Just in time or just in case? Why organisations are turning to modern logistics hubs to ensure business resilience
The UK Government’s proposed Future of Freight Plan reflects a wider changing of the tide for global supply chain operations. Following a chaotic and disruptive period in which businesses have had to fight numerous fires simultaneously, they are now taking steps to future proof, and enhance resiliency levels. The heart of this effort revolves around their chosen logistics hubs.
Having the requisite volume of space, positioned in an optimum location, and built to new and innovative specifications, is more important than ever. The urgent need for more space for urban logistics operations is reflected in the fact that warehouse occupancy levels are now beyond 99 percent, with rental rates doubling over the past decade.
The battle for premium spaces in prime locations, in part, derives from a change of emphasis in the face of recent supply chain crises. COVID-19, the Ukraine war, microchip shortages, inflation and Brexit have all contributed to a mindset shift from ‘just in time’ to ‘just in case’. Compounding this need to cover all bases, consumers’ expectations have altered amid the rise of ecommerce, resulting in demand for quicker deliveries, in more sustainable ways, from trusted brands.
‘Resilience’ in this context comes from being agile to changing and often unforeseen dynamics, while stabilising existing operations and getting closer to customers.
It’s a trend that certainly hasn’t been lost on those providing much-needed logistics space.
“There were huge lessons learned from the global financial crisis, where landlords were left holding on to properties that were no longer attractive,” explained Caroline Musker, Head of Planning, Prologis. “Now, there is a need to think more holistically and in a more agile way, following a pandemic period which really shone a spotlight on the importance of logistics.
“Hopefully, the Future of Freight Plan here in the UK shows the drive for change, with various Government departments coming together to ensure that the industry’s needs are better understood. This collaborative working and proactive engagement with the proposed changes to the planning system is encouraging, and will help businesses to meet consumer demands and create more agile operations.”
Attracting talent
Prologis has been building logistics facilities for more than 20 years as part of its expanding portfolio of parks, giving the company a front-row seat to the numerous challenges impacting supply chains in recent years.
Ongoing market, economic and geopolitical disruptors have exposed manufacturers’ and retailers’ weaknesses, whether they were stretched distribution operations, inefficient deliveries, a lack of data-driven processes, sub-optimal green credentials, or – in particular – labour concerns.
For too long, the sector has grappled with negative connotations around low pay, monotonous work, and progression limitations. Attraction and retention have become subsequent struggles, but amid the clamour for more modern and innovative logistics hubs, Prologis is urging a rebranding of the sector as a whole.
Sally Duggleby, the company’s Vice President of Capital Deployment and Leasing, said: “Logistics is a sector that is constantly evolving, and with that comes a lot more STEM opportunities than people imagine. Modern warehouses rely on data, automation, robotics; and they often come equipped with gyms, canteens, and perks that embrace the surrounding environment or location.
“They’re not all that different from the idea of a modern business HQ, and as more and more companies inhabit these facilities, they have to do better at selling this environment to potential talent.”
The Prologis Warehouse and Logistics Training Programme is an example of the company’s commitment to providing gateway opportunities to people wanting to enter the logistics sector. This sits alongside consultative work with warehouse occupants to aid their attraction, training and retention credentials.
Be part of the ESG conversation
What this HR effort also accounts for, is occupiers’ increasing focus on environmental, social and governance (ESG) initiatives.
Taking steps to become a reputable service provider and employer of choice are two upshots from more sustainable operations; while another relates to companies’ green impacts.
Supply chain resiliency in this vein derives from both the direct efficiencies that can be achieved through streamlining warehouse operations, but also the reputational enhancements that can be yielded should carbon footprints be reduced.
Duggleby explained: “First, there is the issue of transportation, and even large, international corporations are shifting their operations in an attempt to reduce their carbon emissions.
“However, beyond that, companies are also being more proactive across their power makeups – the extent of solar panels on their buildings, moving away from gas towards electric, incorporating EV charging in car parks, and so on.
“I’d say that this ESG conversation is really where Prologis has set itself apart over the past two years. Prospective occupiers are asking about power setups, EPC ratings, renewable generation and the like; long before topics of yard depths or dock accessibility that would traditionally have been priorities.
“Prologis is enabling that change of mindset quickly, via facilities that are situated in sought-after locations.”
Challenging perceptions
What Prologis looks to affirm with clients is that a logistics facility is more than just a basecamp – it sets the tone for the whole company, in the eyes of partners along the value chain, customers and workers.
In the face of recent crises, there has been a need to alleviate risk through the ‘just-in-case’ model, pertaining to hub positioning and supply management. A traditionally underwhelming talent attraction record has called for more modern and dynamic surroundings, and pressure to showcase improved environmental impacts has prompted a need to rethink both building and transport setups.
An optimised logistics hub isn’t just a way to stabilise the supply chain, therefore. With these metrics in mind, it can be the very focal point for future business resiliency and success.
Musker concluded: “For us, it’s all about challenging the way that people view supply chains, away from that image of logistics parks as big boxes creating negative impacts on traffic and emissions.
“Following the pandemic, hopefully people have a better awareness of how critical supply chains are to their lives, and we want to work with the communities and our customers now to build on that perception in a positive way. This means being dynamic, collaborative and bespoke in our solutions to customers, as they seek to find logistics spaces that can carry them forward in the face of the challenges still to come.”