Dive Brief:

• Nestlé and XPO Logistics will build a 638,000-square-foot distribution center in Leicestershire, U.K., which will serve as a "testbed environment" for new technologies for the logistics space, according to a press release.
• This "warehouse of the future" will be completed in 2020 and will use automation and artificial intelligence (AI) to streamline operations and improve the efficiency of Nestlé's supply chain.
• The move aligns with XPO's initiative to be not just a 3PL, but a global tech company, following a host of new tech releases over the past 12 months.

Dive Insight:

XPO Logistics continues its progression toward becoming a tech-driven 3PL with the announcement of this new warehouse, which the press release said will use automation technology provided by Swisslog Logistics Automation as well as "intelligent machines."

According to more details provided to Supply Chain Dive by XPO, the company will "deploy collaborative robots, indoor drones, advanced sortation systems, and lots of other automation. Smart robots will take products from storage and build mixed pallets with a range of case sizes and brands. Huge gantry robots will build what’s called rainbow pallets, with layer after layer of different Nestle products."

Differentiation in the logistics space is becoming increasingly paramount for 3PLs to stay afloat, as "middle men" in other industries become obsolete.

Both XPO and Nestlé are playing the long game: they know e-commerce giants like Amazon are a threat to all industries, and especially in tight markets for food and logistics, to innovate is to survive.

"The lab will be an incubator and a launch pad for all kinds of technology related to supply chains," XPO told Supply Chain Dive. "We expect it to have far-reaching impacts in the industry. More directly, it will encourage Nestle’s global operators to think innovatively and interact with our technology team. It’s a way to future-proof Nestle’s supply chain."

For Nestlé, automating its supply chain and streamlining logistics through XPO could be the competitive edge it needs to outpace other food companies in a very tight food market. The chocolate company already has a majority stake in organic and natural food, as well as a plan to move all its products to environmentally-friendly packaging by 2025, to keep up with current consumer tastes.

Now, it's prepping its logistics network to meet consumer demands.