Blog March 20, 2024

Industrial Outdoor Storage (IOS) in Today’s Logistics Landscape

March 20th 

Last week, LIDD partner, Jennifer Hall, participated as a panelist at the ICON West event in Long Beach. The panel comprised industry experts from MG2, CBRE, Dalfen Industrial, and NFI, who provided invaluable insights into the evolving landscape of industrial outdoor storage (IOS).

Given the escalating demand for IOS, how can companies make sure they are maximizing capacity by strategically positioning IOS within an overall logistics portfolio? What are development considerations and zoning regulations around doing so?

The panel event touched on these topics, which we dive into in a little bit more detail below:

Positioning IOS in the Logistics Portfolio

IOS properties have garnered significant attention as essential components in the overall logistics portfolio given rising space constraints.

With the exponential growth of e-commerce and the diversification of product lines, the demand for indoor storage capacity has surged, resulting in a scarcity of available warehouse space. This spatial limitation has a ripple effect for the overall network, compelling companies to reevaluate their supply chain, including outdoor storage and yard activity.

Ideally, companies would have land large enough to accommodate warehouse and yard activity, but this is not really that feasible. Land site is usually double to triple the building site depending on the size of the building, so companies are increasingly compelled to separate their outdoor storage from warehouse facilities.

In this case, addressing the spatial challenges within the logistics network becomes slightly more complex. Here are few factors to consider:

Optimal Space Utilization:

  • Maximizing utilization of available space is key. This calls for a comprehensive assessment of storage requirements, process refinement, and the strategic allocation of resources. For example, a business could look at implementing cross-docking and transloading operations to drive efficiencies between their warehouse facility and outdoor storage space. These operations facilitate the efficient transfer of goods between indoor and outdoor locations, enabling swift consolidation and redistribution of inventory within the supply chain network. In other words, it plays a big role in enabling efficient inventory consolidation.

Flexibility and Scalability:

  • The ability to adapt to fluctuating inventory levels and seasonal demands requires a flexible approach to storage solutions and transportation fleets. Adaptability ensures that the network can dynamically adjust to changing needs without compromising operational continuity. For example, optimizing the distribution of inventory across indoor warehouses and outdoor storage spaces based on regional demand patterns and consumption trends should be considered to maintain optimal stock levels and responsiveness to market dynamics.

Risk Mitigation:

  • Managing the risks associated with your network capacity at large, including potential bottlenecks in distribution and fulfillment, calls for proactive measures to safeguard against disruptions and inefficiencies.

Network Optimization:

  • Building on the previous point, the big takeaway here is that a holistic approach to storage and distribution network optimization is essential. There needs to be an alignment in the placement of storage facilities with transportation hubs, demand centers, and key supply chain nodes to minimize logistical complexities. As businesses are driven to decouple their warehouse facility from their IOS space, strategically positioning distribution centers and indoor warehouses near transportation hubs and demand centers becomes even more critical. Especially as the need for efficient transfer of goods between indoor and outdoor spaces intensifies.

Outdoor storage has traditionally been an overlooked space in the industrial landscape. As companies increase investments within the four walls of their supply chain, these spaces have transitioned from being neglected assets to essential components. They must not become bottlenecks in the overall process. Or in other words, it’s important to not let IOS become the “squeaky wheel” in your operations.

Industrial engineering, software, and technology are crucial tools for maximizing capacity in the supply chain, and these principles extend to outdoor storage and yards.

Legislation and Zoning

There is also a crucial consideration around land entitlements and design. The panel discussed the critical importance of legislation and zoning regulations governing outdoor storage facilities. Navigating through the complex process of entitlements, including obtaining and respecting the necessary permits and approvals, is a big component in establishing and expanding IOS spaces.

It’s worth highlighting that owners have a responsibility to ensure their tenants comply with zoning codes and intended use. If a tenant does not comply with the intended use of the space and, in turn, disrupts the neighborhood, cities may be less inclined to zone for IOS. This further increases scarcity and creating a lose-lose situation for all.

As supply chain operations grow in scale and intricacy, every element of the supply chain, including outdoor storage and yard activity, now demands serious engineering and investment. For more insights and updates on the topic, reach out to Jennifer Hall directly [email protected] or click the link below.

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