Modern warehousing demands intelligent risk management strategies

Smart warehousing is challenging risk evaluation

Warehouses and distribution centres have become increasingly strategic for the retail sector as it strives to meet the demands of today’s consumer.

Digitisation holds the key to boosting operational capabilities and efficiencies. The necessity of a ‘digitise to survive’ strategy was highlighted in a report by Zebra Technologies Corporation entitled, Building the Smarter Warehouse: Warehousing 2020.

It stated: “A seminal shift in how shoppers increasingly buy via multiple touch points – online from desktop computers, mobile devices and in-store – has created the need for the ‘smarter’ warehouse to serve today’s connected consumer. As retailers look to merge their brick-and-mortar and online operations to cut costs and boost efficiency, warehouse management systems must keep pace.”

As retailers create these more connected warehouses and distribution centres, they must also accept that they have fundamentally different risk profiles to their analogue predecessors.

Retailers will want to maximise the benefits created by these more modern centres and to protect the investment they have made in these increasingly strategic assets. To do this they will need to understand the scope and scale of the different exposures they bear.

Current and complete risk understanding

Smart warehouses need smart risk management strategies, and these can only be designed and implemented on the back of a granular understanding of the risk in question.

Such understanding cannot come from risk profiling that relies on historical loss statistics relating to traditional warehouses. These statistics relate to buildings that are very different to their digitised counterparts and so it is a mistake to assume they will have a similar loss experience going forward.

FM Global does not take this approach and its risk profiling and engineering is built on the detailed knowledge gained from physical surveys conducted by almost 1,900 specialist risk engineers. In total, they complete around 100,000 site visits each year and collect tens of millions of data points.

Each survey creates an in-depth picture of an individual risk. This picture can then be viewed in the context of the rich, accurate and up-to-date databank FM Global has created from all its other surveys.

These micro and macro views are further augmented by the forward-looking Predictive Analytics tools that FM Global has developed using its wealth of real-life risk data.

This risk insight gives retailers a detailed view of the changing face of risk within their digitised warehouse and distribution centres. It will also identify and quantify the exposures they face and inform them on how best to mitigate and manage them going forward.

Scientific risk understanding in practice

One of the major exposures for any warehouse is fire and risk managers will often turn to standards issued by professional bodies for guidance on what protection they should have in place.

However, not all industry guidance takes full account of the specific risks faced by the most modern digitised warehouses and distribution centres running highly automated processes. These commercial properties are evolving so quickly that it takes time for standardised codes of practice to catch up.

For example, goods in many automated centres are often stored in open-top plastic containers that burn more aggressively than cardboard or wooden equivalents. But fire protection options for open-top containers are currently outside the scope of some industry guidance.

Plastic containers create different fire and flame patterns and being open means they can collect water from sprinkler systems and prevent it cascading down over storage racks.

FM Global has identified these issues, and many others, from its risk engineering surveys. It has also designed and spent hundreds of hours testing effective solutions. These include analysis on everything from where and how sprinklers are deployed, to the difference the slope of a warehouse roof makes on a sprinkler system’s effectiveness.

Researched solutions also cover the design and configuration of storage racks, how containers can be designed and packed to allow water to better escape, and how independent aspects of a fire risk mitigation strategy can be integrated and aligned to best effect.

As the retail sector re-invents itself through Industry 4.0 companies will want to consider whether the partners that have served them well in the past are best placed to support them and their evolving assets into the future.

These companies are making multi-million-pound strategic investments in updating and reconfiguring their warehouse and distribution centres. These assets are central to their ability to reduce costs, improve operational capabilities and meet the increasing demands of their customers.

Implementing risk management strategies that are as evolved as these smart warehouses will help to prevent losses, mitigate the impact of those that do occur, and build resilience into ongoing and future operations.