Warehouse establishment – basic issues

16-04-2010

Lars Bek Jensen presents three main areas to contemplate at the establishment of a warehouse.

1) Storage volume, size and location

First issue to consider: what will be the scale, size and location of the warehouse? A strategic warehouse justifies a more comprehensive inventory than an operational warehouse does. Strategic warehouses are prevalent in areas such as furniture and non-food, where you depend on large purchases at the right time; only secondarily are you interested in the stock turnover rate. A fact that makes it difficult to calculate the size of the inventory as opposed to operational warehouses.

Operational warehouses focus on the balance between service level and inventory, or in other words: how small a quantity is it possible to have in stock and still have a satisfactory service level - typically the case in wholesale companies.

Many large companies justify decentralized warehouses with maintaining high service levels - among other things because it enables them to better service the customers locally. But the fact is that the limited local storages are unable to supply the required goods, leading to time-consuming internal relocation or postponement of the delivery time.

In Denmark, with its limited sized and excellent infrastructure, ordinary companies should no longer need decentralized warehouses. Generally, central warehouses are capable of solving the task with a much smaller inventory and, additionally, may justify automation and efficiency improvements.

2) Organisation and automation

The second issue is how we want to organise and automate. Well-managed warehouses work paperless and around a dedicated warehouse management system or WMS (Warehouse Management System). One should let WMS pre-calculate volumes of outgoing orders and then pick goods directly into the outgoing package, thus avoiding an actual packing area where the goods are handled a second time.

A well-functioning WMS and expedient storage design will take you far in the streamlining. Companies with more comprehensive flows and volumes may consider automated solutions. The various automated solutions do, however, not always fit the company's full range. Therefore, it may be necessary to combine several solutions to create a warehouse able to manage the entire task effectively - for example, the flow of an item group will typically determine whether automated solutions make sense.

The ultimate choice will often depend on the expected lifetime for the warehouse. If it is more than five years, automation can probably be justified financially, as in that case your investment is likely to be returned.

3) Warehouse design

The third issue is the layout. Quite often the layout of a warehouse is a direct offshoot of whether the warehouse is automated or not, and usually it is possible to solve the same issue in several ways. Basically, you select equipment and layout according to the item dimensions and frequency, but also elements such as FIFO requirements and valuable goods may be deciding factors.

Additionally, there are a number of ergonomic factors to consider. For example, the Working Environment Authorities focus on working conditions concerning single lifts, the total of daily, heavy lifts and monotonous repetitive work.

Last but not least, considerations in relation to fire have a significant impact on the storage layout and choice of building. When high bays come into the equation, it is advisable to involve experienced consultants given the fact that high bays are still an unregulated area in the Scandinavian countries.

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