For many companies, COVID-19 has put enormous pressure on existing storage and fulfillment centers. If this sounds about right, you might be wondering if you should invest in a new or bigger or better facility, or improve the one you have. Analyzing variables such as facility layout, racking, slotting, and material handling equipment will give you the answer you’re looking for.
To get started, you will need a holistic understanding of the potential capacity of your current space. The process involves building an accurate and flexible capacity model (one that uses the correct data) to understand what you’re working with as a baseline and evaluate multiple “what if’ scenarios that can drive long-term leasing and tactical decisions.
The following areas are vital direct inputs to your model. They may seem overly detailed and perhaps obsessively comprehensive, but it’s in those obsessive details that you find real efficiency breakthroughs.
Clear height
What is the possible maximum racking height versus the current state? Is there room in your existing or potential facility to build higher? Be sure that your remaining clearance meets local fire regulations and complies with applicable building codes.
Dock space
Include a full accounting of your total inflows and outflows to avoid overcrowding at the dock. But don’t stop there. You need to know what kinds of activities are being performed in this area and how often they occur. Are you dealing with reverse logistics, sorting, outbound loading, cross-docking, dunnage, or flex space? Each activity requires different storage and/or staging space ratios, MHE travel lanes, dead space, and other stock-specific considerations. Once you’ve got a handle on these activities, use peak-to-average ratios to fully quantify the space required to operate effectively during your busiest time(s) as well as the rest of the year.
Honeycombing
Honeycombing is the key to not under-sizing the facility. It’s too easy to make flawed assumptions about the actual level of product density within a warehouse. Whether you use pallet storage – which inevitably leads to lost white space and, therefore, unused capacity – or denser case storage, assigning a honeycomb factor can help account for lost storage space. A random sampling of different zones in your warehouse will help you dial in an appropriate honeycomb factor.
Office space
Decide how much of your staff and which types of activities will require office space. Do you require space for meetings, a driver’s lounge, or a break room? How many restrooms will you need to provide? Consider if you’ll need flex space for traveling staff or maybe even a fitness area. Do you need multiple office spaces for different functions or will one main space serve the entire facility?
Material flow
Where is the material going once it’s inside and beyond the dock? Do you require square footage for quarantine, refurbishment, flex space, value-add, or assembly? It’s crucial to dissect the material flow and know precisely how long a particular kind of product remains idle in a given space — and for what purpose. This is how you determine the required size of these specific activity areas within your facility.
Racking and location types
Now is the time when you open your mind and engage in “blue sky” thinking about what you would do with your warehousing space if given no constraints. Think about changing things up by using taller racking, smaller width aisles perhaps, and then going with a wholly different MHE strategy to go along with changes. Think about all the possible options. Single, double, triple, and even quadruple-deep racking. Pick locations or reserve locations? Maybe other types of locations like single-SKU or mixed-SKU? One caveat – always remember that, once again, the peak to average ratio is essential when it comes to deciding which racking configuration is the best fit for your operations.
Labor efficiency
Time-and-motion studies give you the most accurate understanding of labor efficiency within a specific space configuration. The data is essential to any predictive modeling of your future needs. Carefully examine particular activities such as picking, putaway, loading, unloading, and travel in each functional area within the facility.
Any model is only as good as the data used to build it. The more accurate and granular the data, the more realistically predictive the model will be. And, the faster one can empirically verify the results and move toward implementation, which is the whole point, right?
Building a new warehouse isn’t always an option. If you need to do more with what you’ve got, reach out and see how Chainalytics can help quickly and accurately model your existing space. Chainalytics’ combination of top supply chain talent, proven methodologies, and exclusive market intelligence consistently puts our clients ahead of the curve.
Dylan Hrynyk is a Manager in Chainalytics’ Supply Chain Operations consulting practice. Dylan has extensive experience building flexible models that leverage clients’ supply chain data and support warehouse redesign, inventory optimization, and operations management initiatives.
