Modern Materials Handling - December 2011

within the broader logistics universe will be exponential,impacting everything from shipping and rail line constructionto warehousing and terminal development around the world,”predicts Carver. He adds that there are already discussionsunderway between major shippers and logistics providersabout new facilities even if the expansion is several yearsoff. “Logistics providers realize that shippers drive businessto their ports and warehouses,” Carver says. “They’re goingafter the Wal-marts, Home Depots and Ikeas of the world toaddress their needs.”“Volume growth from the canal is going to dictate that companieslook at where they put their four walls and how they operate.”—Page Siplon, executive director, Georgia Center of Innovation for Logisticsno question. The expansion of the canal isgoing to change the importance of logistics in the“There’sUnited States,” says Siplon. “Volume growth is goingto dictate that companies look at where they put their fourwalls and how they operate to handle that increased volume.”Siplon believes five factors will drive the development ofdistribution centers in the coming years.Site selection: “Proximity to customers remains a keybasic of site selection,” says Siplon. “But they’re also askingquestions like whether there is the right kind of infrastructureand whether there will be enough truck drivers in aradius to serve their customers.”In-house or outsource: Siplon is intrigued by one distributionstat in particular: 51% of companies with more than$2.5 billion in sales have more than 10 distribution centers intheir network. Those networks will have to expand to accommodateincreased growth and volume. “The one commonalityI hear when I talk to end users is whether they should outsourcesome of their network to a 3PL,” Siplon says. “Theywant the flexibility to scale up or down, they want to reducetheir costs and they want to mitigate their risks. With a 3PLmodel, the headaches become someone else’s headache.”Small manufacturers and distributors are especially attractedto the 3PL model as they look to expand internationally,according to Siplon.Add value: Importers and exporters are increasinglylooking at their distribution centers as value-added centers,places to configure a product before it is shipped to its nextdestination. “It’s expensive for cargo to stop,” says Siplon. “Ifit must stop in a warehouse, why not use that pause in thesupply chain to do something thatadds value.” Since value-added serviceschange over time “that fitsperfectly the flexibility you get in a3PL model,” Siplon says.Add technology: Materialshandling automation is still theexception for most of the DCs inand around Savannah, but that ischanging. “We’re talking to companiesthat want to double theirthroughput in Savannah,” Siplonsays. “We’re also talking to companiesthat are trying to get newcustomers in industries like pharma and food that have veryspecific inventory management requirements. Companiesthat want to play in that game need technology to scale andcompete.”Labor matters: Yes, we have 9% unemployment. But distributionoperations continue to struggle to recruit, train andretain qualified labor. “In Georgia, we have about 100 differentlogistics offerings in our high schools, community collegesand universities,” says Siplon. “When we sit down withbusinesses and ask them what they need, the first thing theysays is: How do you train a good work ethic.” As the volumesof freight being stored, processed and moves increases, thatis going to become more of an issue nationally. And, it maydrive the adoption of automation and technology. “If we’regoing to get manufacturing back to the U.S., we have to figureout how to make the workforce compete,” Siplon says.mmh.com Modern Materials Handling / D e c e m b e r 2 0 1 1 27