Singapore welcomes smart warehouses

The fourth industrial revolution is beginning to change the way manufacturing and logistics companies operate and use real estate.

May 17, 2018

In Singapore, one of the world’s biggest logistics hubs, industrial space is no longer just grubby storage units and greasy machine shops.

The fourth industrial revolution – the Internet of Things, cloud computing, robotics, big data, cyber security and additive manufacturing – is beginning to change the way manufacturing and logistics companies operate and use real estate.

Last year, Coca-Cola opened the first warehousing facility in Singapore where the automated storage and retrieval system was built on top of the loading and unloading bays.

The US$57.5 million storage and distribution centre in Tuas took up about half the space of conventional warehousing operations. It also meant goods can be accessed more quickly and safely, as employees do not need to use a forklift to retrieve pallets.

While the majority of Singapore’s industrial and warehousing space is still traditionally equipped, “going forward, we expect the quantum of smart space to grow,” says Doreen Goh, associate director, research & consultancy at JLL Singapore.

The next generation of warehouses

Smart warehouses or industrial space are essentially facilities where various business processes can be interconnected via the cyber network, and the system is intelligent enough to adapt and learn from different business situations and run the entire business operation with minimal human intervention.

As part of Singapore’s Smart Nation plan, the Smart Logistics initiative charts a path for the development of a cutting-edge logistics network in Singapore.

Smart warehouses or industrial space should come with higher building specifications that enable firms to embrace Industry 4.0 initiatives, Goh says. For example, they might offer higher floor-loading capacity, higher electrical loading and fibre optic infrastructure.

DHL launched its Advanced Regional Center (ARC) in Tampines LogisPark in 2016. Its multi-customer automation system improved picking efficiency by 20 percent and utilises 40 percent less space than conventional warehousing operations.

 “We are only gradually seeing some introduction of technologies into industrial and logistic space, with more automation and some robotics used in the manufacturing and assembly process,” says Adrian Toh, director (industrial) at JLL Singapore.

“Automated storage and retrieval systems (ASRS) for logistics is now making a comeback with more reliable systems and software. These systems increase efficiency and reduces the reliance on manpower, but the high investment outlay means that it may not be for everyone.”

Getting more from Singapore’s space

More efficient use of land fits well with the Singapore government’s desire to encourage higher land productivity. Land zoned for industrial and warehousing use can be more productive or potentially be turned to a higher-value use, Goh says.

She adds: “With more companies expected to adopt smart initiatives, we foresee demand for higher specification premises that can allow end-users to set up their smart facilities to grow. This includes end-users looking to custom-build their own smart facilities.”

For example, Yusen Logistics is building a warehouse in Tuas with new smart features to improve efficiency. The three-storey warehouse will be driven by the use of technologies such as smart data, radio-frequency identification to track inventory, robotics to move inventory and autonomous technology. The technological changes will also allow staff to upskill to better jobs.

As such technology becomes more widespread, industrial and logistics landlords may find they need to upgrade their space to meet the demands of tenants whose business model is changing. Goh says: “Landlords should pro-actively evaluate the suitability of their existing industrial premises and upgrade or rebuild where necessary to cater to the digital economy to stay in or ahead of the competition.”

Toh adds: “Changes to the physical shell are limited unless landlords rebuild, but upgrading the power supply and making buildings fibre-ready are quick and easy fixes.”