Many distribution centers have been built in the last ten years in the food sector. However, local support for even more distribution centers is declining. Therefore, companies must move towards a more efficient and more intelligent approach to distribution, together with their supply chain partners.
Dutch retailers Hoogvliet, Jumbo, Albert Heijn, Picnic, Hellofresh, and Plus recently developed hypermodern distribution centers. But the objections of local residents to the ugly XXL-DCs, to the extra traffic in their neighborhood, and the nuisance of migrant workers housed in their community are growing. So two months ago, Dutch retailer Albert Heijn decided against building a distribution center in Amsterdam’s Lutkemeerpolder after protests.
The food sector must learn to do more with much less space. The Dutch College of Government Advisors, an advisory body to the government, advocates a halt to new locations for distribution centers. New logistics space for food logistics can no longer be taken for granted. Anyone with plans now is up against the wall.
The food sector is a significant user of logistics real estate
The retail and wholesale food sectors are significant users of logistics real estate. The Netherlands has around 100 distribution centers of the major retailers, more than 100 home delivery centers (more and more), and almost 1,000 distribution centers in the foodservice wholesale sector. Most distribution centers are located near cities where space for businesses is disappearing for residential development.
In their long-term planning, municipalities create little space for new sites for distribution centers. However, the Netherlands needs new, automated distribution centers to transition to electric transport, the growth of online and out-of-home markets, and the development of dark kitchens. But, where will you find the space, sufficient power for zero-emission vehicles, and employees in 5 to 10 years? Current distribution centers are not future-proof.
Less is more
Companies in the food sector will have to learn to do more with less space. It is necessary to achieve greater logistical efficiency in the distribution networks in the food sector. The existing storage, processing, and transportation capacity can be used more efficiently if companies consolidate flows of goods in storage, processing, and transportation. Open and connected logistics networks in which producers, retailers, logistics service providers, wholesalers, and flex partners work intensively will become the golden standard in food logistics.
Collaboration does require a change in thinking. Traditionally, we think in supply chains in hard stuff; pallets, barcodes, rolling containers, and trucks. The future supply chains demand fluff; the intelligent use of data in joint planning and execution of logistics operations. That’s where the efficiency gains can be found.
Companies today face many questions: where will we be in 10 years? With what other supply chain partners? How do we control our joint supply chains? And who is going to manage this transition within our organization?
Walther Ploos van Amstel.