For many wholesale distributors and manufacturers in Kenya, Uganda, and Africa at large, it’s been more than a decade since any significant changes were made to their warehouse operations or systems/software. That means warehouses are running on old technology that has great difficulty meeting the demands of a competitive, technology-enabled business. Legacy systems often mean dated business processes are still being followed, or that new processes must be jury-rigged into old systems that were never designed to support them.
With the speed of business accelerating and margins under constant attack, distributors are realizing that what might have worked fine in the past, might not work in the future or even the present. International distributors and manufacturers are finding new ways to reach customers in Kenya and Uganda, and are shipping directly to them. The stakes are high.
Critical challenges are facing wholesale distributors. Challenges include satisfying increasingly demanding customers, overcoming continuous supply chain disruption, adding value through innovative services, controlling escalating costs, managing a reluctant workforce, and gaining insight from data gathered across various systems. These challenges are wreaking havoc on warehouse operations, requiring technology investments to ensure smooth operations and the delivery of the perfect order.
Distributors whose warehouse operations are stuck in the past need to modernize. This means making a commitment to operational excellence, beginning with a modern warehouse management system (WMS) that earns the trust of everyone who depends on it. A modern WMS makes it possible to track and guide every stage of warehousing operations, enabling organizations to boost efficiency, improve customer satisfaction, eliminate costly failures, and boost employee productivity.
Here are the challenges driving the need for investment in warehouse management software in Kenya, Uganda, and worldwide
Inadequate legacy systems
Most distributor and warehouse management systems used by Kenya and Ugandan businesses are old, outdated, and unable to address the challenges they face. That’s not surprising. Systems implemented 10 to 20 years ago were not designed to address today’s challenges and complexities. And they can’t accommodate the profound technological advancements that are now commonplace.
The rise of e-commerce
Even before the COVID-19 pandemic, e-commerce was experiencing steady growth. When the pandemic arrived, it significantly accelerated e-commerce use. The COVID-19 pandemic forced B2B buyers and sellers to go digital in a massive way. What started out as a crisis response has now become the next normal, with big implications for how buyers and sellers will do business in the future.
This spike in e-commerce activity has major implications on how distributors are trying to keep up with quickly changing consumption patterns. In response to this rise in e-commerce, distributors are shifting resources and warehouse space to support the demands of labor-intensive unit picking. The need for advanced reverse logistic support has increased as returns are the new normal, and the speed at which these orders are expected to ship has accelerated the overall order fulfillment process.
The other emerging trend has become manufacturers skipping distributors and delivering to individual customers or end users themselves – which was unheard of before the COVID-19 pandemic. Since manufacturers are supplying to end users, they need to deploy systems that are used by distributors and also use the generated data to their advantage. Manufacturers’ legacy systems are therefore inadequate to handle these changes and needs.
Distributors no longer just receive and ship products. To survive, many distributors differentiate themselves in the market by expanding value-added services. Examples include kitting and assembly, maintenance and repair, rental services, and distributor-managed inventory. These labor-intensive services typically require additional warehousing space and staffing requirements, as well as re-architecting the typical flow of goods in the warehouse.
Tolerance for mistakes has plummeted while customer expectations for speed and custom specifications have grown significantly. Traditional
supply chain networks are often not built for same-day delivery with excellent service. This is an issue especially when fierce competition offers shorter delivery times with a great customer experience.
Meeting the demands of an accelerated timeline can be expensive. Some additional examples of how distributors’ margins are eroding include: excessive overtime to meet delivery dates; premium freight costs; extended cash-to-cash cycle times; poor inventory control leading to mistakes,
disappointed customers, and additional costs; and powerful retail customers with labeling requirements where failure to comply equates to fines and charge backs.
Warehouse and equipment utilization
Distributors struggle to effectively optimize their equipment and warehouse space. When under pressure, the natural tendency may be to spend more on warehouse equipment such as forklifts, pallet racks, and conveyors. Or it may seem easier to contract for more warehouse space, often at premium rates. But rather than increase costs by acquiring additional assets, distributors must better utilize the warehouse and equipment they currently possess. It’s imperative that organizations take a critical look at how they move product within their facilities. And if that process hasn’t changed in a number of years, it’s likely that improved productivity is being sacrificed for what’s comfortable and familiar.
Inventory accuracy includes not just how much inventory is on hand, but where it is in the warehouse. Inventory accuracy also encompasses tracking information about the inventory, such as lot numbers, serial numbers, expiration dates, country of origin, and ownership (distributor, vendor, or customer). Having inaccurate information not only causes confusion in warehouse operations (with wasted time and money chasing down the right information or looking for product), but also has a cascading effect on other aspects of the business, including sales and finance. In addition, if the counts aren’t right, the purchasing department doesn’t have the right information when determining what to buy, when to buy, and how much to buy.
Staffing and training warehouse employees continues to be an uphill battle for distributors. Employees are frustrated with older solutions that don’t provide easy and mobile access to information to help them do their jobs better. And the recent COVID-19 pandemic created additional challenges in the warehouse, such as having to implement and maintain social distancing and quarantine requirements. The pandemic has also made it more difficult to fill open jobs.
Distributors have limited means to proactively manage and monitor labor productivity. There’s typically no way to direct activities in the warehouse for maximum efficiency to ensure that workers are performing in the most productive fashion. It’s challenging to monitor how a person has performed each day, accounting for time and attendance. If current processes aren’t optimized, distributors can face higher operating costs and decreased customer satisfaction.
Given these conditions, distributors are faced with escalating costs and complexity, which drive demand for greater productivity in warehouse operations. For these companies to remain competitive and profitable, they must find ways to drive warehouse performance to new levels. For many, however, an existing WMS often lacks the automated capabilities necessary to increase visibility into operations, enhance market agility, and boost warehouse productivity.