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Tackling land scarcity across various Australian industries

The Diageo AS/RS System in Huntingwood has integrated high-density warehousing right next to its Sydney manufacturing centre.| Image: Dematic

In this op-ed for MHD, Dematic’s Consulting Manager, David Lamb, explains how land scarcity in Australia is affecting the overall production of various industries, and they are mitigating these challenges to maximise efficiency and streamline supply chain operations.

Many Australian industries from food and beverage to retail, wholesalers, and spare parts, face a common challenge today – land scarcity due to urbanisation. Considering this, there is a need to explore strategic responses and new approaches to navigate the immediate challenge and future uncertainties.

Land shortages: Maximising efficiency in a crowded landscape

The phenomenon of urban sprawl, particularly along Australia’s eastern seaboard, has significantly impacted food and beverage, retail, wholesaler and spare parts supply chains. With more than half of Australia’s population residing in just three cities on the eastern coast along with a significant spike in ecommerce, the demand for land in these urban centres has soared, creating severe land scarcity. As a comparison, in the UK or the US, this proportion of the population would instead be spread across approximately 9 and 27 cities respectively.

The situation is most acute in Sydney, where a CBRE report found that there was only a 0.2 per cent vacancy rate for buildings of 5,000 square metres or more during the first six months of last year. This is the lowest rate recorded globally. CBRE said rents in Sydney are highest at $215 per square metre, compared to $119 per square metre in Melbourne, where the vacancy rate was also higher.

Innovative solutions to urban congestion

Food and Beverage

While focusing on grocery retailers, it becomes apparent that a high-density population combined with high real-estate costs has led to a transition to smaller footprint metro stores, so retailers can stay closer to their customers and better service their needs of convenience in our major cities.

The shift towards these smaller stores, with more distributed networks, requires strategically located facilities and the need to get the most out of the limited land available. By co-locating and integrating warehouses with existing manufacturing sites, the food and beverage industry aims to streamline operations, reduce transportation needs, and mitigate the impacts of urban congestion.

While considering their logistics footprint, food and beverage suppliers must implement optimised solutions that not only enhance economies of scale but also maintain agility in response to fluctuating market demands, without sacrificing performance. They must leverage their existing land footprints to achieve increased storage capacity, heightened throughput, improved facility velocity and greater overall value, ensuring every square inch contributes to operational efficiency and effectiveness.

One leading solution used for this logistics requirement is an Automated Storage and Retrieval System – AS/RS, which offers a way to significantly enhance storage efficiency within the limited available space. Combined with the capability of automatically loading and unloading trucks, this solution provides a fast, accurate and cost-efficient storage and delivery solution.

The Diageo AS/RS System in Huntingwood exemplifies this approach, integrating high-density warehousing right next to its Sydney manufacturing centre. This strategic move not only improves storage efficiency but also reduces the logistics footprint by eliminating the need for multiple storage locations and minimising truck movements and manual operational touches between facilities.

Retail, wholesalers and spare parts

With the rise of e-commerce, consumers have grown accustomed to expedited shipping options, and many expect their orders to arrive rapidly now. As a result, retailers are increasingly using speed as a competitive differentiator. In markets like Korea, companies such as Coupang have set the bar high by offering lightning-fast 2-hour deliveries.

In today’s fast-paced retail landscape, the strategic positioning of distribution centres close to stores and consumers has become a critical factor for success. This facilitates faster order fulfilment, streamlines transport and logistics, and reduces the need for extensive backroom store operations.

For wholesalers and spare parts operations, proximity to their business-to-business (B2B) customers is necessary to meet the demands of a quick turnaround market. Whether it’s mechanics repairing vehicles, mining operations maintaining heavy machinery, or builders overseeing construction projects, the ability to access parts quickly is essential for ensuring uninterrupted operations. By locating distribution centres near their B2B customers, wholesalers can streamline their supply chains, reduce delivery times, and provide the level of service necessary to support their clients in meeting their deadlines and commitments.

Retailers, as well as wholesalers and spare parts operations, are further optimising their supply chain footprint, overcoming current labour availability challenges and ensuring that products reach their intended destinations quickly and efficiently, through automation. Solutions such as the Dematic Goods-to-Person (GTP) Multishuttle system, AutoStore™ systems, and Autonomous Mobile Robot (AMR) picking systems are capable of enabling high-capacity reach picking, which is ideal for retail, wholesale and spare parts distribution centres.

Leveraging innovation and efficiency to overcome challenges

As the food and beverage, retail, wholesaler and spare parts industries look to the future, they face a landscape marked by rapid change and increasing complexity. The challenge of land shortages necessitates a strategic approach that balances immediate needs with long-term sustainability.

David Lamb, Consulting Manager, Dematic

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