10 things to consider when organizing a distribution center
Stan Krawitz, Executive Vice President, Founder & Head of Savills Canada
Executives and logistics professionals are under an increased amount of pressure to optimize distribution center sites to maximize efficiency. This requires strategic planning and ongoing analysis, but weak data and a lack of cutting edge experience can result in dangerous outcomes for the professionals making these mission critical site selection decisions.
Having advised clients on over 22 million square feet worth of property in my career, I’m experienced in not only helping business leaders avoid these pitfalls but also converting such increased efficiency into contributions to bottom line profitability.
Here are ten tips to help you do the same:
1. Select a site location with labour pool availability in mind. When selecting a distribution center site, it is critical to choose a location with a workforce that has the education and experience required to run your facility properly.
2. Align your facility layout with inventory management operations. There should be a fluid flow from inbound inventory all the way to outbound staging and transportation. Consider the processes taking place within the facility when determining the location and proximity between areas.
3. Select and install the right lighting for each facility function. Not all areas of a distribution center use light in the same way. Consider operations within the facility when selecting lighting systems. Cost saving practices include timers on lights that ensure light is only used when it’s needed, as well as LED bulbs that minimize energy usage.
4. Ensure adequate space in staging bays. Take an organized approach to creating space for the outbound process. Allow for 50 feet of space from the dock to give employees enough space to stage for shipment.
5. Select and install proper racking. To maximize flow efficiency, the type, location and density of racking should align with inventory carrying, pick practices and order characteristics. Consider how much product needs to fit on the rack and how it is being taken off the rack.
6. Refine your pick strategy on a regular basis. Business changes from season to season and order to order. Being able to stay on top of order characteristics is critical to long-term efficiency. Conduct an inventory optimization study regularly and utilize data analytics to determine areas for improvement.
7. Create transportation efficiencies through network diagnostics. Schedule simultaneous outbound shipments to maximize your resources and utilize your transportation network efficiently. Increase visibility within a network, and optimize the flow of goods by establishing advanced shipping notifications from the point that the purchase order is placed.
8. Consider crossdocking. Designate a particular area of the facility for staging or holding inventory based on your outbound requirements. Incorporate a strategic role for the crossdocking system to play within the ecosystem of the warehouse to create operational efficiencies within the facility and increase speed to market. Utilize “real-time” data capturing inbound loads, purchase orders and outbound loads to analyze operational flow and better manage inventory levels.
9. Incorporate automation. Robotics and advanced retrieval systems can minimize labour costs and maximize work output. The International Federation of Robotics states that the supply of industrial robots will reach 400,000 units by 2018 and grow by a rate of 15% a year. Consider cloud data storage for secure and visible IT needs.
10. Set up an area to test operational improvements. Before rolling out processes to improve operations, test the idea on a smaller scale to cultivate data and make necessary adjustments. When encountering issues with processes like quality control and returns, determining and executing solutions can be complex. Fine tuning strategies in a smaller designated area allows for maximizing efficiency before rolling out the solutions across the entire facility.
Portions of this article originally appeared in Inbound Logistics. Stan Krawitz is EVP, Founder, and Head of Savills Studley in Canada.