs, the park can work perfectly as a regional distribution hub.

What is a logistics park?

A logistics park is a distribution center designed to store, manage, and transport your products. Since every company and product is unique, the park can be customized to meet the specifications that your company requires. For instance, if your product requires refrigeration or speciality assembly and packaging prior to shipping, the park will be designed to optimize these operations.

Successful logistics parks are built in strategic geographical locations to increase your freight distribution and lower your costs. Your park might be built near expressways for road transport, close to railways for railroad transit, or near a large airport to make air cargo logistics fast, easy, and affordable.

Additionally, your logistics park can include amenities for your employees so that you can attract a skilled workforce population. These amenities might include banks, convenience stores, or even transportation methods to help your staff commute to work.

What is an industrial logistics park?

Many companies across the supply chain require industrial areas to manufacture their products. An industrial logistics park can accommodate large warehousing and production spaces as well as office space and employee amenities to keep your operations running smoothly.

Industrial logistics parks are engineered as manufacturing and logistics centers. Here are a few elements that your park can include:

• Specialty manufacturing equipment
• Hazmat disposal areas
• Freight docks
• Office space
• Common areas, such as a cafeteria or athletic center

How do logistics parks work as regional distribution hubs?

Logistics parks make regional distribution easy. They are built in a central location with fast and easy access to various modes of transportation. This helps your company identify the best logistics zones across the region to distribute and transport your product.

The whole purpose of a logistics park is to increase the effectiveness of your operations and freight distribution. Your park can help your business run like a well-oiled machine because it is built to accommodate your product needs and attract the best employees. The park should also include state-of-the-art technology so that you’re set up for the future. When you put these pieces together, your logistics park will function as a successful regional distribution hub.

How logistics parks assist with sustainable supply chain efforts

In past decades the industrial supply chain has sometimes been thought to contribute to pollution and produce greenhouse gases. Fortunately, a recent push for sustainable supply chain planning across the globe is trying to change that notion. And thanks to these efforts, logistics parks are now being rethought and reengineered to help supply chain industries protect the environment while still producing high-quality goods.

What is sustainable supply chain management?

Sustainable supply chain management incorporates environmentally friendly practices into supply chain operations. Due to climate change concerns in recent years, many industries have developed sustainability initiatives to reduce CO₂ emissions and their overall carbon footprint.

The push toward a greener supply chain has led to a lot of changes for the logistics industry. Companies have added services like reverse logistics and recycling programs. They are moving toward lower-emission transportation methods. And in some cases, they are converting every square foot of their distribution space and warehouse facility to be more eco-friendly.

If sustainability is part of your logistics enterprise, a logistics park can support your green efforts.

How do logistics parks assist with sustainable supply chain efforts?

Nowadays, the most innovative logistics park designers are focusing on building a sustainable supply chain to get greener. Here are a few elements that logistics parks can include to help your sustainability efforts:

• Solar energy to power building HVAC systems
• Wind energy to support electrical systems
• Energy-recapture technology for vehicles
• Safety standards to keep employees safe and healthy

Some companies fear that a sustainable supply chain might lessen their product’s quality or even result in financial loss. However, the most effective supply chain efforts prioritize not only a smaller carbon footprint but high-quality production and financial profitability as well.

What are effective supply chain efforts?

Effective supply chain efforts must achieve three main goals:

• Lower your company’s carbon footprint. State-of-the-art technology uses renewable energy resources to reduce your emissions and support the international sustainability initiative.
• Increase customer satisfaction. Going green doesn’t mean sacrificing product quality. You can still manufacture and distribute high-quality goods to your customers. And since, according to a 2021 Strategy+Business article, roughly half of consumers around the world are trying to be eco-friendly, your sustainability efforts can help grow your brand awareness and customer loyalty.
• Provide financial stability throughout each sustainability effort. Technological innovations help companies save money while being eco-friendly. Motion-sensor lights can save up to 90 percent of electrical costs, according to the Sustainable Buildings Initiative, while newly engineered equipment reduces maintenance fees and lower-emission vehicles mean lower fuel expenses. There are even tax incentives for eco-friendly upgrades, so be sure to see if your company qualifies.

Supply chain sustainability is here to stay—so it’s wise to incorporate sustainable initiatives into your corporate strategy.

Strategies for routing your company’s supply chain processes through logistics parks for distribution

You’ve already developed a strategy that outlines your company’s goals and how to achieve them. And as you work to lower your distribution costs and optimize your supply chain, it’s equally important to create a strategy for routing your processes through logistics parks.

How does supply chain management affect manufacturing distribution costs?

Strong and effective supply chain management affects all aspects of your business—including manufacturing distribution costs. Without strong supply chain planning and management, your supply chain can fail in phases like material delivery and labor allocation that increase your distribution costs. When your supply chain is well managed, your operations will run smoothly and cost-effectively.

Logistics parks help you manage your supply chain and therefore keep your distribution costs low. The best logistics parks include warehousing, office space, eco-friendly amenities, and proximity and access to various methods of transportation. If your logistics company delivers raw materials late, you can still expedite your products once they’re produced if you have easy access to road, railway, and air cargo transport.

What is supply chain optimization?

Supply chain optimization means that you have the most current and effective resources throughout every phase of the supply chain. Technology is constantly changing, and many of these advances help businesses reduce their operating costs, engage in eco-friendly practices, and satisfy their customers’ needs.

Here are a few areas in which optimizing your supply chain with the best and most modern resources can help your business run smoothly:

• Raw material ordering and tracking
• Warehouse management, including machinery efficiency, labor allocation, and inventory loss prevention
• Quality control software
• Outbound logistics operations management

Optimizing your supply chain helps you control the entire life of a product from the moment you order the raw materials through the delivery to your client’s door. This optimization is a key strategy that all companies should incorporate into their daily operations.

What are strategies for routing your company’s supply chain processes through logistics parks for distribution?

Because logistics parks are engineered to increase your distribution operations, they make it easy to design a strategy to route your company’s supply chain processes. An effective park helps you manage each logistic to ensure maximum efficiency throughout your operations.

Here are a few additional components that you can include in your strategy:

• Optimize your warehouse space for efficient operations
• Use speciality software to manage your inventory, control your costs, and forecast your sales
• Determine the best distribution methods across your region, including road, railway, ocean freight, and air cargo

Your strategy is unique to your company. So it’s important to consider your needs as you develop the strategy. And once you’ve laid out your plan, you can begin searching for the optimal location for your regional distribution hub.

How to locate logistics parks for regional distribution hubs for your company

You’re already aware that geographical location plays in important role in the effectiveness of your logistics park. The location must give you easy access to your entire region and a variety of transportation methods. And since the availability of commercial real estate varies across the world, it’s important to understand how to locate the best logistics parks.

One question to keep in mind during your search is whether your location will be affected by the coronavirus. Although supply chain companies faced challenges before the pandemic, companies have had to deal with labor and material shortages over the last two years. Thanks to creative problem-solving and the innovation of multimodal hubs, you can still find a logistics park to suit your needs.

How can companies locate logistics parks during the coronavirus pandemic?

The world changed in late 2019 and early 2020 with the onset of the coronavirus pandemic. Prior to the pandemic, logistics and distribution challenges included high fuel costs, public outcry for a greener supply chain, and the ever-increasing demand of the e-commerce industries.

During the coronavirus pandemic, supply chain companies have faced even more intense challenges. A large percentage of the working population across the world was asked to stay home in effort to prevent the virus’s spread. The reduced workforce meant that less raw material was being made and fewer products were being manufactured. To stabilize and become pandemic-resistant, companies can now look for logistics parks in areas with lower infection rates and with governments that are dedicated to keeping businesses operational.

How can companies locate logistics parks with multimodal hubs to improve supply chains during the coronavirus pandemic?

Multimodal hubs allow for seamless transportation and communication across multiple platforms. Because COVID-19 largely shut down both domestic and international travel and many employees had to work remotely, companies have had to think creatively to keep up their transportation and communication.

Fortunately, technological advancements in multimodal hubs have helped companies become pandemic-resistant. And since the best logistics parks include state-of-the-art technology, businesses throughout the supply chain have had options in choosing a logistics park with a multimodal hub that keeps them operational.

How can you locate logistics parks for regional distribution hubs for your company?

You need to locate a logistics park that will work well for your company’s manufacturing and regional distribution. Here are a few elements to keep in mind as you research commercial real estate and determine where your logistics park should be located:

• Labor cost. Where will you be able to find skilled employees that fit your labor budget?
• Freight and distribution. To optimize your logistics, should you be near an airport, a railway, or an inland port?
• Expansion and upgrade capabilities. Some geographical locations have stronger infrastructures than others. If you want room to expand and continue your sustainability initiatives, you’ll need a location that can accommodate you.

Logistics parks help you access more markets and expand your business

Your company needs high-quality, sustainable logistics services in order to compete in the regional and global markets. And Agility is the expert in developing logistics parks in the Middle East, Africa, and South Asia.

Visit our website to learn how an Agility Logistics Park is your ideal regional distribution center that can help you access regional and global markets as you expand your operations.

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The Saudi warehousing market is growing, and emerging technology and services provide the country with more options to expand. To capitalize on this potential, Saudi Arabia must take stock of its current warehousing market and look for ways that logistics partners like Agility can help it grow.

Status of the warehousing market in Saudi Arabia

In 2016, Saudi Arabia announced its plan to reduce the country’s dependence on the oil market and diversify its economy with a strategy called Vision 2030. To develop the country into a global trading hub, Saudi Arabia is improving its logistics market, including warehousing, and has made strong steps forward in logistics management.

Current warehousing market

According to Ken Research, the Saudi dry warehousing market grew by 2.8 percent between 2015 and 2019 and will continue to grow until at least 2025. The industrial and retail industries are responsible for the largest percentage of this expansion.

The warehousing market is largest in the cities of Jeddah, Riyadh, and Dammam. While Jeddah has a majority of the warehouse revenue share, all three cities play a key role in the expansion of warehousing in Saudi Arabia.

• Jeddah: Jeddah is a port city on the Red Sea. Its warehousing district is close to the Jeddah Islamic Port. Here, the warehouse and logistics supply districts stretch 26.1 million square meters.
• Riyadh: Located in the center of the country, Riyadh is the capital of Saudi Arabia and its main financial hub. Its warehousing districts are primarily near Riyadh’s dry port. The city dedicates 24.5 million square meters to warehousing and logistics parks.
• Dammam: The Dammam metropolitan area is on the Persian Gulf. Its warehousing and logistics parks cluster among four zones to the north, east, south, and west of the city. Currently, the city uses 20.9 million square meters for its warehouses and logistics parks.

Dry freight forwarding

Dry logistics refers to the transport of freight that cannot get wet. The dry logistics market in Saudi Arabia centers primarily in Riyadh and Jeddah. These cities mainly use road transport for dry logistics, with air, sea, and rail following as alternate freight modes.

Dry freight forwarding is a newly stable industry in Saudi Arabia. Between 2015 and 2019, an oil price slump and subsequent economic downturn caused the dry logistics industry’s compound annual growth rate to decline.

However, market analysts from Ken Research forecast that the dry logistics and freight forwarding markets will grow by 1.3 and 0.8 percent, respectively, until the forecast period ends in 2025. This growth is due in part to Vision 2030’s efforts to improve the country’s logistics management.

Warehousing advancements in Saudi Arabia

As the warehousing market in Saudi Arabia expands, companies are developing innovative solutions to streamline their supply chains and increase functionality. Because of this, Saudi Arabia’s warehousing sector is set to keep pace with the rising demand for goods moving in and out of the country.

Key warehousing advancements

To meet the goals outlined in Vision 2030, the Saudi Arabia warehousing market expanded and introduced a number of inventive solutions to push the industry forward.

• Cold storage: In the wake of the COVID-19 pandemic, the need for a safe and effective way to transport and store vaccines was apparent. To meet global demand for a vaccine, Saudi Arabia built a series of warehouses dedicated to storing pharmaceuticals and other perishables. These refrigerated warehouses enable the country to maintain a cold supply chain.
• National Industrial Development and Logistics Program (NIDLP): Saudi Arabia launched NIDLP to improve infrastructure and design new policies related to economic growth. By dedicating financial support to logistics development, NIDLP aims to build Saudi Arabia’s role as a regional logistics hub and improve warehousing.
• Al Khomrah Logistics Zone: The Saudi Arabian ministry of transport opened a logistics zone in Jeddah to support shipping, freight distribution, and transport. This is the largest logistics zone in the country.
• On-demand warehousing: On-demand warehousing enables companies in Saudi Arabia to access warehouse solutions on a temporary basis. On-demand warehousing services negotiate with warehouses to build a network of facilities to increase supply chain efficiency. Companies can lease on-demand warehouse space as a way to cost effectively address shifting demand.

Important technology for warehousing advancements

One of the most crucial elements driving Saudi Arabia’s warehouse market is the country’s embrace of technological advances. These developments help streamline the supply chain and improve warehouse management.

• Saudi blockchain technology: Saudi Arabia aims to implement smart systems to facilitate efficient trade and storage—particularly at seaports, which account for the majority of its trade. To that end, Saudi Customs successfully launched a blockchain pilot to help strengthen the country’s shipping logistics infrastructure. The technology will offer a digital reference of all stages of trade in order to increase transparency across the shipping supply chain.
• Application programming interfaces (APIs): APIs help different order fulfillment, inventory management, and warehouse management software to communicate with each other. This streamlines the warehousing process and enables warehouses to connect with other elements of the supply chain.
• Internet of Things (IoT): The IoT is a boon for warehouse managers, enabling improved inventory management systems and real-time tracking. IoT devices embedded into shipments help companies see where their transported assets are in real time, anywhere in the supply chain. This leads to a faster, more efficient, and more visible flow of goods. By quickly exchanging data with the IoT, warehouses can make all processes more economical.

Challenges with Saudi Arabian warehousing logistics

To emerge as a major player in global logistics, Saudi Arabia must face several obstacles to warehousing expansion. By understanding these challenges, the country is better suited to overcome them.

Major challenges for logistics managers

• e-Commerce: The use of e-commerce has expanded globally and among Saudi Arabian citizens. The market is fast growing, which exposes weaknesses in Saudi Arabian supply chains. Urban centers in Saudi Arabia are not as compact and densely populated as urban environments elsewhere. That lack of density limits efficiency in distribution from the warehouse to the customer. Because of this, suppliers are sometimes unable to meet the demands of e-commerce shoppers for fast shipping.
• Supply chain interruption: COVID-19 revealed vulnerabilities in supply chains. Because their success is dependent upon a variety of uncontrollable variables, warehousing facilities have little power over supply chain interruptions. This means facilities are vulnerable to delays that can result in canceled orders and a lack of customer trust.
• Aging warehouses: Modern, automated warehouses come at a cost. Because of this, many warehousing districts, particularly in Riyadh, contain a large number of aging and outdated structures These are less suited to meet demand and can slow the throughput of goods. Saudi Arabia will need to upgrade these aging warehouses in order to keep up with the global warehousing market.

Solutions for common challenges with warehousing in Saudi Arabia

As challenges arise in warehouse management, companies must develop solutions to meet them. As Saudi Arabia seeks to overcome these challenges, there are many solutions that can help its warehousing networks thrive.

Close proximity to suppliers

Minimizing the distance that materials and goods need to travel can help reduce logistics inefficiencies. Large distances between a company’s suppliers, warehouse facilities, and consumer centers increase lead times, transportation costs, and the risk of supply chain disruption.

Strategic positioning of warehouses can prevent these complications. By positioning warehouses close to suppliers and consumer centers on road, air, and sea transport routes, companies can improve supply chain efficiency. Making these decisions upfront helps companies to cut inefficiencies out of their supply chain before they become a problem.

Warehouse automation

With a growing global demand for goods, it is essential that warehouses effectively manage their inventory, personnel, and equipment. Without reliable warehouse inventory monitoring, companies risk using unreliable data to manage inventory levels.

Additionally, inaccurate personnel or equipment tracking may lead to inefficient warehouse processes. As a consequence, these companies risk failing to deliver goods on time and costly setbacks. Automation in warehouse inventory management systems can alleviate these issues.

The most common way warehouses can implement automation is through warehouse management systems (WMSs) and warehouse control systems (WCSs). While there is some functional overlap between the two, WMSs primarily work to manage personnel and inventory while WCSs focus on equipment.

These systems provide more reliable data on stock levels and workflow to ensure swift order fulfillment. By embracing these systems, Saudi warehouses can more efficiently manage their inventory and product flow.

Logistics parks

One of the most challenging parts of any warehousing operation lies in infrastructure development. Existing logistics parks ease the burden by supplying a fully developed warehouse and logistics infrastructure to companies that need it—logistics parks provide complete logistics services in the storage and distribution of products.

Agility holds over one million square meters of space in Riyadh, Jeddah, and Dammam. Agility’s warehouses in Saudi Arabia are strategically located for easy access to seaports and airports, making them accessible to international customers. These modernized facilities can help companies optimize their logistics.

How Agility can help

Understanding warehousing in Saudi Arabia can help warehouse management companies make a plan for seizing the potential this region has to offer. To meet your warehousing requirements, contact Agility Saudi Arabia, a leading logistics provider in the region.

With Agility Saudi Arabia, regional and global clients can connect with suppliers and markets around the world.

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Common logistics challenges with West African e-commerce

In 2020, e-commerce experienced unprecedented growth. Global e-commerce traffic hit  22 billion visits in June. For many retailers and manufacturers, e-commerce has become a primary method of conducting business. However, Africa trails the rest of the world in e-commerce. Lack of widespread broadband access, cybercrime, underdeveloped postal systems and other  challenges confront businesses trying to sell online. Widespread cybercrime Cybersecurity remains a primary concern for e-commerce in Africa. In 2017, cybercrime cost Africa an estimated 0.20 percent of its annual GDP, according to a report published by the World Trade Organization. Nigeria and Ghana experience some of the highest rates of cybercrime in the world. According to a recent article by Deloitte, Nigeria saw a 20 percent increase in phishing scams in 2020 compared to 2019. An increase in use of digital platforms spurred by the COVID-19 pandemic is likely to blame. Since these countries see some of the highest rates of cybercrime in the world, West African consumers generally avoid sharing their personal information over the internet and distrust online shopping. Moreover, many African countries do not have legislation in place to protect consumers from online fraud, which further exacerbates consumer hesitancy toward e-commerce. Underdeveloped postal services Historically, street addresses in Africa were established in populous city centers, and few if any address networks were extended to outlying areas or rural areas. Since the creation of the West African Postal Conference in 2012, the region has moved toward a more integrated postal system across developing countries. However, postal services are slow to incorporate the use of information and communications technology (ICT) into their daily operations, which slows down the efficiency of this process and others. Africa’s land mass is larger than China, Europe, and the United States combined. Africa is home to more than one billion residents, yet the efficiency and reach of its postal systems fall drastically behind those of the rest of the world. Africa had nearly 3,300 outsourced postal offices and 8,300 owner-operated post offices in 2018. In comparison, the Asia-Pacific region had nearly 100,000 outsourced offices and 227,000 owner-operated ones in the same year. Because of underdeveloped postal services, e-commerce can be especially challenging in West Africa. Tracking the flow of goods and reverse logistics is difficult, and some remote areas remain without street addresses. Lacking ICT infrastructure In general, West Africa has severe gaps in ICT infrastructure. The majority of Africa’s developing countries experience barriers in internet usage, such as bandwidth constraints, unreliable connections and frequent power cuts. Building ICT infrastructure is costly and requires skilled workers, and several West African countries are among the poorest in the world. On top of that, the cost of internet access is much higher in West Africa than in other regions. The lack of ICT knowledge and ICT infrastructure results in a digital divide that affects e-commerce. Africa’s digital divide stifles the rise of online communities—a necessary factor for full participation in the second wave of e-commerce.

Factors affecting industrial logistics in West Africa

Recently, many foreign countries, such as the United States and China, have invested in infrastructure projects with the hopes of helping Africa realize its full potential within the global economy. Although West Africa is developing rapidly, its countries still score relatively low on the World Bank’s Logistics Performance Index. Sierra Leone, for example, ranks 164th out of 167 countries. Identifying ways to optimize costs and operational efficiency can be exceedingly difficult in West Africa’s fragmented markets. The logistics problems in West Africa that manufacturers must overcome include issues with the transport of goods and an overreliance on raw materials. Issues with the transport of goods According to the International Road Federation, sub-Saharan Africa—a region that includes most of West Africa—accounts for 6 percent of global road networks despite representing 17 percent of global land mass. Comparatively, the North American continent accounts for 21 percent of the world’s road networks. This creates major challenges in the transportation of goods and intraregional trade for the African continent. For example, intra-African trade accounted for just 19 percent of Nigeria’s exports and 8 percent of its imports between 2019 and 2020, according to Africa’s Trade Law Centre. Large sections between Côte d’Ivoire and Senegal lack modern, connecting highways. Rural areas in many African nations are cut off from the supply chain completely. Moreover, the lack of road infrastructure can cause difficulties in sourcing raw materials and fulfilling domestic orders. On the other hand, the high costs of ocean and air freight in West Africa impact inbound and outbound logistics. Recently, construction of African airports has been on the rise, but the vast majority of trade is done by boat. Key ports in West Africa include Abidjan, Côte d’Ivoire, and Lagos, Nigeria. Even with recent expansion, there still isn’t enough port capacity to meet demand and bolster the West African economy. Reliance on raw materials Although West Africa is steadily developing, most of its countries’ economies are still resource- based. This is also true for other African regions, such as Central Africa and North Africa. West Africa’s biggest industries include agriculture, mining, and oil. Outside of cities, many of West Africa’s rural inhabitants rely on employment in unskilled labor. Less than 30 percent of Burkina Faso’s population was living in urban areas as of 2019. Africa is rapidly urbanizing, and consumer demand and incomes are closely tied to the rate of urbanization.  Although some West African countries have a growing middle class, other parts of the region still have high poverty rates. In several West African countries, more than 30 percent of the population live on less than $1.90 a day, according to Oxfam International. Reducing that percentage will be the key to unlocking stronger  consumer demand. Inactivation of the labor market With some of the highest fertility rates in the world, West Africa has the potential for a substantial workforce. By 2040, Africa is expected to have a larger working population than India and China combined. However, there are many systemic challenges to sourcing skilled, experienced workers for the logistics industry. According to the World Bank, sub-Saharan literacy rates sit at 65 percent, which falls behind the global literacy rate of 86 percent. Mali has a literacy rate of 35 percent, making it one of the lowest in the world. High levels of illiteracy have to do with ineffective education systems. Furthermore, when looking at education attainment by gender, severe inequalities emerge between African men and women. Moreover, unemployment rates among Africa’s youth (ages fifteen to twenty-four) are significantly higher than those of other demographics. As of 2018, Burkina Faso’s and the Gambia’s youth unemployment rates sat at 49.1 percent and 53.5 percent, respectively. All of these factors combine to create problems with sourcing talent for production, leaving SMEs at risk.

Solutions to mitigate logistics problems in West Africa

Despite the many challenges in the logistics, retail, and manufacturing sectors, Africa’s future is promising. The establishment of the Economic Community of West African States has led government leaders to take a unified approach to policy changes. These changes are expected to facilitate the harmonization of West African countries and in turn lead to economic growth. In the meantime, SMEs are finding innovative ways to mitigate logistics problems. To reap the most benefits from its untapped markets, many logistics companies have begun to open the gates to mobile commerce (m-commerce) and adopt alternative forms of transport. Regardless of the approach, logistics companies must be flexible and dynamic to foster sustainable growth and optimize their supply chains. The boom in m-commerce Although e-commerce is in its early stages in West Africa, m-commerce is on the rise. Many local SMEs have penetrated new markets with this form of transacting. M-commerce has been widely adapted in West African countries for two reasons: first, the growing youth population has been quick to adapt this technology; and second, mobile data costs less than the costs associated with internet infrastructure and usage. In fact, m-commerce may be the key for retailing and identifying consumer demands. According to the 2019 Mobile Economy West Africa report, 70 percent of total telecommunications connections will be via smartphone by 2025, up from 38 percent in 2018. The report also finds that the mobile industry will contribute an estimated $68 billion to GDP in 2023, which is nearly 10 percent of the total estimated GDP. SMEs should invest in mobile formats for marketing their products and cultivating new customers. Furthermore, the use of GPS and tracing technologies may help curb the challenges associated with the postal systems in West African countries. Alternative forms of transport Despite West Africa’s fragmented road networks, African SMEs are outfitting their own supply chains with non-traditional forms of transportation. Many local businesses have invested in motorcycles, referred to locally as boda bodas, to deliver goods domestically. Motorcycles are better suited to handle different terrain and navigate traffic jams than delivery trucks. The COVID-19 pandemic has also prompted the use of drones to deliver vaccines to remote areas of West Africa. Applying this technology to the supply chain can benefit SMEs greatly. With drone technology, SMEs can avoid exorbitant fees for shipping freight by air while increasing flexibility in order fulfillment. Drones may even play a role in sourcing materials for production in the future.

Benefits of working with a company that specializes in supply chain and warehouse logistics in West Africa

One of the biggest challenges logistics companies must overcome is an overall lack of infrastructure. However, building infrastructure needed for end-to-end supply chain management can be uneconomical. Logistics costs, even in more urbanized areas, can add up. For example, total logistics costs in Nigeria amounted to $71.9 billion in 2019, which made up 5 percent of the continent’s total logistics costs. As a result, many start-ups and SMEs can benefit from using a third-party logistics company that is already well established within the region. When considering expansion into West Africa, businesses should identify their core competencies and focus on them. As for the remaining gaps in the supply chain, logistics infrastructure providers such as Agility offer facilities that act as platforms for growth in the region. Logistics parks de-risk market entry and expansion, allowing companies to conserve working capital by storing, distributing, assembling and processing their goods at secure, connected, international-standard facilities funded, built and run by professionals. To discover how Agility is solving logistics problems in West Africa for companies both large and small, check out these case studies.

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Why is warehouse efficiency more important than ever? Because the increased demands of e-commerce are currently straining warehouse operations. According to eMarketer, retail e-commerce sales grew 27.6 percent in 2020, and they’re set to grow another 14.3 percent in 2021. That leaves warehouses scrambling to keep up, and boosting efficiency is a critical way to gain some ground. As a leader in supply chain optimization, Agility offers warehousing solutions designed to reduce costs and improve efficiency. In this article, we’ll delve into the most common factors that lead to warehouse inefficiency and how to solve them.

How warehouse layout affects efficiency

Logistics Management notes that just 11 percent of the total warehouse space in the US appeared in the last decade, meaning many warehouses are out of date. In fact, warehouses typically become obsolete within thirty-four years—a problem, considering that nearly one billion square feet of warehouse space is more than half a century old. These challenges mean many warehouses aren’t properly equipped to handle the increased demands of e-commerce. Common problems include low ceilings, not enough loading docks, or uneven floors that slow down warehouse staff.

Fortunately, it’s possible to modernize and expand warehouses to accommodate changing needs. And just as importantly, you can and should regularly update your warehouse layout to increase efficiency. Even if it’s not possible to invest in raising your warehouse roof or adding more square footage, making the best use of the space you do have can address workflow problems.

How can layout impact performance?

Flaws in your warehouse layout can lead to efficiency and performance problems, such as the following:

• This is when delays in one small area of your warehouse lead to a much larger holdup down the line. For instance, warehouses that do not organize goods efficiently often experience shipping bottlenecks, since picking ends up taking too long to keep up with the flow of incoming orders. Warehouses with inefficiently located receiving bays may see bottlenecks when it comes to stocking goods. Sure, a variety of factors can cause bottlenecking, but making changes to your layout often helps get things moving.
• Redundant movements and activities. When warehouse layout isn’t optimal, workers can waste hours of time over the course of a week. For instance, they may need to move pallets from a receiving dock on one side of the warehouse to a storage location on the other side of the facility: not the most efficient arrangement. In some cases, workers may end up making repeat trips or moving goods to one area, only to have to move them to another area, later. Optimizing worker paths—and changing your warehouse layout to support that—can help reduce wasted effort.
• Low picking metrics. Suboptimal warehouse layout tends to make it hard for workers to pick a high number of units per hour (UPH). This leads to wasted time and money, not to mention shipping bottlenecks and ultimately, customer dissatisfaction. Redesigning your warehouse to enable the most efficient picking paths can address this issue, improving both worker performance and customer satisfaction.
• Heating and cooling inefficiency. Some products in your warehouse may need refrigeration or have other temperature control needs. Storing these goods can result in high energy costs, which could have an impact on your bottom line. Fortunately, it’s possible to optimize your warehouse in order to house refrigerated goods in a separate, preferably insulated storage area. This ensures you aren’t cooling the rest of the warehouse unnecessarily or making refrigerators work too hard.
• Safety and security concerns. If the flow of workers and goods through your warehouse isn’t efficient, or there isn’t enough space to maneuver equipment safely, accidents, injuries, and product breakage can occur. These issues aren’t just detrimental to warehouse efficiency and profit. They could cause serious harm to your workers. In addition, not having secure areas of the warehouse to store high-value goods like jewelry and electronics can lead to theft.

Knowing what changes to make to your warehouse layout

Look for common warehouse design problems, such as the following:

• Insufficient space for deliveries. Using the same docks for loading and unloading goods—or docks located too close together—can lead to inefficiencies and hold up your shipping schedule. For instance, if deliveries overlap with loading and dispatching a truck, workers will struggle to share the space. This can lead to lost time, at best, and accidents or injuries, at worst.
• No clear picking paths. A big goal of warehouse design is to optimize pickers’ work. That means storing products in such a way that pickers can take the shortest possible paths. In general, picking paths should minimize backtracking, and products should be clearly labeled so they’re easy to find. Additionally, picking paths should wrap up near the packing area. After all, it doesn’t make sense for pickers to make their way across the warehouse, only to have to walk back to where they started after picking the order.
• Too many dead-end aisles. Good warehouse design optimizes the flow of goods and workers. Dead-end aisles require pickers—and forklifts—to execute turns and go back the way they came, leading to wasted movements and even traffic jams. This is not only inefficient but can violate safety codes.
• Not enough maneuverability. Moving large objects requires ample space, whereas tighter areas may be fine for storing smaller, lighter objects. When planning your warehouse layout, it’s critical to consider the handling needs for each type of product you stock. Remember that if a forklift has difficulty accessing larger or heavier objects, or if it has problems turning, it could collide with racks or stacks. This could lead to breakage and injuries.
• A shortage of overflow space. When unexpected needs and opportunities arise, it’s important to have some extra space. For instance, maybe your organization got a bulk discount on a product and ordered more than usual. Or maybe you’re piloting a new product that requires assembly at the warehouse. Whatever it is, overflow space will ensure you have room to get it done. And sometimes, warehouses have more room than they think. Cleaning out clutter or getting rid of obsolete inventory may free up the overflow space you’re looking for—whether you need a staging area or temporary storage.
• Insufficient waymarks. Helping warehouse workers safely navigate your facility is a critical consideration. After all, even the best layout isn’t always intuitive. Color-coding the warehouse floor helps with orientation, and clearly marking each aisle with a number can improve efficiency at every step. Keep in mind that sometimes it’s not possible to remove an obstruction to traffic flow. Structural columns are one such example. In this case, using brightly colored column protectors is key to preventing collisions and protecting columns from damage.

How do you lay out a warehouse efficiently?

Designing an efficient warehouse layout requires you to understand your inventory: it’s size, weight, popularity, and storage needs. This way, you can store products in configurations that make the most sense for your business. And if you’re redesigning the layout of your existing warehouse, it’s also helpful to know how your staff works. Do they tend to experience traffic jams in certain parts of the warehouse? Are they taking longer than they should to pick an order? From there, use the following considerations to lay out your warehouse for optimal efficiency:

• Establish proper zoning. Zoning enables warehouse workers to store and pick products via the most efficient routes. As an example, storing bulky goods together in extra-wide aisles makes more sense than storing large and small items in the same aisles. For one, larger or heavier goods may have different logistical considerations. For two, these goods may need reinforced shelving, which tends to be costlier than standard shelving. Why waste those units on lightweight goods?
• Store popular items in the same place. This helps workers pick orders in less time—especially if most orders tend to contain several different popular products. Of course, your best sellers may change over time. It’s important to keep tabs on what these items are and rotate products in and out of your designated prime real estate zone. To achieve this, keep track of stock keeping unit (SKU) velocity. SKU velocity refers to the quantity and frequency of each SKU picked over a certain period of time, and it can help you determine how to sort products for the fastest order fulfillment.
• Maximize traffic flow. When workers can move quickly and easily through the warehouse, they save thousands of hours every year. In addition, your warehouse should see fewer bottlenecks, injuries, and broken equipment or products. To achieve this, plan your warehouse to maximize one-way traffic, avoid sharp turns and narrow aisles, and keep the floor clear and uncluttered.

Design for flexibility. An open warehouse layout enables you to make changes easily. In contrast, a warehouse that features too many fixed spaces can make it hard to switch up the layout as your inventory changes. If you have the option, make use of temporary, moveable partitions to divide up space. A key principle of warehouse layout design is that needs change fast. Keeping your space as flexible as possible is a great way to future-proof your warehouse.

How work methodology affects warehouse efficiency

When warehouse workers don’t use optimal methods for moving, storing, or picking goods, this tends to result in low key performance indicators (KPIs) throughout your operations:

• Receiving efficiency. This is the volume of goods each warehouse worker receives per hour. When warehouse operators use inefficient work methodology, expect receiving efficiency to be lower than your target, leading to higher costs.
• Put-away productivity. This KPI looks at the volume of goods each worker puts away per hour. You can also look at put-away accuracy, which could reveal inefficiencies when it comes to handling new inventory. Tracking this metric by individual worker can help you get to the root of the issue.
• Picking productivity. This is the number of order lines picked per hour. In addition, you should look at picking accuracy. Problems with these KPIs could indicate quality control issues, suboptimal picking paths, and the need to retrain workers.
• Perfect order rate. This is the total number of orders delivered without issues. Needless to say, problems with picking accuracy or efficiency issues that cause shipping delays can prevent your perfect order rate from hitting target.

Work methodologies that improve warehouse efficiency

The following methods could help your staff work smarter and boost overall warehouse efficiency:

• Pick to light. Pick-to-light systems and put-to-light systems use indicator lights to help workers find or correctly place items. This speeds up the process of picking or putting away, since workers don’t have to search for the right location. And when synced with your warehouse management system (WMS) and enterprise resource planning tool, this solution makes it easy to keep tabs on your inventory.
• Cross docking. How fast do incoming products move out the door? If some goods are especially fast moving, shelving them upon arrival may not be efficient. Instead, move them to a staging area for pickers to find easily. Known as cross docking, this method enables quick retrieval, so workers don’t have to waste time shelving popular items only to have to pick them minutes or hours later.
• Achieving quicker travel times. Pickers may need coaching on the fastest way to move from point A to point B. For instance, you could challenge workers to avoid backtracking by mapping the most efficient route through the warehouse before starting each order. In addition, it helps to inform everybody of any new changes to the warehouse layout, to minimize time spent wandering.
• Improving pick list accuracy. If out-of-stock items make it to pick lists, pickers could waste time searching for unavailable inventory. That’s why it’s so important to use an inventory management system and ensure all available data is as accurate as possible.
• Batch and cluster order picking. Batch order picking is when workers pick the same SKUs for several orders at the same time. This reduces travel time, since pickers can grab multiples of the same item at once. Cluster order picking is when pickers work on several orders at the same time—even if they don’t share SKUs in common. Why? Because it cuts down on overall travel time and prevents pickers from having to retrace their steps to and from the packing area with every order.
• Pick and pass. Also known as zone order picking, this method assigns workers to designated zones. They then pick SKUs from their zones, place them in bins, and pass them on to the next zone. With this strategy, picking the order is a true team effort. Plus, picking and passing is ideal for warehouses that have problems with worker congestion.
• Keeping SKUs together. If you have many similar items—like different-colored T-shirts in the same style—it makes sense to shelve these products next to each other. But avoid mixing SKUs. This creates confusion, wastes time during picking, and can lead to accuracy issues.
• Know your fastest pickers. Not every worker can pick at the same speed, and that’s OK. But acknowledging, rewarding, and studying your fastest pickers to learn their techniques is a great strategy. You can even have new or slower workers shadow your top performers to pick up tips.
• Active management. If worker productivity is low, this could be due to insufficient structure in the workday or unclear expectations, overall. It’s critical to allocate tasks and measure performance to keep workers on track. During downtime, assign tasks that can promote overall warehouse efficiency, like removing dead inventory or tidying staging areas.

How to evaluate the efficacy of your work methodology

To know if changes to your work methodology are getting results, you need to set benchmarks for your team and measure their performance against your expectations. It’s as simple as that. Using a WMS with radio frequency (RF) that can capture data makes it easy to track worker metrics, such as UPH, or organizational KPIs, such as perfect order rate. When making major changes to your team’s work methodology, try introducing one change at a time and tracking the results to see if there’s an improvement before introducing another change. If you overhaul everything at once, it’s hard to tell what’s working and what’s not.

How inventory affects warehouse efficiency

Warehouse inventory management is the system and set of processes used to organize and track the goods in your warehouse. Proper inventory management uses principles of facility and process engineering along with technology to improve inventory accuracy and visibility. Without a clear picture of your inventory, it’s difficult for staff to find and access stock, pick orders efficiently, and achieve a high perfect order rate. With a sound inventory management strategy, you’ll not only enable your team to improve their productivity, but you’ll save on the costs of labor, reduce error, and ultimately, increase customer satisfaction.

How does inventory turnover affect your warehouse efficiencies?

Not having enough inventory on hand can lead to order fulfillment delays and dissatisfied customers. On the other hand, having too much inventory that doesn’t turn over can lead to an excess of dead inventory, such as seasonal or expired goods you can’t sell. That can take a bite out of your profits—and take up valuable space in your warehouse. The following techniques can help you stay on top of your inventory and boost efficiency:

• Use ABC analysis. This technique breaks goods down into three categories: A, B, and C. Category A includes the top 20 percent of your inventory, consisting of the best sellers that account for 80 percent of your revenue. Category B features the middle 30 percent of your inventory, which represents 15 percent of your revenue. And Category C consists of the bottom 50 percent of your inventory, or 5 percent of your revenue. By accurately sorting your inventory, you can store products more strategically, forecast demand, and ensure you never run out of your top products.
• Maintain economic order quantity (EOQ). This is the ideal number of units your warehouse should order to minimize overall inventory costs related to factors such as order costs, holding, and shortage. You can calculate this by multiplying total order cost by annual demand, multiplying by two, and dividing by holding costs. Then, find the square root of that number to arrive at your EOQ. Keep in mind that this approach isn’t ideal for every business. If you typically see dramatic seasonal fluctuations in demand, you’ll need a more flexible ordering strategy.
• Try the just-in-time (JIT) inventory method. The JIT technique involves manufacturing or acquiring items right before you need them. Inventory moves quickly and doesn’t require as much warehouse space. Plus, this method eliminates the risk of overordering, which can leave companies with dead stock on hand.

How can you evaluate your current method of tracking warehouse inventory?

Many methods exist for tracking warehouse inventory—from sophisticated WMS with RF identification to universal product code scanning to a pencil and paper. To find out if your method is working for you, consider the following KPIs:

• Inventory turnover. The higher the turnover, the better. If inventory sits too long in your warehouse, you’re losing money.
• Stock outs. Poor demand forecasting and inventory planning can lead you to run out of stock at inconvenient times.
• Lost sales. This is the number of opportunities lost during a stock out.
• Order cycle time. This is the amount of time starting when a customer places an order and ending when they receive the order. Inventory management issues could lead to a longer order cycle time and dissatisfied customers.

Today, warehouse automation can take a lot of the guesswork out of inventory management and demand forecasting. This technology also reduces the need for manual labor, eliminates human error, and can help you optimize your inventory to avoid waste or lost opportunities.

How to evaluate your warehouse’s efficiency

These tips can help you measure the efficiency of your warehouse operation and identify areas that need improvement:

• Use tracking technology. A good WMS offers insights into your operations and team, including the health of your inventory, worker performance, and overall warehouse productivity. A WMS can also help with labor forecasting and inventory demand forecasting. It’s a great way to identify and fix inefficiencies throughout your warehouse.
• Talk to your workers. They’ll be able to tell you what pain points hold them back, and the answers may surprise you. For example, warehouses that feature conveyor belts designed to make certain tasks easier often find that workers get impatient with their slow speed. And if your warehouse layout needs reconfiguring, your pickers can likely tell you what needs to change.
• Observe your warehouse in action. Shadowing an employee will give you a chance to see whether your warehouse runs like a well-oiled machine. It’s the easiest way to find out if problems such as congested areas of the warehouse, receiving bottlenecks, or improperly slotted inventory are holding up your operations.
• Conduct regular warehouse audits. During an audit, you’ll look at everything from your warehouse’s capacity, layout, and storage systems to safety protocols and customer service performance metrics. By proactively and regularly auditing your operations, you’ll be able to identify and fix problems before they have a chance to get serious.

What is the best way to start improving warehouse efficiency?

To boost warehouse efficiency, you first need to isolate which factors need improvement. And that calls for some detective work. For instance, say your pickers’ average UPH is too low. This could be due to warehouse layout issues causing workers to retrace their steps or walk too far to complete an order. It could be because some of your pickers need coaching on the right techniques. Or maybe your warehouse could benefit from rezoning to make the most popular inventory easier to find. Accurately identifying the problem is half the battle, and it’s that much easier to improve your KPIs when you know what processes need fixing.

The post Factors affecting warehousing efficiency: How to improve your warehouse appeared first on Agility Logistics.

After a difficult year of deaths and lockdowns, hope is finally on the horizon as the first COVID-19 vaccines appear on the market. The very first doses of the COVID-19 vaccine have already been administered, but full distribution of the vaccine to the global population—which will represent the largest vaccine procurement and supply operation in history—is yet to begin in earnest.

This operation will greatly impact every aspect of the global supply chain. There are a number of expected vaccine logistics shortages from COVID-19, from shipping container availability to cold chain supplies. And that’s not counting the many COVID-19-related challenges the supply chain is already facing, such as route disruptions and skyrocketing cargo rates.

This article will discuss the impact of the global COVID-19 vaccine distribution on supply chain logistics, including anticipated COVID-19 vaccine logistics, unique distribution challenges of COVID-19 vaccines, development of the COVID-19 supply chain, and how the vaccine could impact pharmaceutical supply chain logistics.

Anticipating COVID-19 vaccine logistics

The COVID-19 vaccine distribution effort is not yet in full swing, but it’s possible to anticipate how the logistics of the effort will work. Both national and global agencies have discussed putting into place coordinated distribution initiatives on an unprecedented scale, which will require the cooperation of supply chain agents and logistics providers.

The vaccine supply chain before COVID-19

Pre-COVID-19, the vaccine supply chain was an end-to-end system that was meant to ensure effective vaccine storage and handling, as well as strict temperature control in the cold chain. It has always been essential for the vaccine supply chain to run smoothly to ensure uninterrupted vaccine delivery to populations in need.

However, even before COVID-19, the World Health Organization (WHO) reported that national supply chains were struggling to manage the volume of new vaccines and to take advantage of improved vaccine supply chain technology like updated cold chain materials.

Necessary changes to the vaccine supply chain due to the COVID-19 vaccine

Moving forward, the vaccine supply chain cannot afford to get bogged down in supply chain issues like inadequate storage, transportation, and personnel capacity. This creates bottlenecks, and in the past has led to spoilage of many vaccines. A global coordination effort will be needed to optimize the supply chain for this crucial operation. Possible steps include the following:

• Standardization of all COVID-19 vaccine packaging to ensure proper fit within containers
• Coordination of vaccine deliveries based on the two necessary doses of the COVID-19 vaccine
• Maintenance of the COVID-19 accessory supply chain for supplies such as needles and alcohol swabs
• Open communication across all agents within the supply chain

How the COVAX initiative will affect the logistics of the COVID-19 vaccine

COVAX is the vaccines pillar of the Access to COVID-19 Tools (ACT) Accelerator, launched by the WHO, the European Commission, and France in April 2020. It is leading efforts to procure vaccines and distribute them to ninety-two lower-income countries, while also supporting procurement for more than ninety-seven upper-middle-income and high-income nations.

According to UNICEF, the United Nations agency responsible for providing humanitarian and developmental aid to children worldwide, these represent more than four-fifths of the world’s population. UNICEF, a COVAX member, is responsible for the transportation and supply chain piece of the COVID-19 vaccine distribution.

COVAX will allocate vaccine doses to participating countries, proportional to their total population size. To distribute the vaccines, UNICEF is working with manufacturers and partners in procurement, freight, logistics, and storage. UNICEF is well suited to handling the distribution, because it is the single largest buyer of vaccines in the world and already has longstanding expertise in procurement and logistics.

How large a project is the COVID-19 vaccination effort expected to become?

The COVID-19 vaccination effort will be the largest vaccine procurement and supply operation in history. The World Economic Forum (WEF) expects approximately six to seven billion doses of COVID-19 vaccines to be consumed in 2021. This accounts for nearly the entire global population of 7.8 billion people.

Europe, North America, and Asia are expected to consume the largest shares of the 2021 doses. The WEF projects that the largest inflows of vaccine doses will be to Asia, excluding China and India (820 million doses), and Africa (450 million doses).

How the COVID-19 vaccination effort will affect other health care logistics

The health care and pharmaceutical industries will experience logistical challenges as a result of the COVID-19 vaccination effort, because of the vaccine effort itself and also because of disruptions to the medical and pharmaceutical supply chain due to COVID-19 and vaccine distribution.

Air shipments to Africa and parts of Asia-Pacific will lead to an imbalance in normal air freight trade and diversion of aircraft to routes leading to hubs in those regions, which may impact other supply chains, including medical and pharmaceutical supply chains.

In addition, shipping and freight prices are high and volatile due to the impact of COVID-19 on the entire shipping industry: global air cargo capacity remains about 20 percent below prepandemic levels, mainly due to reduction in passenger flights and resulting shortage of widebody belly capacity, which is down nearly 70 percent. Also putting pressure on rates is the lack of natural backhaul cargo from Africa and other southern hemisphere destinations.

To improve the COVID-19 vaccine supply chain, the pharmaceutical industry could consider combining a distributed manufacturing approach with multiple manufacturing sites in different regions in order to minimize distribution needs. Shipment in less-than-container loads for transport by ocean could be a possibility. In addition, the pharmaceutical industry may also be able to save time by shipping the vaccines in bulk.

Unique distribution challenges of COVID-19 vaccines

Vaccines are among the most difficult cargo to transport due to their very particular temperature requirements, so we can expect significant challenges in shipping the COVID-19 vaccine. In addition, associated shipping materials may become in short supply, while the unprecedented scale of the vaccine distribution effort will strain the entire global supply chain. Logistics providers will need to strategize carefully to effectively transport vaccines to their destinations.

The role of cold chain logistics in the distribution of the COVID-19 vaccine

“Cold chain logistics” refers to the process of safely transporting temperature-sensitive products in the supply chain. Vaccines are among these cold chain products: according to Supply Chain Dive, they must be shipped at a temperature between -50 degrees and -15 degrees Celsius if frozen, or 2 to 8 degrees Celsius otherwise. Temperature stabilization is tricky in shipping, and unfortunately, a quarter of all vaccines are degraded by the time they reach their destination.

Eighty-three percent of COVID-19 doses will be normal cold chain products requiring storage at 2 to 8 degrees Celsius; roughly 17 percent will be ultra cold chain products requiring storage at lower temperatures.

Temperature-sensitive shipping often relies on dry ice. One significant challenge in the COVID-19 vaccine supply chain is that different types of passenger aircraft are limited in the amount of dry ice they can carry. The range is 180 to 950 kilograms, with most aircraft types limited to the lower end of the range.

Materials in demand for the successful distribution of the COVID-19 vaccine

As discussed above, temperature-controlled shipping materials are essential in the vaccine supply chain and thus will be highly in demand.

There are two options when it comes to cold chain shipping: active containers and passive containers. An active container has active temperature control, while a passive container is an insulated container with no active temperature control. Cooling packaging must be used in passive containers, and cooling materials such as dry ice may soon be in short supply due to high demand.

In addition, requirements for related cargo could be significant: one pallet of vaccine doses requires one truckload of syringes and related equipment. Shipping space will be even more in demand because of this additional cargo.

How will the sheer size of the COVID-19 vaccination effort impact logistics?

The COVID-19 vaccination effort will make the entire logistics landscape look very different than usual. COVID-19 vaccines will represent five times the air freight volumes for all vaccines in 2019, and the vaccines will represent 12 percent of the pharmaceutical industry’s total air freight volume in 2019. Industry groups estimate that global COVID-19 vaccine distribution will require the equivalent air freight capacity of 928 Boeing 747-400 aircraft.

To prepare for the coming changes in the logistics industry, Agility’s COVID-19 Response Team & Charter Desk has done detailed analysis of carriers for capacity, frequency, scheduling, routing, cost, flow type, dry ice constraints, lead time requirements, cancellation rules, and types of agreements (HB, SB, ad hoc/spot). We are also evaluating carriers based on their performance records, flexibility, and risk, as well as the likelihood they will increase rates.

Since major shipping hubs on the ground will certainly feel the strain in the supply chain as well, we have evaluated their ground handling capabilities, airport requirements and constraints, and nearby cold storage availability and options.

Agility has expanded its network of life sciences centers to thirty-two locations worldwide. In addition, we are leveraging our parent company’s global footprint and logistics assets, which include aviation and ground handling expertise and facilities, truck fleets, and workforce, as well as international-standard logistics parks in Asia-Pacific, the Middle East, and Africa.

Developing the COVID-19 vaccine supply chain

Agencies involved with vaccine distribution are aware that developing the vaccine was just half the battle; the other half is effective distribution, a massive challenge in itself. Task forces have been appointed for just this purpose, and these groups will need to address safety precautions in the vaccine supply chain, as well as ways to streamline the process.

The role of the WHO’s COVID-19 Supply Chain Task Force

The WHO’s COVID-19 Supply Chain Task Force is addressing shortages in essential supplies, including personal protective equipment, diagnostics, and medical equipment. It is taking a three-pronged approach to this challenge in the following ways:

• Establishing a global strategy to provide access to essential supplies
• Bringing together public and private partners to help meet those needs
• Ensuring the distribution of essential supplies and cargo

The WHO is pursuing these goals through the following methods:

• Consolidating demand to avoid overlap and demand amplification
• Coordination of procurement to aggregate volumes and get better access and pricing
• Forming allocation agreements based on need, country capacity, and vulnerability levels
• Forming a singular distribution network that allows movement of deliveries through established hubs around the world and to designated ports of entry worldwide

Safety precautions in the coronavirus vaccine supply chain

The biggest vulnerability in COVID-19 vaccine distribution is the possibility of temperature excursions. Vaccine manufacturers must use only temperature-regulated shippers and containers that are certified to meet the international regulations for temperature-controlled products.

At the same time, manufacturers will need to prepare for risks that arise during the shipping process. Companies will need to have a plan for rescuing vaccine shipments that are delayed in delivery, so that temperature excursions do not occur. Companies will also need to plan for a certain inevitable level of vaccine spoilage and damage incurred in the shipping process.

How the coronavirus vaccine supply chain can be streamlined

As a logistics expert, Agility recommends the following strategies for helping the COVID-19 vaccine shipping process go more smoothly:

• Identify and evaluate key lane pairs based on value and importance
• Engage in forward planning, forecasting, and building of stock levels
• Examine possible changes to shipping solutions to reduce volume and weight
• Increase cold chain packaging availability and develop backup plans with key suppliers
• Tighten alliances with strategic partners

How the COVID-19 vaccine could change pharma supply chain logistics

The COVID-19 vaccine distribution will have an unparalleled impact on pharmaceutical supply chain logistics. The vaccine will strain the supply chain more than perhaps any other pharmaceutical product in history. Due to the COVID-19 vaccine, the pharmaceutical supply chain will face certain geopolitical issues and a changed market outlook, at least in the near future.

How will the COVID-19 vaccine rollout change supply chain logistics for pharmaceutical companies and products?

Agility has been talking to various industry stakeholders, including clients, airlines, ground handlers, and packaging providers about the market outlook for pharma supply chain logistics. In short, no one yet has a clear picture.

These stakeholders are looking closely at the following factors:

• Timeline/duration and shipping cycles
• Vaccine availability/expected shipping volumes
• Vaccine transport requirements, including variation in temperature requirements for different vaccines
• Beyond temperature control requirements, the product has a relatively low monetary value, yet a high criminal value. The aspect of product safety cannot be neglected.
• The air market situation and the COVID-19 pandemic impact on equipment and capacity

Agility foresees challenges in equipment and supplies of containers, dry ice shippers, and dry ice itself. We also anticipate imbalances and return logistics challenges for containers. On the road freight side, capacity and drivers will become an issue.

What can the pharmaceutical industry learn from the global distribution of COVID-19 vaccines?

In addition to being a challenge, the COVID-19 vaccine distribution effort can also represent an opportunity for the pharmaceutical supply chain, especially in terms of future vaccine distribution. Never has there been such an impetus for the pharma supply chain to optimize and coordinate its operations on a global scale.

After the COVID-19 pandemic, the pharma supply chain will be able to take advantage of optimized operations that were developed out of necessity for COVID-19 vaccine distribution. It can continue to coordinate pharmaceutical packaging to ensure it fits optimally within containers. It can also utilize strategies developed for COVID-19 vaccine distribution to push more pharmaceuticals to hard-to-reach areas. Finally, it can keep the lines of communication open to ensure better transparency across the supply chain, which will help keep products at the necessary temperatures, leading to less vaccine wastage overall.

How could the pharma industry prepare for future disruptions to its supply chain? 

In the future, pharmaceutical manufacturers can make their supply chains more resilient by diversifying their sources and suppliers. In many cases, this will mean lessening dependence on China, which accounts for 28 percent of manufacturing worldwide. Regional supply chains will emerge, reducing the dependency on a limited number of suppliers located in one geography.

The other major way to “future-proof” pharmaceutical supply chains is to rely more on digital capabilities such as predictive modelling, big data, and partner integration. The increased information and flexibility afforded by these technologies can make all the difference in a crisis situation.

The supply chain’s role in conquering COVID-19

The COVID-19 disease and vaccine will continue to impact the entire global supply chain for the foreseeable future. The supply chain is crucial to distributing the vaccine and finally seeing an end to the pandemic. For the sake of human health and safety worldwide, it’s essential for every party involved to understand the logistics issues inherent in COVID-19 vaccine distribution and to strategize properly for an organized, effective approach.

Agility is committed to helping agents at all points of the supply chain navigate the unique logistics challenges presented by COVID-19. Receive the latest COVID-19 global shipping updates here.

The post Immunizing the World: What the Global COVID-19 Vaccination Effort Could Look Like appeared first on Agility Logistics.

• The number of potentially disruptive technologies in logistics is daunting.
• This makes it difficult for supply chain businesses to know where to look.
• Blockchain, IoT, automation and data science should be first on their list.

Astute business leaders discipline themselves to be on constant lookout for disruptive new technologies.

They foster an internal business culture that is able to evaluate promising technologies through a continuous cycle: Watch > pilot > partner > adopt or discard.

In logistics, as in many other sectors, the number of potentially disruptive innovations is daunting. It includes everything from augmented reality and big data to autonomous vehicles and 3D printing. Even the most agile businesses can’t test or pilot everything, so what’s the right approach?

For companies with goods to move, there are several technologies that bear watching and four that every party in the supply chain should be testing at some level. These four are the BIRD technologies – blockchain, the internet of things (IoT), robotic process automation (RPA) and data science.

The BIRD technologies are inter-related and mutually reinforcing. Blockchain, or distributed ledger technology, establishes trust in data. The IoT provides a vast quantity of relevant data points. RPA improves the accuracy of data. Data science extracts value.

1) Blockchain

Blockchain has its skeptics, including many who believe the technology has already fallen short and might be too inherently problematic. Some skepticism is justified, but it’s premature for blockchain to be written off.

The idea behind blockchain is that all of the information required for completion of a transaction is stored in transparent, shared databases to prevent it from being deleted, tampered with or revised. There is a digital record of every process, task and payment involved. The authorization for any activity required at any stage is identified, validated, stored and shared with the parties who need it.

In ongoing pilots of this technology, shippers, freight forwarders, carriers, ports, insurance companies, banks, lawyers and others are sharing “milestone” information and data about their pieces of an individual shipping transaction. What’s missing today is agreement by all the relevant parties in the supply chain – including regulators – on a set of common industry standards that will govern the use of blockchain.

Absent a consensus on standardization, blockchain offers little. But with a common framework and set of rules, it could make shipping faster, cheaper and more efficient by increasing trust and reducing risk. It would shrink insurance premiums, financing costs and transit times, and eliminate supply chain intermediaries who add cost today but who would become surplus to requirements.

2) The internet of things

As a platform for sharing trusted data, blockchain is ideally suited to the internet of things. IoT devices can be attached to almost anything. As 5G technology evolves and spreads, tiny IoT chips embedded in products will enable businesses to track and monitor shipments of pharmaceuticals, high-tech goods, consumer products, industrial machinery and garments.

That data can be encrypted and shared through the blockchain so that customers and suppliers have a real-time record of the transaction. An IoT-enabled supply chain would be both leaner and less risky. It would allow for true just-in-time production by guaranteeing inventory accuracy and, in turn, reducing working capital requirements.

3) Robotic process automation

Of course, data is no good if it is not accurate. In the supply chain, the leading cause of inaccuracy is human error. Robotic process automation, or RPA, is the artificial intelligence used to allow software to handle many of the steps involved in a shipping transaction by understanding and manipulating data, triggering responses and interacting with other digital systems.

Use of RPA can ensure accuracy in customs declarations, safety certificates, bills of lading and other paperwork. It can reduce reliance on the manually entered data, emails and digital forms that produce errors, create delays and add cost all along the supply chain. RPA frees up workers to be more productive by doing what humans do best: solve problems, react to the unexpected, think creatively and deal with customers.

4) Data science

Thanks to data science, we are in the midst of seismic change in the supply chain. We are getting more data from more sources; it is the right data; and it is accurate. Tools such as artificial intelligence, machine learning and cloud computing enable us to analyze and use that data in powerful new ways.

Rather than using information to sound alarms when there are “exceptions” – problems or anomalies with an individual shipment or in the supply chain – we can use it to prevent them. Data becomes about managing the future, not the present.

The risk, of course, is that only large, well-resourced supply chain players will be able to take advantage of BIRD technologies and other advances that involve harnessing data. That would create a dangerous new digital divide between large and small, haves and have-nots.

Thankfully, data is having a democratizing effect by making the global economy fairer and more inclusive in important ways. Small businesses and emerging markets companies aspiring to go global aren’t piloting blockchain or developing their own RPA applications. But they are already the beneficiaries of new, inexpensive, data-informed tools and platforms underpinned by artificial intelligence and machine learning: online freight booking, instant financing, automated marketing, cheap cloud computing and remote advisory services.

The BIRD technologies generate trust in data, ensuring accuracy and giving users the ability to predict and act. In a data-driven world, they can help businesses of all sizes take flight.

The post 4 Technologies Helping Supply Chains Fly appeared first on Agility Logistics.