Warehouse Design - Location, Location, Location - where do you put your DC?

There are some fantastic modelling tools out there.  Feed in all your data - in-bound ports, delivery locations, customers demands - and out pops the answer; put your DC in the centre of the Peak District! Nice if you can get it, but not necessarily a good answer.  The fact is that in a crowded and busy country like the UK a centre of gravity analysis is rarely going to give you the total picture when planning the location for new facilities.

And the same goes for most of the rest of Europe.  In practice of course there are many conflicting requirements which dictate a commercial solution including availability of land or buildings, availability of labour, rents and planning rules, as well as the logistics requirements for being well placed to minimise in-bound and out-bound costs and providing good customer service.

With all these factors to take into account the best way of finding the best location is to take a practical approach.  The starting point is the input of experience.  Given some basic initial parameters on the nature of the business and its requirements it is relatively easy to identify three or four locations which broadly meet the requirements, based on knowledge of available sites, road infrastructure and the labour market.

Next comes a high level cost model to look at the costs of in-bound transport and the costs of serving the customer base.  Service delivery times will also need to be considered at this stage - does the location allow us to  meet the customers’ service requirements?  At this stage it is usually possible to home in on a couple of preferred locations, which meet the main criteria.  Then comes the more detailed modelling where labour rates and rents or land prices are included with the transport modelling to understand the overall cost balance.  Where high levels of service (e.g. same day delivery) are required it could also include detailed modelling of out-bound deliveries, taking into account drop density and deliver mileage.  Out of this comes a preferred solution upon which can be built a full business case, with the associated pros and cons.

The fact is that the location for a DC will always be a compromise with the need to balance the conflicting requirements that affect all distribution networks and to work with limited practical possibilities.  The choice is based on a combination of art and science where experience and a pragmatic approach is just as important as well founded and detailed modelling.

To speak to one of our Senior Consultants about how THE LOGISTICS BUSINESS can assist you with your next project please call +44 (0) 1527 889060.