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3/23/2021

Warehouse Design
Unit - 13

Introduction:
The strategic issues affecting warehouse design have been discussed in the last class.

The factors represent the starting point for warehouse design are, particularly:

The business plan and


The supply chain strategy,

As they define;
o the warehouse’s precise role,
o throughput requirements,

Warehouse throughput refers to the number of units that are processed and moved through your building, either during stocking and
inventory processes or when fulfilling orders

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Introduction:
The strategic issues affecting warehouse design have been discussed in the last class.

The factors represent the starting point for warehouse design are, particularly:

The business plan and


The supply chain strategy,

As they define;
o the warehouse’s precise role,
o throughput requirements,
o inventory levels and
o customer service levels.
Customer service level is the percentage of occasions on which the order is delivered as promised. It is a set of rules and strategies put forth to
evaluate the performance of a system. We can determine the satisfaction of the customers it deals with, and how much more of an effort it
needs to make.
Customer service level in a supply chain is a function of several different performance indices. The first one is the order fill rate, which is the
fraction of customer demands that are met from stock. Another measure is the backorder level, which is the number of orders waiting to be
filled.

From these types of requirement, the warehouse designer must select:

o the appropriate equipment and operating methods,


o determine the internal and external layouts,
o calculate the equipment and staffing numbers,
o identify the supporting information systems, and
o present the capital and operating costs.

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Design procedure:
The design of a large and modern warehouse is very complex and requires a range of skills
and disciplines, including:

o Operations,
o Construction,
o Materials handling,
o Information systems,
o Personnel,
o Finance and
o Project management.

Design procedure:
The operations (e.g. supply chain or logistics) function often sponsors the project, as that
function will be responsible for its eventual successful running.

External warehouse designers may be an important part of the team, as many organizations
only design warehouses on an infrequent basis and therefore do not necessarily possess all
the necessary skills in-house.

Usually, a Steering Group, comprising senior directors and executives, oversees the project
and provides guidance on future business strategy and financial resources.

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Design procedure:
The design process is a series of steps. In reality, these steps are normally undertaken in an
iterative manner. Suggested steps are:

Iterative: as decisions at a later step may necessitate decisions made at an earlier step being reconsidered.

Design procedure:
The design process is a series of steps. In reality, these steps are normally undertaken in an
iterative manner. Suggested steps are:

o Define business requirements and design constraints.


o Define and obtain data
o Formulate a planning base.
o Define the operational principles.
o Evaluate equipment types.
o Prepare internal and external layouts.
o Draw up high-level procedures and information system requirements.
o Evaluate design flexibility.
o Calculate equipment quantities.
o Calculate staffing levels.
o Calculate capital and operating costs.
o Evaluate the design against business requirements and design constraints.
o Finalize the preferred design.

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Define business requirements and design constraints


The wider business requirements set the context and the design requirements for a warehouse.
These are likely to include, for example, the required:

o warehouse roles (e.g. to act as a decoupling point, a cross-dock facility or a returns


center);
o throughput levels and storage capacities;
o customer service levels;
o specified activities, such as production postponement and added value services .

These requirements will also specify how quickly the warehouse needs to be operational, any
financial constraints (e.g. on capital expenditure) and any wider corporate policies that may
affect the design (e.g. information technology, environmental and personnel policies).

Define business requirements and design constraints


There will also be design constraints, or considerations, to be taken into account from various
other stakeholders, such as:

o government agencies, for example in terms of health and safety regulations (e.g.
manual handling and equipment), working time directive, packaging regulations,
product recovery and environmental legislation;
o fire officer (e.g. requirements in terms of evacuation, fire exits and fire/smoke
containment);
o insurance company (e.g. regarding fire detection and fire suppression – overhead
or in-rack sprinklers, etc.);
o local authority (e.g. maximum building height, working times, noise, etc.)

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Define business requirements and design constraints


Other factors such as:

o Long term asset, depreciation of 20 to 25 years


o Leasing , renting,
o Number of business scenario
o Incorporating flexibility (integral part of design)

Define and obtain data


The next step is to define and obtain the base data on which the design will be conducted.

Although data are often obtainable for recent months and years, the warehouse will
almost certainly need to be designed for future requirements.

The data will therefore need to be adjusted to reflect likely changes such as business
growth, changing customer requirements and competitive market pressures.

Normally, data are collected for the base year (eg the most recent year of the current
operation) and then projected forward in line with the business plan to the planning
horizon.

There may in fact be a number of planning horizons used

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Define and obtain data


There may in fact be a number of planning horizons used.

For example,
a 1-year horizon may be used to calculate the initial staffing level,
a 5-year horizon may be used for sizing the building and the design of fixed equipment, and
a 10-year horizon may be considered for the purchase of land and for possible modular
expansion of the building.

Typical data required for warehouse design include:

Products:
For each product line, information is required concerning:
product group;
– quantity throughput (eg by item, case, pallet or cubic metre);
– value throughput (to reconcile to business financial figures);

– seasonality;
– inventory turn (at average and peak);
– characteristics (eg unit load weight/dimensions);
– number of order lines.

Order characteristics:
– order profile (eg lines per order and units per order line);
– order frequency (by season, week, day and time);
– number of order lines for each SKU (to identify pick frequency);
– time profile (eg percentage of orders received by week, by day, by hour);
– unit load and packing requirements;
– service levels (eg cut-off times, order lead times, and order fill target).

Intake and dispatch patterns:


– number of vehicles per day and by hour;
– types of vehicle (eg bed-height and end- or side-loaded);
– unit load types and profiles (eg SKUs per pallet and need for re-palletizing);
– volumes per dispatch route; – own vehicles or third-party;
– cross-docking profiles (eg quantities, timing and sortation requirements).

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Warehouse operations:
– basic operations to be undertaken;
– ancillary functions, eg packing, returns, quality control, battery charging, offices,
– warehouse cleaning, maintenance workshop, services, stand-by generator,
restaurant, locker rooms.

External area requirements:


– security facilities, including gatehouse;
– truck parking and maneuvering areas, car parking;
– vehicle wash and fueling points.

Site and building details (for redesign of existing facilities):


– location, access and ground conditions;
– drawing to show building dimensions, columns, gradients, etc;
– services (eg electricity supply).

Cost data:
– rent (or land and building costs) and rates;
– building maintenance and security;
– heat, light and power;
– wage rates and shift premiums;
– equipment costs, depreciation rules, maintenance costs.

Any existing facilities or equipment that may be used:


– size, condition, numbers.

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Most organizations do not keep the exact data required for warehouse design and
therefore a wide range of methods normally need to be used to assemble the data.

These methods include:


o extracting data from computer records and paper records,
o sampling or surveying existing operations,
o projections based on forecasts,
o interviews with customers,
o site drawings,
o information from equipment and information technology suppliers and
o input from relevant management and staff .

Assumptions often have to be made based on informed opinion and experience, and these
should be clearly highlighted and agreed with the Steering Group.

Formulate a planning base


The relevant data need to be brought together as a structured planning base.

This requires detailed data analysis (eg using spreadsheets) and needs to be presented to
the project team, Steering Group and external stakeholders as clearly as possible; for
example, by means of summary tables, graphs, charts and drawings.

A useful way to present the throughput and storage data is as a warehouse flow diagram

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Formulate a planning base


In this diagram, a typical day in the life of the warehouse is presented in terms of flows
and inventory quantities.
It is a schematic diagram with the receiving area at the top and the dispatch area at the
bottom.
This does not represent the layout in any way, as no decision has been taken at this stage
as to whether to have a through-flow or U-flow configuration.
The flows are represented by the arrows, and are given in the most useful units for the
operation under consideration.
For example, they may be represented in pallet equivalents throughout, and some of
these may be converted to other unit loads, as the design develops. The storage
quantities are shown in the boxes, together with the number of SKUs that they
represent.

A number of such warehouse flow diagrams may be constructed for the various planning
horizons that are relevant to the design.

Similarly, consideration needs to be given to whether to draw these at average, peak or some
other level of activity in the planning year.

The level used will depend on the precise purpose for which the flow diagram will be used.
For example, the design of AS/RS equipment is likely to be based on peak flows, whilst
staffing may be based on a figure such as average plus a specified percentage uplift (eg 10
per cent). This uplift will depend on the extent of seasonal, weekly and daily variations, and
how these may be accommodated.

The flow diagram forces some initial consideration of warehouse zoning, in terms of whether
to separate picking stock from reserve storage inventory (which is likely to be the case if the
volume of goods is too great to fit into one convenient size location).

Also, the warehouse may be divided by product groups, by temperature regime, by the
degree of hazard, by the need for security, by size of items or by Pareto classification.

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Formulate a Planning Base

Pareto diagram, for throughput (sales) and inventory

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Define the operational principles


The basic operations will have been determined at the outset by the definition of the various
roles that the warehouse must perform (eg as a decoupling point, consolidation center,
assembly center or returns center).
However, it is necessary to detail these as far as possible before design commences. For
example, the warehouse tasks may include:

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Define the operational principles


The basic operations will have been determined at the outset by the definition of the various
roles that the warehouse must perform (eg as a decoupling point, consolidation center,
assembly center or returns center).
However, it is necessary to detail these as far as possible before design commences. For
example, the warehouse tasks may include:
o vehicle unloading,
o quality assurance,
o storage,
o picking,
o production postponement,
o added value services,
o packing,
o Cross-docking,
o sortation and
o vehicle loading
o as well as such ancillary activities as accommodating sales offices or providing vehicle
wash facilities.

Define the operational principles


The time available for each activity is an important factor in determining how each should be
performed.

For example, if there is a late-evening cut-off time for orders and the service level is for next-
day delivery, then the time window available for order picking may be limited to only a few
hours.

On the other hand, it may be possible to instruct suppliers to deliver goods to the warehouse
earlier, so this activity could be scheduled for the morning in order to balance the workload
over the day.

An indicative time profile, could therefore be established.

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Define the operational principles

Time profile of warehouse operations

Define the operational principles


• Goods inward/receipt
• Inward sortation and Cross-
docking
• Storage
• Replenishment
• Order picking
• Secondary sortation
• Collation
• Postponement
• Value adding services
• Despatch
• Housekeeping
• Stock counting
• Returns processing

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Order Picking

At this stage, general operational methods may be identified for each activity.

For example, if there are many small orders across a wide range of SKUs, then batch picking
may be identified as the most likely picking concept.

Similarly, for cross-docking, a pick-by-line concept may be adopted.

Each activity should be examined to determine whether some general operational methods
of this nature can be identified at this early stage.

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At this stage, general operational methods may be identified for each activity.

For example, if there are many small orders across a wide range of SKUs, then batch picking
may be identified as the most likely picking concept.

Similarly, for cross-docking, a pick-by-line concept may be adopted.

Each activity should be examined to determine whether some general operational methods
of this nature can be identified at this early stage.
The choice of unit loads (e.g. pallets, stillage, roll-cage pallets, skid sheets, tote boxes and hanging garment rails)
to be handled and stored in a warehouse is critical and should therefore be established early in the design
process.
UNIT LOAD
Suppliers may impose the unit loads in which material arrives at a warehouse, and customers may specify
dispatch unit loads, but the warehouse designer should use whatever freedom of choice exists to ensure the
most appropriate unit loads for the processes being carried out.

As an example, if roll-cage pallets are specified for dispatch to retail stores, then it may be advantageous to pick
directly into these.

Stillage

Roll cage

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Evaluate equipment types


There is a wide range of equipment available to warehouse designers. Some of these may
be well suited to a particular operation and some very badly suited.

It is vital that an appropriate equipment type is identified as subsequent changes could be


extremely expensive and disruptive to implement.

It is therefore important to proceed in a structured manner so that appropriate equipment


types are not discarded without proper consideration.

A narrowing down of options should therefore be carried out.

It should be noted that the reasons for discarding equipment at each stage are just as
important as the reasons for selecting equipment.

A structured approach to equipment selection must be used

Evaluate equipment types


A structured approach to equipment selection may comprise the following stages:
o Initial automation assessment
o Attribute assessment
o Decision trees Automated equipment may have distinct advantages in terms of
o Cost comparison good use of floor area (eg high-bay AS/RS), low running costs,
o Equipment choice security, accuracy and low damage levels.

However, it may be possible to take a decision at an early stage as


to whether to discard automation in certain situations, for example
where land and staff costs are low or where the operation needs
to be up and running very quickly.

For example, in situations where a conventional warehouse may


take one year to design and build, an automated warehouse may
take up to 18 months. In addition, the full commissioning and
refinement of the automated systems may take several more
months.

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Evaluate equipment types


A structured approach to equipment selection may comprise the following stages:
o Initial automation assessment
o Attribute assessment
o Decision trees It may be possible to discard certain equipment types based on
o Cost comparison their attributes. For example, only certain storage equipment
o Equipment choice types are suitable for strict first in first out, if this is a requirement
of the operation.

APR: Adjustable Pallet Racking

Evaluate equipment types


A structured approach to equipment selection may comprise the following stages:
o Initial automation assessment
o Attribute assessment
o Decision trees It may be possible to discard certain equipment types based on
o Cost comparison their attributes. For example, only certain storage equipment
o Equipment choice types are suitable for strict first in first out, if this is a requirement
of the operation.

Push-back
APR: Adjustable Pallet Racking

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Evaluate equipment types


A structured approach to equipment selection may comprise the following stages:
o Initial automation assessment
o Attribute assessment
o Decision trees It may be possible to discard certain equipment types based on
o Cost comparison their attributes. For example, only certain storage equipment
o Equipment choice types are suitable for strict first in first out, if this is a requirement
of the operation.

Push-back
APR: Adjustable Pallet Racking

Evaluate equipment types


A structured approach to equipment selection may comprise the following stages:
o Initial automation assessment
o Attribute assessment
o Decision trees It may be possible to discard certain equipment types based on
o Cost comparison their attributes. For example, only certain storage equipment
o Equipment choice types are suitable for strict first in first out, if this is a requirement
of the operation.

Racking Systems
APR: Adjustable Pallet Racking

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Evaluate equipment types


A structured approach to equipment selection may comprise the following stages:
o Initial automation assessment
o Attribute assessment
o Decision trees It may be possible to discard certain equipment types based on
o Cost comparison their attributes. For example, only certain storage equipment
o Equipment choice types are suitable for strict first in first out, if this is a requirement
of the operation.

Racking Systems
APR: Adjustable Pallet Racking

Evaluate equipment types


A structured approach to equipment selection may comprise the following stages:
o Initial automation assessment
o Attribute assessment
o Decision trees It may be possible to discard certain equipment types based on
o Cost comparison their attributes. For example, only certain storage equipment
o Equipment choice types are suitable for strict first in first out, if this is a requirement
of the operation.

Racking Systems
APR: Adjustable Pallet Racking

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Evaluate equipment types


A structured approach to equipment selection may comprise the following stages:
o Initial automation assessment
o Attribute assessment
o Decision trees
o Cost comparison
o Equipment choice

Carton Flow Pallet Flow

APR: Adjustable Pallet Racking

Evaluate equipment types


A structured approach to equipment selection may comprise the following stages:
o Initial automation assessment
o Attribute assessment
o Decision trees It may be possible to discard certain equipment types based on
o Cost comparison their attributes. For example, only certain storage equipment
o Equipment choice types are suitable for strict first in first out, if this is a requirement
of the operation.

Racking Systems
APR: Adjustable Pallet Racking

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Evaluate equipment types


A structured approach to equipment selection may comprise the following stages:
o Initial automation assessment
o Attribute assessment
o Decision trees
o Cost comparison
o Equipment choice

APR: Adjustable Pallet Racking

Evaluate equipment types


A structured approach to equipment selection may comprise the following stages:
o Initial automation assessment
o Attribute assessment
o Decision trees
o Cost comparison
o Equipment choice

APR: Adjustable Pallet Racking 6 Most Common Types of Pallet Racking Systems - YouTube

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Evaluate equipment types

Evaluate equipment types

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Evaluate equipment types

Evaluate equipment types

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Evaluate equipment types

Evaluate equipment types


A structured approach to equipment selection may comprise the following stages:
o Initial automation assessment
o Attribute assessment
o Decision trees
Clarity of thinking can be established by developing decision trees.
o Cost comparison
The decisions may not be clear cut at each point for a particular
o Equipment choice
operation, but this process can help to narrow down further the
options available.

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Evaluate equipment types


A structured approach to equipment selection may comprise the following stages:
o Initial automation assessment
o Attribute assessment
o Decision trees
o Cost comparison
o Equipment choice At the end of this process, there may be two or three equipment options
left for a certain activity, and these can then be subjected to a cost
evaluation.

It is important to include all the relevant cost factors. For example, when
choosing storage equipment, it is likely to be necessary to include costs
for land, buildings, services, sprinklers, lift trucks, operators,
maintenance and running costs, as well as the cost of the racks
themselves.
For example, when choosing storage equipment, it is likely to be necessary to include costs for land,
buildings, services, sprinklers, lift trucks, operators, maintenance and running costs, as well as the cost
of the racks themselves. As some of these costs are capital and some are annual, a satisfactory method
of comparison is needed, for example by using net present values or annualized costings (ie converting
all capital costs to annual costs).

Evaluate equipment types


A structured approach to equipment selection may comprise the following stages:
o Initial automation assessment
o Attribute assessment
o Decision trees
o Cost comparison
o Equipment choice When the preferred equipment has been identified for each warehouse
activity, then a final choice needs to be made, based on such factors as the
overall equipment mix, the flexibility provided and environmental
considerations.

Each equipment type can be compared in terms of greenhouse gas


emissions (eg conventional versus automated equipment energy usage, and
alternative fuel types for fork-lift trucks, such as lithium-ion batteries and
hydrogen cells).

Sensitivity analyses can be conducted to identify whether the preferred


equipment is still the most appropriate choice under the different business
scenarios that were identified.

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Powered Mobile

Prepare internal and external layouts


o When most people think of a warehouse design they picture a layout drawing.
o This is obviously a critical part of the design process.
o Once the operational principles have been established and the equipment types chosen,
then the internal and external layouts can be drawn.
o Computer packages, such as computer-aided design (CAD) software can be very useful in
this regard.

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Prepare internal and external layouts


o When most people think of a warehouse design they picture a layout drawing.
o This is obviously a critical part of the design process.
o Once the operational principles have been established and the equipment types chosen,
then the internal and external layouts can be drawn.
o Computer packages, such as computer-aided design (CAD) software can be very useful in
this regard.

https://t2storage.com/
Internal layout
The warehouse flow diagram is a useful starting point as this shows the relative flows between
the different zones.
Obviously, the designer will try to minimize the distances for the greatest flows and will avoid
any backtracking or major cross-flows.
Typically, a number of draft designs will be drawn and these will be compared by the design
team.

This process will have a number of objectives, such as:

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Internal layout
The warehouse flow diagram is a useful starting point as this shows the relative flows between
the different zones.
Obviously, the designer will try to minimize the distances for the greatest flows and will avoid
any backtracking or major cross-flows.
Typically, a number of draft designs will be drawn and these will be compared by the design
team.

This process will have a number of objectives, such as:


o throughput efficiency, i.e. achieving the required throughput with least resources;
o building utilization, i.e. for new buildings, designing to conform to rectilinear building
norms for both high-bay and low-bay areas, while for existing buildings, making best use
of the available space;
o safety, e.g. separating pedestrian from fork-lift truck traffic, avoiding the inclusion of any
dangerous junctions between aisles, and ensuring that there is a rapid means of fire
escape for all personnel (e.g. no closed aisles);
o environmental, e.g. capturing rainwater run-off for further use and location of solar
panels.

Internal layout
Parameters to be Planned when Designing

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Internal layout
Parameters to be Planned when Designing

Internal layout
Parameters to be Planned when Designing (WH Management Processes)

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Internal layout
Parameters to be Planned when Designing (Type of Material Flow)

Internal layout
Parameters to be Planned when Designing (Type of Material Flow)
U – Flow Advantages

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Internal layout
Parameters to be Planned when Designing (Type of Material Flow)

Internal layout
Parameters to be Planned when Designing (Type of Material Flow)
Through Flow Advantages

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Internal layout
Parameters to be Planned when Designing (Type of Storage Systems)

Internal layout
Parameters to be Planned when Designing (Temperature Controlled Storage)

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Internal layout
Parameters to be Planned when Designing (Controlled Rooms and Freezer Rooms)

Internal layout
Parameters to be Planned when Designing (Material Type)

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Although the warehouse should be designed around the operational requirements, there is a
significant interface at this stage with building design. For example, building spans, feasible
floor slab dimensions, and fire officer requirements (eg fire walls) may all be important.

Other layout considerations include:


building spans, column pitches, required clear operational heights and floor flatness
tolerances, eg for narrow-aisle operations;

dock area design for vehicle loading and unloading, eg the number, pitch (ie distance
between doors) and whether raised or level access (eg for end or side loading);

the location of, for example, offices, battery-charging area, pump room (for sprinklers),
restaurant, toilets, and facilities for delivery and collection drivers.

The design also needs to be planned for potential further expansion. For example, the designer needs to consider how
the building can be expanded to accommodate increased throughput (eg more marshalling area, more raised docks, etc)
and greater storage (eg extension to a high bay AS/RS area), bearing in mind that disruption to the ongoing operation
should be minimized during any further construction work.

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External layout issues


The external layout will show exactly where the warehouse building is to be located on the site
and the relevant roadways and parking area.
Critical decisions therefore include whether vehicle traffic should go around the building or
whether traffic should just go to one or two sides of the building and then return.
This will be partly associated with the decision regarding a flow-through or U-flow internal
configuration.
Even if operational access is only required on one side, then it is still likely that access will need to
be considered for emergency services (eg for fire-fighting) on the other sides.
Other external layout considerations include:
roadway design;
o parking areas, for trucks, containers, demountable bodies and private cars (the latter
normally being separate from the operational area);
o gatehouses, fences, barriers and landscaping;
o vehicle wash, fueling and maintenance facilities;
o fire assembly area.

Draw up high-level procedures and information system


requirements
Once the equipment and layout start to become clear, it is important to draw up the high-
level procedures of how the operation will work.

For example, if zone picking to plastic tote bins on conveyors is adopted, the process of
issuing the pick instructions, confirming the pick, and conveyor sortation (eg the
accumulation of multi-bin orders) needs to be established to ensure that it is in fact a
good and workable solution.

In conjunction with this, the information system requirements should be established. For
example, in the above instance, it would be possible to use a variety of information
systems, such as paper pick lists in the totes, reading an RFID tag on the tote and issuing
instructions by radio data terminal to the picker, pick by light, or voice technology.

This decision will form the basis of the specification for the warehouse management
system and associated information and communications systems.

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Evaluate design flexibility


The flexibility of the design to the range of business scenarios envisioned during the first stage
should be fully evaluated.
Even though this would have been considered at each stage, it is important to evaluate in
detail to what extent the proposed design is flexible and can therefore meet the requirements
of an agile supply chain.

The type of agility required may include the following facets:


o volume, eg to accommodate unexpected growth or sudden surges in demand;
o time, eg to enable rush orders to be picked and dispatched;
o quantity, eg to be able to switch to item rather than case picking;
o presentation, eg to present different unit loads to various clients;
o information, eg to provide specific information on customer labels.

Evaluate design flexibility


This agility may be provided by a combination of available warehouse resources, namely:
o land/building, eg by designing for modular expansion of the building;
o equipment, eg by choosing versatile equipment;
o staff , eg by facilitating the addition of more staff to operations in peak periods;
o processes and systems, eg by developing processes and systems for a range of
eventualities.

Examples of flexible design options

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Calculate equipment quantities


Based on the warehouse flow diagrams and the equipment choices, it is normally relatively
straightforward to calculate the equipment quantities.
For storage equipment, the number of unit loads (eg pallets) to be stored needs to be
increased by the location utilization

Handling equipment requirements are based on material movements in the warehouse,


including seasonal variations and short-term peak loads, and on operational data, typically
from manufacturers’ technical data plus operating experience.

Shift working patterns will affect these calculations, and also determine whether spare
batteries will be required for battery-powered trucks.

The number of order picking trucks will depend not only on total warehouse throughput but
also on order sizes and frequencies.

Calculate staffing levels


The requirements for operating staff are closely linked to the mobile equipment
requirements, and in many cases will ‘fall out’ of the equipment calculations.

Quite clearly, staffing levels have to be established as part of the design and to enable a full
costing of the warehouse to be made.

Allowance needs to be made for absenteeism, sickness and holidays, as well as for shift
rotas (eg for 24/7 working).

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Calculate capital and operating costs


At this stage, the capital and operating costs can be determined.
It is often useful to assemble these under the headings of:
o building, including land, construction (or leases or rents), local rates or taxes, services
and building security and maintenance;
o equipment, including static and mobile equipment capital costs (or leasing or rental
costs), and maintenance and running costs;
o staffing, including management, operatives, clerical staff and maintenance staff ;
o information systems, including hardware, software and implementation costs

Calculate capital and operating costs


At this stage, the capital and operating costs can be determined.
It is often useful to assemble these under the headings of:
o building, including land, construction (or leases or rents), local rates or taxes, services
and building security and maintenance;
o equipment, including static and mobile equipment capital costs (or leasing or rental
costs), and maintenance and running costs;
o staffing, including management, operatives, clerical staff and maintenance staff ;
o information systems, including hardware, software and implementation costs
It is also normal to add a contingency to capital costs for unforeseen events and for the
detailed design of equipment (eg side-shift s and flashing lights on fork-lift trucks).
Under each of the above cost headings, the capital and operating costs should be calculated.
These will represent the actual expenditure by the company on the warehouse.
In addition, it is often useful to present these costs in a way that represents the timings of
the cash outflows (eg net present value or annualized costings), both for the comparison of
options and for the presentation of the business case.

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Evaluate the design against the business requirements


and design constraints
Before finalizing the design, all the details determined up to this point should be checked
against the defined business requirements and any design constraints that must be met.

It is not uncommon for the design to have strayed away from the original criteria during all of
the detailed work that has taken place and therefore this is a very useful checkpoint.

It is important not only to ensure that the design works well for ‘the business plan’, but also
to identify how, and at what cost, the various other business scenarios would be
accommodated. The use of simulation may well therefore be of benefit again at this stage.

Finalize the preferred design


The design process normally involves considerable iteration.
For example, the evaluation of equipment types may result in the original warehouse zoning
being revisited.

At this final stage, all of the aspects of the design need to be finalized, including layout, operating
methods, equipment, staffing, information technology and costing. This complete ‘operational
specification’ is then normally put forward to the organization’s executive body (eg the board of
directors) for approval.

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Finalize the preferred design


Once approval is received, then the actual project implementation can begin. This will involve
many different strands of activity, all based on the agreed warehouse design, for example:

o building: site search, building design, tendering and selection of the construction
company, detailed design, and construction, as well as ancillary specialisms such as
sprinklers and security;
o materials handling: detailed design, tendering and supplier selection (or development
with preferred supplier), manufacture, installation and commissioning;
o information systems: specification, selection, development and testing;
o personnel: job specifications, recruitment and training;
o associated areas: for example, transport.

All of these strands will need to be co-ordinated by a project management activity, which will
involve implementation planning, a project network, and change management procedures
and continuous control.

Thank You

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