Go Supply Chain Consulting Limited, explores the options to consider before investing in a new warehouse.
A new warehouse may not be the solution…
It is important for a business to constantly check it is maximising its potential holistically. One area where this can often be overlooked is the warehouse. Especially when a business is growing, the warehouse is usually the last thing that is analysed, often it is at a point where the distribution centre is becoming a hindrance to the business that the focus shifts. The first assumption is that a new warehouse is needed, however, this might not always be the case. We discuss the points that should be examined before deciding. This could potentially save you time and money.
A second or bigger facility has cost implications that are often not taken into account. The common problem with this type of expansion is that it takes longer than expected to ease into functioning optimally, also it usually is under maximised in the early stages. Therefore the daily running costs are not taken into account, leaving a deficit in the budget.
Figuring out the capacity of a warehouse can be confusing to businesses, especially as Throughput capacity has to account for a number of factors and constraints. For example
Firstly Inbound Capacity – How vehicles are handled on entry, the unloading procedure, how the inbound marshalling area is managed and cleared.
Secondly outbound capacity – This is related to overcrowding when order picking, how the outbound marshalling area is controlled and how the flow of dispatched vehicles is managed
What we want – The ideal warehouse capacity, one which can store satisfactory product to meet the levels of the throughput.
Once all the above elements are taken into consideration a number of solutions could be implemented.
Consolidate the entry gatehouse and the offloading/storing procedures.
Ensure that all the storage racks/shelves are used to the maximum efficiency, if not reassess and redesign it.
If it is required an external storage facility can be hired for off peak periods.
Increase trailer ratio as this will allow an increase in pre-loading and the strain on outbound marshalling will be reduced.
Aside from this there are other options which are dependent upon the constraints of the business.
Look at implementing changes that diminish the burden on the warehouse.
Collaborate with suppliers to improve how vehicles are processed, if this can be reduced it will derive positive benefits.
Consider origin picking for initial allocations and / or promotional lines
Assess when the stock receipts are required and de-expedite accordingly.
Ensure stock that is obsolete is managed and the inventory framework is being met
In conclusion, before making the assumption that you need a new warehouse, analyse the logistics and supply chain procedures and processes. This may enable you to make small adjustments to increase productivity without the hefty costs.
Note: It can be difficult for the operations team involved in the day to day logistics to be completely objective when reviewing the warehouse capacity. Consider sourcing an independent logistics consultant. The consultant will employ a methodical strategy and collaborate with the team to create solutions which are functional, acceptable to the team and actually implemented. A logistics consultant will also bring industry knowledge and expertise of what works.