Changing technology drives logistics in new directions - Liza Helps

One of the most noticeable technological advances influencing supply chain property requirements at present is the internet. Rob Hall, head of CEMEA logistics at DTZ says: “E-commerce is emerging as one of the fastest growing sectors in Europe with Amazon signing two of the largest transactions of 2011 – 110,00 sq m in Rheinberg and 140,000 sq m in Werne. Business growth linked to e-tailing is already evident in the UK, France and Germany.”

Indeed CBRE’s Europe Online research shows that 40% of 16-65 year olds in Europe use the internet to shop. Sweden shops most on line (69%) compared to Russia (5%).

Jon Sleeman, head of research at Jones Lang LaSalle notes: “Different types of product bought off the internet require different types of property and locations and frequently different supply chain solutions.

“The internet slips into three types of logistics; bulky items which need a network of centres; fast moving goods which can go through the post which do not require specific locations relying on 3PL couriers; and food which in the UK started out as pick-in store and now devolving into state of the art e-fulfilment centres which need to be close to consumers by its very nature.”

Alexandra Tournow, head of EMEA logistics and industrial research at Jones Lang LaSalle says: “Fast moving goods require sorting not storing so buildings tend to be long and narrow and cross docked aimed at speeding delivery. That means that location is key and needs to be where you can reach highways and connect across the country easily.”

James Attfield, CBRE’s director of industrial & logistics in the UK, agrees and adds delivery speed is crucial in this competitive market. “The need for high street retailers to compete with the likes of Asos.com and Amazon for custom in the online marketplace puts significant pressure on the supply chain. In order to fulfil delivery requirements, retailers have to employ, and pay for, third party services to match demand.

This has led to smaller satellite warehouses being required for parcel sortation by courier companies located in or as close as possible to city centres, allowing greater last mile transparency and ever shorter delivery times to customers.

For ecommerce enterprises offering a large variety of goods Attfield says: “A centralised campus of warehousing allows all manner of product to be stored, before being distributed, and therefore dramatically reduces the costs associated with a widely dispersed logistics portfolio.”

Lisa Fitch of BNP Paribas Real Estate notes: “In the internet age, warehouses need to interface with customers directly. Small parcels and increased customisation is commonplace. Both tend to require larger amounts of space to utilise pick-to-light or voice pick/pack operations and to do value-added processing. This may mean floor area, but is very likely now to mean mezzanines to use of all available cubic space. By elevating the packing space, companies can increase the overall warehouse space, without the need for additional storage space.”

As long as customer expectations can be managed many of the big internet retailers can locate in non-traditional distribution locales i.e. Amazon in Swansea or ASOS in Barnsley and yet still deliver on a national or even international level.

Check out the dedicated logistics conference track at MIPIM 2012.

Image: Mispahn

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