Warehouse planning levels up with AI

As inventory challenges and supply chain woes ease, retailers are looking for ways to make their last mile more efficient.

Why it matters: This is set to drive continued investment in supply chain tech, especially in last-mile delivery, autonomous delivery and fulfillment, and supply chain visibility.

Driving the news: Prologis, the logistics real estate provider, tapped property tech company TestFit's tech to help them figure out where to deploy new warehouse space.

• TestFit's AI algorithms can provide real-time insights into an area that has the potential to be a warehouse site and can assist with optimizing design, constructibility, and cost forecasting for early-stage planning.

What they're saying: "Historically, you have these big distribution centers," TestFit CEO Clifton Harness says. "Now we have much smaller distribution centers that are located everywhere."

How it works: TestFit, which got its start using its tech to determine where to build multi-family housing, inputs data like parking demand, trailer demand and topography.

• "Companies should use the least amount of space possible," Harness says.
• "We want to build the buildings that we need, not to fit the buildings that we built," he adds.

Reality check: As consumers return to stores and curb online spending, the need for warehouse space has shrunk.

• Newly leased space declined about 36% in the second quarter, according to Cushman & Wakefield.

Yes, but: Amazon has moved away from big warehouse spaces and focused its efforts on building smaller fulfillment centers in areas like Omaha, Nebraska, and Sioux Falls, South Dakota.

• Those centers can carry smaller, more high-flying items and also serve as a middle-mile solution to allow inventory to move strategically across its vast network.
• This is all in service of getting packages to customers' doors more quickly, Amazon says.

What's next: Harness says he can see TestFit being used in other applications, like retail and hotels, down the line as well.

• "AI is good at figuring out how to squeeze the most amount of value out of the space as possible," he says.

Catch up fast: Dallas-based TestFit raised $20 million in Series A financing led by Parkway Venture Capital in July.

• Prologis Ventures also participated in the round.
• TestFit has raised $22 million in total.