Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
Warehouses across the U.S. are filled to the rafters, and another wave of imports is coming soon as retailers stock up for the holiday peak season. That puts most companies in a pinch as they look for ways to deal with the extra inventory.
Conventional wisdom says that retailers can simply move their goods from expensive coastal distribution centers to cheaper rural locations or ship them directly to brick-and-mortar stores, “forward positioning” the inventory closer to consumers. But nothing comes for free in logistics; in practice, every option comes with its own costs and challenges.
For example, warehouse space is hard to find anywhere right now, thanks to soaring demand during the pandemic rebound. And even if you can find space, good luck paying for the truck to get your goods there; freight costs are higher than ever, thanks to rising fuel costs and tight capacity.
The conflict is real. A survey released in June by the shipping and mailing services provider Pitney Bowes showed that big retailers are now offering widespread discounts to shoppers as a way to draw down their inventory. “This summer will present both new challenges and new opportunities for brands,” Vijay Ramachandran, VP market strategy, global e-commerce at Pitney Bowes, said in a release announcing the survey’s findings. “Overstocks and markdowns will impact profitability but also create new openings to sell, as a large portion of consumers seek out deals—further aided by the return of [Amazon’s] Prime Day and other mid-year promotions. At the same time, our survey found a growing number of consumers cutting back on retail spending altogether as they react to record inflation and gas prices, and rising interest rates.”
Caught in a vise between rising stocks and slowing consumption, companies have to be more precise than ever in balancing the costs and benefits of carrying inventory, says Steve Denton, CEO of Ware2Go, a third-party fulfillment services provider that is owned by UPS Inc.
Waiting out the storm is not an attractive option, either. “The cost of storage is higher than [it was] a couple years ago because of the lack of warehouse space,” Denton says. “That means the margin evaporates if you carry [inventory] too long.”
FINDING NEW MARKETS
As for how companies can clear out some of that overstock, Denton urges them to explore new sales channels beyond the classic options of direct to store (DTS) and direct to consumer (DTC). For many merchants, an easy option is to liquidate their goods by selling them on a secondary market—such as Overstock.com or T.J.Maxx—or to sell them to the giant online retailer Amazon.
However, Denton points out that even those options carry some costs, such as the extra labeling compliance costs required of “Amazon 1P”—or first-party—partners (meaning companies that sell their products directly to Amazon, which then sells them to consumers). Choosing the “Amazon 3P”—or third-party—option could cost even more, since only the digital sale itself occurs on the Amazon marketplace in that model, leaving merchants to take care of order fulfillment and shipping themselves.
As companies fight their way through the thicket of rising inventory management costs, many are turning to a middle ground between the in-store and online models, using their stores as small DCs. That’s where software analytics has become an important tool for balancing the strengths and weaknesses of the purely warehouse and retail sites, says Amy Tennent, senior director for product management at Manhattan Associates, a supply chain software developer.
As Tennent explains, the “simple” decision to forward-deploy goods to a retail store actually represents a potential minefield. In theory, stockpiling goods at stores should shrink a retailer’s shipping costs by enabling practices like “buy online/pick up in store” (BOPIS) or minimizing shipping distances for items sent to consumers, she says. In pursuit of that goal, some companies create “mini fulfillment hubs” within some of their retail sites, then task their store employees with picking and packing orders for home delivery.
However, that strategy may have drawbacks because managers at each location must decide how much store labor to devote to e-commerce fulfillment work, as opposed to serving customers in the showroom, says Tennent. Make the wrong choice, and parcel shipments could be backlogged for days, or impatient customers could walk out of the store. “You need to identify specific labor assigned to the job, otherwise your store team will have to [fulfill online orders] while also serving customers,” Tennent says. “If they get only two or three orders a shift, then store associates can do it just fine. But if it’s 50, 100, or 150 [orders], then they need the right tools in place: pick-path optimization, batch picking, prioritizing orders, sorting and staging the products after picking, and a packing station.”
Generally speaking, the retailers most likely to benefit from forward-deployment strategies are those that are able to assign committed resources to the task, Tennent says. Ideally, that would mean deploying a dedicated labor force for every shift, using cloud-based software like supply chain management and warehouse management systems to balance all the variables.
JUMPING IN WITH BOTH FEET
When it comes to inventory-balancing technology, retailers have other tools at their disposal as well. Another type of software for the job is an order management system (OMS), a critical tool for coping with overstocks in any location, says Carson Krieg, industry solutions + strategy, last mile, at project44, a provider of freight data and supply chain visibility solutions.
Typically, the best results come when a retailer has both OMS software and a limited number of stock-keeping units (SKUs), he says. That combination allows companies to choose the most efficient option. Three common choices are: 1) to deploy inventory to multiple microfulfillment centers (MFCs) that are dedicated to shipping orders; 2) to rent short-term shared warehouse space through a marketplace like Flexe,Flowspace, or Stord; or 3) to use their own brick-and-mortar locations in the local market and implement a ship-from-store strategy.
But of course, not every company is able to take full advantage of those options; many lack the necessary software or have an extensive product catalog. “If the retailer has a [large] number of SKUs, it may not benefit [it] to implement an MFC strategy due to the storage costs in local markets. It will depend on the maturity of [the retailers’] pick, pack, and ship processes and their cost to stock additional forward inventory,” Krieg says.
When it comes to clearing out their overstocked warehouses and reining in their storage costs, companies today have more choices than ever before. Among other options, they can ease the pressure by turning to liquidation websites, Amazon partnerships, shared warehouse space, and hybrid retail/DC facilities.
Choosing among those options may not be easy, but with the right logistics partners and finely tuned software, warehouse leaders can realistically assess the costs and benefits of every choice. No option offers a silver bullet, but experts say that strategies abound for managing the nation’s inventory glut.
Fruit company McDougall & Sons is running a tighter ship these days, thanks to an automated material handling solution from systems integrator RH Brown, now a Bastian Solutions company.
McDougall is a fourth-generation, family-run business based in Wenatchee, Washington, that grows, processes, and distributes cherries, apples, and pears. Company leaders were facing a host of challenges during cherry season, so they turned to the integrator for a solution. As for what problems they were looking to solve with the project, the McDougall leaders had several specific goals in mind: They wanted to increase cherry processing rates, better manage capacity during peak times, balance production between two cherry lines, and improve the accuracy and speed of data collection and reporting on the processed cherries.
RH Brown/Bastian responded with a combination of hardware and software that is delivering on all fronts: The new system handles cartons twice as fast as McDougall’s previous system, with less need for manual labor and with greater accuracy. On top of that, the system’s warehouse control software (WCS) provides precise, efficient management of production lines as well as real-time insights, data analytics, and product traceability.
MAKING THE SWITCH
Cherry producers are faced with a short time window for processing the fruit: Once cherries are ripe, they have to be harvested and processed quickly. McDougall & Sons responds to this tight schedule by running two 10-hour shifts, seven days a week, for about 60 days nonstop during the season. Adding complexity, the fruit industry is shifting away from bulk cartons to smaller consumer packaging, such as small bags and clamshell containers. This has placed a heavier burden on the manual labor required for processing.
Committed to making its machinery and technology run efficiently, McDougall’s leaders decided they needed to replace the company’s simple motorized chain system with an automated material handling system that would speed and streamline its cherry processing operations. With that in mind, RH Brown/Bastian developed a solution that incorporates three key capabilities:
Advanced automation that streamlines carton movement, reducing manual labor. The system includes a combination of conveyors, switches, controls, in-line scales, and barcode imagers.
A WCS that allows the company to manage production lines precisely and efficiently, with real-time insights into processing operations.
Data and analytics capabilities that provide insight into the production process and allow quick decision-making.
BEARING FRUIT
The results of the project speak for themselves: The new system is moving cartons at twice the speed of the previous system, with 99.9% accuracy, according to both RH Brown/Bastian and McDougall & Sons.
But the transformational benefits didn’t end there. The companies also cite a 130% increase in throughput, along with the ability to process an average of 100 cases per minute on each production line.
Artificial intelligence (AI) and the economy were hot topics on the opening day of SMC3 Jump Start 25, a less-than-truckload (LTL)-focused supply chain event taking place in Atlanta this week. The three-day event kicked off Monday morning to record attendance, with more than 700 people registered, according to conference planners.
The event opened with a keynote presentation from AI futurist Zack Kass, former head of go to market for OpenAI. He talked about the evolution of AI as well as real-world applications of the technology, furthering his mission to demystify AI and make it accessible and understandable to people everywhere. Kass is a speaker and consultant who works with businesses and governments around the world.
The opening day also featured a slate of economic presentations, including a global economic outlook from Dr. Jeff Rosensweig, director of the John Robson Program for Business, Public Policy, and Government at Emory University, and a “State of LTL” report from economist Keith Prather, managing director of Armada Corporate Intelligence. Both speakers pointed to a strong economy as 2025 gets underway, emphasizing overall economic optimism and strong momentum in LTL markets.
Other highlights included interviews with industry leaders Chris Jamroz and Rick DiMaio. Jamroz is executive chairman of the board and CEO of Roadrunner Transportation Systems, and DiMaio is executive vice president of supply chain for Ace Hardware.
Jump Start 25 runs through Wednesday, January 29, at the Renaissance Atlanta Waverly Hotel & Convention Center.
The new cranes are part of the latest upgrades to the Port of Savannah’s Ocean Terminal, which is currently in a renovation phase, although freight operations have continued throughout the work. Another one of those upgrades is a $29 million exit ramp running from the terminal directly to local highways, allowing trucks direct highway transit to Atlanta without any traffic lights until entering Atlanta. The ramp project is 60% complete and is designed with the local community in mind to keep container trucks off local neighborhood roads.
"The completion of this project in 2028 will enable Ocean Terminal to accommodate the largest vessels serving the U.S. East Coast," Ed McCarthy, Chief Operating Officer of Georgia Ports, said in a release. "Our goal is to ensure customers have the future berth capacity for their larger vessels’ first port of calls with the fastest U.S. inland connectivity to compete in world markets."
"We want our ocean carrier customers to see us as the port they can bring their ships and make up valuable time in their sailing schedule using our big ship berths. Our crane productivity and 24-hour rail transit to inland markets is industry-leading," Susan Gardner, Vice President of Operations at Georgia Ports, said.
It appears to have found that buyer in Aptean, a deep-pocketed firm that is backed by the private equity firms TA Associates, Insight Partners, Charlesbank Capital Partners, and Clearlake Capital Group.
Through the purchase, Aptean will gain Logility’s customer catalog of over 500 clients in 80 countries, spanning the consumer durable goods, apparel/accessories, food and beverage, industrial manufacturing, fast moving consumer goods, wholesale distribution, and chemicals verticals.
Aptean will also now own the firm’s technology, which Logility says includes demand planning, inventory and supply optimization, manufacturing operations, network design, and vendor and sourcing management.
“Logility possesses years of experience helping global organizations design, build, and manage their supply chains” Aptean CEO TVN Reddy said in a release. “The Logility platform delivers a mission-critical suite of AI-powered supply chain planning solutions designed to address even the most complex requirements. We look forward to welcoming Logility’s loyal customers and experienced team to Aptean.”
Netstock included the upgrades in AI Pack, a series of capabilities within the firm’s Predictor Inventory Advisor platform, saying they will unlock supply chain agility and enable SMBs to optimize inventory management with advanced intelligence.
The new tools come as SMBs are navigating an ever-increasing storm of supply chain challenges, even as many of those small companies are still relying on manual processes that limit their visibility and adaptability, the company said.
Despite those challenges, AI adoption among SMBs remains slow. Netstock’s recent Benchmark Report revealed that concerns about data integrity and inconsistent answers are key barriers to AI adoption in logistics, with only 23% of the SMBs surveyed having invested in AI.
Netstock says its new AI Pack is designed to help SMBs overcome these hurdles.
“Many SMBs are still relying on outdated tools like spreadsheets and phone calls to manage their inventory. Dashboards have helped by visualizing the right data, but for lean teams, the sheer volume of information can quickly lead to overload. Even with all the data in front of them, it’s tough to know what to do next,” Barry Kukkuk, CTO at Netstock, said in a release.
“Our latest AI capabilities change that by removing the guesswork and delivering clear, actionable recommendations. This makes decision-making easier, allowing businesses to focus on building stronger supplier relationships and driving strategic growth, rather than getting bogged down in the details of inventory management,” Kukkuk said.