To maximise the use of the warehouse cube it is important for distribution centres to become more intelligent and that includes being more adaptable to sudden changing order patterns. Any failure to adapt and evolve risks becoming uncompetitive, unprofitable and possibly company collapse.
A key determinant about sizing a warehouse and achieving best operational efficiency is where to positon oneself in product servitisation. If you wish to provide an omni-channel distribution setup within one building then that will require far more thought at the planning stage. Experience so far suggests that more often than not it would be more efficacious when serving online customers directly to invest in a dedicated e-tail warehouse rather than an omni-channel centre. If, however, going for a hybrid operation then not only does that demand an initial careful analysis of the SKU data and the order profiles of the business but an ongoing exercise that will inevitably be shaped by the fast rise in online shopping. SKU data must include the total number and physical sizes of the SKUs and data on the number of SKUs that comprise an order.
The labour time factor is also important because this could mean that one must sacrifice the advantages of the densest methods of racking and shelving storage in favour of faster picking times because time to market (consumer) is now of prime importance in online shopping and which some practitioners view as a key competitive tool.
A good example of such a tradeoff is a hand-worked crisp company with low SKUs compared with the volume processed. Initial thought was to choose a dense, shuttle-based storage system as being the most efficient solution but based on the nature of the shuttle and speed at which the goods are picked the shuttle system got progressively slower, and thus stymied the operation’s ability to handle periodic demand, including peak periods like weekends, Christmas, Easter and summer. The alternative considered was a traditional very narrow aisle (VNA) system. This could achieve a similar storage capacity to the shuttle system and with the right number of forklifts and operatives peak demands could be met. The VNA system provided a much greater return on investment.
Another point to bear in mind about VNA is that their dedicated lift trucks are costly. Considerable money, therefore, could be saved if opting for articulated forklifts, which achieve the same storage density advantage as VNA trucks and can also work outside with delivery lorries, saving time and money, especially if equipped with radio data terminals.
No new or existing warehouse operation should be considered without adequate thought about warehouse management systems (WMS). Of particular value are the demand/stock forecasting programs that can react in real time to daily weather forecasts, which can be so critical in the food and drinks businesses. These can reduce stock holding costs (often the biggest running cost of warehouses) by up to one third without harming service levels, while sometimes delivering a return on investment in only weeks.
While automation may not always be the best solution it is likely to get a boost from Brexit if concerns over the uncertainty of the labour workforce, heavily dependent on EU labour, are realized. This concern is goading some companies into reviewing the efficiency of their warehouses so that they are not so reliant on a traditional workforce. But Brexit concerns apart, what will shape adoption of warehouse automation more than anything else is the need to use it to gratify the demands of online shoppers instantly.