There might be a new game changer in the supply chain game, and it goes by the name of on-demand warehousing. Now that might not be as sexy of a label, but the concept of it is extremely appealing to e-commerce merchants.
In actual fact, the concept is not as new as it seems. Almost everyone has heard of Fulfilment by Amazon (FBA), and that is the practice of on-demand warehousing. Companies that sell products on Amazon can choose to utilise FBA to fulfil those orders by sending their products there to be picked, packed and shipped.
That in essence, is how the idea of on-demand warehousing works. A company lacking warehouse capacity for their products have a flexible option in the form of on-demand warehousing to store inventory somewhere for an extended period of time.
In a statement published by Supply Chain Management Review, Nick Vyas from the University of Southern California said: “on-demand warehousing… makes better use of under-utilised warehouse assets for companies that need a home for inventory on a flexible basis.
“It isn’t a whole lot different than what Uber and Airbnb do in matching people to under-utilised vehicles and lodging, respectively,” he continued.
The main challenge, when it comes to on-demand warehousing, is matching up warehouses with space and companies with inventory, and finding warehouses that want to lease space short term.
Will this model of warehousing be the future considering how similar models in the form of Airbnb or Grab are so well-received? Only time will tell. But for countries that are facing challenges in land scarcity or manpower shortages, this may prove to be a feasible solution.