Tomorrow’s Warehouse: Analysis
warehouse automation, but ‘no lights out warehouses
planned in the short term’.
It says ‘most vendors are offering micro fulfilment
centres’ and this ties in with our earlier observations on
e-grocery. For predominately bricks and mortar retailers
it is an urgent priority to boost online offerings, and this
can include MFCs, which has the advantage of serving
online demand while also leveraging current store
footprint that may be under-utilised at present.
Dave Howorth, executive director at SCALA
summarises: ‘eCommerce is the big challenge -
warehouses which have traditionally fed other
distribution centres and stores are not best suited to
individual eCommerce picking. Companies are
evaluating solutions such as; adapting current
warehouses, adding specialist warehouses, in-store
provision or urban consolidation centres.
‘In all instances, companies are increasingly looking at
automation, robotics and AI to boost productivity,
increase accuracy and reduce reliance on staff,
particularly for handling volume fluctuations.’
Warehouse space has long been under pressure in the
UK, with demand very high for a number of years now.
According to Savills, demand for logistics property
has soared as a result of increased levels of eCommerce.
Eri Mitsostergiou, research analyst, Savills, says: 'Given
the scale of investor demand and low vacancy rates, the
prospects for logistics are the most positive, with 79%
of our markets expecting an increase in transaction
volumes in the second half of 2020.'
We asked our readers if the pandemic would
exacerbate or ease taut demand for warehouse space.
This question found our readers on a knife edge. Some
feel an economic slowdown will reduce demand, and
others feel disruption will lead to new warehouse
requirements, fuelling demand. This is reflected in our
survey results, where 47% felt the pandemic would
exacerbate the space issue, and 21% felt it would ease it.
That was reflected in the comments.
One head of warehousing explains ‘warehouse space
was tight before. Will elements of reduced activity result
in less space? Probably not, we have to hold what we
have’. Another says ‘businesses will undoubtedly want
to hold more stock as they were caught out by just-in-time.
Clients are already building stockpiles for a second
On the other hand, one respondent sees the market
easing as there will be ‘fewer companies vying for the
space’. A respondent who works for a large
manufacturer in a logistics role adds ‘we have just
upgraded our racking and this has enabled us to create
more space’. But due to the pandemic, ‘our home
customers are buying only what they need so we are
making less product’.
Interestingly, warehouses are quickly adapting to the
situation, with one respondent saying ‘staff have got
used to being more economical with space, helped by
increased use of IT’.
Not every company has been so fortuitous however,
and many are questioning the limits of the lean
philosophy they have pursued so long. Steve Purvis,
operations director at Bis Henderson Space says
‘businesses may well be considering a reversal of
thinking on running lean supply chains with low
inventory cover. This is likely to lead to increased levels
of inventory being held over the long-term, with a
subsequent upsurge in demand for warehouse space’.
Dave Howorth, executive director at SCALA adds 'a
variety of factors mean that requirements for
warehouse space are virtually certain to increase in the
foreseeable future. These include the high volume of
non-food goods transported to the UK throughout the