Relocating warehouse operations is a critical decision that can significantly impact a company’s supply chain, profitability, and overall business performance. However, in recent times, the prospect of higher interest rates has introduced a new layer of hesitancy among businesses contemplating such a move. This post delves into the reasons behind the hesitancy to relocate warehouse operations in light of the recent increase in interest rates and the economy overall.
Financial Considerations
One of the primary reasons for hesitancy is the financial impact of higher interest rates. Relocating a warehouse involves substantial capital investments, including land acquisition, construction costs, equipment purchases, and employee relocation expenses. Higher interest rates increase borrowing costs, which can affect a company’s ability to secure favorable financing terms. As a result, businesses may hesitate to proceed with relocation plans, fearing increased debt burdens and reduced financial flexibility.
Uncertainty in the Economy
Higher interest rates are often seen as a signal of a tightening monetary policy aimed at curbing inflation or cooling down an overheating economy. The uncertainty surrounding the economic outlook due to higher interest rates can make businesses reluctant to undertake significant operational changes, such as relocating warehouse facilities. Executives may prefer to wait and assess the stability of the economy and how interest rate changes will impact their business in the long run before committing to a costly relocation process.
Market Volatility and Demand Fluctuation
Interest rate hikes can trigger market volatility, affecting consumer spending patterns and overall demand. Businesses might be hesitant to relocate their warehouse operations due to concerns about potential shifts in market conditions. Uncertainty about the future demand for their products or services can make companies reluctant to invest in new facilities, fearing that they may not be able to sustain operations or generate the expected return on investment.
Disruption to Supply Chain
Relocating warehouse operations can disrupt a company’s supply chain, leading to potential delays, increased transportation costs, and logistical challenges. Higher interest rates might discourage businesses from undertaking such a disruption, as they could impact the seamless flow of goods and services to customers. Companies that rely heavily on just-in-time inventory management or have stringent delivery deadlines may hesitate to relocate their warehouses, fearing negative consequences on customer satisfaction and brand reputation.
Operational Efficiency and Adaptability
Warehouse relocation involves not only physical aspects but also operational adjustments. Companies must ensure that the new location provides equal or improved operational efficiency, including factors such as proximity to suppliers, transportation infrastructure, and access to skilled labor. Higher interest rates may lead businesses to question whether the benefits of relocation outweigh the potential risks and costs associated with adapting their operations to a new environment.
Long-Term Commitment
Relocating warehouse operations is a long-term commitment that requires careful planning and consideration. Higher interest rates can impact the viability of long-term financial projections, making it difficult for businesses to assess the potential return on investment. Uncertainty about the future trajectory of interest rates and their impact on the overall business climate may lead companies to delay or postpone relocation plans until the economic environment becomes more favorable and predictable.
While the decision to relocate warehouse operations involves multiple factors, the recent increase in higher interest rates has introduced an additional layer of hesitancy among businesses. Financial considerations, uncertainty in the economy, market volatility, supply chain disruption, operational efficiency concerns, and the long-term commitment required are all valid reasons contributing to this hesitancy. Businesses must carefully evaluate the potential risks and rewards of relocation, taking into account both interest rates and broader economic factors, before making any decisions that can shape the trajectory of their operations and future success.
ABCO Systems can help you evaluate your warehouse and whether staying in your current space or if relocating makes sense for the future of your operation. Our team of talented engineers can help redesign your existing space to make your space more efficient if moving is not in the company’s best interest. Reach out to our team to assist you with that evaluation.
To most people, the idea of automated labor seems like something out of the realm of sci-fi. With visions of Rosie the Robot dancing in our heads, it’s hard to believe we’re living in the future that so long seemed restricted to the realm of fiction.
And yet, these days, automated labor has become more common, and more practical, than ever before—and nowhere is this truer than within the distribution and fulfillment industries. Automation investment can make sure that your distribution center is prepared for the challenges of operating at peak profitability in the current market landscape.
As employers face issues of employee unreliability, high turnover, and increasing labor shortages through the distribution space, automation is more than just a future fantasy. It’s quickly becoming vital to commercial success in the here and now.
A closer look at labor scarcity
According to a recent report published by The Washington Post, over 43 million Americans quit their jobs over the course of 2021. Commonly called the “great resignation,” this wave of employee departures shows no sign of slowing. In fact, some employers report that resignation is currently at an all-time high.
So what’s the future of the great resignation? Expert predictions vary, with some stating that the trend will continue into 2023 and beyond. Other experts predict that more Americans are getting back to work—but that the attitude towards labor and willingness to walk away from a job that no longer feels rewarding will likely stay the same.
As demand for online shopping surges and e-commerce sales continue to become a preferred retail method for Americans throughout the United States, employees face increased hours and higher stress levels as they try to keep up with the growing demand.
The result? An increasingly unstable labor market that shows no signs of self-correcting, leaving employers facing higher costs and worse results. In fact, according to one study, as many as 73% of warehouse operators struggled to find adequate labor.
We need to face the facts: what was once a trend is quickly becoming a labor market norm, one that disproportionately impacts operators of distribution centers, warehouses, and other third-party logistics professionals, where staffing shortages are worsened by increasingly high turnover rates.
Automation: the wave of the future Automation may once have seemed like a sci-fi solution to the sector’s labor woes, but these technologies have increasingly become a critical aspect of the manufacturing and logistics world’s real-world operations. In fact, a study published in the Harvard Business Review indicated that within the next four years, the global warehouse automation market can be expected to double in value, with supply chain leaders describing warehouse automation as, …” One of their top three priorities for digital investment.” Workers cited by the study also expressed optimism, with many sharing their excitement for the potential of automation technologies to improve safety, increase speed and efficiency, and allow them to produce higher-quality work. The advantages of automating processes that were once performed by human labor is clear to employers who have struggled to maintain adequate staffing within their warehouses. Automation cuts down on your need to hire, making it easier to increase order accuracy, and productivity, and focus on reducing workplace injury for warehouse employees. Not only does automation reduce the need for labor, but it also makes work less demanding, reducing the turnover rate and leading to lower stress levels and a more positive work environment that encourages employees to stick around. These days, there are many forms of warehouse automation in common use. Companies use warehouse management systems to automate manual processes, inventory control, and data capture, supporting data analysis. Using this software in conjunction with technology such as sensors and robotics helps minimize the need for human labor, increasing efficiency and reducing costs. Making automation practical It’s no secret that warehouses and the fulfillment industry as a whole continue to be major drivers of change within the American economy. Around 1.5 million American workers are employed in the warehouse and storage sector, many of whom are ambivalent about the impact that the coming automation revolution may have on their careers. However, when approached correctly, automation can actually be a critical asset in supporting the fulfillment sector for both workers and employers alike. The key to making automation an asset? Communication and training at every step of the way. Automation can do a lot, but it still requires human intelligence and discernment to perform at its most effective level. Instead of framing automation as a threat to employees, employers should share the way that automation can make their lives better, and their jobs easier. Done correctly, automation takes the pressure off, handling all the most dangerous, difficult, and repetitively dull tasks, leaving workers free to think more creatively and focus on building their skill sets on a higher operational level. This need for training is apparent even to workers who are otherwise enthusiastic about the potential automation brings to their workspaces. As 35% of the warehouse workers interviewed in the Harvard study reported, workers fear that inadequate training resources will make it difficult for employees used to the old way of doing things to succeed in the new digitized, automated workspaces of the future. “I think the more the warehouse is automated, the better we’ll all perform,” said one warehouse supervisor cited by the study. “Robots will greatly diminish our workloads, reduce risks, and increase productivity. But if we don’t know how to handle them, they’re hardly going to do any good.” To assuage these fears, employers in the distribution and fulfillment space need to place a priority on training, communication, and open conversations with employees as they move forward into the coming automation revolution. Emphasizing the potential career growth possibilities moving towards automation offers will allow workers to envision their longer term prospects working within the fulfillment sector, helping get them on board to perform the tasks necessary for accessing the full potential of automation technology. As warehouse work continues to be a mainstay of the global economy, automation technologies can make a major positive impact. When human capital combines with the power of automation, anything is possible.
The COVID 19 pandemic has resulted in major changes in many aspects of our lives. In addition to the health concerns of the pandemic, many brands have experienced the impact of COVID 19 on their brands, the industry, and eCommerce overall.
Since the onset of the pandemic, many physical stores have closed doors, as lockdowns kept many potential shoppers quarantined at home. To obtain essential items, consumers turned to online shopping. According to data from IBM’s U.S. Retail Index, the pandemic accelerated the pivot from physical stores to digital shopping by roughly five years.
Understanding emerging eCommerce trends has always been important to long-term business success online but has become much more prevalent in the wake of COVID’s unparalleled disruption of all things eCommerce.
Unfortunately, it appears as though COVID still isn’t behind us just yet. Though life may have begun to return to normal, the lasting effects of the pandemic have become the new normal. Looking back at how COVID affected businesses can help us better appreciate why it’s so important to pay attention to eCommerce trends. Should disruptions to everyday life return, this understanding can prepare us for a second round.
Back in 2019, we had no idea what the following year would bring us, but there were people in the eCommerce world who had considered the trends that might emerge. Let’s take a look back at what the state of eCommerce looked like before COVID hit.
Back in 2019, the Amazon Effect was as powerful as ever. Online retailers around the globe felt the pressure to keep pace with the many ways Amazon continued to grow its revenue. Amazon invested billions into offering 1-day shipping to its Prime members at no extra cost. This was after two-day shipping for Prime members helped it rule eCommerce since that offering was implemented back in 2005.
Amazon’s shipping times were already a massive competitive edge, so making them even faster was big news. Not surprisingly, two of Amazon’s biggest competitors, Target and Walmart, countered with similar one-day shipping plans soon after this news was announced.
In hindsight, these developments could not have come at a better time, as many of us would soon depend on these shipping plans once our usual in-person shopping was no longer possible.
Another trend that picked up steam in 2019 – and also just in time for impending lockdowns – was BOPIS (Buy online, pick up in-store). With BOPIS, customers can shop online, make their purchases online, and then go pick up those items without having to troll the aisles and wait in line to check out. The genius of BOPIS is that any local retailer can offer the service. All they need is a website and an in-store pickup extension to convert customers who want their products right away.
Many grocery stores took this a step further and offered curbside pickup, making it even easier for customers to buy from them. On the other hand, many digital brands realized the potential for having a brick-and-mortar presence as well, prior to the global pandemic. Many of these online companies tested the concept with popup shops, while others jumped right in with legitimate brick-and-mortar stores.
By the end of 2019, there were more than 1,700 stores owned by digital brands all over the country. But once again, this is the kind of business decision that no longer needs to be complicated or expensive.
The first step is to understand how eCommerce can increase efficiency and productivity in your business while also reducing costs. ABCO Systems has years of expertise in the design and development of eCommerce solutions that can make your eCommerce goals to happen. You know your product – we know distribution design. Let us help you bring your product to the eCommerce market.
ABCO Systems offers design engineering expertise to provide custom solutions for material handling and distribution system design for their customers. This requires a team of professionals who understand the intricacies of the modern-day distribution center, and the right strategic partners to meet and exceed the goals of our customers.
We are excited to highlight our partnership with Fetch Robotics, a pioneer of on-demand automation. Intelligent automation can be the workforce multiplier needed to accelerate throughput and productivity. Automation reduces congestion in aisles, limiting interactions between workers and potentially hazardous heavy loads and equipment, enhancing safety as well as performance and productivity.
Being able to incorporate Fetch Robotics into our design engineering allows us to provide both innovation and resilience to personalize each design to the unique needs of the customer. To learn more about ABCO Systems Solutions with Fetch Robotics, contact us at 201-429-0580 or at [email protected]. We look forward to providing you with your custom design solution with a unique blend of efficiency and resilience.
ABCO Systems – Solutions engineered for today’s challenges and tomorrow’s opportunities.
ABCO Systems is excited to announce our partnership with Deposco; bringing their cloud-based order management and fulfillment applications to our solutions. This impelling partnership combines Deposco’s suite of advanced technology solutions with ABCO systems’ exemplary customer service, proven engineering design, and implementation capabilities to heighten the level of solutions we can offer our customers. Let us show you how we can transport` your warehouse automation to the next level and provide you with a customized solution to fit your needs by bringing together ABCO Systems’ experience and Deposco’s innovation.
Deposco is a cloud-based, omnichannel fulfillment software provider offering a suite of advanced solutions to small, midsize, and enterprise-class businesses. The company has supported over 120 million package orders to 35 million consumers worldwide while processing approximately $10 billion in gross merchandise value (GMV) through its platform. From order orchestration and advanced warehouse management to dynamic sourcing, business forecasting, and synchronized e-store applications, Deposco empowers business leaders to adapt, transform and lead their organizations to achieve unified commerce excellence in direct-to-consumer (DTC) and business-to-business (B2B) environments. To learn more, visit www.deposco.com.
As your material handling system partner, we are committed to bettering your business. We provide a wide range of solutions from e-commerce to full-fledged automated warehouse design and implementation.
To learn more about ABCO Systems and Deposco contact us at 201-429-0580 or [email protected]. We look forward to helping you increase efficiency and decrease labor costs with the material handling solutions that work the best for you.
Preventive maintenance is a critical component of any maintenance strategy. It is a key factor in lowering maintenance costs, reducing equipment downtime, improving asset lifespan and efficiency, and increasing workplace safety. Having a clearly defined, well-thought-out maintenance plan is a crucial first step in long-term success.
Preventive maintenance is critical to any business looking to reduce maintenance costs and the number of reactive maintenance issues. But … what exactly is preventive maintenance?
Preventive maintenance involves taking the necessary precautions and actions to prevent accidents or equipment failures from occurring before they happen. Some examples of this would be: performing regular business and equipment inspections, cleaning and lubricating essential equipment, and tidying your business’s grounds are all examples of preventive maintenance.
The goal of preventive maintenance is to proactively prevent equipment failure and reduce the risk of accidents and downtime. Taking certain precautions to ensure minimal risk to your business ensures you and your staff can focus on organizational goals, instead of having to repair what is broken.
Any type of maintenance that is not reactive (i.e. a response to a problem, malfunctioning equipment, technology, etc.) is preventive, and there are many different types of preventive maintenance that pertain to different areas of a business, or specific timing.
In short, as a business owner or manager, you face a certain amount of risk when it comes to customer and employee safety, equipment operations and safety, and property upkeep, among other areas. Implementation of regular preventive maintenance measures can ensure your business is protected from substantial risks and accidents, keeping your business goals and safety goals intact.
CLICK to see how ABCO Systems can assist you with your Preventative Maintenance needs.
