There are several basic principles that apply to warehouse layout and design, and operating an efficient ecommerce fulfillment center. Without them, no matter the square footage, you will face capacity issues, decreased productivity and storage inadequacies.
In this blog, we’ll discuss 11 key principles that you should consider for FC layout design and productivity.
Trends in Facility Design
Whether you’re looking to acquire an existing center or build a new one, it’s important to understand how trends in warehouse design have changed. New centers built in the last ten years or so typically have a clear span – the vertical distance of usable space throughout the facility – of 24-34 feet. Larger, automated centers with very narrow aisles and picking systems are now built up to 54 feet of clear span.
Older centers often have less than 24 feet of clear span. The tradeoff is that they have larger footprints but lower ceiling clearance vs. larger clear span and higher clearance for storage space in newer facilities.
Commercial real estate is become more expensive due to scarcity, and the number of “big box” transactions in excess of 200,000 square feet increased in 2021, according to CBRE. Thus, it’s important to calculate your total storage capacity, and the racking, automation and material handling equipment needed to take advantage of higher clearances.
Ecommerce Fulfillment Center Facility Costs
In our consulting with ecommerce fulfillment center operators, total facility costs generally range between 15% and 20% of the total cost per order. Costs include leases or building ownership, total occupancy, material handling and depreciation and amortization of systems. As far as systems and automation are considered, how will increased asset depreciation and amortization reduce labor expenses, increase capacity and order throughput?
The Cost of Labor
An efficient building layout can dramatically increase labor productivity. Direct and indirect labor is more than 50% of the cost per order, excluding outbound shipping. The minimum wage in many states is slated to reach $15 per hour in the next five years; we have several clients already at $20 per hour.
One of your key design considerations should be how labor hours can be saved by the effective use of layout and design, as well as systems and process improvements.
Storage Space and Cube
Make sure you’re utilizing the potential storage space/cube of your fulfillment center. Ensure that vertical space, as well as individual location cubic capacity, is fully utilized. Maximize cube and ground-level square footage.
Square foot requirements for storage are directly impacted by racking design and aisle width. Most ecommerce fulfillment centers operate with one of the following racking designs:
12-foot standard aisle width utilizes a traditional sit down/counterbalanced lift truck
8-9-foot narrow aisle width utilizes a narrow aisle reach truck and may yield up to a 33% improvement in pallet storage capacity over 12-foot aisles
6-foot very narrow aisle width utilizes a turret truck or swing arm truck design, and may yield up to a 66% improvement in pallet storage capacity over 12-foot aisles.
The rack configuration and layout affect these potential improvements.
One way that ecommerce fulfillment centers can make better use of the total cube is by installing mezzanines over work areas and departments that do not require higher clearance. In larger centers, picking modules can be installed on upper levels.
Flexibility in Operations and Layout
From your company’s strategic planning process, understanding potential future changes to the business or fulfillment model is vital to avoiding unnecessary costs associated with unplanned changes. These include product mix changes which make certain automation solutions ineffective, unit sales volume and inventory on hand requirements, company acquisitions being discussed and consolidation or expansion of centers. Don’t develop a layout or process that is inflexible or can’t scale.
Location Storage Media
Use a variety of location storage media for slotting and reserve as dictated by item cubic velocity. The “one size fits all” approach rarely works to maximize efficiency in space and labor performance.
Some clients have shown pickers can walk 14 miles per day in a large ecommerce fulfillment center, representing up to 75% of their working hours. Maintaining slotting procedures are critical to an efficient center.
Try to provide primary pick space for one week’s average unit sales for each SKU. Focus on the top 10% of fast selling SKUs to ensure they are properly slotted. Make sure slotting is maintained as a dynamic, ongoing process.
Conveyors for Horizontal Product Transport
Using a simple transfer conveyor system can improve operating efficiency by reducing handlings and walk time. Make sure the equipment is cost justified. Conveyor selection should be based on product size and weight and your throughput volume. The accumulation line for packages has to be planned for in any conveyor design.
Number of Dock Doors
The expense of providing enough inbound/outbound dock doors, docks and staging areas is relatively small in the initial building design and construction. However, the impact of not having enough doors is huge because cartons on docks and staging areas create congestion and flow problems. It’s a reoccurring issue every time your center is at shipping and receiving capacity, which might be half the year.
Keep 10% of your locations open and available. This may not be possible all the time, but having space available to store inventory in picking and reserve locations is a key factor.
Move as much product as possible at one time. Maximizing the product transported per trip will reduce total trips and time required. Applications of this principle can be applied in picking, put-away and replenishment functions.
When designing an ecommerce fulfillment center layout, the physical characteristics are only one aspect. Workflow, processes and how labor will be used are all important considerations in getting to an efficient design.
Note: This post was published in 2019 and has been updated