Automation boosts productivity
Logistics should not be perceived as a cost centre for a company or as a place where profits and losses could be easily optimized should problems arise. It should help gain a competitive advantage. And although it may seem to be a worn-out cliché that can easily apply to numerous activities within an organisation, logistics has recently – like no other industry – clearly demonstrated that its underestimation is likely to have devastating consequences.
A forklift, a pallet, a high-bay storage rack or even an IT warehouse management system will not be enough to deliver modern logistics services. There is certainly no need to immediately duplicate the modern fully automated warehouses of Chinese e-giants. And what’s more, the implementation of automation will not act as a magic wand solving all problems. In addition, fully automated solutions will not always be the best.
However, automation will continue to progress to drive efficiency, eliminate bottlenecks in the sequence of processes and improve precision given labour shortages and rising labour costs.
And additionally, given significant space savings (for example AutoStore expands storage capacity four times without moving warehouses and increases order fulfilment ten times without hiring additional staff) and low energy consumption (picking robots do not consume more energy than a household vacuum cleaner), and the value of automation in work health and safety and handling hazardous materials, it seems that every warehouse will soon be at least partially automated. It is worth noting that a warehouse employee spends up to 50% of the working time on moving between locations and picking costs account for up to 50% of all warehouse costs. Each optimization measure will therefore yield substantial savings.
A boom for e-grocery and q-commerce
“Another notable trend last and this year is a boom for e-grocery and quick grocery shopping which began in 2020 with the outbreak of the pandemic. At that time the expression q-commerce was totally unknown, but quick commerce has since been gaining traction in online retail. It refers to a quick delivery of groceries ordered online to your doorstep – within 10 or 15 minutes. You must have often seen branded bicycle and motorcycle riders in the street carrying purchases in their cube backpacks. A reader fascinated by logistics is likely to ask where the purchases were made. Initially, such purchases were made just in stores, but more recently in dark stores that are popping up like mushrooms in the largest Polish cities,” says Damian Kołata, Partner, Head of Industrial & Logistics Agency | Poland, Head of E-Commerce | CEE.
Dark stores come in various sizes – they may be small local shops or large fulfilment warehouses spanning thousands of square meters (in the US in particular, dark stores are being set up in disused shopping centres and hence called dark warehouses). They are usually located in cities or close to arteries. Poland is currently seeing the rise of smaller dark stores sized 200-250 sq m and offering about 1,500 SKUs in retail units within housing estates. Liser and Jokr have already opened about a dozen such stores looking like grocery stores on the outside (see the photo below) and providing deliveries within an approximately 2 km radius. Similar concepts will soon be opened by Bolt, Glovo, Wolt, Gorillas, and such market giants as Żabka and Biedronka (in cooperation with Glovo, as BIEK, or Biedronka Ekspress). Q-commerce is also attracting growing interest not only from customers, but also from investors and venture capital funds, the latter investing more than USD 1.5 billion in express food delivery companies in 2021 compared to USD 687 million, or three times less, in the previous year.
In addition to providing groceries, dark stores will soon begin to offer clothing. In conjunction with warehouses in shopping centres and a fulfilment from store system (FFS), they will form a new last mile delivery chain that will be a lot more efficient and effective. According to many industry experts, last mile costs account for between 40% and 55% of total supply chain costs – hence there are so many initiatives undertaken to optimize logistics processes and spending on urban and last mile logistics and delivery reorganisation.