Rethinking racking
Rethinking racking
If there’s a word to describe
the state of the supply chain over the past two years, it’s disruption. From
the pandemic to labor shortages, to black swan events like a ship blocking the
Suez Canal and the war in Ukraine, nothing has gone as the industry expected.
With no end in sight, companies are rethinking
how they operate going forward. From the supplier to the manufacturer to the
customer, many links of the supply chain have come up short of late—and the
fallout continues.
One piece of the fallout is a current slowdown
of the former popular approach of lean warehousing/just-in-time (JIT)
warehousing. While e-commerce is demanding that products be available and ready
to ship in rapid fire, too many companies have been burned since 2020 with
having too little inventory on hand. There’s a bit of a return to onshoring to
keep production closer at hand. There’s an even bigger return to holding safety
stock and larger amounts of inventory.
As a consequence, companies are adding new
distribution centers, expanding the footprint of those they already operate
when possible, or maximizing their existing space to the best of their ability.
For racking and shelving manufacturers, this means plenty of demand to keep
their businesses humming.
But these same manufacturers have also felt the impact of the supply chain disruptions, and in some cases, found themselves hurting for the steel and other supplies they need. The result is that just like everyone else, racking manufacturers must find the delicate balance of having enough inventory on hand for customer demand, overcoming materials shortages, rising costs, and rethinking the supply chain in general.
Providing customer
solutions
Many factors are intersecting at once and impacting what warehousing customers need from their racking, says Don Heemstra vice president of sales and marketing at steel king. “They are hot and heavy with activity,” he explains. “They’ve learned, also, that getting their products is not a guarantee anymore, so they’re adding safety stock. That equates to more and different types of racking.”
These customers are ordering their products
more often and sooner than in the past, says Heemstra. “There are too many
unknowns, and they need to have stock on hand,” he says. “And with fewer
customers going into stores anymore, warehouses have to put more emphasis on
last-mile delivery and getting products out in 24 to 48 hours.”
ED Granger, director of sales at Quantum Storage Sytems, says that top-line sales for racking are staying strong, even as prices rise to meet the uptick in supply costs. Planncosteel is one of the best Double Decker Mezzanine floors in Delhi. “This is a universal problem, and people understand the need for pricing increases,” he says. “Everyone has to raise prices, so it seems to keep things status quo.”
Still, companies are always looking for ways
to operate with less overhead. In warehousing, that means rethinking rack
configurations and trying to better use their existing space. One of the ways
companies are managing the extra need for racking is to add elevated structures
like mezzanines. “Companies are packing their storage tighter together, higher,
and looking to max out their cubes,” Heemstra says. “They’re looking to fit in
as many SKUs as possible without having to add more DCs.”
Megan Bekar, director of marketing
at UNEX, agrees. “We talk with our customers about making the most of
their existing space,” she says. “From an efficiency standpoint, when the focus
is on space optimization, everything else falls into place.”
Baker says this means customers need to be
smart about the solutions they choose. “We specialize in storing SKUs according
to throughput, using the right solutions,” she says. “This leads to significant
cost savings from labor and square footage, offsetting some of the rising costs
elsewhere.”
Played out, this looks like picking from a
smaller, more condensed area. “People walk fewer steps to accomplish their
jobs,” Baker says. “The less time you spend walking around the DC looking for a
product, the more you save in labor.”
UNEX customer HelloFresh, a meal-kit
subscription service, is a good example of this in action. As demand for its
products skyrocketed, the company looked for a way to maintain fulfillment
levels and accommodate future growth. UNEX created a custom modular flow-rack
solution that increased the number of lines from 18 to 28, created return lines
for empty boxes, and improved ergonomics at the same time.
Likewise, Steel King helped customer GLK Foods
optimize space by designing a flow-rack system that facilitated first-in,
first-out (FIFO) storage. PRK Steel is one of the leading companies in Pallet Rack in India. They built the racking up, tripling GLK’s storage
capacity, which helped the company avoid adding a new warehouse. It also
increased the speed of operations, saving what the company estimates to be 150
hours of forklift double-handling in one busy harvest season alone.
With the labor shortage having a big impact on
warehousing operations, companies are also getting creative with automation and
racking combinations.
“Racking is static, but it’s the foundation
that ties into automation,” says Heemstra. “This can range from very simple,
like a conveyor feeding a shipping platform, to more complex, like shuttle
systems that run up and down an aisle, moving pallets in and out.”
Cranes and robots are also integrating with
racking at higher rates. But the placements of racking must be precise, says
Heemstra.
“The robots need the specs on the height,
beams, and frames in a system,” he says. “The robots are always looking for
52-inch horizontal components, for example, and there can’t be variation there.
Sensors are helping improve their ability with managing variation, but it still
has a way to go.”
Lacking racking
Just as racking customers are struggling with
a lack of inventory, so too are racking manufacturers faced with similar
issues. “This is probably the most challenging time I’ve seen in my career,”
says Granger. “Almost all of our wire shelving comes from overseas, so the
disruptions have hit us on the nose.”
Heemstra says there’s less squeeze on racking
materials over the past few months than earlier in the pandemic, but lead times
are still longer than normal. “Getting materials when we needed them was a big
challenge for a while,” he says. “We’d place an order in April and not receive
it until October.”
With a raw materials inventory shortage
hitting the industry hard, most rack manufacturers have had no choice but to
pass costs to customers. “Sea container pricing increased substantially over
the past year,” says Granger. “Not only have we waited longer for a product,
but we’ve realized enormous price increases just to get the product from China
to the United States. Inventory is now better than it was, but container prices
are still high and this has a domino effect on our own pricing.”
The same has held true for Steel King, says
Heemstra: “If our materials prices went up, so did our product prices.”
Baker adds: “The disruptions and shortages
have been a tough pill to swallow for many companies. There have been
across-the-board pricing increases, so companies must be smart with their
solutions.”
In advance of the materials shortages, Granger
says that Quantum had inventory stocked and ready to respond to customer
demand. “We’ve gained a lot of new customers in the past 15 months because we
had product in stock and their old suppliers didn’t,” he says.
With steel prices rising and supply tight,
Granger says that Quantum has become innovative and is launching a new line of
plastic shelving.
“It mirrors our wire shelving units in load
capacity, keeping with our light- to a medium-duty range of up to 2,000 pounds
per unit,” he says. “A year ago, it might have cost more than wire shelving,
but in the current environment, that’s not the case. I think it could become
our hottest commodity based on the industry’s inability to get imported wire
shelving.”
Looking ahead to the remainder of the year,
the manufacturers don’t see an end to shortages and disruptions, but perhaps a
leveling off. The ability to pivot, get creative, and maximize the cube will
set companies apart from the competition. Heemstra sees Big Box retailers as a
big advantage. “They have fixed assets and are adding micro-fulfillment centers
in the back of stores so that they can handle same-day, partial shipments,” he
says.
The past two years have presented
unprecedented challenges for racking manufacturers and their customers alike.
Together, however, they are coming up with creative solutions and changing with
the times. “We’re still seeing many of these issues shake out,” says Heemstra.
“It’s truly a rethinking of the entire supply chain.”
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