Top 10 Operational Impacts to Distribution Centers During COVID-19

by | 20 April 2020

Colliers’ Supply Chain Solutions team continues to monitor and evaluate the short and long-term impacts and disruption to the supply chain. In our “COVID-19 Supply Chain Update,” we provided an overview on the major trends related to the supply chain and industrial real estate areas resulting from COVID-19. The overall financial impact of this worldwide epidemic is still unknown; however, we surveyed the top 15 retail distribution center operations and have identified the immediate and current effects on distribution center operations below.

top 10 trends to operating Distribution centers

  1. Implementation of temperature check screenings: Employees are required to have their temperature checked with forehead scanners at all points of entry. If anyone has a fever registering more than 100.4 degrees (Fahrenheit), they will be sent home to self-quarantine. Those testing positive for COVID-19 will be paid for time off.
  2. New cleaning and sanitization services: Distribution centers are being scheduled for cleanings “as needed”; this is a two-to-three-day process for buildings larger than 500,000 square feet.
  3. Increase in hourly rates and bonuses: Pay hikes ranging from $2.00/hour up to $3.50/hour are being called appreciation bonus; where no pay hike is offered, many distribution centers are offering 80 hours of ‘emergency time’ available and paid out at the end of the year, if unused.
  4. E-commerce approaching or exceeding peak levels: E-commerce distribution centers are currently operating near, at, or over peak levels.
  5. Cross-training of employees to promote social distancing: Some retail distribution centers are now cross-training employees to use apps, like Dozuki, to distribute best practices, reduce quality issues and implement standardization.
  6. Transitioning employees to follow social distancing guidelines in the working environment: Restructuring flow of employees to adhere to social distancing norms (seating in break areas/cafeterias, lines into the common areas of the building).
  7. Decreasing size of in-person meetings and training: Hosting smaller orientation and onboarding groups.
  8. Prevent crowding by staggering shifts and breaks: Shift staggering with equipment cleaning between shifts may be implemented to reduce risk of infection to employees.
  9. Limit transfer of equipment by assigning equipment to specific users: Another potential implementation is the assignment of radio frequency and lift equipment to specific users per shift or per day to minimize sanitization and the spread of virus,
  10. Dividing functional areas or spaces within large distribution centers: For distribution centers larger than 200,000 square feet with multiple functions, separating the building footprint into functional areas with individual entrance/exit points to enable sectioning off areas if affected by virus. This may minimize sanitization needs and keep parts of the distribution center running while others are decontaminated.

About the Author:

Todd Steffen is a Chicago-based vice president in the Supply Chain Solutions team within the Occupier Services platform. Todd partners with Colliers’ advisors to provide supply chain consulting services ranging from strategic capability assessments and development to operational guidance on inventory management, transportation, procurement, and omni-channel distribution network optimization. Todd brings more than 25 years of large-scale supply chain expertise and worked for leading companies such as EY and Walgreens.