GXO Logistics & DHL Supply Chain: CEO Transition, Automation Bottlenecks, and M&A Playbook

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Why is that? Is it because you don't have space to add more people, or is there another reason?

You have several competing factors in a warehouse. You have warehouse space efficiency, productivity, and flex capacity, the ability to ramp up and ramp down. For instance, at Christmas time, in e-tail centers, a warehouse might be very space efficient and productive, but if you can't surge an extra 200 people in there to handle Christmas volumes, then you get handcuffed. Right now, there is so much technology out there, so evaluating the right technology that makes sense, that's flexible, that's scalable, that doesn't eat up a ton of space, is critically important. You need to make the right decisions, not just get robots into a warehouse because it looks good.

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Another thing you mentioned is that you realized life sciences companies were ready to outsource their logistics operations. What's usually the trigger for a company or industry to start outsourcing when they used to do it internally?

What prompted this change was a leader within Novartis who recognized they weren't very good at supply chain management. They were spending a lot of money on warehouses that were in the wrong locations. As they grew, their operations became over-engineered and inefficient. This leader knew they needed a professional supply chain partner and trusted us because we were committed to the space. He trusted that we had the ability to operate and understood our commitment to distributing life-saving drugs.

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