Digi-Key facility expansion sets new standard for automated warehousing

For more than four decades, Digi-Key Electronics has called Thief River Falls, Minnesota its home. This modest town of 8,500 people located in the far northwest corner of the state is just 70 miles from the Canadian border. From this remote locale, Digi-Key has evolved into one of the world’s leading global electronics distributors because of its steadfast commitment to its customers and a penchant for fueling innovation.

Amid explosive online sales growth, Digi-Key needed more space to store its massive electronics inventory and to process online orders. Its existing 800,000-square-foot building was bursting at the seams.

The complexity of the three-year project presented significant economic and labor hurdles. Digi-Key had to balance its desire to improve efficiencies and reduce operating costs with the best interests of its employees and the community. While Digi-Key wanted to remain in Thief River Falls, it was necessary to explore building opportunities and development sites both in and out of the region.

Digi-Key engaged a multi-disciplinary JLL team with experts in site selection labor analytics, government incentives, design, and construction to manage this huge development project.

Results:
 

• JLL helped Digi-Key obtain the largest incentives package in Minnesota’s history.
• JLL managed the design and construction process to achieve an on-time and under-budget project.
• Value-based engineering yielded $20 million in cost savings.

To erect an industry-leading automated warehouse, JLL worked closely with McShane Construction Company and KNAPP Inc., a warehouse logistics and automation leader, on the functional layout of the facility. The teams ushered an average of 130 employees per day to the site, navigating COVID-19 restrictions and severe winter weather.

For this project to succeed, the team needed to uncover all opportunities for cost savings. Value-based engineering solutions achieved significant savings, such as choosing reclaimed asphalt pavement (RAP) as a base course material and alternating the building structure from precast concrete to a hybrid precast/steel.

But ultimately, the building itself took a back seat to something more important. 

“A project of this scale demanded industry-leading technology and advanced industrial innovations in every corner of the completed space,” said Rick Steger, Managing Director at JLL. “The building isn’t the focal point. It’s the automation.”

The immense, multi-level distribution space is one of the largest and most intelligent warehouse facilities in the world. Large enough to hold 38 football fields, it features four levels of fully automated storage space, shipping and receiving docks and airlocks, multiple breakrooms, high-end amenities and sustainable infrastructure systems to reduce environmental impact. The expansion also incorporates KNAPP’s automated goods-to-person OSR shuttle system to store more than one million unique electronic components and utilize over 1,000 order fulfilment shuttles.

A substantial incentive package helped make the project feasible. Working in partnership with JLL, Digi-Key successfully demonstrated the impact of its expansion on the local economy. As a result, the State of Minnesota offered one of the largest incentive packages in its history to keep the headquarters in place. Digi-Key is committed to enriching the communities they are involved in by providing employment to match their continued growth and success.

The value engineering solutions resulted in a $20 million reduction in overall costs in the construction phase. Twenty-six million pounds of steel were erected, and the decision to combine steel and pre-cast concrete alone saved millions of dollars.

“The decision to partner with JLL on this project was easy based on their proven history of managing industrial projects of this magnitude, along with their progressive ideas on the future of industrial warehouses,” said Chris Lauer, Vice President, Order Fulfillment of Digi-Key. “The JLL team helped guide this project from site selection to strategic design to facility layout. JLL has been instrumental since we started working with their team of experts in 2018.”