Warehouse Location Automation
If a robot told you where to go, would you listen? Choosing a domestic distribution site is a well-honed science with several schools of thought. Some supply chain practitioners favor the mega-DC approach, while others use retail locations to do double-duty as efulfillment centers. Other practices include a blended approach to match evolving customer demand.
The cardinal rule, at least in days gone by, was that you’d locate your DC or warehouse near your customers to keep transport costs low, speed fulfillment, and optimize inventory investment. Does that rule still hold? Maybe not.
While current approaches have been monumentally successful and offer benefits for those who follow the rules, logistics automation—specifically new developments in warehouse automation—gives forward-thinking supply chain managers some counter-intuitive choices on warehouse or fulfillment center locations. Three factors drive that counter-intuitive thinking.
1. Products follow people and some centers of American consumption are reshuffling. “Where are my customers now? Where will they be in 5 years?” That’s hard to know. But smarter, and in some cases older, consumers who hanker for less crowded, less congested, less contested, and more clement climes are moving elsewhere as a result of the pandemic, work from home, high taxes, social challenges, onerous regulations, and other factors. Companies are planning and building a new wave of distribution assets to serve that mini migration.
2. Warehouse labor shortages in many areas. Conventional thinking was to locate a new facility in larger, more urban centers of population to gain access to a good and reliable labor pool. Yet many modern and automated DCs are less labor intensive and more labor light, meaning product can move with fewer hands on the boxes.
That also means you don’t need to locate your distribution facility in traditional urban areas. Consider that those locations are typically more highly taxed, have higher energy costs, and, in some cases, a more stringent regulatory environment, prompting the question: What am I doing here?
3. A new wave of available warehouse automation and robotics. Lower-cost, hard-working automation solutions enable you to locate your facility in sites more distant from your final mile. While it’s true that automation costs are high, amortizing those investments over time is likely to offset the costs associated with traditional locations, even accounting for higher transport costs.
New choices are here. You don’t have to be a robot whisperer to listen to where your robot tells you to go.