Factories Are Modernising Fast. Their Warehouse Networks Were Never Designed for It

Plants have spent the past few years making production faster, more flexible and more automated. The buildings that store and move what those plants make have rarely received the same attention. A new survey of manufacturing supply chain leaders suggests that gap is now a constraint in its own right: output gains are only worth what the network behind them can absorb.

Warehouse Networks Grew by Accident, Not by Design

The WSI Warehouse Network Survey polled 306 supply chain, operations and logistics leaders at US manufacturers in April 2026, across industries including chemicals, metals, food and beverage, building materials and electronics. Its headline finding is that 75% of respondents said their warehouse network had evolved organically rather than strategically. The report warns that this creates structural constraints as operating conditions become more complex.

A summary of the findings published this week adds detail. Some 73% said their warehouse model was designed for a different operating environment, and 73.5% said earlier capital investments had led them to delay or avoid changes. Storage capacity and inventory accuracy or visibility were each named by 35% as the leading operational challenge. Jesse Jones, WSI's vice president of operations, said: "I don't know that optimizing a particular facility or a group of facilities individually is going to address inefficiencies that are kind of baked in."

That distinction matters. A plant can tune a single site for years and still be limited by where its stock sits, how many hands it passes through and how well anyone can see it.

Buffers Are Standing In for Visibility

The survey shows how plants have coped. Some 63% increased safety stock or inventory buffers over the previous two years, which is a sensible hedge against disruption but also a sign that planners do not trust the network to respond. Extra inventory needs extra space, and storage capacity is already the joint most-cited constraint. The result is a loop in which buffers consume the capacity that better flow would have freed.

Location is part of the problem. According to the same summary, 59% of respondents consider proximity between warehousing and manufacturing very important, yet only 35% have their primary warehouse within 10 miles of production. As reshoring and new plant investment shift where goods are made, the footprint built around the old map is being asked to serve a new one.

Managers are starting to act. About 75% are rethinking warehouse strategy at a regional or national level, 35% are adding US warehouse capacity for reshored production, and 34% are repositioning facilities closer to new manufacturing locations. Looking ahead, 39% expect to expand capacity or locations within 18 months, while 31% expect to consolidate.

The Gains From Smart Manufacturing Can Stall at the Dock

The pressure to modernise production is real. In its 2025 Smart Manufacturing and Operations Survey of 600 executives at large US manufacturers, Deloitte found average production output improvements of 10 to 20% after implementing smart manufacturing, along with 10 to 15% of unlocked capacity. A separate Corning Data sentiment report, also covered in the summary above, found that 43% of manufacturing respondents see industrial AI as a transformational growth tool and a further 29% see it as an important capability.

The same report shows how uneven the follow-through is. Half of respondents said innovation initiatives were progressing steadily but slowly, and only 31% said they move quickly from pilot to scale. Put the two surveys side by side and the exposure is plain. If a line produces 15% more but the network that stores, picks and ships its output has not changed, the extra volume lands in a system already short of space and visibility.

What Operations Leaders Should Do Now

The fix is not a rebuild of every facility. It is treating the warehouse network as part of the production system and planning it in the same way.

• Map the network against the plants it serves: chart every warehouse by distance, lead time and cost to each production site, and flag where the footprint reflects history rather than current demand.
• Plan production and storage together: before approving a line upgrade, test whether receiving, storage and outbound flow can handle the additional throughput.
• Question every buffer: for each increase in safety stock, ask what information gap it is covering, and whether better visibility would release the space it occupies.
• Fix inventory accuracy first: a network redesign built on unreliable stock data simply moves the errors to new locations.
• Look beyond single-site optimisation: as WSI's Jones suggests, inefficiencies that are baked into the network will not yield to facility-by-facility tuning, so review the footprint at regional or national level.
• Write down why change was delayed: with 73.5% citing earlier capital investments, sunk cost is a major brake, so make the cost of keeping the legacy footprint visible in the business case.

Modernising the plant was the easier half of the job. The harder half is admitting that the network around it was assembled over decades, for conditions that no longer exist. Operations teams that plan both together can hold on to the gains they have paid for. Those that do not may find them waiting in a queue.