The logistics warehouse of the future will be heavily automated, purpose-built for e-commerce and ready for tenants to “plug in” and go live almost immediately, a top executive for distribution giant Ingram Micro said Tuesday.
Keynoting FreightWaves’ daylong webinar on the future of logistics warehousing, Ken Beyer, executive vice president and president of commerce and life cycle services for the Irvine, California-based company, said developers must focus on building design and construction to fully support the e-commerce requirements of small to midsize businesses that will enter the segment in droves in the years ahead.
Speaking with Prologis Inc. (NYSE:PLD) COO Gary Anderson, Beyer said developers would be well-served to follow the “data-center” model in which businesses outsource their information management needs to companies with massive data centers and have their data reside in the cloud for easy, secure access. Gone — or fast going — are the days when companies kept servers in large data rooms, and maintained them at huge financial and manpower costs, he said.
Despite the dramatic rise in e-commerce demand, there are few warehouses today dedicated to the unique needs of online fulfillment and distribution. Prologis, which is the world’s largest developer, owner and operator of logistics warehouses, is focusing more of its efforts than ever on developing urban warehouses near densely populated consumer centers, Anderson said.
However, urban infill space — raw land set for repurposing — is not easy to find and is not cheap. Existing urban buildings that might be candidates for warehouse modification often lack the infrastructure and building design to effectively support e-commerce fulfillment and distribution services. Experts have said that many facilities are designed and built to support traditional retail replenishment, not e-commerce.
Owned by Chinese giant HNA Technology, Ingram Micro is a $50 billion company with 198 logistics and service centers in 164 countries. It is the world’s largest distributor of information technology products and handles one out of every three cellphones in the U.S. market. However, it today distributes more non-IT goods than IT products, according to Beyer. Ingram Micro has been involved in dedicated e-commerce fulfillment for about seven years. That coincided with its 2013 acquisition of CloudBlue, a global reverse logistics and enterprise IT asset disposition services provider that Beyer co-founded and headed.
Despite its sophistication and deep pockets, Ingram Micro would benefit just like smaller companies from a “plug-and-play” environment that dramatically compresses the operational ramp-up cycle that today could run 90 days or more, Beyer said. Occupying a property with an already-installed basic infrastructure would eliminate the “huge sunk cost” that Ingram Micro incurs from when it signs a contract to when it begins generating revenue, he added.
Prologis, for its part, has a “smart warehouse” project underway that marries robotics and warehouse management systems (WMS) to create the type heavily automated warehouse model that Beyer spoke of during the keynote. Prologis has also launched a workforce initiative in which it works with communities to recruit and train people for logistics positions. Prologis wants to train 25,000 workers by 2025, Anderson said.
Labor availability in general is a huge pain point, Beyer said. Ingram Micro’s year-round full-time warehouse workforce of about 15,000 swells to nearly double that for the holiday shipping season. However, the company is struggling to meet current staffing demand, especially as government stimulus plans resulting from the coronavirus pandemic have made it more attractive for a number of unemployed Americans to stay home rather than return to work, Beyer said.
