Customer orientation

“The face of warehousing is changing”

As part of a new series of articles, we will be shining the spotlight on our customers to introduce the sectors they work in and highlight the trends and challenges they face. This article covers the current situation in the retail and wholesale industries which is being revolutionized by e-commerce.

2017-03-30

Print

What started with individual products has now come to include complete product ranges and entire sectors, although the food industry remains somewhat niche. “The level of variety on offer is growing everywhere we look,” observes Andreas Hartwig, Member of the Management Board at Miebach Consulting GmbH, which specializes in intralogistics. There was a time when offering 100,000 different items – a figure reached by huge hardware stores or spare parts dealers – would have been considered second to none.


The famous German “Quelle” catalogue, for example, once showcased 25,000 items. Amazon now indicates that the company deals with four million items that are ready and waiting to be delivered. This many products do have to be stored, recorded and picked from somewhere, however. This situation also forces all other retailers to stock a more varied product range, as they know customers are likely to walk away if the product they’re looking for isn’t in stock after they’ve been researching it online.


Individual special products

As Hartwig sees it, “the face of warehousing is changing. Most dealers aren’t selling more, they’re just selling differently – in smaller, distinct units.” In the old days, shops would take deliveries in pack sizes of 12 or 20 pieces. These days, on the other hand, every customer wants their own personalized toaster, special deodorant or a particular type of vegetable, whatever it might be.


This also means that dealers find themselves using complete boxes or pallets less and less. So is this a red flag for forklift trucks? After all, uniform packaging is practically their raison d’être. Yes and no, explains Frank Schulze, who specializes in logistics at University of Dresden: “We are still going to be using Europallets going forward,” he confirms, although this will be restricted to a mere subsection of the logistics process. Particularly when it comes to the large warehouse halls belonging to the giant online retailers, more and more processes will be automated in the future, meaning the niche for human intervention in warehouse logistics equipment will steadily diminish. The logistics expert also reveals a growing trend towards automation in the retail sector, as evidenced by the use of self-driving forklift trucks or tugger trains capable of orienting themselves, for example. Asked what the sector is looking for, Schulze sums up with “enormous flexibility that can be scaled.”


Smaller, more flexible, more scalable

The combination of both trends, smaller sizes and (partial) automation may mean that the vehicles themselves will have to become even smaller and more flexible in the future. “From a supplier’s point of view, I would be thinking about how equipment such as trolleys and order pickers could be adapted to suit this kind of future,” reveals Miebach consultant Hartwig.


Planning security is also said to be of the utmost importance, explains Schulze, going on to add that “reliability is more important than speed. Dealers are reassured when they can safely plan ahead to have a product on the shelf the day after tomorrow.” When it comes to logistics, then, it is clear that he can see a trend towards “precision landing”.


With regard to the challenges faced by the retail sector, other key factors include space, labor costs and property prices. It is becoming increasingly common for showrooms and logistics centers to be located in completely different locations. “In the future, you might go into a showroom, find what you’re looking for, but then order the products from the dealer’s online shop,” explains Schulze. In line with this trend, leading online retailers such as Amazon will start by opening up real stores in inner city locations.


According to the experts, the customers of the future will have two distinct buying behaviors: purchases that have undergone extensive deliberation and those that are simply routine products. If someone is looking for a new TV or a particular bottle of wine, for example, they will expect there to be someone on hand in the shop to provide competent and friendly advice. When it comes to the same old day-to-day purchases (such as skimmed milk or triple-ply toilet paper), however, many people will soon switch to ordering these online for home delivery. Even if the almost legendary, self-refilling fridge is still not quite a reality, the very concept remains as popular as ever.


“Sometimes innovations just need two or three attempts,” notes Hartwig. For him, the situation is clear: if retailers want to stay successful, they have to offer various channels and become innovative in themselves. “In any event, we are finding that all dealers are putting a great deal of thought into intralogistics and supply chains,” he goes on to add.

The challenges of retail

Customers’ retail expectations have now changed beyond all recognition. Goods are increasingly being purchased online and delivered right to the customer’s door. On that note, delivery times are becoming ever shorter, with online retailer Amazon, for example, even guaranteeing delivery within 60 minutes in some cities. What this means for retail companies is that more and more products have to be available in larger warehouses, not to mention the fact that they then have to be found, packaged and delivered faster than ever before. And that’s all while keeping the costs of storage, transport and personnel within budget.

What does this mean for the KION Group?

The present trend in the all-important retail industry is leaning towards transporting a large number of small goods quickly from A to B. As a result, KION’s brands as Linde and STILL shift their focus and transform theirselves from exclusive industrial truck manufacturers into companies that provide solutions for customers at every stage of the material flow. In conjunction with the automation specialist Dematic, the brands of the Industrial Trucks & Services segment will be able to respond more closely to the needs of their customers in the wholesale and retail sectors in the future.