Labor Shortages
Another challenge facing every industry — especially in the warehousing sector — is a nationwide labor shortage. Implementing automated solutions can make operations more efficient as long as there are still people on-site. Ideally, automated solutions should supplement human workers rather than replace them entirely — for example, have human workers manually picking small items while a robotic solution does the heavy lifting or repetitive tasks. The issue is that employees are consistently leaving the workforce faster than their employers can replace them, especially in warehouses.
2. Consumer Behaviors
Consumer behavior is also changing the food and beverage landscape. In response to growing inflation and economic concerns, consumers are increasingly trading down, or switching from higher-priced brands to more affordable options.
Despite rising prices, consumers are still buying the same volume of products. Price increases have led to an increased demand for more affordable brands, but demand still remains for higher-priced brands. These shifts in brand demand, caused by price increases, leads to further warehouse SKU proliferation.
Consumer desire for convenience is another factor driving change in the food and cold chain industries. As more consumers opt for frozen foods and meal preparation kits directly to their doorstep, warehouses have to adapt to meet these changes in behavior.
3. SKU Proliferation
Adding more products to inventory, such as new flavors of best-selling items, increases the number of SKUs a warehouse needs to track. This process is known as SKU proliferation, and it presents new challenges with long-tail SKUs.
While long-tail SKUs do not generate high sales volume, they can significantly increase overall revenue. This boost helps companies enter into new markets and diversify their product offerings to customers.
However, long-tail SKUs are more likely to be slow-moving inventory that occupies warehouse space for longer periods of time than more popular fast-moving SKUs, which sell quickly. Essentially, the more long-tail SKUs a company offers, the harder it will become to manage product slotting and storage space.