Connecting the Dots — The Effects of the Pandemic and Russia's Invasion on Your Operational Costs
The Covid-19 pandemic and Russia’s invasion of Ukraine have at least one thing in common; they’re wreaking havoc on the global supply chain. Between rising inflation, labor shortages, and the inability of production to keep up with commodity demand, it can feel like a terrible time to be in an industry that relies heavily on the global supply chain. What can the pandemic and Russo-Ukrainian War tell us about where the supply chain is headed and more importantly, how can we be prepared to rise to the challenge?
The Covid-19 Ripple Effect
Though the pandemic drastically accelerated trends in e-commerce, consumer practices have been shifting more and more towards digital in the past decade. Working from home caused some additional increase in online retail sales – which is not at all surprising – but the growth rate at which certain online services were used was completely unprecedented. Prior to the pandemic, a statistically negligible number of Americans shopped for groceries online. In September of 2021, 64 million American households placed an online grocery order, according to a Brick Meets Click/Mercatus survey. That’s almost half of U.S. households!
Furthermore, as vaccines were made widely available and consumers returned to brick and mortar stores, e-commerce numbers remained high, indicating that consumers weren’t just shopping online because it was the only option.
So, what’s the upshot of this increased online shopping? Thanks to site models like Amazon, consumers want a huge variety of products at their fingertips, but they also want them fast. This forces distribution centers to carry a much wider variety of SKUs, while maintaining the most efficient possible picking processes. A tall order to be sure!
Russia's Invasion And The Global Economy
The impact of the pandemic on supply chains is clear, but what is Russia’s invasion of Ukraine doing to the global economy?
On one hand, there are direct consequences. Ukraine is one of the world’s major suppliers of corn, wheat, barley, and rye, and exports from Ukraine have all but ceased, partially due to Russian blockades of major Ukrainian shipping ports.
On the other hand, and probably even more economically damaging, there are indirect consequences. Russian sanctions and counter-sanctions have radically altered the availability of resources and technology. The most tangible impact of these sanctions is one we’ve all felt – rising gas prices.
The closing of Russia’s airspace and modification of shipping routes have also impacted physical supply lines. This has caused the cost of shipping to increase dramatically. Fourkites data indicates that shipments from Shanghai to Rotterdam were around $2,000 per container before war broke out. Now, the same shipment can cost upwards of $54,000!
This graph illustrates the abrupt rise in global shipping prices
How Can Voice Picking Help?
To recap, global supply chain issues are requiring distributors to carry a wider variety of products, deliver the products quicker, and spend more money than ever on shipping. Voice picking workflow solutions are a great way to address these issues.
Voice picking is completely hands-free and automated, so it allows for the high variety of SKUs that consumers desire without sacrificing time spent picking. Warehouse workers are guided directly to their destination.
Because workers can pick items more efficiently, this also decreases turnaround time in preparing the items for shipping, which completes orders faster.
Finally, voice picking systems are highly accurate. By making sure that every order that leaves the warehouse is accurate, an enormous amount of money is saved on shipping costs. There’s also no worry of incorrect orders being returned, or creating disgruntled customers.
Implementing voice picking technology in your warehouse is a great way to address current supply chain problems and get ahead of future ones. Mountain Leverage has specialized in voice picking design, implementation, and support for nearly 30 years as we’ve helped DCs achieve higher productivity, greater performance, and meaningful savings through our solutions.
Interested in learning more about how we can help improve your warehouse productivity? Contact us today.