One important factor in site selection decisions is access to an available, well-qualified workforce. Companies can struggle if they can't attract labor in the quantities they need or if workers lack the skill and expertise for their logistics operations.
transportation is the biggest spend for network design.” Looking ahead, companies will need to confront the challenges of physical distance in their distribution strategy. “They will need to shorten their length of haul,” Roth says. “Reshoring and nearshoring are de nitely more prevailing than they had been in the past.” The process of decoupling from China will alter international trade agreements. “There will be more bilateral trade agreements where democracies are going to trade with democracies,” Roth says, adding that planning for this eventuality will impact distribution networks. “Companies that can, and where product allows, need to be regional in nature,” he says. “I like to call it ‘international regionalization.’ Supply chain will become a less common term; instead it will be called ‘supply web.’ We will have multi-state replenishment locations with access to intermodal transportation options.” HASTE MAKES WASTE The evaluation process necessary to identify the right DC location is neither simple nor fast. Most companies will not make the determination alone, but rather will engage a quali ed and experienced consulting rm to coordinate the effort with the company’s internal team. When Wulfraat engages in a dialogue with a company, they usually want to
gure out the site selection process in the next eight weeks. However, doing the job properly will take considerably longer—and it should. “Imagine a company that sells billions of dollars of merchandise,” Wulfraat says. “They’re a well-known brand name, they’ve got existing facilities, they’ve got thousands of people whose jobs are on the line. They want to blow it up and look at the map totally fresh. That’s not done over six, seven, or eight weeks. That takes months.” It is neither credible nor diligent to expect otherwise. “If you’re going to be responsible about the business, the workers, and the customers, you owe them the decency of doing a good job of site selection,” Wulfraat says. “You can’t rush. It takes time to gather and cleanse the data. Then you’ve got to develop economic models where you’re moving the levers.” Minimizing or, worse, skipping any of these critical steps is likely to lead to a negative outcome. “Imagine if you were a kid and you had 100 Lego blocks but the sizes don’t t together,” Wulfraat says. “You need Lego blocks where the dimensions all make sense.” How well or how poorly you assemble the various pieces will either construct an expressway to a DC destination you can depend on for years to come—or an outdated road lled with potholes that will impede your company’s progress at some point along the way. n
That’s where regional expertise comes in. “If a company tells me they want to be in Cleveland or Columbus, and cites their top three motivational factors, I can tell them in 10 minutes and within 5% where they are going to go,” says Newmark’s Coyne, who adds that the regional labor market must always be among a company’s most important motivational factors in choosing a DC site. Brokers will narrow the eld quickly, Coyne says, because they know and understand the size and scope of the local labor market. That’s why, while recognizing the importance of every department’s input, he prefers to have the HR representative on the company’s site-selection team serve as his primary contact. CREATING A SUPPLY WEB Each member of the site selection team needs to approach the task with an open mind. It’s also important to ask the right questions: “If we have a building that’s running out of capacity and has a labor problem in that market, do we want to consider automation as an alternative to having a labor-intensive operation?” Wulfraat says. In the end, appropriately enough, transportation will take companies to their nal DC destination. “By far the biggest determining factor in this whole algorithm is transportation,” Roth says. “Part of it is construction and part of it is that
212 Inbound Logistics • January 2023
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