An interview with Joakim Kembro (MSc Logistics, Lund University)

Mecalux sat down with Joakim Kembro, Associate Professor at Lund University, Sweden, to talk about how the latest trends in warehousing are transforming the world of logistics.

• You’ve spent more than a decade conducting research on warehousing. What have you learned?

  In the past ten years, warehousing has gone through a fantastic journey, moving up on the agenda. It’s no longer possible to neglect its strategic position in the supply chain. Warehouses play a crucial role in meeting customers’ demands and ensuring a steady distribution process. Businesses can get cutting-edge results by having the right warehouse tailored to their needs.

• How is automation reshaping the warehouse?

  The new generation of automation with artificial intelligence is changing the game and bringing flexible solutions that were unthinkable in the past. Automation has moved from a question of “if” to “how.” Years ago, only a few companies were pioneers in warehouse robotics — now, you have to have these technologies. Automated solutions can reduce lead and throughput times, minimize errors, and increase flexibility.

  Warehouses play a crucial role in meeting customers’ demands.

• What types of businesses can benefit from warehouse automation?

  Automation used to be reserved only for big companies, but in recent years, it has broadened to include medium-sized businesses. Retailing has been on the frontline when it comes to automated warehouses because of its focus on shortening lead and throughput times. We’re also seeing how manufacturing companies that used to only center on production are now considering automation in their warehouses to optimize operations.

• How has warehousing changed over the years?

  If you went to a warehouse ten years ago, many of them looked similar. Now, they look quite different, and they’re more tailored. The competencies are shifting. I used to work in a warehouse myself, driving a forklift. You can still have that in parts of the warehouse, but you also have a lot of technology — and in different shapes, partly depending on what your context and challenges are. For instance, you can either focus on technology solutions that chase lead times to have a really fast throughput, or adopt a more flexible system that can handle variations in sizes and order patterns. Or you can choose a system that squeezes out space, such as building high, installing mobile racking systems, and so on. These discussions about technology are currently ongoing in almost every company and retailer high up in the organization.

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  What strategies are retailers using in their warehouses?

  It all started a few years back with the increase of e-commerce challenging the traditional way of using a warehouse. Suddenly in a facility, you're mixing goods to be sent to physical stores with a customer that ordered one pair of shoes and two T-shirts. When we started examining this issue, we saw that retailers were following different paths in their warehouses. For instance, while some companies integrated their online orders and retail store distribution in a single facility, other retailers chose to separate the two. And while some of the big players opted for large investments in automation, other retailers targeted specific technologies to solve their challenges.

• What factors should companies bear in mind when configuring their warehouses?

  If you have very little variation in goods size and order characteristics, it’s easier to tailor your warehouse configuration. But as soon as you start to add variation in the types of orders you receive — for instance, mixing in retail store orders with e-commerce orders — you need to start putting more money into your solution. A similar pattern happens with goods size. A facility with standard-size products can opt for more streamlined configurations. But retailers with a large mix of SKUs may need to implement a variety of picking methods and zones combined with automated solutions.

• How are shorter delivery times influencing warehouse strategies?

  The global giants are kind of setting the agenda and the competition. We see a cluster movement where “If they’re offering 12-hour lead times, we also need to offer those times.” But if you have shorter lead times — this is one of the major trends impacting warehouses — you come to a point where you have tradeoffs. You can't just keep cutting throughput times in the facility while you're going to handle a large mix of orders and goods. So, you need to look into what options you have. While 20 years ago many centralized to create economies of scale, now, we see a trend going more towards decentralization. For example, besides having big central warehouses, many companies are now creating additional types of facilities closer to customers to fulfill short lead times.

• How can you configure a warehouse for success?

  First of all, realize that you need a team with strong competencies: from a logistics manager with a solid understanding of warehousing to an IT manager with knowledge of automation. We can see those logistics warehousing teams grow in companies. Second, make sure you have the competencies in-house. If you're smaller and you need to find these skills externally, then find a good partner to guide you. Third, don’t be sold a system that doesn't fit your business. Remember that it’s all about matching your needs, and then it will be a good investment. The world is changing really fast, and warehouses are difficult to change quickly. So, all the more important it is not to get it exactly right, but as close to that as possible. Last but not least, look into the future to see the big picture, and remember: always work closely with the entire supply chain because the warehouse and the various parts of the chain influence each other.