There are several basic principles that apply to warehouse layout design and running an effective distribution center operation. Without the proper layout and design of your distribution center, no matter the square footage, you will face capacity issues, decreased productivity, and storage inadequacies.
In this blog, we’ll discuss the 28 key principles that you should consider for warehouse layout design and productivity.
Here are 28 considerations for effective warehouse design:
1. Trends in facilities
If you’re looking to acquire an existing center or build a new center, it’s important to understand how trends in warehouse design have changed. New centers built in the last ten years or so typically have clear spans between 24’ and 34’. Larger, automated centers with very narrow aisle and picking systems are now build to 54’.
Older centers often have less than 24 feet clear span. The tradeoff is that older facilities will have larger footprints and lower ceiling clear span versus the higher clear span for more cubic height of storage with newer centers.
As real estate becomes more expensive and the existing warehouse market remains at capacity, it is important to calculate what the total storage capacity for an existing building is and the racking, automation and material handling equipment that will be required to take advantage of the higher clear span.
2. Distribution center facility costs
Considering the total cost per order for fulfillment, facility costs in total are in a range of 15% to 20%. These costs include:
- leases or building ownership
- total occupancy costs
- material handling in the center
- amortization and depreciation of systems
3. Cost of labor
A proper building layout can dramatically affect labor productivity. Direct and indirect labor is more than 50% of the cost per order, excluding outbound shipping costs. Minimum wage in many states is slated to reach $15 per hour in the next five years. One of the key design considerations should be how labor hours can be saved in the layout and design, as well as systems and process. A number of recommendations below improve labor productivity.
4. Storage space/cube
Make sure you are utilizing the potential storage space/cube of the distribution center. Ensure that vertical space, as well as individual location cubic capacity, is fully utilized. Maximize cube and ground level square feet.
Square feet requirements for storage are directly impacted by the racking design. Most warehouses operate with one of the following racking designs:
- 12’ Standard Aisle Width – utilizes a traditional sit down/counterbalanced lift truck
- 8’ to 9’ - Narrow Aisle Width – utilizes a narrow aisle reach truck
- 6’ Very Narrow Aisle Width – utilizes a turret truck or swing arm truck design
Example of pallet storage by type, each of these options are discussed and illustrated below.
STANDARD 12’ AISLE
NARROW 9’ AISLE
VERY NARROW 6’ AISLE
One way centers often make use of total cube is to install mezzanines over work areas and departments that do not require high cube. In larger centers, picking modules can be installed on above floor levels.
5. Slotting, replenishment, and location control systems
These three activities form the backbone of the operation and should be given appropriate attention. If they are cared for, much of the rest of the operation will run effectively.
6. Flexibility in the operation and layout
Planning for unknown future changes to the business or fulfillment model is vital to avoid unnecessary costs making unplanned changes to the facility and operation. Don’t develop a layout or process that is inflexible or not scalable.
7. Congestion and interference
Avoid unnecessary congestion or overcrowding in the distribution center. The time lost due to overcrowding or congestion is significant.
8. Location storage media
Use a variety of location storage media for slotting and reserve as dictated by item cubic velocity. The “one size fits all” approach rarely works to maximize efficiency in space and labor performance.
9. Travel walking time
Since more than half of the total labor time in the distribution center is spent walking, any efforts to reduce travel distance and time will pay off in reduced labor costs. Effective layout and slotting processes can help reduce walking time. The warehouse payout and method of picking must be considered.
10. Conveyors for horizontal transport of product
Whenever possible, using a simple transfer conveyor system can improve operating efficiencies by reducing handlings and walk time. Make sure the cost of the equipment is justified. Conveyor selection is based on the size and weight of the product and the throughput volume. Accumulation has to be planned for in any conveyor design.
11. Accumulation and storage space
Provide adequate accumulation and storage space on docks. Inefficiencies caused by lack of space on docks gets the operation off to a bad start. It not only causes inefficiencies in the operations on the dock, but it’s negative effects ripple down to other distribution center functions.
12. Number of dock doors
Since the expense of providing enough dock doors for inbound and outbound use is relatively small, and the impact of not having enough doors large, invest to make sure you are not slowing down the operation.
13. Cross docking
Consider using cross docking for backorder processing as the item is received. The ability to omit steps in the fulfillment process and take receipts directly to the packing/shipping function will save time.
Use barcodes as much as possible. Consider applications to reduce labor and improve efficiency in as many areas of the fulfillment process as possible.
15. Open space
Keep 10% of locations open and available. This may not be possible all of the time but having space available to store inventory in picking and reserve locations is a key factor.
16. Productivity reporting
Most employees want to know what’s expected of them and how they are measuring up to those expectations. Measure and report productivity in the warehouse to improve performance.
17. Product volume
Move as much product as possible at one time. Maximizing the product per trip will reduce the total trips and time required. Applications can be found in the picking, put away, replenishment, etc. distribution center functions.
18. Slotting procedures
Maintaining slotting procedures are critical to an efficient center. Try to provide primary pick space for one week’s average unit sales for each SKU. Focus on the top 10% of fast selling SKUs to ensure that they are properly slotted. Make sure the slotting process is maintained as a dynamic, ongoing process.
19. Well-designed pack station
Since the majority of distribution center labor is spent in the packing function, it makes sense that a well-designed pack station can save you time and money. Ensure that all of the required materials are available for the packer and that adequate workspace is provided.
20. Shift start times
Make sure that your schedule for distribution center staff coincides with work being available. This may involve staggering shift start times. Consider off shift activities to minimize interference with other distribution center functions.
21. Aisle mapping
Save headaches in other distribution center activities by aisle mapping. This simple process validates that the correct item is in the assigned location and can be done quickly without taking a cycle count.
22. 80 – 20 rule
The 80-20 rule indicates that 20% of your SKUs usually account for 80% of your unit sales. As such, these popular items should be processed as efficiently as possible. Create a “Hot Pick” zone for the fastest sellers and reduce picker travel time.
23. Single line orders
Batch-pick singles as much as possible. Single line orders may be more than 50% of orders in some centers.
Provide for the level of automation that can be cost-justified based on your particular operation and cost structure. Look for 18-month payback as a guideline.
25. Flow charts
Develop process flow charts that track inbound product flow (a receipt through the put away process) and outbound customer orders (from replenishment to shipping), showing the path and number of times the product is touched. Eliminate touches to save labor costs and speed up throughput.
26. Staff involvement
Involve your distribution center staff in decision making relating to facility layout or operations planning. Those closest to the process usually understand it best.
27. Lighting levels
Make sure that you provide adequate lighting levels based on the type function to be performed. Do not let existing light fixture locations determine where aisles between shelving and racking are located. Poor lighting not only reduces morale, but can contribute significantly to human errors. Work activities like picking, packing, shipping, and pre-pack require a minimum of 50 to 75-foot candles of light. Bulk storage areas require 30 to 15-foot candles for equipment operators.
Plan for an appropriate level of inspection and don’t over inspect where not required. Pick the best function and inspection level to set quality requirements.
When designing a warehouse layout, the physical aspects of the layout and facility are only one aspect. Workflow, process and how labor is used are important considerations in an effective warehouse design.