Using Warehouse Space

Feb 01, 2004 10:30 PM  By

TOM GUSCHKE
Principal, Keogh Consulting

There are three key steps to getting the best use of the available space in your new facility. First, you should develop two plans and two layouts — one for the short term and another for the longer term. The future plan will help you see what the best organization and use of space will be after the expansion, and will guide you in placement of operations and equipment for the short term. The overall objective is to make the best short-term use of space within the vision of the long-term arrangement.

Second, a clear and precise forecast of planned activity levels is critical. Each area of the new facility needs to be sized to fit its planned function. The forecast directs the sizing of each area by translating planned business volumes (sales, orders, inventories) into physical measures such as pallets, cases, and “cube” for both storage and throughput. By closely matching planned physical capacities and requirements to the space allocations, you can ensure that each area is properly sized and that all available space is accounted for.

Third, flexibility is the key to success. The point is that as each area is sized and placed in the layout the designer should ask “what if” to explore the impact of downsizing or expansion of that function on the space itself or on adjacent areas. One way to achieve flexibility is to provide for “soft” boundaries between functions — eliminate or minimize internal walls, and be careful about placing fixed equipment or other permanent obstacles. When those are necessary, place them where future expansion will not require their relocation.

Attending to these three basic principles will ensure full use of the available warehouse space, whether it’s 10,000 sq. ft. or one million.

RON HOUNSELL
Vice President, Tom Zosel Associates

Designing the layout of any distribution facility should consider at least three overall factors: holding or capacity requirements, workflow requirements such as throughput and productivity, and future requirements such as seasonal changes, growth, and additional cost to operate.

Holding requirements include defining the physical size of the inventory on hand. Unless the on-hand total is fairly stable across the year, it is usually preferable to plan for a high but not peak inventory level. To fully utilize the space, it is important to determine how product needs to be stored (e.g., floor stacked, pallet rack, shelving, case flow) and how much of each fixture type will be required. Cube data (length × width × height) for each product is a very useful kind of information for many aspects of capacity planning.

Workflow requirements encompass everything from how product arrives to how it leaves the facility and everything in between. The objectives of this aspect of planning are to minimize product handling, to reduce travel as much as possible, and to minimize the resource requirements (labor, packaging, transportation) to move the product to the customer.

Among the factors to consider are the following: (1) Link the way product arrives with where it is to be stored (location capacity). If possible, store all of a product in one location and pick from that location as well. This does not work if stock rotation matters (expiration dates, serial number, or lot control issues). (2) Locate the highest-volume products (greatest number of orders, not physical size) closest to the outbound shipping area to minimize the travel required to pick and ship orders for them. (3) Because vertical travel is always slower, locate as many products as possible on or close to the floor. (4) Allow for staging space to handle product that is in transit, such as items waiting to be put away.

Future requirements include accommodating growth in the form of higher volume of existing SKUs, an increase in the number of SKUs, more customers, and more orders. If expansion is already a thought, consider how that will be accomplished from the outset. If possible, expand the space without disrupting ongoing operations. Factor in the impact of additional space on flow, not just holding capacity.

STEPHEN HARRIS
Principal, Harris & Harris Consulting

In order to be effective, you need to evaluate your merchandise. Size, value, velocity, and number of SKUs should always be considered when approaching the issue of an appropriate warehouse layout.

Receiving

Start thinking of your arrival as a shipment. If yours is a high-value item (a medical instrument rather than a bag of pancake mix), it will need to be carefully examined, counted, and checked for damage before it is received. This takes a clean, well-lit and spacious area in which to conduct the receiving/pre-pack process, as well as at least two well-sealed dock doors dedicated to receiving. You will need to assign about 15% of the floor space attributable to the building’s footprint. In a 12,000-sq. ft. facility, this means 1,800 sq. ft. you will need to protect from other uses.

Pre-pack

Once the product is received, break it down, bag it, label it, kit it and “pre-pack” it so it is ready to pick before you store it. Put it in a container that can go straight onto flow rack or a static shelf picking location before you store it. This process takes up room and should be on the other side of your “bonded shelving” so that packers can attend to this function while receivers continue to do their work. Assume another 10% of space for this activity (1,200 sq. ft.).

Storage

If you can store your product in a pick location, do it. If it takes more frequent deliveries to make this possible, arrange for them to happen. Twelve turns a year is not too much to manage, if such a velocity and buying strategy is tolerable and keeps you out of the backorder jungle. If your core product (the 50% of your line that is responsible for 95% of your sales) has one location in your warehouse, your storage media allocation can be kept down to 50% of your floor plan area. If you have a bulk storage area, a reserve location and a pick front for most of your product, you will need to devote up to 75% of your floor area to storage.

If you think like your product, imagine that what makes you happiest is to get on your way to your consumer with as few fingerprints on you as possible. This rule has a dramatic impact on facility mapping. Cramming a building too full of product is a false economy. Every time you have to move one thing to get at another, it is costing you money. Your “direct labor” expense is a much better measure of efficiency than your fixed costs of overhead like rent, mortgage, taxes, or heating oil. In the immortal words of Dire Straits, “We gotta move these refrigerators, we gotta move these color TV’s.…” The song does not suggest, “We gotta store these refrigerators.…”

Pick, pack, and ship

Keep this space to the minimum necessary — 10% or so (1,200 sq. ft.) of the floor area. If you pick to a cart, try to pick to the box. Get the order onto a gravity conveyor as soon as possible so that the activities of checking, packing, and manifesting can happen in a straight line heading for the truck. Get the product onto the truck as soon as possible and with a minimum of handling. If your product has to wait to be retrieved, try to leave it on the conveyor until the truck arrives. Your shipper’s truck is your secret weapon. It is an extension of your warehouse and is the first place you should set the boxed order down. You’ll also find that the process works more efficiently if you dedicate another two or three dock doors to shipping.

Overhead and staging

Don’t forget returns. Most of what comes back to you can be put back into stock. But it must be inspected, cleaned, re-bagged if opened, and generally fussed over. Dedicate some separate space to these orphans. Offices, the break room, toilets, sprinkler risers, electrical panels, and a controlled employee entrance with time clock and reception area — these items will gobble up the remaining 15% of the floor space. Go up only if you need to. Even if you can afford to install an elevator or a freight lift, a second level is a nuisance.

Shallow versus deep

If the product moves quickly, keep it handy to the dock wall, close at hand. The deeper you go into your storage media, the slower the item should move, until at the back wall, you should be storing the real sleepers. The same applies to your picking slots. Reserve the golden zone for your core product; save the stooping and stretching for the dogs. Picture your DC as a swamp. The deeper you go in, the harder it is to get out.


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