November 16, 2020

The Warehouse of the Future

The Warehouse of the Future

While distribution giants like Amazon or Walmart have been implementing automated solutions into their warehouses for decades, automation hasn’t seemed as practical for small- and medium-sized warehouse operators. Physical picking and packing has been good enough for the majority of warehouses, especially those that already supplement employee-based picking with warehouse management systems (WMS), voice-picking solutions, wearables, or other technology. When coronavirus hit the supply chain, however, the warehousing sector discovered that remaining stubbornly behind the technology curve was no longer an option.

As 2020 winds down, logistics stakeholders have spent months developing new strategies to combat new and unexpected challenges. Technology implementation and warehouse automation factor heavily into what is now commonly referred to as a “new normal” — new best practices that will guide the logistics sector in the years to come. This article will discuss some of the trends that are accelerating the adoption of automation solutions in the warehouse.

Addressing Safety Concerns

Employee safety is top of mind for most businesses that operate warehouses because warehouse work often entails close-quarters tasks, such as shared lifts or item handoffs. With physical contact and respiratory droplets as primary transmission methods, it is currently not practical to have employees working side by side.

Automation technology solutions have become essential methods for keeping warehouse workers safe. Some examples from across the supply chain include:

Overcoming Labor Challenges

While fears about robots taking jobs have been in the headlines for years, the reality is that plenty of unfilled warehouse jobs exist across the country. Even before the coronavirus pandemic made it difficult to safely keep a warehouse fully staffed during a shift, the logistics sector has been experiencing a shortage of labor. With unemployment pretty consistently under five percent for nearly five years before anyone had heard of COVID-19, the smaller available labor pool has made it increasingly challenging for warehouse owners and operators to recruit new talent into the sector.

While warehousing employment is actually at an all-time high heading into 2020 peak season, it stands to reason that the talent shortage will resurface eventually as peak season fades and better treatments and vaccines become available for COVID-19 that allow new warehouse workers to return to jobs in other industries. Robotics, automated guided vehicles, conveyor systems, artificial intelligence (AI), and other automated capabilities that have been implemented to offset labor shortages during the pandemic will undoubtedly remain in place and become normalized in the majority of warehouses. Picking and packing operations are labor-intensive and will probably require physical employee presence for a long time to come, but it’s unlikely that facility managers and owners will let go of the ability to optimize a smaller labor force.

The E-Commerce Boom

E-commerce growth shows little sign of slowing, with online sales rising 43 percent in September 2020 from the prior year. Without retail stores to hold inventory, e-commerce distribution requires up to three times the real estate space. This means that e-commerce businesses must build exceedingly large distribution facilities, distribute their inventory across multiple warehouses, or fulfill from stores to support omnichannel strategies. With the rise in order volumes, managing any of these methods is highly complex. Omnichannel grocery sellers in particular have had to learn this lesson as demand for online purchasing and delivery continues to soar during the pandemic.

Through the use of artificial intelligence, robotics, and other automation capabilities, warehouses and distribution centers can tie picking, packing, and shipping operations directly to the online purchase without any need for manual processing. Pushing orders directly to the warehouse for picking makes meeting consumer demands for same-day or two-day delivery much more feasible.

About Phoenix Investors

Founded in 1994 by Frank P Crivello, Phoenix Investors and its affiliates (collectively “Phoenix”) are a leader in the acquisition, development, renovation, and repositioning of industrial facilities throughout the United States. Utilizing a disciplined investment approach and successful partnerships with institutional capital sources, corporations, and public stakeholders, Phoenix has developed a proven track record of generating superior risk-adjusted returns, while providing cost-efficient lease rates for its growing portfolio of national tenants. Its efforts inspire and drive the transformation and reinvigoration of the economic engines in the communities it serves. Phoenix continues to be defined by thoughtful relationships, sophisticated investment tools, cost-efficient solutions, and a reputation for success.

Mr. Frank P. Crivello began his real estate career in 1982, focusing his investments in multifamily, office, industrial, and shopping center developments across the United States. From 1994 to 2008, Mr. Crivello assisted Phoenix Investors in its execution of its then business model of acquiring net lease commercial real estate across the United States. Since 2009, Mr. Crivello has assisted Phoenix Investors in the shift of its core focus to the acquisition of industrial real estate throughout the country.

Given his extensive experience in all aspects of commercial real estate, Mr. Crivello provides strategic and operational input to Phoenix Investors and its affiliated companies.

Mr. Crivello received a B.A., Magna Cum Laude, from Brown University and the London School of Economics, while completing a double major in Economics and Political Science; he is a member of Phi Beta Kappa. Outside of his business interests, Mr. Crivello invests his time, energy, and financial support across a wide net of charitable projects and organizations.

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