Our tendency is to raze old buildings and build something new and state of the art on the site. But with warehouses and DCs, that could be a costly and unnecessary move.
Art van Bodegraven was, among other roles, chief design officer for the DES Leadership Academy. He passed away on June 18, 2017. He will be greatly missed.
If you're familiar with Oscar Wilde's only novel, The Picture of Dorian Gray (ourselves, we read the Classic Comics version), you know it tells the story of a portrait that aged, while its subject remained youthful in appearance. Our theme is the facility that superficially ages, while its functionality remains viable. (We will omit any parallels with the debauchery that permeates the book.)
Oldies but goodies
Ultimately, the only thing that can completely wipe out the utility of a warehouse or DC is a very bad floor. In parts of Texas, for example, untreated soil can shift and render floors unusable. A poor-quality floor can also pose hazards to sanitation systems. For that reason, special care is required to have good floors in the "meadowlands" (i.e., swamps) of New Jersey, not to mention to avoid discovering Jimmy Hoffa. In other parts of the world, quality shortcuts can result in floors that are able to swallow forklifts whole.
Absent floor problems, however, facilities can have a long useful life. For instance, a Philadelphia company that has been in business since the 1830s still uses a number of buildings that pre-date the Civil War as storerooms and mini-warehouses. Constructed by immigrant Moravian craftsmen whose only experience was in building churches, the buildings are paragons of quality and are strangely beautiful, with arches, windows, and vaulted ceilings. Some of the company's other facilities still use the ramps built for horse-drawn wagons for truck and car access.
Dependable Distribution Centers in Los Angeles is located in a five-story, 1.5 million-square-foot building that dates to the 1970s. It is the largest public storage facility under one roof in the United States.
Richmond, Va.-based Cockrell Distribution Systems operates public warehouses that are 40 and 50 years old. Even though their clear heights are low by today's standards, the well-maintained (and paid-for) buildings offer both quality and very flexible pricing in competitive situations.
But that's not to say things always work out so well. There are, sadly, cases in which an older facility is not suitable for warehousing and distribution. These often involve functional mismatches that should never have been attempted in the first place.
We recall the home goods importer and distributor that stored pallets and filled retail orders from within the labyrinthine maze of a low-ceilinged former textile mill, with many small rooms and narrow passages. The owner could not—and cannot to this day—get past the notion that the building was practically "free," no matter the cost of its manifold inefficiencies.
Then, there was the uncommonly thrifty grocer that attempted both manufacturing and distribution from a 19th century "plant" that would have made sweatshops look good by comparison. Even though inbound and outbound trucks clogged narrow and twisting city streets for endless blocks, the grocer couldn't resist the lure of a "free" facility.
Reuse, recycle ...
But cases of misapplication and failing floors aside, older buildings don't have to be abandoned or razed. Repurposing, creative process design, and practical technology applications can all help keep ageless facilities useful. In an ever-more-green supply chain universe, recycling and reusing buildings seems timely and appropriate.
Selected and targeted technology can help keep older buildings relevant. Vertical reciprocal conveyors (VRCs) can replace elevators in multistory facilities, reducing cost and risk, and improving speed and reliability.
Robotics can be game-changers in ageless facilities. Automatic guided vehicles (AGVs) can "see" where they are going. Converting current rolling stock into operator-less lift trucks can reduce labor—and risk. In a building that might not be efficient—for reasons of sheer size or structural complexity—the added time of robotic movement becomes a relatively trivial factor when compared with the cost of time lost by workers to travel.
To be honest, which we sometimes try to be, the absence of complex technology can also help the ageless facility stay in the game. An empty room offers enormous flexibility when it comes to potential applications and uses.
Granted, yesterday's pallet-in/pallet-out storage facility might not be the right foundation to convert into a high-volume retail or consumer fulfillment center. But it could be very useful for storage—either primary or overflow—and low- to moderate-volume transaction processing. It's really all a matter of finding the right role for the building in the greater scheme of supply chain things. And understanding the difference between problem-solving technology and gee-whiz shiny new things.
Remember, even the aged Inuit who is only good for chewing leather into a useful state of pliability is providing societal value while others go out to hunt seals.
“While there have been some signs of tightening in consumer spending, September’s numbers show consumers are willing to spend where they see value,” NRF Chief Economist Jack Kleinhenz said in a release. “September sales come amid the recent trend of payroll gains and other positive economic signs. Clearly, consumers continue to carry the economy, and conditions for the retail sector remain favorable as we move into the holiday season.”
The Census Bureau said overall retail sales in September were up 0.4% seasonally adjusted month over month and up 1.7% unadjusted year over year. That compared with increases of 0.1% month over month and 2.2% year over year in August.
Likewise, September’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were up 0.7% seasonally adjusted month over month and up 2.4% unadjusted year over year. NRF is now forecasting that 2024 holiday sales will increase between 2.5% and 3.5% over the same time last year.
Despite those upward trends, consumer resilience isn’t a free pass for retailers to underinvest in their stores by overlooking labor, customer experience tech, or digital transformation, several analysts warned.
"The 2024 holiday season offers more ‘normalcy’ for retailers with inflation cooling. Still, there is no doubt that consumers continue to seek value. Promotions in general will play a larger role in the 2024 holiday season. Retailers are dealing with shrinking shopper loyalties, a larger number of competitors across more channels – and, of course, a more dynamic landscape where prices are shifting more frequently to win over consumers who are looking for great deals,” Matt Pavich, senior director of strategy & innovation at pricing optimization solutions provider Revionics, said in an email.
Nikki Baird, VP of strategy & product at retail technology company Aptos, likewise said that retailers need to keep their focus on improving their value proposition and customer experience. “Retailers aren’t just competing with other retailers when it comes to consumers’ discretionary spending. If consumers feel like the shopping experience isn’t worth their time and effort, they are going to spend their money elsewhere. A trip to Italy, a dinner out, catching the latest Blake Lively and Ryan Reynolds films — there is no shortage of ways that consumers can spend their discretionary dollars,” she said.
Editor's note:This article was revised on October 18 to correct the attribution for a quote to Matt Pavich instead of Nikki Baird.
The market for environmentally friendly logistics services is expected to grow by nearly 8% between now and 2033, reaching a value of $2.8 billion, according to research from Custom Market Insights (CMI), released earlier this year.
The “green logistics services market” encompasses environmentally sustainable logistics practices aimed at reducing carbon emissions, minimizing waste, and improving energy efficiency throughout the supply chain, according to CMI. The market involves the use of eco-friendly transportation methods—such as electric and hybrid vehicles—as well as renewable energy-powered warehouses, and advanced technologies such as the Internet of Things (IoT) and artificial intelligence (AI) for optimizing logistics operations.
“Key components include transportation, warehousing, freight management, and supply chain solutions designed to meet regulatory standards and consumer demand for sustainability,” according to the report. “The market is driven by corporate social responsibility, technological advancements, and the increasing emphasis on achieving carbon neutrality in logistics operations.”
Major industry players include DHL Supply Chain, UPS, FedEx Corp., CEVA Logistics, XPO Logistics, Inc., and others focused on developing more sustainable logistics operations, according to the report.
The research measures the current market value of green logistics services at $1.4 billion, which is projected to rise at a compound annual growth rate (CAGR) of 7.8% through 2033.
The report highlights six underlying factors driving growth:
Regulatory Compliance: Governments worldwide are enforcing stricter environmental regulations, compelling companies to adopt green logistics practices to reduce carbon emissions and meet legal requirements.
Technological Advancements: Innovations in technology, such as IoT, AI, and blockchain, enhance the efficiency and sustainability of logistics operations. These technologies enable better tracking, optimization, and reduced energy consumption.
Consumer Demand for Sustainability: Increasing consumer awareness and preference for eco-friendly products drive companies to implement green logistics to align with market expectations and enhance their brand image.
Corporate Social Responsibility (CSR): Companies are prioritizing sustainability in their CSR strategies, leading to investments in green logistics solutions to reduce environmental impact and fulfill stakeholder expectations.
Expansion into Emerging Markets: There is significant potential for growth in emerging markets where the adoption of green logistics practices is still developing. Companies can capitalize on this by introducing sustainable solutions and technologies.
Development of Renewable Energy Solutions: Investing in renewable energy sources, such as solar-powered warehouses and electric vehicle fleets, presents an opportunity for companies to reduce operational costs and enhance sustainability, driving further market growth.
The clean energy transition continuing to sweep the globe will give companies in every sector the choice to either be disrupted or to capitalize on new opportunities, a sustainability expert from Deloitte said in a session today at a conference in Orlando held by the enterprise resource planning (ERP) firm IFS.
While corporate chief sustainability officers (CSOs) are likely already tracking those impacts, the truth is that they will actually affect every aspect of operations regardless of people’s role in a business, said John O’Brien, managing director of Deloitte’s sustainability and climate practice.
For example, regulatory requirements on carbon emissions are expanding in every region, which means that even if a specific company doesn’t have to change its own practices, it will almost definitely need to flex to accommodate its partners and suppliers as they track scope 3 emissions or supply chain practices.
Likewise, companies are starting to challenge the classic concept of “force majeure” events than can cancel service providers’ contractual duties due to unforeseeable weather events. As the new argument goes, extreme weather patterns increasingly occur in accordance with climate scientists’ forecasts, so those hurricanes and wildfires are in fact foreseeable after all.
But one strategy for coping with the cost of those changes is to mine the power of the data that most companies will soon need to collect as part of their evolution. Instead of simply tracking its trucks to trim their routes and emissions, a transportation company could use the same data to manage their maintenance and fuel consumption.
“The climate management transition is going to be a massive disruption, but with that comes massive opportunity,” O’Brien said from the keynote stage at the “IFS Unleashed” show. “Don’t waste compliance efforts just on compliance, use it to create new value. You’re collecting all that new data, so use it!”
A real-time business is one that uses trusted, real-time data to enable people and systems to make real-time decisions, Peter Weill, the chairman of MIT’s Center for Information Systems Research (CISR), said at the “IFS Unleashed” show in Orlando.
By adopting that strategy, they gain three major capabilities, he said in a session titled “Becoming a Real-Time Business: Unlocking the Transformative Power of Digital, Data, and AI.” They are:
business model agility without needing a change management program to implement it
seamless digital customer journeys via self-service, automated, or assisted multi-product, multichannel experiences
thoughtful employee experiences enabled by technology empowered teams
And according to Weill, MIT’s studies show that adopting that real-time data stance is not restricted just to digital or tech-native businesses. Rather, it can produce successful results for companies in any sector that are able to apply the approach better than their immediate competitors.
However, that trend is counterbalanced by economic uncertainty driven by geopolitics, which is prompting many companies to diversity their supply chains, Dun & Bradstreet said in its “Q4 2024 Global Business Optimism Insights” report, which was based on research conducted during the third quarter.
“While overall global business optimism has increased and inflation has abated, it’s important to recognize that geopolitics contribute to economic uncertainty,” Neeraj Sahai, president of Dun & Bradstreet International, said in a release. “Industry-specific regulatory risks and more stringent data requirements have emerged as the top concerns among a third of respondents. To mitigate these risks, businesses are considering diversifying their supply chains and markets to manage regulatory risk.”
According to the report, nearly four in five businesses are expressing increased optimism in domestic and export orders, capital expenditures, and financial risk due to a combination of easing financial pressures, shifts in monetary policies, robust regulatory frameworks, and higher participation in sustainability initiatives.
U.S. businesses recorded a nearly 9% rise in optimism, aided by falling inflation and expectations of further rate cuts. Similarly, business optimism in the U.K. and Spain showed notable recoveries as their respective central banks initiated monetary easing, rising by 13% and 9%, respectively. Emerging economies, such as Argentina and India, saw jumps in optimism levels due to declining inflation and increased domestic demand respectively.
"Businesses are increasingly confident as borrowing costs decline, boosting optimism for higher sales, stronger exports, and reduced financial risks," Arun Singh, Global Chief Economist at Dun & Bradstreet, said. "This confidence is driving capital investments, with easing supply chain pressures supporting growth in the year's final quarter."