Rise of online fulfillment.

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Online volumes from a supply chain perspective are now reaching critical tipping points for Australian retailers – where key investment decisions are required – in order to support sustainable and efficient competition into the future.

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Australia Post -eCommerce Industry eCommerce Industry Report 2023

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Some example questions emerging for Australian retailers include: 

Centralised or Decentralised?

To what degree should we centralise our online fulfilment physical network?

Together or Dedicated?

To what degree should we bring together our store and online fulfilment operations?

Manual or Automated?

To what degree should we automated our online fulfilment – given volumes, product profile, etc.?

Push or Pull?

What is the optimal inventory operating model for online fulfilment?

Technology Options?

It is only once an organisation has a relative feel for the above that specific technology options should be considered.

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What are the strategic online fulfilment options?

A key strategic decision for retailers is choosing the right online fulfilment channel, be it traditional stores, dark stores, dedicated online centres, or shared distribution centres.

How can online fulfilment channel achieve faster and cheaper online fulfilment whilst avoiding the “white elephant” when making strategic investment decisions ?

Finding the optimal channel will come from balancing factors such as range, responsiveness, product complexity, market maturity, set-up costs, and operating costs. By carefully assessing these elements, retailers can establish an efficient fulfilment system tailored to their needs, boosting customer satisfaction and driving long-term success.

It is never one consideration in isolation – the challenge is to overlay the considerations and identify the optimal point when balancing trade-offs.

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Fulfilment Options

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Store Fulfilment

Manual

Semi-automated

Automated

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Dedicated Online HUBs

Dark Stores

Semi-automated

Automated

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Co-located

Manual

Semi-automated

Automated

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The visual below highlights the fulfilment options across two dimensions. On the Y-axis, level of centralisation and on the X-axis, level of automation.

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What are the key supply chain considerations?

How can retailers shortlist online fulfilment options for consideration?

It can be daunting knowing where to start. At trace. we recognise it can be difficult to understand the strengths and respective trade-offs of common approaches to online fulfilment. This is why we offer a simple questionnaire to support our clients translate what they know of their existing business strategy, and targeted customer offer, into a shortlist of potential Online Fulfilment Models.

This hypothesis driven analysis simplifies the path forward by ruling out options that are not complementary to your strategic considerations.

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Deeper analysis is often required, however this table can highlight the relative trade-offs to help shortlist scenarios for modelling.

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Is your business transitioning from store fulfilment to dedicated or co-located fulfilment?

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How to find the right online fulfilment option.

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Below is an example 3 phase approach for this type of project.

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1. Analyse & Design 2. Scenario Modelling   3. Business Case & Implementation

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Our approach to helping our clients identify, select, design and implement the optimal online fulfilment option is hypothesis driven, structured and fact-based. We utilise a range of in-house developed tools for this analysis.

The objective is to design a network and online fulfilment capability that is able to deliver on the target customer promise at the optimal operating costs – whilst also providing a level of resilience to changing operating conditions – for example, as customer demands, product profiles, volumes, etc. continue to change and evolve.

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Selecting Online Fulfilment Technology

Highly interrelated to the strategic direction is the selection of the technology to support the fulfilment solution. Below are some example options to consider – each with varying trade-offs that require balanced assessment.

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Core Picking Technology

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Traditional

Person to Goods (PTG)

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Popular & Emerging

Goods to Person (GTP)

Goods to Robot (GTR)

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“…GTP and GTR can be 6 to 16 times more productive than traditional PTG…”

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Picking Support Technology

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Traditional

RF

Voice-Picking

Light Directed

Display

Augmented Reality

Picking Methods: Cluster Picking, Batch Picking, Zone Picking

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Popular & Emerging

Autostore

Mobile Autonomous Robots

Multi-shuttle ASRS

Perfect Pick

Carousels (legacy)

Vertical Lift Modules (legacy)

Mini Load ASRS (legacy)

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Order Consolidation and Unit Sortation

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Traditional

Put Walls (Batch to Order)

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Popular & Emerging

Sure Sorter (Automated Put Walls)

Unit Sorters (Tilt Trays, Cross Belt, Bombay)

Pocket Sorter (Overhead Sorter)

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Don’t let inventory be an after-thought.

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Inventory management can be complex…

Extensive SKU Ranges

Multitude of Stocking Locations

Multiple Channels

Service Level Targets

Working Capital Targets

Customer Expectations

Large Vendor Lists

Varying Product Profiles

Demand Patterns & Variability

Product Lifecycles

Promotional Activity

Lead Time Variability

Storage Capacity Constraints

Returns & Excess Stock Mgt

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Below we have listed a few drivers for the ‘big’ inventory questions – this assumes a co-located facility with a level of automation

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Contact us today, trace. your supply chain consulting partner.

Warehousing and Distribution of High-Risk Inventory: Best Practices for ANZ Organisations

The supply chains involving high-risk inventory require specialised handling, storage, and distribution solutions. For organisations across Australia and New Zealand (ANZ), managing such inventory is more than just ensuring smooth operations — it’s about prioritising safety, security, and regulatory compliance. Whether dealing with pharmaceuticals, hazardous chemicals, evidence, or luxury goods, the risks associated with these types of inventory make meticulous management essential.

This article explores the challenges of managing high-risk inventory, the best practices for warehousing and distribution, and how Trace Consultants can assist ANZ organisations in building and optimising their warehouse networks for such sensitive materials.

The Challenges of High-Risk Inventory Supply Chains

Managing high-risk inventory involves handling products that can pose safety, environmental, security, or legal challenges if not properly managed. These products may be prone to theft, degradation, or hazardous incidents, making them significantly more complex to store and transport.

Key Challenges in High-Risk Inventory Management:

1. Regulatory Compliance
   High-risk inventory is subject to strict regulations, varying depending on the type of product. Pharmaceuticals, for instance, must comply with Good Distribution Practice (GDP) guidelines, while hazardous chemicals must adhere to the Globally Harmonised System of Classification and Labelling of Chemicals (GHS). Non-compliance can lead to legal ramifications, fines, and reputational damage.
2. Security Risks
   Certain goods, such as firearms, luxury items, or controlled substances, are attractive targets for theft. As such, warehouses handling these products must have robust security measures in place, including surveillance systems, restricted access, and real-time tracking.
3. Safety and Environmental Concerns
   Hazardous materials like chemicals, explosives, or radioactive materials pose significant safety risks. Any accident in storage or transport can lead to dangerous spills, contamination, or even loss of life. Proper storage conditions, containment protocols, and employee safety training are critical to mitigating these risks.
4. Inventory Integrity
   Products such as pharmaceuticals, perishable goods, and sensitive electronics require precise environmental controls to maintain integrity. Temperature-sensitive items must be stored in climate-controlled environments, while high-value electronics need protection from dust, moisture, and mechanical damage.
5. Complex Documentation and Tracking
   High-risk inventory requires accurate, up-to-date documentation to track its movement, condition, and location at all times. This is particularly important for evidence supply chains, where the chain of custody must be meticulously documented to ensure the integrity of legal proceedings.

Key High-Risk Inventory Types in ANZ Supply Chains

1. Pharmaceuticals and Controlled Substances
   Managing pharmaceutical products requires stringent temperature controls, security measures, and tracking systems to prevent theft, tampering, or product degradation. Controlled substances, including narcotics, must be stored securely in compliance with government regulations.
2. Perishable Goods
   Items such as fresh food, biological samples, and medical supplies require precise temperature controls. These items must be transported quickly and safely to maintain their integrity, making warehouse distribution speed and reliability essential.
3. Hazardous Chemicals
   Chemicals used in industrial, agricultural, or medical applications need secure, well-ventilated storage with clear labelling and safety precautions. Staff handling these materials must be trained in proper handling, and warehouses must adhere to strict environmental and safety regulations.
4. Firearms and Ammunition
   The storage and transportation of firearms and ammunition are tightly regulated in ANZ, requiring secure facilities, limited access, and meticulous record-keeping. Warehouses handling these items must meet government standards and enforce rigorous security protocols.
5. Luxury Goods and High-Value Electronics
   High-value items like jewellery, luxury watches, and sensitive electronics face significant theft risk. Warehouses must employ advanced security measures such as surveillance, restricted access, and tamper-proof packaging to protect these items from loss or damage.
6. Radioactive Materials
   Handling and storing radioactive materials, often used in medical or scientific applications, demands stringent safety measures, including lead-lined storage, radiation shielding, and the use of specialised transport containers. Compliance with international safety standards is critical to prevent accidents.
7. Evidence Supply Chains
   Evidence in criminal investigations must be stored securely with full documentation to maintain its integrity for legal proceedings. Evidence handling facilities must ensure the chain of custody is tracked from collection to courtroom, preventing tampering or loss.

Best Practices for Warehousing and Distribution of High-Risk Inventory

Successfully managing high-risk inventory supply chains requires a combination of technology, strategic warehouse design, robust processes, and comprehensive training for staff.

1. Warehouse Design for High-Risk Inventory

When storing hazardous materials or sensitive goods, the design of the warehouse plays a crucial role in ensuring safety and efficiency.

• Temperature and Climate Control
  For perishable goods, pharmaceuticals, and sensitive electronics, temperature-controlled zones and humidity monitoring are vital. These controlled environments prevent spoilage or damage, ensuring that products maintain their quality throughout their lifecycle in the warehouse.
• Segregation of Hazardous Materials
  Dangerous goods should be stored separately based on their classification and hazard level. Flammable, corrosive, and toxic substances must be segregated in compliance with regulatory requirements to prevent dangerous chemical reactions.
• Security Systems
  Warehouses handling high-value or regulated items such as firearms, controlled substances, and luxury goods should implement advanced security measures. This includes 24/7 surveillance, motion detectors, and controlled access points to prevent theft or tampering.

2. Inventory Management Systems (IMS)

The complexity of high-risk inventory necessitates advanced inventory management systems (IMS) to ensure traceability and compliance.

• Real-Time Tracking
  For evidence supply chains or pharmaceuticals, real-time tracking systems are critical to maintaining the chain of custody or verifying the integrity of temperature-sensitive shipments. IMS provides up-to-date information on the location and condition of goods, ensuring full visibility and accountability.
• Regulatory Documentation
  High-risk inventory must be accompanied by extensive documentation, including compliance certificates, safety data sheets (SDS), and proof of handling. An IMS can automatically generate and store these documents, simplifying compliance and reducing human error.

3. Compliance and Safety Training

Warehouse staff must be properly trained in handling hazardous materials and high-risk goods.

• Regulatory Compliance Training
  Staff must be knowledgeable about relevant regulations, including safe handling practices, reporting requirements, and emergency response protocols. This is especially important for those handling hazardous chemicals or radioactive materials.
• Safety Procedures and Protocols
  Regular safety drills, use of personal protective equipment (PPE), and clear labelling of hazardous areas reduce the risk of accidents. Ensuring that all employees are familiar with the latest safety protocols protects both personnel and the surrounding environment.

4. Specialised Packaging and Transportation

Transporting high-risk inventory is often as challenging as warehousing it.

• Tamper-Proof Packaging
  For items such as luxury goods or controlled substances, tamper-proof packaging and RFID tags add an extra layer of security during transport. This reduces the risk of theft or product loss during transit.
• Regulated Transport Containers
  Dangerous goods, perishable items, and radioactive materials must be shipped in specially regulated containers. These containers provide insulation, shock protection, or radiation shielding, ensuring that the product arrives safely at its destination.

How Trace Consultants Can Support ANZ Organisations

Managing high-risk inventory requires a deep understanding of regulations, safety, and security protocols. Trace Consultants bring expertise to help ANZ organisations implement best practices for warehousing and distribution, tailored to their specific high-risk supply chain needs.

1. Warehouse Design and Optimisation

We help organisations design warehouse facilities that meet the safety, security, and compliance needs of high-risk inventory. Whether it's creating temperature-controlled zones or securing storage for hazardous materials, our team ensures your warehouse is optimised for both efficiency and safety.

2. Technology Integration and Inventory Management

Trace Consultants work with businesses to integrate advanced IMS and tracking systems, enabling real-time monitoring of high-risk inventory. This ensures full visibility and traceability, reducing the risk of compliance violations or safety incidents.

3. Compliance and Training Programs

We assist organisations in developing robust compliance strategies, offering staff training programs tailored to regulatory requirements. From hazardous materials handling to evidence chain-of-custody protocols, we ensure your teams are prepared to manage high-risk inventory safely and efficiently.

4. Distribution and Logistics Support

Our experts help streamline the distribution of high-risk inventory, ensuring that products are securely and safely transported. Whether it's packaging solutions, route optimisation, or regulatory compliance, Trace Consultants provide end-to-end logistics support.

The warehousing and distribution of high-risk inventory, whether it be hazardous chemicals, pharmaceuticals, or evidence in criminal investigations, requires meticulous planning, robust safety measures, and unwavering compliance with regulations. By partnering with Trace Consultants, organisations in Australia and New Zealand can effectively manage these complex supply chains, ensuring safety, security, and efficiency at every stage.

Contact Trace Consultants today to learn how we can help your organisation manage its high-risk inventory supply chains and optimise your warehouse and distribution networks.

Contact us today, trace. your supply chain and procurement consulting partner.

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Warehouse Capacity and Space Planning for Peak Efficiency

Effective warehouse capacity and space planning are critical to the overall success of supply chain operations. Warehouse space is a valuable resource, and the ability to use it effectively can mean the difference between a smooth-running, cost-efficient operation and one that struggles to keep up with customer demands. In Australia, where warehousing costs are high and the need for efficient logistics solutions is growing, optimising warehouse capacity and space planning is essential for staying competitive.

In this comprehensive article, we will explore the importance of capacity and space planning in warehouses, the key techniques for optimising space, the benefits of efficient capacity planning, and practical steps for Australian businesses to ensure peak efficiency in their warehouse operations.

The Importance of Capacity and Space Planning

Warehouse capacity and space planning involve the effective use of available space to accommodate inventory, streamline operations, and minimise costs. It encompasses everything from the layout of storage areas to the allocation of inventory within the warehouse. Proper space planning allows businesses to maximise storage density, improve workflow, and minimise the costs associated with underutilised or overutilised space.

Key Objectives of Space Planning

1. Maximise Storage Capacity: The goal is to make the best use of available space by optimising the arrangement of racking, shelving, and other storage systems.
2. Improve Operational Efficiency: A well-planned warehouse layout minimises the travel distance for workers, reducing picking times and enhancing productivity.
3. Accommodate Fluctuating Demand: Warehouses must be able to adapt to changing inventory levels, particularly during peak seasons or unexpected surges in demand.
4. Minimise Operational Costs: Effective capacity planning helps reduce storage and handling costs by ensuring that space is used efficiently.

Techniques for Warehouse Capacity and Space Planning

1. Slotting Optimisation

Slotting optimisation is the process of determining the best locations for products within the warehouse based on factors such as demand frequency, product size, and picking methods. Slotting optimisation aims to reduce travel time for workers, improve picking efficiency, and maximise the use of available space.

Steps for Effective Slotting Optimisation

• ABC Analysis: Categorise inventory into A, B, and C items based on demand frequency. A-items (high-demand products) should be placed in easily accessible locations, while C-items (low-demand products) can be stored in less accessible areas.
• Product Grouping: Group similar products together to streamline the picking process and reduce travel time.
• Reevaluate Slotting Regularly: Inventory demands change over time, so it is important to periodically reassess and adjust slotting to ensure ongoing efficiency.

2. Vertical Space Utilisation

Maximising vertical space is one of the most effective ways to increase storage capacity without expanding the warehouse footprint. By using taller racking systems and multi-tier shelving, businesses can make better use of available space and significantly increase storage density.

Considerations for Vertical Storage

• Safety: Ensure that racking systems are properly secured and that appropriate safety measures are in place to prevent accidents.
• Handling Equipment: Invest in equipment such as forklifts and order pickers that can safely access high-level storage locations.
• Floor Load Capacity: Assess the warehouse floor's load-bearing capacity to ensure that it can support the weight of stacked inventory.

3. Flexible Storage Systems

Implementing flexible storage systems allows warehouses to adapt to changing inventory needs and accommodate different types of products. Modular racking, adjustable shelving, and mobile storage units are examples of flexible solutions that can be adjusted as inventory requirements change.

Benefits of Flexible Storage

• Adaptability: Flexible systems can be easily reconfigured to accommodate different product sizes or changing inventory levels.
• Optimised Space Utilisation: Adjustable racking and shelving systems ensure that space is used efficiently, regardless of product dimensions.
• Cost Savings: By adapting storage systems to current needs, businesses can avoid the costs associated with overcapacity or underutilisation.

4. Cross-Docking

Cross-docking is a technique used to minimise the amount of inventory stored in the warehouse. Instead of storing products for extended periods, goods are received, sorted, and shipped out to their final destination with minimal handling. This approach reduces the need for storage space and improves the efficiency of the supply chain.

When to Use Cross-Docking

• Fast-Moving Goods: Cross-docking is ideal for high-turnover products that need to be shipped quickly to customers.
• Seasonal Products: Cross-docking can help manage seasonal inventory by minimising the time products spend in storage.
• Just-in-Time Deliveries: Cross-docking is often used in just-in-time (JIT) supply chains to ensure that products are delivered to customers without unnecessary delays.

5. Space Zoning

Space zoning involves dividing the warehouse into different zones based on the type of inventory, picking methods, or operational requirements. This helps streamline operations and ensures that inventory is stored in the most appropriate location.

Types of Zones

• Fast-Moving Zone: High-demand products are stored in a dedicated area that is easily accessible to reduce picking times.
• Bulk Storage Zone: Large or bulky items are stored in a separate area to prevent congestion in other parts of the warehouse.
• Temperature-Controlled Zone: Products that require specific temperature conditions, such as perishable goods, are stored in a dedicated temperature-controlled area.

6. Mezzanine Floors

Mezzanine floors are an effective way to increase storage capacity without expanding the warehouse footprint. By adding a mezzanine level, businesses can create additional storage or work areas, making better use of vertical space.

Benefits of Mezzanine Floors

• Cost-Effective Expansion: Mezzanine floors provide additional space without the cost of constructing a new facility.
• Versatility: Mezzanines can be used for storage, packing, or office space, depending on the needs of the business.
• Improved Space Utilisation: Mezzanines help maximise the use of vertical space, increasing overall storage capacity.

Benefits of Effective Capacity and Space Planning

1. Improved Operational Efficiency

Effective space planning reduces the time workers spend searching for products, travelling between locations, and handling inventory. By optimising the layout and ensuring that products are stored in the most appropriate locations, businesses can improve workflow and reduce bottlenecks, leading to increased productivity.

2. Reduced Costs

By maximising storage density and minimising wasted space, businesses can reduce the costs associated with underutilised warehouse space. Efficient capacity planning also helps prevent the need for costly expansions or relocations, allowing businesses to make the most of their existing facilities.

3. Enhanced Inventory Management

Proper space planning ensures that inventory is organised logically, making it easier to track and manage stock levels. This leads to improved inventory accuracy, reduced stockouts, and better visibility into inventory levels, which is crucial for meeting customer demand and avoiding overstocking.

4. Increased Flexibility

Warehouses that are designed with flexibility in mind can more easily adapt to changing inventory needs. Whether it’s accommodating a sudden surge in demand, managing seasonal products, or reconfiguring the layout to handle new product lines, flexible storage solutions provide the adaptability needed to respond to market changes.

5. Improved Safety

A well-organised warehouse layout reduces the risk of accidents by ensuring that aisles are clear, storage systems are secure, and workers have easy access to the products they need. Proper zoning and vertical storage also help prevent congestion, reducing the likelihood of collisions and injuries.

Steps to Implement Effective Capacity and Space Planning

1. Assess Current Warehouse Layout

The first step in optimising warehouse capacity is to assess the current layout and identify areas for improvement. This includes evaluating the placement of racking, shelving, workstations, and equipment, as well as analysing the flow of goods through the warehouse.

2. Analyse Inventory Data

Understanding inventory characteristics is crucial for effective space planning. Analyse data on product size, weight, demand frequency, and turnover rates to determine the best storage methods and locations for each item. This data-driven approach helps ensure that space is used efficiently and that high-demand items are easily accessible.

3. Design an Optimised Layout

Based on the assessment and inventory analysis, design a warehouse layout that maximises storage density and minimises travel distances for workers. Consider using software tools to create a visual representation of the layout and simulate different scenarios to identify the most efficient configuration.

4. Implement Flexible Storage Solutions

Incorporate flexible storage solutions, such as modular racking and adjustable shelving, to accommodate changing inventory needs. This allows the warehouse to adapt to fluctuations in demand and ensures that space is always used efficiently.

5. Monitor and Adjust

Warehouse capacity and space planning should be an ongoing process. Regularly monitor warehouse operations to identify any inefficiencies or areas for improvement. Adjust the layout, slotting, or storage systems as needed to ensure that the warehouse continues to operate at peak efficiency.

Challenges in Warehouse Capacity and Space Planning

1. Fluctuating Demand

One of the biggest challenges in capacity and space planning is managing fluctuating demand, particularly in industries with significant seasonality. Sudden spikes or drops in demand can make it difficult to maintain an optimised layout, requiring frequent adjustments to accommodate changing inventory levels.

2. Limited Space Availability

In urban areas, space availability can be limited, making it challenging to expand warehouse capacity. In such cases, businesses must focus on maximising the use of existing space through vertical storage, mezzanine floors, and efficient layout design.

3. Balancing Efficiency and Safety

While the goal of space planning is to maximise efficiency, it is important not to compromise on safety. Overcrowded storage areas, narrow aisles, and poorly placed equipment can create hazards that increase the risk of accidents. Ensuring that safety remains a priority is crucial for successful capacity planning.

4. Cost of Upgrades

Implementing new storage systems, racking, or mezzanine floors can require a significant upfront investment. Businesses need to carefully consider the costs and benefits of any upgrades to ensure that they are making cost-effective decisions that will provide a positive return on investment.

Case Study: Capacity and Space Planning for an Australian FMCG Warehouse

An Australian FMCG company faced challenges with limited warehouse capacity and inefficiencies in their picking process, particularly during peak seasons. The company decided to undertake a capacity and space planning project to optimise their warehouse operations.

Approach

• Inventory Analysis: The company conducted a detailed analysis of their inventory, categorising products based on demand frequency and size.
• Slotting Optimisation: High-demand products were relocated to more accessible locations, while slower-moving items were moved to less frequently accessed areas.
• Vertical Storage: The company installed taller racking systems to maximise vertical space and increase storage capacity without expanding the warehouse footprint.

Results

• Increased Storage Capacity: The installation of taller racking systems led to a 20% increase in storage capacity, allowing the company to accommodate more inventory during peak seasons.
• Improved Picking Efficiency: Slotting optimisation reduced travel distances for workers, resulting in a 15% improvement in picking efficiency.
• Cost Savings: By making better use of existing space, the company avoided the need for costly warehouse expansion, saving on capital expenditure.

Warehouse capacity and space planning are critical components of efficient supply chain management. By optimising the use of available space, businesses can improve operational efficiency, reduce costs, and enhance inventory management. Techniques such as slotting optimisation, vertical storage, flexible storage solutions, and cross-docking all contribute to creating a warehouse that operates at peak efficiency.

For Australian businesses facing high warehousing costs and fluctuating demand, effective capacity and space planning can provide a significant competitive advantage. By implementing the strategies outlined in this article and regularly reassessing their warehouse layout, companies can ensure that they are making the most of their valuable warehouse space.

Ready to optimise your warehouse capacity and space planning for peak efficiency? Trace Consultants is here to help you create a tailored solution that meets your unique business needs.

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