Warehouse Operational Challenges In Shanghai’s Retail Industry

1. Introduction

With the ever-changing customer demand, the retailers who are focusing on end customer-oriented operations are confronted with several challenges in terms of warehouse operation. The Shanghai’s retailers who are grappling with a great deal of foreign competitors and with relatively low level of technology adoption are facing serious challenges in warehouse operation.

2. Two current warehouse operational challenges faced by Shanghai’s retailers.

2.1 Warehouse operation efficiency

With increasingly repaid changes of customer purchase preference, the warehouse operation efficiency is highly demanded to cut down the new product introduction time worldwide to ensure fast market penetration. In the past several years, product introduction times were getting shorter by nearly 50percent (on average) every five years. While in some industries this rate of changes was less sever, in other industries the rate of change was even more rapid. Automotive industry, for example, new product introduction times changed from around 60 months to a target of approximately18 months, or a sharp reduction of around 70 percent from the mid-1980s to 2003! In several industries, the total time taken to introduce a new product into the market can be the key difference between a blockbuster and a mediocre performing new product. Therefore, the retailers who take on the responsibility of delivering products and services to consumers for their personal or family use play a crucial role in time saving. Shanghai’s retailers who are confronted with fierce competition from foreign counterparties are grappling with the challenge of operation efficiency.

It is not unusual for us to find that when we do shopping in some relatively smaller Shanghai supermarkets, a few categories of new products are not in place and even worse is that when these kinds of products would be in stock is also unknown. However, the same circumstance in some foreign counterparties, like Wal-Mart and Carrefour is completely different: as long as you want, you can find any kind of product with various choices and abundant supplements. These embarrassed situation point out a serious challenge for Shanghai’s retail industry, says high warehouse operation efficiency.

Defects, transportation, human motion, waiting, says four wastes, are prevalent in current warehouse operations. “Many retail operations continue to suffer from significant inefficiencies, as forklift operators waste time and resources hunting and digging, because they lack adequate information on the location of items and the optimal route for putaway, replenish and retrieval actions,” says Michael Giuliano, the President of Meridian.

Image that 2.5 minutes are wasted during the average retrieval cycle, and that figure is multiplied by hundreds or thousands of cycles per week.