Cutting supply chain costs is top priority

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Supply chain managers regard pressure to reduce costs as the top trend over the next five years, according to a European logistics occupier survey by Jones Lang LaSalle.

Costs accounted for 71 per cent of responses while 61 per cent identified speed of change in consumer markets as a top trend – ahead of growth in internet retail at 39 per cent.

Survey findings are based upon qualitative analysis of information provided by 50 European 3PL, retailer, manufacturer and waste to energy respondents.

Respondents ranked rising energy / transport costs (95 per cent), changing consumer demand (76 per cent) and transport infrastructure constraints (66 per cent) as the three biggest challenges over the next five years.

“The top three trends and challenges indicated in the survey reflect sensitivity to supply chain risks and a shift towards multi-channel distribution,” said Alexandra Tornow, head of EMEA logistics and industrial research at Jones Lang LaSalle.

“Shifting consumer purchasing behaviour is putting retail companies under high pressure to differentiate offerings, manage shorter product lifecycles and improve speed to market, including a growing home delivery segment. This requires the re-alignment of existing distribution networks to successfully service complex, multi-channel operations.”

The survey found that floor space requirements  were in alignment with the top trends and challenges. More than 75 per cent of respondents require either new build (33 per cent) or modern (44 per cent) floor space while around 50 per cent of respondents require distribution floorspace over 10,000 sq m. Furthermore, more than 50 per cent of respondents state they do not want to commit to leases longer than five years.

Tornow said: “We expect latent demand for modern logistics floor space to come back to the market over the first half of 2013 when a global economy recovery is kicking in according to latest consensus forecasts.

“By that time modern available floor space will be in short supply in the majority of markets further fuelling build-to-suit development activity. For equity strong developers willing to be more opportunistic and return to speculative development this could present an excellent opportunity to capture returning demand ahead of the competition.”

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