3 in 4 US manufacturers admit their warehouse networks are falling behind

3 in 4 US manufacturers admit their warehouse networks are falling behind

A recently released Warehouse Specialists Inc, LLC (WSI) survey of 306 supply chain, operations, and logistics leaders at U.S. manufacturing companies found that 75% agree their warehouse network evolved organically over time rather than being designed strategically. Another 73% say their current warehouse model was built for a different operating environment than the one they face today.

In many U.S. manufacturing companies, warehouse networks began as practical extensions of the plant. Production happened in one place, and finished goods moved next door, down the road, or into a nearby building that could hold inventory until a truck arrived. The logic was straightforward. Keep storage close to production, keep costs down, and add space when the business outgrows the existing network.

Over time, that approach created networks that worked well enough but were never meant to add up to a national distribution strategy. The footprint was built for yesterday’s assumptions, and the operating environment has changed around it, creating a quiet crisis plaguing manufacturing warehouse networks during a highly turbulent time.

The network legacy problem

Manufacturing warehousing has always been shaped by control. Products may be heavy, hazardous, high value, temperature sensitive, lot controlled, rail served, or difficult to handle without specialized equipment and trained labor. For decades, those requirements reinforced the idea that warehousing belonged close to the production floor and, often, under internal management.

WSI’s survey, How Manufacturers Are Structuring Warehouse Operations in 2026, reflects that legacy. Nearly half of manufacturers still operate their primary U.S. warehouse or distribution center with their own internal teams. Another 32% use a company-owned or leased facility operated by a 3PL provider, while smaller shares use dedicated contract warehousing or mixed models.

This self-reliant model has advantages. It gives manufacturing leaders direct visibility into inventory, tighter coordination with production, and more control over processes that can carry real compliance or customer risk. But it also leaves companies managing infrastructure that may no longer match where their customers, suppliers, labor pools, or cost pressures now sit.

The survey found that 83% of manufacturers have highly or somewhat centralized warehouse networks. That centralization usually tracks production, with inventory clustered where products are made. Yet only 35% have their primary facility within 10 miles of production, even though 59% say proximity to the plant is very important.

That gap matters. A centralized network can be efficient when production, storage, labor, and outbound transportation are aligned. It becomes much harder to defend when the plant, the warehouse, and the customer base are all pulling the network in different directions.

The external pressure is no longer theoretical

The warehouse problem is not happening in isolation. U.S. manufacturing is being pushed by a wider set of forces that are changing where companies produce, source, store, and distribute.

Reshoring and foreign direct investment, or FDI, continue to add new manufacturing activity in the United States. The Reshoring Initiative reported that 244,000 U.S. manufacturing jobs were announced in 2024 through reshoring and FDI, with more than 2 million jobs announced since 2010. Manufacturing construction spending remains elevated as well. Federal Reserve data sourced from the Census Bureau showed manufacturing construction spending at a seasonally adjusted annual rate of $185.7 billion in April 2026.

At the same time, trade volatility is adding pressure to warehouse strategy. Deloitte’s 2026 manufacturing outlook reported that 78% of manufacturers in a National Association of Manufacturers survey named trade uncertainty as their top concern, with expected input cost increases averaging 5.4% over the next year.

Warehousing is where many of these pressures physically show up. Tariff uncertainty can lead companies to front-load inventory, while supplier diversification can change inbound flows. Reshoring can move production closer to U.S. customers but farther from existing storage. And regionalization can require more capacity in markets where a company has never operated.

CBRE’s 2026 industrial outlook points in the same direction, forecasting a 5% year-over-year increase in industrial leasing activity to nearly 1 billion square feet. The firm expects new leasing to be driven by a flight to quality, more outsourcing of distribution operations, and continued reshoring of manufacturing operations. It also estimates that 3PLs will account for more than 35% of leasing activity in 2026.

In other words, the warehouse is becoming a pressure valve for manufacturing strategy. The companies that once treated storage as a secondary function are now being forced to decide whether their networks can support a more volatile, regional, and capacity-constrained operating model.

The numbers behind the redesign

WSI’s survey shows that manufacturers are not simply aware of the problem. Many are already responding. In fact, 88% expect some kind of U.S. warehouse or distribution footprint change in the next 18 months.

Key findings include:

• 48% cite warehouse operating costs as a top operational challenge.
• 35% cite storage capacity as a top challenge.
• 35% cite inventory accuracy and visibility as a top challenge.
• 35% are adding U.S. warehouse capacity to support reshored production.
• 34% are repositioning facilities closer to new manufacturing locations.

The data points to a market in motion, although it’s not moving in a single direction. Some manufacturers are expanding, others are consolidating, and many are reconsidering what should stay in-house versus move to an outsourced or contracted model. In essence, warehouse network strategy has shifted from site-level troubleshooting to regional and national redesign.

Efficiency still matters, but it is no longer the only measure of a strong network. Manufacturers are now weighing cost against resilience, proximity, compliance, labor availability, inventory strategy, and transportation exposure.

The capex trap

One reason warehouse networks are hard to change is that old decisions are expensive to unwind.

Prior capital investments can create a powerful bias toward staying put. A company may own a warehouse that no longer sits in the right place. It may have installed racking, automation, bulk handling equipment, or compliance infrastructure that is difficult to replicate elsewhere. It may have a lease that made sense before demand shifted. It may have built processes around a specific facility layout that now limits throughput.

WSI’s survey found that nearly three-quarters of manufacturers have delayed or avoided warehouse changes at least somewhat because of prior capital investments. Of those, roughly 21% say those investments constrained them significantly, while 53% say they constrained them somewhat.

Capex is not stopping most manufacturers completely; it is slowing them down by creating friction at the exact moment when market conditions demand faster network decisions.

The result is a type of operational inertia. Companies know the footprint needs to change, but the existing network still has sunk cost, institutional knowledge, and internal defenders. Warehouses are not buildings alone but labor models, compliance systems, customer commitments, carrier routines, technology connections, and management habits.

Why 3PL relationships are under strain

If manufacturers are rethinking the warehouse footprint, 3PL relationships will inevitably come under review.

The WSI survey found that 67% of leaders have grown more likely to consider switching third-party logistics providers because of friction over the past 12 months. It also found that 75% agree that managing multiple 3PL relationships creates more complexity than value, while more than half are already managing two to three providers.

This does not mean manufacturers want a generic outsourced model. In fact, the survey suggests the opposite. Sixty percent of companies have ruled out a 3PL partner specifically because the provider lacked experience with their industry or product type. When evaluating a dedicated warehousing partner, leaders cited cost and pricing transparency, compliance certifications and track record, proximity, technology and visibility tools, scalability, and industry expertise as top criteria.

This highlights a more selective 3PL market. Manufacturers may want fewer partners, but they also want better ones. A warehouse partner must understand the product, the regulatory environment, the handling requirements, the transportation profile, and the strategic reason a facility exists in the first place.

Outsourcing requires a partner that can help redesign a network without stripping away the operational control manufacturers still need.

The next warehouse network will be more intentional

The next phase of manufacturing warehousing will likely be defined by deliberate network design rather than incremental expansion.

That does not mean every company will outsource. Some manufacturers will keep warehouses in-house because the product, compliance profile, or production model demands it. Others will use 3PLs to add regional capacity without committing capital to new real estate. Some will consolidate providers to reduce complexity. Others will split their networks by product type, region, or customer requirement.

The strongest redesigns will begin with a more fundamental question: What job does each warehouse need to do now?

Once that purpose is clear, the partner decision becomes more precise. The right 3PL can support network analysis, phased transitions, inventory visibility, compliance documentation, technology integration, labor stability, specialized material handling, and facility placement that matches the manufacturer’s next operating model.

The warehouse built for the old environment may not disappear overnight. Many of those buildings will remain part of the network because they still serve a purpose. But the assumption that the inherited footprint is good enough is weakening.

Three-quarters of manufacturers have already admitted that the network grew by accident more than by design. The next question is whether they can redesign it before the cost of waiting becomes harder to absorb.

This story was produced by WSI and reviewed and distributed by Stacker.