WAREHOUSING NOVEMBER/DECEMBER 2020
COVID-19, the associated lockdowns, and
the double hit to both supply and demand,
has challenged supply chains networks
in ways unprecedented in the history of
advanced economies. Some have stepped
up to the plate in remarkable style, others
are scrabbling to find workable solutions, and some
have simply collapsed.
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 to store goods that are still coming in
from suppliers. In other sectors, health and groceries
most obviously, demand has soared.
Manufacturers have backlogs, not only of finished
goods that retailers cannot currently take, but also of
raw materials, intermediate and part-finished goods
that are waiting on disrupted supply lines.
According to a report published by property
consultants JLL, entitled COVID-19: Global Real
Estate Implications, the disruption to global supply
As the pandemic forces companies to re-think their
supply chains and stock holdings, could a new way
of thinking about warehousing space be the answer?
BY STEVE PURVIS OPERATIONS DIRECTOR, BIS HENDERSON SPACE
chains will significantly impact
the industrial property sector.
The report notes the ‘outbreak
is likely to elevate the issue of
supply chain risk mitigation
and resilience’, making it likely
businesses will start re-shoring
or near sourcing, as well as
The report also points out
that there could be a reversal of
thinking on running lean supply
chains with low inventory cover,
leading to businesses deciding
to increase their inventory levels
in the long term – which would
increase demand for warehousing.
Clearly, businesses will need
to look carefully at how they
adapt their supply chains for a
new reality post COVID-19, and
importantly, how they flex their
warehouse space requirements
to build in resilience. But before
reviewing forward strategies,
what have businesses been faced
with, here and now?
Enquiries to Bis Henderson
Space in April 2020 give a flavour.
We have seen manufacturers of
kitchen units needing storage
because, as no one is upgrading
their kitchen at this time. We
have been asked to find space to
support the spike in healthcare
demand. Some requirements are
more esoteric – storage of goods
supporting a major sporting event
that has now been postponed to
next year, for instance.
Many businesses are
navigating their way through the
crisis by throwing extra assets,
and cash, at the problem – extra
staff, additional vehicles, but also
for expensive warehouse space in
a seller’s market.
For many, this extra
expenditure is unsustainable
except in the shortest of terms.
Tesco, for example, estimates its
cost base has risen by between
£650m-£925m per year. Sales
admittedly have soared, but only