Latest trends in industrial supply chain and logistics: convenience, efficiency, and adaptation

By Dan Ulmamei*, Managing Director, Swisslog Australia and New Zealand

The industrial supply chain is undergoing significant changes, as companies deal with longer lead times, labour shortages, low industrial vacancy rates, and increasing customer demand.

In 2023 and beyond, it’s clear that the same processes that were working before, are not always going to be good enough to meet the challenges of tomorrow. Companies that focus on convenience, efficiency, and adaptability will come out on top.

But what trends are shaping the industrial supply chain, and affecting the way the logistics and warehousing industries work?

From just in time to just in case

With supply chains being stretched, and longer lead times becoming increasingly common across all industries, companies are looking to bring more inventory into the country to futureproof themselves against shortages. Instead of the highly efficient “just in time” systems, where parts or goods were replenished on an as-needed basis, companies are now bringing in additional stock, just in case it can’t come quickly further down the line. Industrial parts are being held for longer times, as equipment ages and maintenance and spare parts agreements still need to be honoured.

From POS to RDC or NDC: transforming the way industries source and store parts

With more parts needing to be stored in-country, and very low industrial vacancy rates (as low as 0.4% in Sydney and 0.8% Australia-wide in 2022, according to The Property Tribune and a similar story in New Zealand with 0.7% in Auckland and 1.8% in Wellington, according to JLL), it’s natural that companies are looking at ways to utilise economies of scale to save costs.

Many are moving away from a point-of-sale (POS) approach, and rationalising a move to distribution centres – either Regional Distribution Centres (RDCs) or National Distribution Centres (NDCs) to take advantage of larger scale storage and the associated cost savings of having fewer storage facilities.

Consumer convenience

On the consumer side, while convenience will always be important, there has been a distinct shift away from wanting ultra-fast deliveries, such as those within three hour windows. What’s more important to consumers now is that companies deliver when they say they will, even if that’s a bit longer. Same day will continue to be important for many industries, but faster times are less in demand than pre-Covid times. To help companies continue to fulfil same day orders, many are opting to bring storage and fulfilment closer to the main population centres, and utilising Micro-Fulfilment Centres (MFCs).

Evolving nature of warehouses

With labour shortages continuing to be an issue in manufacturing and distribution, automated warehouses are one way that companies can keep up with consumer demand. And, with industrial land becoming increasingly scarce and more expensive, many companies are looking into multi-level automated warehouses to optimise the utilisation of their existing industrial space. For industrial customers, convenience of part pick-up is top of mind, so click-andcollect parcel lockers are likely to form part of the solution moving forward, after their success with consumer applications.

Conclusion

The industrial supply chain is facing a number of challenges and changes that require companies to be more flexible and innovative. By embracing trends like multi-level warehouses, rationalisation of distribution facilities, bringing inventory in-country, and utilising MFCs, companies can meet the needs of customers, overcome labour shortages, and stay ahead in a rapidly evolving market. Whether it’s through delivering on time, increasing convenience, or optimising storage space, companies that adapt to the latest trends in the industrial supply chain will be better positioned to succeed in 2023 and beyond.

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* Dan Ulmamei, Managing Director Swisslog Australia and New Zealand has more than 26 years of experience in logistics automation, most of it in various leadership roles, ultimately managing teams engaged in operations around the globe. He has been working in similar positions in the industry in Sydney since 2016. Your personal copy of Air Cargo Week is now ready to download

About NABERS - National Australian Built Environment Rating System (NABERS)

NABERS is a national government program that rates the environmental performance of different buildings. NABERS tool has helped building sectors save 7 million tonnes of CO2 emissions and 1 billion dollars in cost-saving to date.

Since 2021, SCLAA has been part of the Warehouse and Cold Stores Advisory Panel and provided valuable insights from its members and industry to enable benchmarking of energy and water usage and the platform for industry stakeholders and our members, to have their say and shape the tool, which was launched late 2022.

This has been a great opportunity for SCLAA and its members to do our part in the collective goal of net-zero targets!

With the close of the Warehouse and Cold Stores Advisory Panel, the official launch of the tool on 29 September, and the first rating certified on 21 October – SCLAA will be part of a working group to support the rollout of the tool with the broader industry.

NABERS Warehouse and Cold Stores Working Group

This new NABERS Working Group aims to: Support industry with the uptake of the tool and share learnings from members undertaking the

Rating Process

• Provide members with updates and information on how NABERS ratings can be used, such as:

- Updates on Commitment Agreements, NABERS Carbon Neutral, Renewable Energy Indicator; and

- How NABERS Ratings can be used to access sustainable finance, used in schemes such as the NSW Energy Savings Scheme (ESS) and VIC Victorian Energy Upgrades (VEU) Scheme.

• Discuss ongoing changes in the industry and opportunities available.

SCLAA will continue to keep our Members and stakeholders informed regarding this critical initiative.

NABERS Energy rating for Warehouses and Cold Stores has officially launched and we were thrilled to see such a large audience tuning in to this important event.

The launch of energy ratings for these sectors is a fantastic sustainability initiative to help the industry measure and manage these industrial buildings. The energy rating tool can rate the energy efficiency of warehouses, cold stores, and combined facilities. It provides an excellent benchmark for the industry to target higher standards in energy efficiency and a pathway to continuous emission reductions.

We’d like to reiterate our thanks to everyone who has been part of developing the tools, with a special thank you to the Commonwealth Department of Climate Change, Energy, the Environment and Water (DCCEEW) for funding and supporting this project.

“The launch of NABERS Energy for Warehouses and Cold Stores is the perfect example of industry and government working together to drive change at scale. We’re so excited to have a rating tool for the fastest-growing building sectors in Australia.”

Carlos Flores, Director, NABERS