From compliant inventory to ensuring there is plenty of space to pick, sort, and assemble, square footage of warehouse is a challenge. When a firm is hoarding stock, it can be difficult to establish warehouse management system. We speak to some leaders to see how they have overcome hurdles.
- Abigail Mathias
David Dronfield, General Manager, Swisslog Middle East
With more time for essential tasks and a higher rate of accuracy, using robots in warehouses goes a long way toward enhancing human efficiencies and making processes smarter. Warehouse automation offers clear benefits when it comes to reliability. Switching from a two-shift operation to a three-shift one is possible at any time, too, allowing the companies to respond flexibly as the orders peak during the holiday season.
Many people have the mindset of the warehouse automation working only for a specific product or industry. However, post the workforce shortage during the pandemic, the use of robotics in warehousing industry plays a significant role for many industries such as e-grocery, retail, food, beverage, pharmaceuticals, healthcare, and manufacturing.
The warehouse automation market is estimated to be around US$19.78 billion in 2023. As per latest report by Ken Research, the UAE warehouse automation market may grow at CAGR of 13.4 per cent and may generate US$550 million by 2026 driven by the demand for e-commerce sector and rapid integration of automation tech to support market growth.
One of the examples of warehouse automation is of a goods-to-person dynamic picking systems when high performance and maximum productivity are required. Goods-to-person picking is characterized by maximum reliability and by being employee-friendly.
User-friendly workstations prevent order pickers from lifting heavy items or bending over a lot.At Swisslog, we believe robotics transform warehouse ops. Mobile, intelligent robots address pressing issues warehouse ops face, like the need for greater productivity and throughput.
Thomas Schürmann, Head of Cargo Operations & Delivery Etihad Cargo
Etihad Cargo works with a network of trusted ground handling partners across our global network to ensure quality standards are maintained throughout the cargo’s journey. Organizations that own and operate warehouse and storage facilities play a vital role in today’s global supply chain, and any challenges experienced have the potential to impact all stakeholders, including shippers, carriers, and consumers. It is essential the stakeholders work together to address these challenges through the power of partnerships and collaboration.
We work closely with ground handling partners to manage evolving needs and market conditions with agility. To ensure our partners align with our commitment to meeting our delivery promises, we manage our suppliers through contracts and service level agreement framework, which enable us to track performance against KPIs. Etihad Cargo maintains quality control through continuous audits and inspections.
These help us to work with our ground handling partners to identify any challenges, make recommendations, and implement solutions. This approach enables us to provide stable service levels. Of late, a trend impacting warehouse ops is labor shortages, combined with knowledge gaps. As the air cargo sector ramps up again, there is a shortage of experienced staff.
To achieve a stable talent base, firms are implementing talent acquisition strategies. In addition to the campaigns, they are offering incentives to join and invest in staff training and development to enable long-term growth. Strengthening today’s talent pool, these strategies create recruitment and retention pipeline, so experienced warehouse workers stay within the sector.
The upside of this is it has eased congestion in the main hubs as they handle less cargo, which is being routed to more destinations. We are working with our partners to standardize operations, making it easier for warehouses to ramp up operations, which is good for all stakeholders in terms of cost efficiencies and safety.
A shift in consumer demand and product portfolios is another challenge warehousing is currently facing. We have seen an uptick in demand for e-commerce, including next-day deliveries, and additional requirements and standards for specialized products, such as pharmaceuticals. Digitalization presents a solution, with automation and data-driven decision-making offering efficiencies and optimized performance.
Saajin Salim, CEO, Total Freight International
Three of the major issues of the warehousing industry today are the evolution of WMS to keep up with the changes in the market, revamping the existing storage system to operate efficiently in the warehouse, and costly integration of Artificial Intelligence (AI) systems and automation tools.
Evolution of warehouse management systems (to keep up with the changes in the market:
Several WMS run in legacy B2B operations. However, increase in e-commerce after COVID calls for the integration of B2C features and processes, crucial to cater to the sector’s needs. This leads to a dilemma of whether the industry needs to work on two warehouse systems, which leads to inefficiency or upgrade the existing system to keep up, which is expensive.
Revamping the existing storage system to operate efficiently and optimize warehouse space:
To cope with the changes in customers’ needs, warehouses should modify or replace their existing storage system. However, this is where the challenge comes in. Apart from being costly, it requires careful planning.
Warehouses need to consider how the modifications can impact their existing ops and other structures, such as the proper positioning of fire sprinkler systems. Poor planning can impact their operational efficiency and space utilization strategy.
Costly integration of AI systems and automation tools:
Although the growing AI and automation systems offer groundbreaking opportunities, they present equally challenging scenarios. Upgrading to AI systems and automation tools is a costly affair. This creates difficulty in finding the middle ground on whether to work on existing systems or upgrade abruptly to new infra and tech. Hence, providers must offer a hybrid solution that allows warehouses to adopt these upgrades in phases.
Fahad Al Salhi, Chief Solutions Officer, AJEX Logistics Services
The warehousing industry in the Middle East and GCC has experienced growth over the years, driven by sectors such as e-commerce, healthcare, retail, and oil and gas. The total logistics market in the MENA region may reach US$400 billion by 2025, up from US$250 billion in 2019. At Ajex, we are at the forefront of this growth, with a focus on developing new warehousing facilities and advanced, customizable solutions to meet the needs of our customers.
Healthcare is one of the main drivers of growth in the industry in the region. We have responded to this trend by providing our customers with specialized cold chain capabilities and we are expanding to include frozen storage too.
Our warehouses are certified according to local and international industry regulations, and our skilled and government-certified team meets the highest industry standards. We are also investing in expanding our warehousing facilities to meet the growing demand in the region, such as our expansion in Jeddah to double our warehousing facilities by next year.
We are proud to be a part of the increase in warehousing space from 56 million sq. mts. in 2020 to 76 million sq. mts. by 2025 across GCC countries. Warehousing has faced several issues over the years. Customs and regulatory issues, and a shortage of skilled labor are some of the challenges that the industry has faced.
The extreme temperatures, especially during summer, can pose challenges in maintaining conditions for storing and handling goods. The customs and regulatory environment can be complex, particularly for companies operating across multiple countries. Compliance with rules and obtaining necessary permits can be time-consuming and costl affair, which can impact the efficiency of warehousing ops.
We support our customers in overcoming these hurdles with our customs clearance gateways for sea, air, and ground, which provide some of the fastest transit times across GCC. Our warehouses ensure that customers’ goods are stored and transported in compliance with all necessary regulations such as SFDA, ISO 9001 and EU GDP.
Another challenge is the shortage of skilled labor, particularly in fields such as automation and robotics. This can result in operational inefficiencies and increased costs for companies. We are working to encourage the youth to join the warehousing industry and impart them training through initiatives, with out support for Saudi Logistics Academy. By providing specialized logistics training for fresh graduates, we hope to create the next generation of logistics leaders.
The hot temperatures in the Middle East and GCC can pose challenges for maintaining the ideal conditions for storing and handling goods. At our company, we specialize in the handling and transportation of cold-chain goods such as healthcare and pharma.
Our temperature-controlled warehousing, combined with our use of advanced technology, allows us to provide live temperature control and monitoring for our customers for each facility and each individual pallet. We are also working to encourage more youth to join the industry and support their skills and development training through initiatives such as our support for the Saudi Logistics Academy.
In Saudi Arabia, we are expanding our warehousing facilities to support the Kingdom’s Vision 2030 objectives, which aim to diversify the economy and reduce dependence on oil. COVID had speeded up the shift towards e-commerce, with more Saudi consumers shopping online and trusting digital payments.
By investing in new facilities across the Kingdom, we are positioning to meet the needs of e-commerce, healthcare, retail and oil and gas sectors and support the Kingdom’s growth objectives.
Dina Awad, Senior Business Development Manager Milaha, Qatar Navigation
The UAE’s warehousing industry has undergone a change in product storage handling due to global changes. The demand increased for new product categories such as vaccines or food. Some of the challenges include cold storage, ineffective policies that need to be adhered to, high maintenance costs, issues with suppliers and providers and improper infrastructure of the cold chain as it is still in the growth phase in the country.
But about the industry, the challenges are inaccurate inventory management, which lead to shortages in the stock, lower productivity, and revenue losses. Another challenge is service providers need to use the warehouse space adequately to avoid profit losses. we noticed recently the increased labors costs due to the shortage of skilled staff.
Time management is essential when it comes to warehousing ops because it ensures efficiency, productivity, and profitability. Managing the customers’ expectations is another challenge we must highlight; customer demands are growing fast, and they now expect shorter shipping times, 100 per cent order accuracy, and excellent customer service levels. And when these expectations are not met, it can lead to service level failure. Bear in mind the importance of monitoring safety measurements, managing possible risks, and controlling quality levels.
As the region strives to accelerate progress towards a gender balanced workforce, Amazon outlined its paid parental leave policy that benefits all employees across UAE, Saudi Arabia, Egypt, and Jordan, who have become new parents, regardless of gender. The inclusive policy offers both parents who have completed one year of service, paid parental leave for up to six weeks within the first year following the birth of a child.
Prashanth Balakrishnan, General Manager, Orient Cargo
Usually, warehouses use different modes to transport perishables. It usually depends on the type of product, the required temperature range, and the distance it needs to be transported. Common modes are refrigerated trucks where temperature can be adjusted as per needs of the product, and the truck can be loaded and unloaded quickly to ensure the items remain fresh. Reefer containers with similar functions can be used in trains, ships, and trucks too. Proper packaging is an important factor. Warehouses use advanced inventory management systems to track the temperature and shelf life of perishables. This is important as it helps to make sure that the product’s shelf life is optimized.
To run successful warehousing ops, a few points are important. Location, WMS, technology, optimum workforce, cost management, safety, and transport management are the key factors. The location of the warehouse is referred to the proximity to the hubs, vendors, and end users. Having the right WMS tech and managing and tracking the inventory is important. The warehouse must be safe in terms of having all the safety proofs against accidents, fire among others. The workforce must be trained to handle safety functions. Skilled labor is very important to execute the functions in a timely manner.
Ronaldo Mouchawar, Vice President, Amazon MENA
Amazon emphasizes on providing its employees with options to balance their professional and personal commitments. Our parental leave policies are another step to unleash the full potential of every person, regardless of gender. Achieving gender balance in the workplace is critical for the region’s economic growth and the key to creating a thriving and sustainable society. Amazon supports its employees back to its office sites across MENA.
The policies underscore Amazon’s continued commitment to assist working parents in creating the right harmony between home life and work life. As part of a broader benefits package for new parents, it also provides a “Ramp-Back” program that offers primary caregivers eight consecutive weeks of flexibility and partial work hours as they adjust to work schedules as new parents.
Suchit Sehgal, Managing Director, MEA Logistics Plus
With the surge of e-commerce businesses over the past few years in the Middle East, while its probably one of the most exciting times for the warehousing business, it does present its own set of challenges.
One of the biggest challenge right now, is the high rentals and the scarcity of good quality warehousing spaces in the mainland area such as Al Quoz, Ras Al Khor among others. Consumers expect a delivery to be fast—on the next day or same day—but due to high cost of real estate, businesses cannot afford these warehouse spaces.
Another challenge is the shortage of labor, particularly skilled workers, in the warehouse industry. Automation and digitalization is increasing and warehouses have to streamline their processes, reduce errors, and improve inventory accuracy. There is still a big gap between the skilled physical labor and the one with the technology know-how resulting in higher costs and reduced productivity.
This is where Logistics Plus, a global supply chain company, with its in-house Warehouse Management systems, trained and efficient team and a fully integrated 3PL facilities in mainland Dubai and parts of Saudi is helping SME businesses grow seamlessly and reach their clients faster and effectively.
Sandis Zālītis, Marketing Project Manager, Vervo Group
While the global warehousing sector is still rebounding from the COVID, it seems that each year brings new disruptions, as if disruptions are now the default option for businesses. The warehousing and storage industry faces many challenges, internal and external, that can impact its efficiency, profitability, and success.
From rising energy costs to the ongoing geopolitical conflict, the potential economic recession, the digital revolution, and pressure to meet environmental goals need to think about what the industry’s next step and what the future holds for warehousing management.
Potential global recession
We should be realistic about the present global context of the potential global recession and how its effects extend to include the warehousing industry.
The potential recession can result in a decreased demand for goods and a slowdown in global trade, which can reduce the volume of goods being stored and shipped. This reduction in demand might lead to price competition and lower profitability for companies operating in the industry.
So, businesses in the industry should first diversify their customer base and reduce their dependence on any single market. Optimizing supply chains and eliminating inefficiencies are now a must. Investing in tech can reduce reliance on labor and maintain profitability. e-commerce, AI explosion
The rise of online shopping has led to an increase in the need for faster delivery. Consumer expectations are now higher than before. With the presence of giant e-commerce firms such as Amazon, the challenges facing warehousing and inventory management increase by placing pressure on volume and speed. Expectations about next-day delivery and same-day delivery can pose significant challenges.
The AI revolution also poses challenges that companies must address to remain competitive. One of the main one is potential impact on the workforce. As more advanced automation systems and robotics are introduced, firms need to retrain or reduce their workforce. They must consider the costs of acquiring and maintaining AI and potential disruption to operations during the implementation phase. The circular economy model is based on reusing, repairing, refurbishing, recycling, and remanufacturing materials, and products to achieve resource productivity and reduce waste going to landfills. The challenge for the warehousing and storage industry is to adapt their operations to support this shift towards circular supply chain management.
One strategy that warehouses can use to support circular supply chains is to redesign their reverse logistics and returns management processes. Another challenge is that returns management is currently the top operational challenge for warehouses, as per a study by Zebra’s Warehousing Vision Study.
The challenge is to transform existing structures to support circular concepts such as reuse, repair, or renting on a larger scale, which requires a shift towards sustainable logistics processes and circular supply chains. As sustainability is visible in countries such as the UAE, where businesses’ efforts should be aligned with the sustainable vision of the UAE Government.
Diversifying ops in globalization
The globalization of trade has created new opportunities for the industry, but it has also brought new challenges. The complexity of global supply chains coupled with ongoing geopolitical tensions has made it difficult for firms to manage their ops.
So, firms are investing in advanced supply chain management systems that provide real-time visibility. Labor shortages are a challenge in the UAE, as it relies on foreign labor to fill manual labor positions. However, the government has implemented policies to encourage the hiring of Emirati nationals, and the UAE is exploring the use of automation and robotics in its warehouses. The growth of e-commerce is more than evident in the UAE.