Warehouse Re-Design

It was Heraclitus in around 500BC who wrote “All things are in flux … like a river … you can never step in the same river twice”.  His flux doctrine was interpreted by many including Plato who took this to mean that a river is still a river from one moment to another but the water in it is different and flows in a different way. He used this as a metaphor for life – All things are constantly changing but that the change is not always obvious or visible.  He concluded by saying that as with a river some things can only exist if they change.

Now I don’t know if Heraclitus ever visited a warehouse or got involved in its design but that process of change is as vital to warehouse layouts as it is to life.  Nothing stays the same but we don’t always see the changes that are taking place.  If we leave it too late we can run into big problems.  So the moment you finish implementing a new warehouse you should put in place the constant re-design process that will keep it optimised to your ever changing customer river.

  • Break the process down into short, medium and long term changes
  • Review your design data and periodically update it using the latest SKU, order and stock profiles
  • Stay ahead of the game, predicting when change is likely to be needed

So, if warehouse re-design is to be part of your operational processes how do you go about it?  The first thing to be aware of is that there are short, medium and long term changes.  Short term are things such as pick face profiling which should take place weekly or even daily, medium term might be adjusting location sizes or changing processes which might be needed quarterly or when some more significant change occurs and long term might be re-location of racking or addition of more equipment again when more major change is required.

Pick face re-profiling is simply a case of making sure each SKU is located in the best position and has the right amount of backup stock to support it.  A fast mover in a slow mover area will be inefficient to pick.  A slow mover in a fast mover area will get in the way and may be the reason for the previous example.  The best warehouses are ones where a number of SKUs are moved or re-slotted every day.  Some warehouse management systems include functionality to undertake this automatically.  Moving little and often keeps the process manageable.

Medium and long term changes follow a similar process.  They may be triggered by increasing difficulty in achieving a good pick face profile or may result from a major change in the business such as the launch of a new product range, the acquisition of a new customer or some other factor.  In more recent years re-designs have been triggered by the increase in e-commerce which can have a dramatic impact on the profile of activities in a warehouse, so dramatic in fact that many choose to sub-contract e-commerce fulfilment even if the rest of the operation is run in-house.

In each case the re-design process is the same.  Fresh SKU and order history is loaded into a model which can be setup with parameters to determine how many of each type of location are needed.  This output is compared with what you have available.  If there is a significant mismatch then its time for change even if, on the ground, everything seems to be working well.  Remember Heraclitus advising us that change may not always be obvious.  Next the new parameters can be loaded into a cost model which will compare investment costs with operating cost benefits to see if other solutions or technologies offer benefits.

Some companies keep ahead of the game by developing and maintain and development road map.  This plots the predicted businesses changes over time, the effect these have on capacity and the point in time when bottlenecks are likely to be seen.  Crucially these roadmaps should then work back from the point when the bottleneck is predicted to occur to take into account the lead time to implement the changes needed to remove the bottleneck.  This then becomes the trigger point for starting the implementation of change.

Choosing the right solution for a re-design is partly about the numbers – what the analysis tells you – but also comes from experience – knowing what works well and what does not.  As this is a re-design rather than a clean sheet start that we are talking about it is also important to understand what the Operations Team are likely to be able to cope with.  If they have got used to a certain way of working or type of technology then having more of, or re-configuring, the same will be less risky than introducing something they have no experience of.

Clearly there is much more to say about warehouse re-design but hopefully the principles proposed here will provide a starting point for embedding re-design in you operational processes.  This in turn will ensure that you stay ahead of the game with an operation in peak condition serving the needs of customers and shareholders alike.

If you would like help in developing a re-design process for your business please get in touch with The Logistics Business.  We will be delighted to help.