Covid-19, the associated lockdowns, and the hit to both supply and demand, have challenged supply chains and distribution networks in ways never imagined.Steve Purvis, operations director at Bis Henderson Space, says businesses will need to look carefully at how they adapt their supply chains for a new reality post pandemic, and importantly, how they f lex their warehouse space requirements to build in resilience.“Challenges have extended across all supply chain activities, from sourcing, through transport and distribution, to the adoption of safe working practices,” he writes in a white paper on the topic. “A common factor for many supply chains has been radical change in retailers’, manufacturers’ and shippers’ requirements for warehousing and warehouse-related activities. In some cases, sales activity has slowed to a standstill and firms need somewhere, anywhere, to de-stuff containers and store goods still coming from suppliers. In other sectors, demand has soared. However, the need to maintain safe distances while increasing throughput raises the f loor-space requirement even f ur ther.”Further impacting the warehousing sector has been the e-commerce boom. Along with this has been the increase in home deliveries as more people around the world work from home as part of ongoing quarantine policies.According to Purvis, e-commerce in particular is notoriously hungry for warehousing/distribution centre space, and demand for warehousing space is sure to spike in years to come.This outlook is supported by property consultants JLL who believe reshoring or near sourcing will further impact regional demand for industrial facilities.“Businesses will not go back to the way we knew before the pandemic, but will use this crisis to reinvent themselves to be more resilient, adapting their operational models to the new normal,” reads a report by the group on the pandemic’s impact on real estate.According to the JLL report, the pandemic accelerated trends already in evidence across the logistics sector – such as increased online penetration rates, expansion of online grocery shopping, omni-channel retailing, and the integration of technology into warehousing.“Industrial and logistics fundamentals were very strong prior to the Covid-19 crisis. Occupier demand had been exceptionally robust, and vacancy rates were at near record lows. The pandemic has highlighted the critical importance of supply chains and logistics real estate, and the sector is well placed to respond to the post-Covid recovery.”The report also points out that a rethink of lean supply chains could be on the cards in a post-Covid environment. The risks associated with the lean-inventory approach were evident across the world when the pandemic broke out in early 2020, and around the world businesses are toying with the idea of boosting inventory levels again – which will increase demand for warehousing space.According to Purvis, businesses will need to look carefully at how they adapt their supply chains in a post-Covid world, and more importantly, how they rethink their warehouse space requirements to build in resilience. E-commerce is notoriously hungry for warehousing/distribution centre space, and demand is sure to spike in years to come.– Steve Purvis
