There’s no room for mistakes in today’s economy—and that includes building or re-engineering distribution centers.
Because these facilities are critical components of the supply chain, they require a detailed planning process to ensure they meet return on investment expectations.
More than ever, the “measure twice, cut once” rule applies, since having to tack on additional capital outlays five, six or seven years down the road is costly. The projection of inventory and how it is to be stored and moved are the driving factors, as a 20 percent deviation on a 200,000 square foot storage area can result in a 40,000 square foot shortfall or surplus.
In the final design phase, picking and storage will rule the day; yet they have opposing agendas. Large storage areas increase travel distances and reduce the picking efficiency. On the other hand, the ideal picking operation requires relatively small amounts of product stored in dedicated locations, relatively close to one another, which works counter to a facility’s storage efficiency.
When considering the design and layout of a new distribution center, it’s important to first consider which of the four scenarios most closely resembles your operation:
• Low activity/low storage requirements: This combination represents the simple, smaller warehouse operation. Rarely are automation or sophisticated storage and picking mediums or devices justified for these smaller operations. In most instances, floor storage, stacked pallets, simple pallet racks and/or conventional shelving are utilized within the facility, along with manual handling.
• Low activity/high storage requirements: This combination typically calls for high bay, multi-level, high-density storage and a random location strategy. Order picking can be manual or semi-manual.
• High activity/low storage requirements: This combination generally suggests a very condensed forward picking area supported by simple overstock storage. The high pick activity level often justifies automating the order picking system and the use of automated material handling systems.
• High activity/high storage requirements: This combination is characteristic of a typical large distribution center. The high pick activity and high storage requirements often justify the use of exceedingly automated order picking systems, heavily automated material handling and sortation systems and high-density storage.
Once the storage and picking scenario is understood, taking into account economic forecasts (consumer spending habits down in today’s stagnant economy could change over the next few years, and inventory requirements with it), the planning process is now off and running.
FOLLOW THESE SEVEN STEPS
Keeping in mind that a distribution center may be a company’s largest capital investment, as well as the final stop before the product reaches the customer (or doesn’t), it’s imperative the planning is done perfectly the first time. To accomplish this objective, here are seven critical steps to follow when planning a warehouse or distribution center.
1. Define goals and objectives. These should be closely aligned with the overall strategy for the new facility. They can be defined as minimizing warehousing operating costs, maximizing picking productivity, or simply providing the best customer service. They can also be defined more specifically, such as maximizing cube utilization, providing maximum flexibility in the final layout to accommodate future expansion or changes in business, or maximizing efficiency and productivity with a minimal amount of resources.
2. Document the process. Review the existing or proposed methodology and process, and conduct personal interviews with the staff dedicated to all major functional areas within the process. Recent changes in the economy may have caused some downsizing and movement of personnel to work areas they may not be totally familiar with, so be sure to interview enough people familiar with each functional area. If those interviewed can’t identify areas of opportunity for improvement in their department or area, you should look to interview more from that department or functional area as there is always room for improvement.