DC Velocity - March 2018

BEFORE THE AGE OF E-COMMERCE, MANY COMPANIES BUILT large centralized distribution centers designed to service the entire country. These facilities were erected in places like Kansas or Nebraska, where land was plentiful and labor was available at a fraction of what it would cost in urban areas. The central location meant that the companies could reach customers on both coasts within three to four days. For many businesses, these facilities became their sole national distribution centers.

The advantages to this approach are many. Inventory can be housed in
one building instead of duplicated over several sites,
This was a successful distribution strategy—that is,
until e-commerce came along and changed things dra-
matically. Customer demands have now shifted, and
the repercussions reach far beyond just those com-
panies that compete directly with the Amazons of the
world. The same service levels that major e-commerce
players have conditioned their customers to expect—
such as free shipping within two days—are now the
norm for every distributor.

Those changes in customer expectations required businesses to rethink their distribution models. Being located in the middle of the nation would not allow them to meet those demands without expensive transportation. Add to this the truck driver hours-of-service regulations, and reaching the customer within two days requires a different strategy. As a result, companies began scrambling to add new DCs near the large markets, sometimes sacrificing the benefits gained by consolidating operations in one highly automated facility.

But what if another twist were added that made centralized distribution attractive once again? That game-changer could very well be autonomous vehicles. As noted earlier, the driving force in regional distribution strategies is speed—being able to reach customers sooner. But what if autonomous vehicles doubled the current amount of time that merchandise could be on the road each day?

Unlike drivers bound by hours-of-service regulations, self-driving trucks do not have to pull off for mandated rest breaks. Autonomous vehicles would only need to stop for short periods to refuel or recharge. As a result, a self-driving vehicle could possibly cover 1,000 highway miles or more in a day, bringing more remote distribution facilities into play. How will that alter your future distribution network?

bigpicture

Editorial Director

Distribution networks may need

to be reimagined—again
David Maloney
Editorial Director
dmaloney@dcvelocity.com
Karen Bachrach
Executive Editor - Features
karen@dcvelocity.com
Mark Solomon
Executive Editor - News
mark@dcvelocity.com
Martha Spizziri
Managing Editor - Digital
martha@dcvelocity.com
Ben Ames
Senior Editor
ben@dcvelocity.com
Susan Lacefield
Editor at Large
slacefield@dcvelocity.com
Steve Geary
Editor at Large
sgeary@dcvelocity.com
Toby Gooley
Contributing Editor
tgooley@dcvelocity.com
Victoria Kickham
Contributing Editor
victoria@dcvelocity.com
Diane Rand
Associate Editor
diane@dcvelocity.com
Keisha Capitola
Director of Creative Services
keisha@dcvelocity.com
Jeff Thacker
Director of eMedia
jeff@dcvelocity.com
Gary Master
Publisher
gmaster@dcvelocity.com
Mitch Mac Donald
Group Editorial Director
mitch@dcvelocity.com
Peter Bradley
Editor Emeritus
Jim Indelicato
Group Publisher
jindelicato@dcvelocity.com
EDITORIAL OFFICE
Tower Square, Number 4