A structured approach to warehouse design pays dividends

A structured approach to warehouse design pays dividends, says Gavin Parnell, Director of logistics consulting firm Go Supply Chain.

In my role as a logistics consultant, I spend a lot of time observing warehouse operations and talking to the people who are responsible for them. One thing I have learned is that while any two operations may look similar at first glance, there is huge diversity in the equipment and systems used, processes followed and specific challenges faced in warehouses.

Looking through the pages of this and other industry magazines you will find a vast array of solutions on offer from equipment vendors, with new ideas being introduced all the time. Over the years, customers and vendors have specified just about every size of plastic tote imaginable, and much the same applies to shelves, cages, pallet boxes, flow racking, lift trucks and even automation, where there are now so many ways to do what seems to be the same thing.

So there is a wide range of challenges, and the good news is that there is a wide range of solutions. The difficulty for many companies, however, is identifying what solutions are appropriate for their warehouse operation.

Getting this wrong can cause obvious problems, when very inefficient processes or capacity bottlenecks are introduced. Most warehouse managers have their share of so-called war stories. But I would like to draw attention to the less visible pain that is being caused to the bottom line by warehouses that operate satisfactorily, but could be so much more productive or space efficient.

There is a structured process to warehouse design – data should be gathered and analysed to understand the storage and handling characteristics of the SKU range, and to create a ‘Day in the Life’ picture of material flows for typical and peak periods. Growth and seasonality should be accounted for. Once this is complete, a range of solution (layout and process) options can be modelled. This modelling should include calculation of capital equipment costs and operating costs (space, labour, MHE leasing etc.) for each solution. The relative merits of these solution options can then be assessed, taking into account the situation and priorities of the business (e.g. willingness to invest). Once a preferred option is agreed, a more detailed design process is undertaken, including producing drawings.

It cannot be emphasised enough how important it is to have the right data available for this type of exercise. Many companies do not keep accurate (or any) records of the weights and dimensions of the products they handle. This is a mistake, as good dimensional data can easily make 10 – 20% difference in the efficiency of storage allocation. The knock-on effect of this is not only felt in space costs but also in labour costs, as travel is a major component of warehouse labour hours. Nowadays, as many as several hundred products can be accurately measured in one day using a dimensional scanning system, so it is feasible to measure even quite large product ranges if the data cannot otherwise be obtained.

Following a structured process based on good data means that you can be confident the solution implemented is the right one – at the time. But there is no time to rest, because businesses are changing rapidly and so are the demands on the warehouse. A performance measurement regime should be implemented using a few, well-chosen KPIs. Post implementation, continual review of these KPIs, and periodically revisiting the analysis behind the initial design can help to keep things on track.

In many businesses, the warehouse is barely noticed by senior management until something goes wrong – and yet a warehouse that seems to be running satisfactorily may be hiding significant opportunities for cost savings that go straight to the bottom line.

www.gosupplychain.com