UKWA National Conference 2019  Recap...All You Need to Know!

 

The UKWA helds its national conference at the majestic Hallmark Hotel Chester The Queen on 5th - 6th March, as it celebrates its 75th anniversary. SEC Storage was delighted to attend with over 120 delegates for two days of thought leadership, panel discussions and networking.

 

Transforming Logistics for the Digital World - People - Performance - Productivity - Profits was the theme of the 2019 conference. Unsurprisingly, Brexit was a recurring theme this year (as it was in 2018) as well as what logistics businesses need to do to become digital, attract talent and add value, so that the industry is not so low margin.

 

In case you couldn't make it, we've compiled the top headlines and topics below as a view of what 2019 holds.

1) Positive in the face of Brexit

 

Walter Boettcher of Colliers International again kicked off the conference, setting the scene of the last 12 months and present day from an enconomists viewpoint.

 

It was a mixed view from Walter. Although GDP growth is the slowest in 6 years with business investment down four consecutive quarters at -3.7%, companies seemingly have the cash to spend, they are just waiting for certainty over Brexit. Similarly, the Chancellor has increasing fiscal flexibility as tax receipts are up and expenditure is down (or more controlled), with what looks like a budget surplus. The gap is actully depreciating public sector assets.

 

The real economy which includes production and public consumption remains fairly resilient however the balance sheet economy is now under performing the real economy economy owing to the Brexit referendum.

 

In the retail sector, non-store sales are up 37.8% since the Brexit vote and store sales up 5%.

 

With Brexit high on the agenda, Walter's view is that a hard Brexit is looking less likely. The EU have contigency plans in place for a hard Brexit including airline landing rights, fishing rights and visas for workers. All providing the UK reciprocates with EU member states. There is increasing probablity of an agreed deal to prevent postponement, which he believes is the worst case for business based on the uncertainty.

 

Overall, the economic landscape is looking positive, however this all depends on the Brexit outcome. Good news!

 

Image Right: Photo by UKWA on Twitter

Walter Boettcher, Colliers International - UKWA National Conference 2019

Impacts of Brexit...
 

Short-term - 3 to 6 months
sterling volatile, inflationary pressure, real wage growth and spending reduced, QE  & base rate cut?

 

Medium-term - 6-18 months
sterling stable, monetary policy normalised, business organic investment recovers

 

Long-term - 18 months+
strategic investment returns


- Walter Boettcher, Senior Economist at Colliers International

2) Property is all ok...so far...for now…

 

Second up at the UKWA National Conference 2019 was Location, Location, Location from Kevin Mofid of Savills.

 

With logistics and warehousing on the front pages, there seems to be evidence of stockpiling but this is seemingly having little impact on the property markets. UK factories are stockpiling at the fastest rate in history of all G7 states. But this seems to be in grey space i.e. existing capacity.

 

The good news for any businesses looking for a new warehouse is that 11m sq/ft is currently being speculatively built across the UK, the highest since 2006 with the average warehouse size now at 300,000 sq/ft. That said, 2/3's of available space is below 200,000 sq/ft, good news for SMEs. Kevin also mentioned that one of the biggest speculative built warehouses, Altitude MK is no longer on the market...

 

Owing to vacancy rates rising (West Midlands 10%; South East 8%) this is good news for tenants but bad news for landlords, unlike last year where it was all positive for landlords.

 

In term of innovation, G Park Docklands, the first UK multi-storey warehouse will soon be submitted for planning and these types of warehouses will become part of the future owing to policy intervention. There is also 2.1m sq/ft of underground space potentially available in an aggregates quarry that will have a concrete cap under the Heathrow flight path.

 

Image Right: Photo by UKWA on Twitter

Kevin Mofid, Savills - UKWA National Conference 2019

Things are just right...for now!

 

Many things are different to 2006/2007

  • Market has doubled
  • Supply and vacancy has fallen
  • Structural changes have some way to go
  • Known unknowns could be in our favour?

Supply is increasing

  • There is more choice in the market
  • Landlords are being creative with deal terms

- Kevin Mofid, Director of Commercial Research at Savills

3) Communication with clients is key in a digital world...

Gavin Masters from Maginus kicked off the day 1 afternoon session with logistics being the new retail as a theme.

 

Interestingly, it was highlighted that in a bid to meet consumer demand for next-day delivery and actually offering this, it was self-inflicted pain by retailers. It was seen as a form of customer service, but instead it was about the ease of buying and impulse buying. This in turn has resulted in increased returns, adding costs and complexity to the supply chain.

 

Retailers are failing to evaluate the true cost of their eCommerce operations, with too many external factors and no visibility in one place and therefore can't ensure it is profitable. It is therefore important to maintain a commercial performance baseline, measuring the true impact of a promotion, event or outage and mitigate the cost of upgrading aging platforms.

 

So what can UKWA members, especially those offering fulfilment services for retail clients do?

 

You need consistent two-way communication with clients to understand the demand in the supply chain, including the marketing plan in order to predict peak periods. For example promotions on end-of-season fashion items will likely see increased sales but also increased returns, but what do you do with these obsolete products?

 

KPIs are important! Use them to measure cost per order, cost per order line, cost per consignment and percentage of revenue cost to fulfil!

 

Image Right: Photo by SHD Logistics on Twitter

Natash Tyrell, BearingPoint - UKWA National Conference 2019

Because succeeding online is in a thousand little details

 

"Use big-data and data at your disposal to plan and remain agile, don't react to situations"


- Gavin Masters, Industry Principal for eCommerce at Magnius

4) Developing a digital strategy starts with a vision…

Jeremy Hammant from BearingPoint presented the importance of logistics businesses having a digital strategy in order to succeed in the modern Industry 4.0 that we live in.

 

Customers are digital, products are digital, channels are digital, insights are digital, competitors are digital, operations are digital.

 

There are 12 key digital technologies to consider:

 

  1. Social
  2. Agile technologies (software)
  3. Extended reality (virtual reality picking etc)
  4. Cloud
  5. Intelligent Process Automation
  6. 3D printing/additive manufacturing

 

With the following of particular importance to logistics:

 

  1. Internet of Things (connected products such as forklifts)
  2. Autonomous vehicles
  3. Machine learning and AI (he cited an example of a French retailer that would complete picks before they had been ordered, owing to predictive technology)
  4. Physical automation (such as exosceletons)
  5. Mobile
  6. BlockChain

 

This all seems very daunting for logistics businesses, particularly the SME membership base within the UKWA. However, you just need to start with a vision. This vision should then just be implemented like any other business strategy.

 

Jeremy had a success rate of 75% on a study in back in the early 1990's in relation to predicting digital trends, so expect at least 75% of the 12 digital technologies to become part of normal life!

 

Image Right: Photo by UKWA on Twitter

Jeremy Hammant, BearingPoint - UKWA National Conference 2019

Pilot applications already up and running in the industry...

 

  • Blockchain  - traceability, e-contract and identity verification
  • Intenet of Things disrupters - removing traditional sales channels (e.g. call centres) and using online platforms to sell services
  • Autonomous vehicles - long haul driver guided convoys and smaller customised vehicles (home delivery drones/robots)
  • Machine learning and AI - provide actionable insight into supply chain data, predictive algorithms estimate delays, identify patterns and simulate solutions
  • Mobile and consumer expectations - always on, always available, instant gratification, convenience
  • Warehouse automation & robotics - increase throughput, lower staff costs, maximise space utilisation


- Jeremy Hammant, Senior Advisor at BearingPoint

Top Tweets from the Conference. Follow the story at #UKWANatConf2019...

5) Logistics Users Panel Discussion

The newest category of UKWA members, Logistics Users, held a panel discussion with questions from the delegates and insights into their logistics operations. It featured Dixons Carphone, Pentland Group, John Lewis and Urban Outfitters.

 

John Lewis is obsessed with their cost-to-serve because 50% of their sales are online. On average it cost £5 to serve a Click & Collect order, but this would be for values of products below £5. Now they have a £30 minimum order charge for Click & Collect orders. They believe at somepoint in the future eCommerce customers across the industry will be expected to contribute to the cost-to-server as current models are unsustainable. This was echoed by all the Logistics Users.

 

Digital is central to the John Lewis business having invested £350m including customer analytics! They try and get total supply chain visibility. For example they know 9.32pm is the optimum time for dresses to be ordered by women, 50% of which are returned whereas just 10% of menswear is returned! Year-on-year figures is that footfall is up to stores. John Lewis believe customers may be priced back to the high street, when they can get the same products at the same price as online, without having to pay the cost-to-serve (P&P, delivery).

 

Dixons Carphone had the desire to serve 85% of the UK on a next-day basis. However the impact was an extra trailer to Scotland overnight, to deliver a washing machine which only made a £12 margin. Their cost-to-serve was unsustainable, and they couldn't do everything for everybody.

 

Now more customers actually want added value offerings such as having products installed and old products disposed of, which means delivery charges covering the cost-to-serve are more accepted.

Logistics Users Panel Discussion - UKWA National Conference 2019

The Pentland Group say returns are a key part of a retailers proposition and so it needs to be as efficient as possible, and as lean as possible. In terms of their growth into new markets, they are looking to utilise trusted partners including Amazon, JD and Alibaba.

 

Urban Outfitters are saying that the interoperability of all stocking points (stores, fulfilment centres, overseas stockists) has been key with speed and seasonlity demands. They are considering actually stocking in China but don't want product to sit on an "island" which they cannot access stock for the rest of the world.

 

They are actually working with a partner in the US on an algorithm for returns. If it is a previously marked down item that is no longer stocked (i.e. end of line) then they will tell the consumer to keep it, rather than send it back.

 

Their online sales are approaching 40% and will easily hit 50% in the future.

 

Image Above: Photo by SHD Logistics on Twitter

Collaboration is the future...
 

"It's all about collaboration - why not collaborate in delivery to outlaying areas in the UK having multiple different retailers delivered in one vehicle, from multi-operator sites."


- Rob Redmile, Head of Planning and Transport at Dixons Carphone

6) Yep, the B-word!

Brexit brexit brexit! The finale to the first day of the UKWA National Conference 2019 took look at Brexit and the progress since the 2018 Conference, which, there didn't seem to be.

 

Karen Wheeler CBE (Director General for Border Co-ordination) was due to speak but was unable to attend, so a colleague from the Border Delivery Group attended.

 

The good news? The Border Delivery Group has been working on the worst case No Deal Brexit, to ensure that there is just one standard to comply. The government have prioritised flow at the borders and there will be no changes to checking of goods crossing the border. If it was good enough for 28th March, it will be good enough for 29th March.

 

A new Partnership Pack is available on the gov.uk website which summarise the Technical Notices previously issued.

 

A new portal is also available called EU Exit which has information in plain English and videos are also available on the HMRC YouTube Channel which includes 60-second bitesize clips. Soon to be published is a new resource focusing on the Dover & Folkestone to Calais short straits.

 

There will be a surge of information in the next 21 days!

 

So, there was no major news delivered by the Border Delivery Group, but seemingly HM Government are not resting on their laurels. Lets hope Parliament can strike a deal soon for certainty!

Do you have a contingency plan?
 

"Stockpiling is only a short-term solution so you need a contingency plan, or start planning for Brexit. End-to-end supply chain and just-in-time production will be a real issue."


- Pierre Ligouri, Managing Partner of Tokema International

7) Benchmark to improve...

Lynn Parnell of Logistics Partners presented the recent updates to the UKWA Benchmarking Survey and why you should Benchmark.

 

If you are a UKWA member, you can contribute to the UKWA Benchmarking Survey (which gets you access to the results) that collaborates with the Warehousing Education and Research Council in the United States. There are 30 Benchmark questions to measure against, using your own data to contribute to the report and compile everything into comparable data.

 

Benchmarking can seem daunting, so you should only measure yourself against your own USPs; there is no need to measure everything! So if you aim to be the cheapest, measure against cost, if you plan to deliver the quickest, measure against speed and so on.

 

Image Above: Photo by SHD Logistics on Twitter

Lynn Parnell, Logistics Partners - UKWA National Conference 2019

Why Benchmark?
 

"Benchmarking enables you to know if you are out-performing your competitors, measuring and auditing your operation against specific KPI's in order to improve and differentiate your business. It should be used to facilitate growth"


- Lynn Parnell FCILT, Independent Logistics Consultant at Logistics Partners

What did we learn? A summary.

 

The two-day UKWA National Conference was as always full of insight and trends for any warehouse operator or logistics provider.

 

It was an interesting conference with juxtaposition. It started off very positive, with relatively good economic outlook despite the Brexit uncertainty. And the property sector is looking favourable for logistics and warehouse operators, rather than landlords.


That said, it was clear the industry is struggling with its low margin reputation and the pressure the eCommerce part of the industry is putting on the supply chain and costs. There needs to be significant change in order to recoup the cost-to-serve and demands of consumers on free-delivery. It is just not sustainable.

 

There was also stark reminders on Day-2 that the industry is struggling to attract talent, with the industry not having an attractive proposition.

 

Without doubt, 2019 could be the most pivotal years for logistics since the UKWA inception at the end of World War II in 1944. But, the industry survived then and will no doubt survive 2019 and beyond!

 

The next UKWA Conference will be nearly 12 months since the UK leaves the EU (assuming there is no postponement) so we look forward to seeing how the logistics world has changed...

 

Post by Dean Kahl