On-demand Warehousing to the Rescue
By Gary ForgerSo you’re closing in on the time of year when you begin stockpiling your warehouse. However, what do you do when it appears that your holiday inventory will exceed the space you have?
Or, what about that new launch beating all projections, but there’s not enough storage room for those products?
What if you’re a new company that has no owned space, no budget for warehouse rent and a short timeline to stock and then ship your goods?
Welcome to the world of on-demand warehousing.When it comes to warehousing space, most supply chain professionals, 3PLs and relators typically think in terms of long-term commitments. Years usually, multiple years preferably. However, that kind of stability and predictability is becoming less, well, predictable. Fortunately, on-demand warehousing is quickly spinning up as a viable solution – for everyone involved.
“On-demand warehousing is a game changer for the supply chain. It makes better use of underutilized warehouse assets for companies that need a home for inventory on a flexible basis.” That’s according to Nick Vyas of the University of Southern California in the newsletter NextGen Supply Chain.
The key word here is “flexible.” As Vyas explains, on-demand warehousing isn’t a whole lot different than Uber or Airbnb or WeWork. Now on-demand warehousing snaps into focus. Quite simply, it’s unused warehouse space that can be contracted on a highly flexible basis. Some companies use it for a few months, others longer term.
You might be wondering the source of all this unused space, especially with warehouse occupancy rates running about 93%, according to CBRE and others. Actually, there’s plenty of unused space in those occupied warehouses. Experts say the internal utilization rate of those facilities is closer to 60%. As a result, many companies that built to peak, as well as 3PLs, are making their unused space available for on-demand warehousing.
Already, many Fortune 1000 companies are using the arrangement for established product lines as well as their e-commerce business. At the same time, yes, there are plenty of startups with too many orders to fulfill in someone’s garage.
By the way, the e-commerce giants are driving the success of on-demand warehousing. Many companies need to access space closer to their customers to compete with the big guys’ warehouse networks. That’s just a new fact of life.
At this point, there’s no question that we are experiencing the Wild West of on-demand warehousing. Just when you think you have it well-defined, it changes. Almost every time you re-visit it, on-demand warehousing has developed new capabilities. And that’s all to the benefit of people like you.
At its core, it’s really all about flexibility and space. For instance, companies such as Warehouse Exchange use an electronic platform as a matchmaker between you and available space. Flexe, which launched in 2013 and is generally considered the original on-demand warehousing company, is another matchmaker with more than 1,000 warehouses in its network.
Then there is UPS’ Ware2Go. It started out doing some matchmaking but quickly evolved. Just a year into it, Ware2Go is a full-fledged fulfillment service, too.
To a great extent, on-demand warehousing isn’t all that complicated and offers unprecedented flexibility. Better yet, it just might be the answer to your space problems.
Next week we’re going to delve into on-demand delivery, which is its own new frontier.
Gary Forger is the former editor of Modern Materials Handling magazine and the Material Handling & Logistics U.S. Roadmap to 2030.