WAREHOUSING & MATERIALS HANDLING u Hendersen Near-sourcing drives


need for flexible space Steve Purvis, managing director at Bis Henderson Space, highlights a report from commercial real estate services firm Cushman & Wakefield, which revealed a rapid increase in the take-up of industrial space across Europe last year


A


28% rise in take-up, to 9.6 million sq m, is a significant increase on pre- pandemic levels, which were already


rising steadily, and also contrasts with a 4% decline in overall logistics and industrial space. The principal driver, according to C&W, is


the growing trend towards near-sourcing (of bought in materials, parts and products) and near- or re-shoring (of manufacturers’ own operations), to locations closer to consumer markets. This shift in manufacturing locations will also feed rapidly into the warehousing space market, changing both preferred locations and the nature of the space required. The proximate causes are of course the fall-out from Covid, the Ukrainian war, and heightened geo-political tensions, especially but not exclusively with China. At Bis Henderson Space, where we help business find flexible, short-term warehouse space, we had noticed that many firms were at least considering near-shoring strategies well before the pandemic.


Structural changes to supply chains


introduce many unknowns, along with, of course, risk. And flexible, short-term arrangements on storage space can help mitigate some of those risks. There is a complex interplay of factors, some proactive and some more defensive. The sequence of ‘black swan’ events in global supply chains – not just war and pandemic, but Japanese tsunamis and vessels going sideways in the Suez Canal – have undoubtedly focused business minds on the costs and risks of extended supply chains. On the positive side businesses are seeking


improved speed to market, to offer consumers ever-shorter lead times and higher levels of availability across increasingly customised and individualised product ranges, both flexibly – because consumer demand is now so rapidly changeable – and sustainably – because, not always correctly, consumers see global supply chains as bad for society and the planet. That in turn is driving businesses to remould


supply chains so that they can be seen to enjoy greater levels of oversight and control.


32 July/August 2023 Irish Manufacturing Another factor which was already active


pre-pandemic is that of cost. China in particular, and to a lesser extent other popular offshore manufacturing locations in Asia and elsewhere, no longer enjoy their old labour cost advantages, and this is even more true as manufacturing implements ever more robotics and automation. Political factors, of course, are also in play. The EU is easing rules on subsidies and state aid to encourage reshoring, to achieve economic, environmental and social goals as well as to compete with US incentives in the misleadingly named Inflation Reduction Act In terms of location, it is conceivable that


greater sourcing from the near-abroad (the EU, perhaps North Africa) will over time encourage the use of smaller vessels and second-rank, cheaper and less congested ports, rather than everything arriving from Asia into Felixstowe or Southampton, and that may encourage a wider distribution of ‘quayside’ warehouse and logistics facilities. But redirecting a supply chain is even slower than steering a ULCV. New suppliers have their


own learning curves, and bring their own risks, whether they are in Beijing or Birmingham. Companies will typically mitigate risk by dual- sourcing over a, possibly extended, changeover period. That may tend to increase the amount of inventory in the system, and hence the need for additional temporary warehouse space. A re-shored manufacturing facility will of course require its own new warehousing infrastructure for inputs, while at least parts of the distribution network may also need to be reconfigured. As different supply and manufacturing elements are worked on, warehousing and distribution may go through several evolutions, all possibly requiring some element of short-term space. So, any business contemplating nearshoring and near-sourcing strategies, which can be quite high risk, and won’t necessarily work perfectly out of the box, will benefit from the assurance that they can access short term space to accommodate changing locations, operations and volumes, whether planned or unplanned.


www.irish-manufacturing.com


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46