Short Takes: Shrink-Wrapped

Warehouse network contraction and expansion are a way to restructure to meet the demands of the economy, and current restructuring has a definite vector toward contraction. Warehousing Education and Research Council surveys conducted in 1993, 1998, and 2002 show that the size of warehousing networks in the U.S. has continued to decrease steadily for almost a decade.

Average network size changed from 5.38 warehouses in 2001 to 5.24 in 2002, with a predicted decrease to 5.17 in the next year, a 48.6% rate of decline between 1998 and 2002. The most recent WERC survey found that warehouse network shrinkage has been most notable in the Great Lakes and Southeast regions, while the Mid-Atlantic region has actually seen a net gain of six facilities in the last year.

Consumer goods companies lead the decline in average number of warehouses in networks, but almost 60% of 2002's survey respondents agree that sales, including inventory turns, will have the greatest effect on their decisions to maintain or eliminate facilities; 20% named general business conditions as a significant factor.