Distribution centers will require more automation, more capital equipment and mostly larger DCs. A large DC a few years ago might have been 500,000 sq. ft. and it is now 1 million or 2 million sq. ft., and they hold potentially an order of magnitude more items or SKUs.

Customers demand an omnichannel shopping experience that allows them to order from anywhere. Therefore, the supply chain has to be able to deliver according to the consumer’s wishes. For example, retailers now include shipping from stores as a distribution option. This increased responsiveness to customers is changing the way a distribution network is set up and managed. Developing an omnichannel supply chain strategy requires rethinking the number and location of distribution centers, as well as their layout and design features.

3-D printing and other additive manufacturing technologies, which digitize and reproduce tangible goods will impact how you decide where to locate a DC. Decentralization of production is a trend being fueled by an increase of customization options toward the end of the manufacturing cycle. The size of manufacturing plants will become smaller and move closer to where consumers live. This will have a significant change on distribution of goods because you won’t have as much long haul.

Hakan Andersson discusses the topic—where you locate your distribution centers (DCs) matter more than you think. It is a topic that Hakan believes is about the fundamentals in supply chain management. The reason is that this is where you have the chance to really make things good and to change things from the bottom up.