But what will happen if companies downsize their core facilities with
the notion that warehousing companies can continue to accept the
inventory surplus, but a declining economy forces some of those
warehouses to close? The challenges of the past few years have helped
prepare warehousing companies for future economic turbulence.
"The last few years have created the ability for warehousing companies
to go up and down," Ward said.
One example is Brampton, Ontario-based Crownhill Packaging Ltd., a
warehousing and fulfillment company handling more than 15,000 products.
Crownhill has recently seen growth in utilization as customers seek to
maintain inventory space only for their most profitable products. As a
result, Crownhill opened a new facility in Waukegan, Illinois. The
50,000-square-foot center includes four loading docks and two
drive-through loading docks. The company is seeking to expand over the
next five years as demand for such services grows, according to Gary
Fox, Crownhill's managing director for the Waukegan facility.
"Our general philosophy is that we'll be our customers' warehouse per
se, so in a given scenario, we might have a customer who has 15 to 30
SKUs [stock-keeping units] that they need on a daily or weekly basis,"
Fox said. "Our customer can send to our system what their usage is for
the day, and what it will be for the following day, and our usage teams
will pull those items and will call them or have them available the
Lakeland, Florida-based Saddle Creek Corporation is a full-service
warehousing and transportation company that emphasizes cross-docking,
the practice of a facility receiving goods and shipping them to
customers that day or overnight, sometimes as a combined load with other
shippers' items. Cross-docked products typically remain at the facility
for less than a day.
According to Tom Patterson, a Saddle Creek vice president, tightening
lead times are prompting companies to cross-dock as an alternative to
expensive warehouse space and economically inefficient
less-than-truckload (LTL) shipping.
"We're seeing a lot of attempts these days to bypass the LTL market in
total," Patterson said. "Being an LTL carrier is becoming kind of a
dangerous place to play. So you're seeing solutions to try to build
truckloads at the point of origins at the stop-off as opposed to running
any LTL freight."
For executives choosing or designing a facility site, that means the
warehousing and distribution market understands a company's desire to
streamline operations - and is trying to innovate to permit for paring
down. As long as those outside providers can sustain their growth and
fund their innovations, those lean facilities that hold such appeal for
your company might just do the trick over the long term.