5 Warehousing Problems Caused by COVID-19 (And How You Can Solve Them)

The COVID-19 pandemic has had a major impact on industries across the globe. For those operating in the supply chain, these effects can be felt in a major way. Product shortages, labor disruptions and evolving consumer demands have created new obstacles that professionals in the industry are up against.

The best way to handle challenges you didn’t plan for is to develop resiliency with proactive and strategic planning. Resiliency means you can adapt, and this extends not just to business but physical operational choices. Many warehousing and distribution center professionals are making permanent changes to how they operate.

Let’s go over some of the ways warehousing and distribution have changed as a result of the pandemic. With a deeper understanding of these changes, your team will be better equipped to flex, regardless of what challenges come. 

1. Less Crowded Facilities

Masks and lockdowns may be a thing of the past, but many factors are still contributing to a shortage of workers. 

First, social distancing changed the comfort level of people. They don’t want to stand shoulder to shoulder, or even work in confined spaces. While most people don’t adhere to a six-foot distance anymore, many are still skittish about the unnecessary risk of close quarters. The result is an increase in employee demand for less crowded (“de-densified”) workspaces.

Coincidentally, this demand will be easier to meet than before COVID-19 because of the labor shortage. It’s no mystery that our industry has been down more than a few good men and women, and we know that ops leaders everywhere are struggling to staff up.

Studies have shown that workplaces without physical distancing measures were more likely to experience some form of disruption. Despite this, the average hourly wage of warehousing and storage workers has not changed meaningfully over the past year. As a result, many workers have resigned or elected not to return to their former positions. This means more unfilled positions as fewer people are willing to work.

Going forward, facilities that prioritize worker health, safety and satisfaction will be better equipped with competent, motivated teams.

2. Increased Need for Inventory and Capacity

Studies have found that approximately 61% of supply chain executives implemented strategies to increase on-hand critical inventory in 2021. 

This is a drastic shift from the old lean inventory model, in which managers coordinated short windows between receiving and shipping dates. This method helped reduce the cost of inventory and improved storage efficiency. Despite the fact that it was previously considered a best practice, lean inventory models proved to be damaging when pandemic supply chain disruptions made it difficult to receive products.

The new best practice going forward will be similar, but with adjustments for buffer stock of critical products. This change means that storage space and capacity will need to be adapted to suit the storage of safety stock. 

Depending on the type of stock the warehouse is storing, this could mean more cold storage for groceries. This type of storage involves specialized equipment that is expensive to install, maintain and operate. 

Due to the need for physical distancing, many are already struggling to create more floor space in their facilities. This increase in demand for storage capacity creates additional strain. 

Studies have found that approximately 61% of supply chain executives implemented strategies to increase on-hand critical inventory in 2021. 

3. Resistance to Warehouse Automation

Before the pandemic, warehouse automation was becoming more common, but the demand for physical distancing and the labor shortage has ramped up adoption rates.

Some of the tasks that can be automated in warehouse and distribution facilities include:

• Inventory counting and management
• Order delivery
• Inventory retrieval 
• Inventory storage

Researchers are continuously improving the efficiency and affordability of these systems, making them an attractive option for warehouses facing the challenges the pandemic left behind.  

Automated systems can drastically improve throughput and productivity, but they could also have a negative impact on worker satisfaction. Surveys with warehouse workers found a wide range of opinions about automation that range from fear to optimism. This means managers may prefer to ease into automation efforts to avoid alienating their staff. 

4. Complications With International Partnerships

Even as the supply chain restabilizes, warehouse and distribution center supervisors have found innovative ways to mitigate risk in the anticipation of future disruptions. 

One of the most common strategies is reshoring/nearshoring, in which distributors seek in-house or local manufacturers to ensure fewer disruptions. 

The main benefit of this tactic is increased resiliency and control over inventory, making businesses less reliant on deliveries from overseas. The strategy is effective in increasing security, but it requires a significant increase in storage capacity to accommodate the increase in on-hand inventory. 

5. Increasing Consumer Demand

During COVID-19, many consumers turned to online shopping and delivery. As a result, the demand for fast shipment and seamless processes skyrocketed. 

There are many ways warehouses are seeking to meet the demands of consumers. Here are a few: 

• Micro-distribution from the store: Some businesses are leveraging their storefront locations as small-scale local distribution centers. The goal of this is to increase distribution without investing too much money in new facilities. 
• Smaller decentralized warehouse locations: Smaller warehouse locations allow businesses to improve same-day or next-day delivery times. This can reduce the cost of transportation and limit the risk of disruption.
• 3PL distribution networks: Another way manufacturers can improve delivery times is by leveraging existing distribution center networks.
• Shorter warehouse/3PL contracts: Co-leasing deals, warehouse sharing and shorter contracts between building owners and companies will allow business owners to take more risks with their decentralization initiatives. The main benefit of this is decreased risk in the case of another supply chain disruption or global shutdown event. 
• Embracing omni channel distribution: Consumers are now used to having multiple delivery options. E-commerce allows them to decide if they’d like to purchase in-store or online, and whether they’d like to pick up in-store, do curbside pickup or have the product to be shipped to their house. 

With new consumer demands, warehouses and distribution centers are forced to innovate to keep up.

Other Ways COVID-19 is Changing Warehousing and Distribution

As we continue to reflect on the aftermath of COVID-19, the list of ways in which it has impacted the industry continues to grow. 

Here are some of the other changes that could be here to stay:

• Scalable processes and picking strategies: In order to accommodate fluctuations in demand, many warehouses are developing processes that are easy to scale rapidly.
• Increasing work-in-progress (WIP) inventory: The tumultuous nature of the supply chain has led many companies to invest in storage space for incomplete products (WIP).
• Acceleration of e-commerce: E-commerce was growing before the pandemic, but lockdowns forced the world population to adopt it at a faster rate. As a result, the full-case picking model is becoming less relevant in favor of a split-case model.
• Demand for inventory visibility: The demand for quick delivery places a strain on everyone in the supply chain, especially distribution centers. In order to accomplish the fastest possible delivery times, businesses need total visibility of their inventory.

COVID-19 Warehousing Solutions

COVID-19 has fundamentally changed our industry. Businesses must keep up with increasing consumer demands while developing strategies that will lead to greater resiliency and stability. 

There are many ways to optimize your facility for these changes, and they all start with customized equipment and warehouse plans that cater to the unique needs of your operation.

At East Coast Storage Equipment, we specialize in premium equipment solutions that help your team adapt to changes and maximize productivity in your facility. Contact us to see how we can help.