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Supply Chain News: Thoughts on the DCs of the Future in the Face of Changes in Requirements and Technology


New Report from Cushman & Wakefield Includes Design Criteria to Keep New DCs Competitive for Years

Sept. 5, 2019
SCDigest Editorial Staff

How are technology and trends in ecommerce going to impact distribution center design?

The real estate pros at Cushman & Wakefield recently released a report analyzing these questions and which provides some excellent insight for logistics managers.

First comes some baselining. The report notes that a full 29% of distribution center space is located in the port markets of Los Angeles and the Inland Empire, New Jersey and the major distribution hubs of Chicago and Atlanta.

Supply Chain Digest Says...

The report also observes that the DC or the future will not just be built for people - but also for robots. Accommodating robotics "will require modernization of existing space as well as implementation of smart technology."

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"However, supply chain technologies will redefine where logistics facilities need to be located; they will also define what is considered a warehouse, particularly in relation to mixed-use spaces that might include warehousing," Cushman and Wakefield says.

It adds that the two underlying factors shaping logistics networks are urbanization and the ever-increasing service-level migration to next day/same day service.

The report also notes that while still likely many years away, autonomous trucks have the promise of significantly reducing transportation costs, making remote locations, such as secondary/tertiary markets, more attractive.

But before autonomous trucks, drones may plan a big role in reducing last mile delivery costs. The report notes that according to ARK Invest, a product delivered by a drone could cost as little as $1.00 compared to $8.99 for a comparable delivery using a parcel truck today. [SCDigest notes that $8.99 number today is generally too high.]

To communicate the evolution of distribution networks, the report provides the graphic below, showing the different options for managing rapid shipping of ecommerce orders.

The report also notes that 60% of currently available US logistics space is more than 20 years old – really built before ecommerce took off - and that over half of it has clear heights lower than 28 feet. In addition, availability rates are at record lows.


"Both factors mean there are limited options for tenants seeking modern space," the report says. "On the positive side, speculative projects under construction are also at historic highs; consequently, some of this demand will be met."

In recent times, warehouses have become bigger and taller. The report says this trend will continue as the pace of automation/robotics implementation accelerates.

In fact, the average rentable building area for newly delivered warehouse product has increased by 60% nationally over 20 years. The average clear height for a new 300,000-sf warehouse has increased from 25 feet clear to 32 feet clear with a move toward 36 feet. In mega-sized distribution buildings, 36 foot clear height is common, with some rising past 40 feet in modern fulfillment centers for some retailers.

The report also notes that when clear height exceeds 32 feet, floor flatness may require tighter specifications to ensure the stability of the rack and high reach fork trucks. Extra flat floors also may be needed for mobile robots, as they are today for very narrow aisle trucks.

The report also says that near urban cores, distribution facilities will have much smaller footprints and be less automated than regional distribution centers (labeling, stocking, and picking). These locations are more likely to maintain lower ceiling heights for high-velocity goods.

Due to the high cost of urban space, the report says "some warehouse capabilities will likely be integrated into existing infrastructure, taking below-grade space in high street retail and multifamily. Repurposing some of this space is a less costly alternative and inventory would be limited to high-velocity goods. The inclusion of warehousing in these typical mixed-use assets will be innovative."

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The report adds that in these new times, dock efficiency will become highly important to reduce cycle times and get products into the DC for pickin and shipping faster – and that technology to enhance dock performance, such as tracking how often levelers have been used to adjust maintenance schedules on them.

If you are building a new DC, the report offers handy graphic that suggests design criteria to ensure the facility stays competitive for years to come, as shown below.

The report also observes that the DC or the future will not just be built for people - but also for robots.

Accommodating robotics "will require modernization of existing space as well as implementation of smart technology. Redesign of warehouses will likely include repurposing employee parking and break rooms which could be converted to logistics space, increasing the built inventory" Cushman & Wakefield says.

The full report is available here: Tech Disrupters and the Supply Chain Part

What's your take on this report's analysis and predictions? Let us know your thoughts at the Feedback section below.




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