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Own the future – from MHD magazine

The distribution centre of the future: scale, flexibility and the need for automation

The distribution centre of the future will need scale, flexibility and automation. As technology advances and society changes, consumers are demanding services faster and more readily available. Current warehousing and distribution practices won’t be sufficient to keep up with market expectations, so forward-thinking businesses are investing in flexible, scalable and automated solutions to future-proof their operations.
Societal and logistics trends will have a huge impact on what the warehouse of the future will look like.

Impacts on distribution

The changes in society and technology will certainly influence how products are stored and distributed in the future. Based on those changes, key capabilities of the supply chain of the future will include:

  1. Storing products closer to consumers

Many of the trends lead to the same conclusion: more people living in cities and ordering products online, which will increase the need to support same-day delivery. At the same time, cities will be battling increased congestion and air pollution.
Small, self-driving vehicles and local delivery robots, such as Starship, and possibly drones could be part of the solution to this challenge. However, these systems are typically meant for short-range transport, which will require that distribution centres be located in cities, close to large groups of consumers.
Yet, this presents its own set of challenges. The number of SKU is already in the thousands or tens of thousands in many warehouses and could grow to more than 100,000. With the space constraints inherent in most urban environments, how can an urban distribution centre support the needs of the market it is positioned to serve?

  1. Customised production

As seen with the example of the new Adidas factory, products that are custom-made for one consumer do not require warehouse storage. These articles are sent from the manufacturing site to the consumer directly upon production.
While this minimises the requirement for storage space, it will require fast transport and sortation networks, and potentially some ultra-short storage to synchronise product flows with consumer schedules.
In 2030, customised production will most likely be limited to luxury items, spare parts or fashion products. Basic essentials will still be produced to stock – probably in smaller batches than today, but enough to require some form of warehousing.

  1. Omni-channel support

Supporting omni-channel retail requires providing consumers with options that extend beyond traditional delivery. By enabling options such as in-store or kerbside pickup, retailers can give consumers more control over how they receive products and eliminate some of the frustrations with home delivery, such as product security and returns, while minimising the cost of same-day delivery by shifting the cost of the ‘last mile’ to consumers.
These various impacts are all addressed through the development of urban distribution centres that bring distribution closer to consumers, support custom production and enable fast, efficient delivery based on consumer preferences.

The urban distribution centre of 2030

Societal trends are driving the shift to numerous urban distribution centres that bring key logistics capabilities close to consumers. Urban DC will likely be shared-service facilities that optimise all logistics flows for the area or community they serve, including the following core functions:

  1. Inventory and order picking

Similar to many warehouses today, the urban DC will need to hold some inventory. However, since space in cities is limited and product ranges are likely to continue to expand, this inventory will be limited. In principle, smaller items and products that are sold regularly would be held in stock. Inventory size would be minimised through 3D printing and use of big-data to predict behaviour and distribute articles to the urban DC just before they are ordered. An order picking process, using automated picking systems would also be required. Because the urban DC will support multiple sellers in a shared service model, this creates the opportunity to consolidate articles from different sellers into one shipping carton to reduce shipping costs and enhance the customer experience.

  1. 3D printing

Products not available in the limited inventory may be 3D printed. This reduces inventory requirements and allows the creation of individualised products. The urban DC is an ideal location for several large, sophisticated and fast 3D printers. With the picking scenario described above, it is also possible to consolidate printed items with items picked from the inventory into one parcel.

  1. Parcel consolidation

The urban DC of the future will consolidate pre-picked parcels coming from multiple sellers or parcel companies into one last-mile transport to the consumer. Functionally, this is no different from the many parcel sortation hubs that exist today. The difference is that flows will be consolidated. In today’s networks, companies like DHL, UPS and FedEx do their own sortation and last-mile transport, for their customers. The future urban DC will consolidate flows from all companies.

Key enabling technologies

In addition to supporting these core tasks, urban distribution centres will need to incorporate a number of advanced technologies to meet the distribution requirements of 2030.
For picking, intelligent robots with advanced grippers could not only pick individual products, but also assemble products from several parts produced inside the warehouse, and consolidate orders from multiple sellers, including 3D printed products, into one shipping carton. Robotic goods-to-person or fully automated picking systems, such as Swisslog’s AutoPiQ, would support the high pick-speeds required by the urban DC.
Big data and smart, self-learning analytics will predict what consumers will be ordering to minimise inventory; however, the predictions will not always be correct, and that will create additional product movements. Technology advances, such as self-driving trucks and robotic loading and unloading systems, will minimise the costs of those movements.
For products that can’t be printed and are not predicted, new means of fast, long-distance transport could support delivery of products not stored locally. Emerging transport technologies, such as Hyperloop, could connect large, central warehouses with urban DC in major cities. Alternatively, larger, long-distance cargo drones could offer flexible, infrastructure-independent transport over longer distances. In addition, automated storage and retrieval systems could be deployed to maximise the amount of product that can be stored in the available space.
Online marketplaces would need to be employed to manage supply and demand among sellers vying for space in the DC, allowing sellers to balance their costs against the need for delivering very quickly. This will reduce the number of distribution centres within a particular city and maximise space utilisation.

Last-mile delivery options

Many different ways will exist for last mile delivery and the urban DC will need to interact with a multitude of delivery options.

“Some parcels may need even more individualised transport methods.”

A significant percentage of parcels will still be delivered in a multi-delivery vehicle. Most likely, this will be an electric, and potentially driverless, version of the familiar delivery van. Loading such a vehicle efficiently requires that a high number of parcels be loaded simultaneously in as short as time as possible. Very likely some kind of drop-sequence will be required for that as well.
For this, we can imagine standardised loading modules where parcels can be staged before the vehicle arrives and loaded into the vehicle ‘in one go’. Inside the vehicle, there may be a form of automated handling, presenting individual parcels to the driver. The Daimler Vision Van is an early example of this concept.
The urban DC will also need to support customer pickup, and a network of mobile pickup points.
To support pickup, the DC will require a ‘parcel station’ similar to those used by overnight shippers today. But, being located within an automated warehouse, it will allow for automatic loading of individual lockers, from which consumers would receive their purchase from the back.
Mobile pickup points would be filled quickly with multiple parcels at the community warehouse and then driven to a spot even closer to the consumer (e.g. shopping mall parking lot) where consumers would pick up their parcels.
Some parcels may need even more individualised transport methods. Parcel-drones or small autonomous vehicles similar to Starship could accomplish this. These methods will require different loading processes, since each vehicle will only be loaded for one stop. The warehouse will need a series of small ‘docks’ for these vehicles, and a way of automatically loading into the drone or vehicle.
Another potential scenario is that consumers will send their self-driving vehicles to collect their packages. For that, the DC could use mobile robots to place the goods in the trunk of the car. It is not difficult to imagine a next generation of KUKA’s Mobile Robot (KMR) doing this.
The preceding article in this series Welcome to the future appeared in the November-December issue of MHD magazine and can be read here: This article is to be continued next issue with Scale, flexibility and the need for automation and A question of ownership.
Martin Kohl is senior sales consultant, warehouse and distribution solutions at Swisslog Australia, responsible for Swisslog’s Food & Beverage segment in Australia and New Zealand. He has over 15 years of experience in intralogistics with roles varying from consulting, design and project management to market strategy and innovation. For more information visit

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