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The European Warehouse

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The warehouse is the workhorse of commerce and essential to economies that produce and supply goods.

A lot has changed for the format in Europe during the past twenty years. Barriers to trade and labour have eased. Global trade has increased, multiplied by infrastructure improvements and technology, radically altering purchasing habits. To the main users of warehousing; manufacturers, retailers, 3rd party logistics, we now add the consumer. The consumer as a direct end user of warehouse services represents the most fundamental shift in the market. It presents the other uses of warehousing, who have historically served consumers indirectly, with an industry defining problem: how to give just-in-time delivery of thousands of products to millions of people.

Driving Forces

One day delivery of items (and its extreme, within the hour delivery) is increasingly the goal being demanded by the new users of warehousing. The driving force why this is occurring is the rapid expansion of internet shopping. The adoption of E-commerce by consumers is altering purchasing behaviour and displacing shopping that historically took place in shops. Consumers now bypass shop based purchasing and use electronic interface to order from a “shop” that is actually a link to a warehouse. On an absolute basis, more warehouse space will continue to be required as relatively cheaper warehouse space replaces more expensive retail space, and this is consistent with what is being seen in Europe at the current time. The boundaries between retail and logistics will continue to blur. Even now, most parcel carriers have invested in last-mile ful?lment infrastructure. In some cases, a similar building to what was there before, but now accompanied by a different mind-set.

Successful Location Successful Warehouse

Geographic location is paramount to the successful warehouse. It is as important as effective technology and the organisational skillset required for efficient logistics. There are two levels to location. Strategic location is an expression of the business model because the power of logistics lies in networking; the ability to move goods at great speed across distance. Operational location is how well the unit performs at a local level. The successful location covers six key factors.

Land and building are critical. The cost of the land is a capital expenditure and access to the land to the transportation network allow the logistics function to work. Building design is the intersection with the organisational efficiency of the user. Its internal structure must allow technologies to fit in. Because logistics is a low margin activity, modern warehouses make use of data analytics, blockchain and robots to reduce labour costs and picking errors. It must also allow for new transportation means such as driverless cars, and drones, and some manufacturing to occur (3-D printing and assembly).

Transportation has always been central in the supply chain in connecting suppliers to final end users. Access to good infrastructure is a necessity because moving goods accounts for the highest cost component, nearly 50% of the total cost of logistics chain. Logistics needs highly skilled employees and difficulty here means the labour market is an increasingly sensitive issue. It influences decisions sometimes on a European level. The geography of suppliers can matter hugely if the warehouse is there to facilitate movement of goods from one manufacturer to another. Logistics warehouses need business services nearby such as information technology support, building maintenance, security and fuel delivery. Lastly local regulations on usage can make an important difference to whether a location is viable for business.

Greater Diversity in Format

What is clear from purchasing patterns and technologies evolving so rapidly, is that it will remain difficult to predict functional obsolescence of any particular facility with precision. The new users with demands for quicker delivery are forcing changes such as robotics and automation onto the industry that in turn are helping to foster product differentiation in warehousing.

Subcategories

• Logistics warehouses: typically equipped with racking with good Moor to ceiling height to allow warehouse handling equipment to store goods higher

• Fulfilment centres: properties typically larger than standard logistics to allow for other (often automation driven) activities alongside storage

• Cross docking: properties used to unload goods and reassemble / move them directly for outbound distribution with little or no storage time

• Last mile/ city distribution facilities: these can include a wide range of warehouse and storage units including older space previously considered obsolete

• Production: properties where light manufacturing can occur

• Robotic facilities: properties equipped with robotics, typically used for e-commerce

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