John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.
More than two years after the dot-com crash, equipment worth millions sits abandoned in closed warehouses. That may be a nightmare for creditors, but it's proving to be a bonanza for bargain hunters. Among those beneficiaries of the dot-com boom—or more precisely, the dot-com bust—is Henry Schein Inc., a $3 billion distributor of dental, medical and veterinary products. When the company built its new distribution center in Jacksonville, Fla., it was able to scoop up used conveyor equipment from a defunct online grocer for pennies on the dollar.
The conveyors and components came from a facility in Atlanta formerly operated by the grocery dot-com Webvan. And although the equipment is technically second-hand, it's barely used. In 1999,Webvan signed a $1 billion deal with Bechtel to build at least 25 highly automated warehouses around the country, including the Atlanta facility. But shortly after the construction was finished, Webvan shuttered that warehouse, and by July 2001, the company had declared bankruptcy.
Webvan's loss was Henry Schein's gain: "Buying used equipment allowed us to put in better systems for less money," says Dave Kagey, the company's vice president of distribution. In fact, Kagey estimates he paid about 50 cents on the dollar for 15,000 feet of conveyor equipment and related components for the 210,000-square-foot DC—including integration and installation.
"Our budget was built on the assumption that we would use all new equipment," says Kagey. "And though the racking and our high-speed shoe sorter are new, we got very good used mechanized conveyor at a reasonable price. We consumed that budget, but ended up with excess conveyor, which is now being put to use in our other distribution centers." (The leftover conveyor equipment has already been installed in a facility in Reno, Nev., and in an expansion project in Jacksonville.)
Something old, something new
Though installing used equipment may have been cheaper than buying new, it most certainly wasn't easier. To accommodate its client's request to incorporate used material handling equipment into its order fulfillment system, systems integrator Peach State Integrated Technologies first had to locate pre-owned conveyors, sorters, controls, storage racks and shelving, and miscellaneous components. Then it had to evaluate each lot to determine its condition and valuation as well as its suitability for this particular application. And once the two companies had agreed on the Webvan equipment, Peach State had to mobilize a team of project managers, engineers and technicians at the Webvan facility to identify, tag, inventory and stage the equipment for packing and shipping to its new home in Jacksonville.
Time was very definitely of the essence with this job. "We were under the gun to remove all the used equipment from its warehouse location in roughly three days," reports Peach State director of operations Joe Phillips, who spearheaded the project. "This was a monumental task considering that Peach State was not involved in the tear-down of the system, which created an additional challenge in locating, organizing and categorizing all the components." In the end approximately 72 full trailer loads of equipment and materials were removed from the site and placed in temporary storage for its future shipment to the Jacksonville facility.
Included in those 72 trailer loads were critical parts (electronics, scanners, field electrical devices and 15 conveyor control panels) that required special handling. Field devices were placed into totes by type, along with mounting hardware and brackets. Bar-code scanners, cabling and mounting brackets were catalogued and placed in containers for shipment. Control panels were packed for transit, with special packing materials to protect delicate electronics and sensors. Specialty conveyor equipment like sorters and large-radius flat-belt curves were also specially crated for shipment. The remaining conveyor equipment had to be palletized, banded, stretch-wrapped and inventoried prior to shipment.
During the packing and shipping process, a project engineer carefully tagged all of the conveyor units-drive sections, inclines/declines and sorters, for example-with information indicating exactly where they fit into the new DC design. Concurrent with the move, the Peach State team began the detailed engineering work required for integrating the used equipment into the DC's layout. Once that task was out of the way, the project team then had to identify, stage and ship specific pieces of used equipment to the job site for implementation.
Moving day
Back at the job site, assembly was getting under way. And true to predictions, reconfiguring used equipment for a new application was proving to be very different from installing new machinery. "In a typical project, each bed section is shipped from the conveyor manufacturer pre-assembled with new components,"explains Pat Minnucci, a project manager with Peach State. "In this project, every piece of equipment needed to be fully inspected and retrofitted as required on site."
Retrofitting equipment intended for one operation for use in another meant some new components and accessories would be needed. Team members drew up lengthy lists of pieces to order-gear reducers, motors, support legs, odd-length intermediate sections, sorters and guardrails - all of which had to arrive on time to meet the project schedule. Then there were the controls, which also needed reworking to meet the new application's requirements. Peach State worked with Pyramid Controls Inc. of Cincinnati, Ohio, to integrate the used controls and programmable logic control (PLC) panels into the final system, rebuilding them where necessary.
Meanwhile, back in Jacksonville, the installation team coordinated the delivery of equipment from the remote storage facility. New drives, chains, sprockets and other miscellaneous parts were installed. Special support legs and ceiling support systems were fabricated onsite and integrated into the system. Not long afterwards, the facility was up and running.
All that was left was the cleanup. Team members sorted through the leftover pieces of equipment,putting some aside for use as spare parts. After that,Henry Schein and Peach State performed a complete audit and repack of the extra equipment on site at the Jacksonville DC and shipped the product back to a remote storage facility for future use or disposition.
Expandable belts
"It's just a beautiful installation," says Kagey. "If you looked at it, you'd never know the equipment was used. And if you consider the economics of it, we bought the entire batch of conveyor for what we would have paid for new conveyor just to equip Jacksonville. We've still got some left over for later use.
Already expanded once (the 210,000-square-foot operation started out as a 135,000-square- foot operation), the Jacksonville DC has been designed with scalability in mind, capable of handling Henry Schein's distribution needs well into the future. According to the company's projections, volume will increase from the current 10,000 cartons a day (at peak demand) to 12,000 cartons in 2005. The DC handles approximately 18,000 lines, a number that will increase to 22,000 in two years. And picking rates are expected to climb to 121 lines per hour in 2005, up 20 percent from current levels.
How are those conveyors working out? As the pharmaceutical company sees it, they've been put to a better use than just gathering dust. "The successful implementation of the conveyor system has helped us provide next-day service to over 99 percent of our customers in the Southeast," says Jay Fisher, the site's DC manager. "It's been a real victory for everyone involved, including our customers."
some (dis)assembly required
For Henry Schein Inc., the gamble paid off. Dismantling Webvan's Atlanta distribution center gave the company access to yards of conveyor equipment and components in excellent condition at bargain basement prices. But not every company prowling the dot-com graveyard is so lucky. There are plenty of horror stories out there about buyers of cheap used equipment who found that it wasn't such a bargain after all. Here's some advice from the team that made it work.
Check the fit. No matter how cheap it is, a conveyor that's not the right size is no bargain. The conveyor Henry Schein purchased was actually built to move grocery items, not medical products. However, the conveyor width was the same, making it usable.
That's used, not abused. Bob Frye, solution development manager at Peach State Integrated Technologies, recommends supervising the equipment takedown process if at all possible. "It would behoove [the buyer] to control actual demolition of product if it's still installed," says Frye. "With Webvan, we came in on the tail end of the de-installation. It was taken down by a group that didn't care what it was used for in the future, and there was a considerable amount of unnecessary damage during the takedown process. That results in more costs on the back end when you go to re-install the conveyor."
Look at total costs. Dave Kagey, vice president of distribution for Henry Schein, warns that it's easy to overpay for used equipment if you can't see the big picture. Integration and installation costs for second-hand equipment can mount up quickly, he says, potentially offsetting the savings. In this regard, his company was lucky. Henry Schein got such a good price on its conveyors, Kagey says, "that we knew that even if we had to throw the leftover stuff into a Dumpster, we'd still be way ahead of the game." But with a less favorable deal, he warns, a company could easily end up taking a big financial hit.
Get the history. Frye says it's critical to inspect the used equipment thoroughly to make sure it's in good working condition. That requires more than a visual examination. "Be sure that it's been applied properly and maintained properly so it will work when put into your facility," he says. The former Webvan equipment installed in Henry Schein's DC was so new that its condition was not an issue, but there's always the danger of being taken in by machinery that looks better than it run.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.