Critical Steps to Planning a Cost-Effective Warehouse

There's no room for mistakes in today's economy — and that includes building or reengineering distribution centers (DCs). 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 rule, measure twice, cut once, 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 driving factors, as a 20% 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 rule the day, yet they have opposing agendas. Large storage areas increase travel distances and reduce 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 DC, it's important first to 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 used 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 often justifies automating the order picking system.

• High activity/high storage requirements

  This combination is characteristic of a typical large distribution center. 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 in today's economy could change over the next few years and inventory requirements along with them.) means the planning process is off and running.