Co-warehousing: Warehouse-as-a-service

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  Quantumrun Foresight
• August 24, 2023

Insight highlights

Co-warehousing, like coworking, is set to disrupt how businesses handle inventory and logistics, with companies paving the way through innovative, human-robot collaborative workspaces. This new logistics model offers immense flexibility and cost-effectiveness, reshaping traditional roles, fostering entrepreneurship, and demanding updated regulations. Consequently, it promotes sustainability by optimizing resources, introduces technology-oriented functions, and impacts urban planning and real estate by transforming underutilized spaces.

Co-warehousing context

Warehouses are evolving to meet both human and technological needs, such as those of robots and cobots (robots designed to work alongside people). Retailer REI, for example, has improved the work environment by introducing more natural light and reducing noise in its warehouse. A new trend, co-warehousing, is emerging where offices are placed close to production sites, fostering better communication and management. 

Co-warehousing also comprises multiple businesses sharing the same warehouse to save on costs. Companies can use the necessary storage facilities without the obligation of buying a whole building or renting it based on the proprietor's conditions. Saltbox provides a similar service for e-commerce entrepreneurs, providing warehouse and office spaces in the same location. 

In addition, co-warehousing offers greater flexibility with shorter-term commitments, which can benefit businesses looking to downsize. This feature is also beneficial during uncertain times, when predicting supply and demand becomes challenging, and swift changes to business strategies may be required. To accommodate the different businesses that opt to share warehouses, these spaces are designed to house cobots and drones, which need dedicated areas for movement and activities, such as scanning or delivery. Future designs may include automatic loading and unloading zones, charging stations, and roof hatches to fully accommodate these technologies.

Disruptive impact

Co-warehousing, much like its forerunner in the "sharing economy" - coworking - is set to change how businesses manage their inventory and logistics. As a disruptive model, co-warehousing combines the flexibility of shared spaces with the efficiency of modern supply chain management. This model is particularly beneficial for small and medium-sized enterprises (SMEs) and e-commerce ventures that often face unpredictable variations in their inventory requirements. 

From an employment perspective, the advent of co-warehousing presents both challenges and opportunities. Traditional warehousing jobs may decline as these shared spaces leverage automation technologies to achieve efficiency and cost-effectiveness. However, new roles will likely be created in areas like warehouse management software development, logistics coordination, and co-warehousing space leasing and management. It's worth noting that the shift towards automation does not necessarily imply job losses but rather a transformation of the nature of jobs in the warehousing industry. As we've seen in other industries disrupted by technology, the challenge will be ensuring that the workforce is adequately equipped with the necessary skills to adapt to this changing landscape.

Looking at the broader business landscape, the impacts of co-warehousing will likely ripple outwards, influencing other sectors. Real estate developers, for instance, may shift their focus towards building flexible warehousing spaces, while investors could see significant potential in funding startups that offer innovative co-warehousing solutions. Additionally, co-warehousing could lead to a more sustainable approach to logistics and inventory management by optimizing the use of space and thus reducing the environmental footprint of warehouses. 

Implications of co-warehousing

Wider implications of co-warehousing may include: 

• Empty or underutilized buildings in industrial zones being revitalized and transformed into co-warehousing spaces, leading to a redistribution of urban space and reviving rundown areas.
• Lowered barriers to entry for startups, particularly in e-commerce and retail, promoting a culture of entrepreneurship and innovation.
• The further growth of e-commerce by offering more affordable and scalable solutions for inventory management and delivery, leading to a more significant shift in consumer behavior towards online shopping.
• A more decentralized warehousing model where freight transport could be better distributed, reducing traffic congestion and improving the quality of urban life.
• A more resilient economy as businesses would be better equipped to adapt to demand fluctuations, mitigating the risk of supply chain disruptions during economic downturns.
• Governments updating zoning regulations and policies to accommodate this new business model. Additionally, laws related to labor in warehousing might need to be reformed.
• Traditional logistics companies re-evaluating their business models and service offerings in light of the increased flexibility and efficiency offered by co-warehousing.
• An increased demand for skills related to warehouse automation technology, such as programming, system maintenance, and data analysis.
• Businesses reducing their individual energy consumption and waste, contributing to resource optimization and a reduction in their overall environmental footprint.

Questions to consider

• If you work for a business that co-warehouses, what are the benefits and challenges?
• How else might this new model affect smaller businesses?