no DC is an island

Speaking at a roundtable discussion at the Massachusetts Institute of Technology a few years ago, the top logistics officer for one of the world's biggest consumer goods manufacturers minced no words: "Nothing good happens in a warehouse," he said. As he saw it, goods just became obsolete, suffered damage or disappeared while his company paid to keep them there.

Whether his assessment of warehousing at that time was fair is irrelevant in 2003. The business has come so far so fast in the last decade that the traditional storage depot could soon wind up on the endangered species list.

The intense focus on improving inventory velocity throughout business supply chains has forced major changes on most of those facilities—whether private warehouses, public warehouses or third-party service operations. As professors Arnold Maltz and Nicole DeHoratius reported during a presentation at the Warehousing Education and Research Council in San Francisco last month, the traditional warehouse is no more. "Increasingly, fast response is the issue," Maltz said. "Forget about storage. You have to discuss flow and process." And as the warehouse rapidly evolves into the distribution center, operations center, return center or fulfillment warehouse, he added, it's becoming an integral part of the supply chain,not a stand-alone way station.

In deed, giving lie to a prediction widely circulated not all that long ago that the warehouse would disappear, distribution centers today are evolving into crucial hubs in supply chain networks. They're moving goods to market more ef fectively than ever before and taking on value-added functions that they can perform more efficiently than any other link in the chain.

But there's more change to come,and keeping up's not going to be easy. Cost pressures won't ease anytime soon. The complexity of the technology involved demands a better-educated workforce and increasingly sophisticated support. And all too often, senior management still doesn't get it. Like the roundtable speaker, too many CEOs see logistics operations as a mere cost center - as if goods have much value if they don't get to the shelf on time.