When first deciding to build a warehouse, often the top priority on people’s minds is how to maximize the use of the space or how to reduce costs. While these are important, they should be thought about a little further down the line. Planning in a holistic manner with careful decisions being made beyond just the basic layout can help keep those building a warehouse on the right path.
From an outsider’s perspective, a warehouse may just look like four-walls and a roof where products are stored, but there’s much more going on behind the scenes. Often overlooked factors both large and small can have significant effects and plague a warehouse with inefficiency, creating bottlenecks can have a cascading effect throughout the warehouse. Attentive management and fully thought out processes can make work flow more efficiency and increase productivity.
For a more in-depth look, we sat down with Mr. Tim Burger, General Manager Solution Design & PMO, Business Development, Mekong Cluster (Thailand, Vietnam, Cambodia, Laos & Myanmar) from CEVA Logistics to explore what common mistakes people usually over look when designing warehouses and how we can avoid and eliminate those factors.
A Start in the Right Direction
When designing a warehouse, there is more details to consider than first meets the eye. Mr. Burger said that, “To design a warehouse, there are several steps that need to be done correctly to ensure that the building is designed and built to suit a customer’s needs. When starting the process, there are normally two types of categories we consider. The first type is a greenfield solution, which we start from scratch and sit with the landlords to discuss the customer and best practices that will result in a Build-to-Suit solution. The second, which is more popular in Thailand, is retrofitting a current or existing facility to the customers’ requirements. Customers need to provide data such as products or commodities, volumes, what type of business model they require, orders structures,how products are transported to and from as these all have an impact on how the goods are going in and out of the warehouse. We need to calculate what kind of footprint is needed, which in turn is based on the inventory analysis by volume throughput against stock and type of product. We need to know those elements to accurately calculate, analyze and map out our solution direction.”
With so many details and precise information, sometimes customers often overlook important factors which causes processes in the warehouse to become inefficient. From Mr. Burger’s experiences, there are some areas that customers usually misunderstood and overlook. Let’s explore find out the ways to eliminate them.
Top Five Areas People Usually Overlook in Warehouses
1. Material Flows
“Material flow is one of the biggest issues we face during consultancy. It’s very easy to just put some racks and pallets in a warehouse, but to effectively run a warehouse you must be able to have good movement and flow of the material in the warehouse, that’s the real challenge. The struggle which you often see in the warehouse is non optimal put-away and picking logic which can become the biggest issue. You must analyse and map out the warehouse by finding a balance between optimal stock/pick locations and how activities are connected as part of the material flow in the warehouse, as you try to balance out traffic across the warehouse. Some ways to optimize these material flows are; proper slotting of the locations by doing a comprehensive ABC(D) analysis, creating optimized picking paths and try to seprate man and machine in work area’s as much as possible. You need to design the material flow within the warehouse before you even begin with the design of the infrastructure layout,” Mr. Burger said.
2. Marshalling Area
To reduce costs and maximize the value use of space for storage, people normally design the marshalling area too small. Mr. Burger said that, “People often think of the best way to save direct costs and they often design the marshalling areas too small or forget to properly map it out based on inbound/outbound volumes, order cut-off times, truck sizes picking strategies and daily peaks of the activities (seasonality). The receiving/dispatch area is a fundamentally critical area in any warehouse, because issues that happen here will cascade throughout the warehouse, creating a number of other issues like pallet in the aisles, stock discrepancies, reduced productivities and/or quality issues will impact later on. These inefficiencies are indirectly impacting costs and erode profits.”
“As a benchmark, the marshalling area should be between around fifteen to twenty percent of your total space depending on the business model. But in Asia, the marshalling area tends to be too half or less in many cases. I often see warehouses trying to use a marshalling area 50% the size it should be and result in the staging area to overflow and creating a lot of issues down the line,” Mr. Burger demonstrated.
More often than not, warehouses use the wrong type of racks, location set-up and the way they are designed and arranged is incorrect. “Companies choose the wrong type of racks as they don’t make the choice based on their storage and handling strategy. The storage strategy should be determent by combined factors of business model, picking strategy, material flow, volumes, product dimensions, number of SKU, facility restrictions and cost.
“A common mistake is for example under-utilized locations, having not enough pick faces or using shelving cabinets for fast moving carton picking. Also the way the storage areas are organized might impact workers have to travel a lot more than required. For example in spare-parts warehouses more than 70% of the picks happen in small bin area’s like mezzanines, they should then not be put at the back of the warehouse what some might think. You don’t want people to travel across the warehouse all the time. Consequently, the lower productivity is, the more people you need, which creates an increase in overtime and additional headcounts.”
Housekeeping is often a big mistake to overlook as well. The role of housekeeping is more than just cleaning up the warehouses as Mr. Burger said that, “having discipline and training in place can ensure for a more smooth operation. But this goes beyond messy marshalling areas, aisles littered with plastic or products covered in dust. It should be around the principles of concepts like 5S, doing regular cycle counts and doing regular location management. What we often see is that customers forget to do regular location management by doing ABC analysis’s, but they only do it once a year or not at all. Apart from the risk to safety and stock accuracy, a warehouse operation with good housekeeping, results in an efficient warehouse.”
5. Technology should complement, not be a burden!
“A common mistake seen is that customers invest in technology solutions, only to realize it does not compliment the solution, is not flexible or is not used to its full extend.”
“Automation for example is a beautiful to see and could deliver a lot of value if used in the right manner, but if you automated a warehouse with broken processes it will just add to the problem. Flexibility is a factor that should be taken in mind as well when automating a warehouse, some customers we have seen revert back to non-automated solutions due to the inability or very costly impact of changing the automated systems to make them optimal once more. Maintenance, repair and spare-parts also are often hidden cost overlooked by customers.
“A good WMS system should be the backbone of a warehouse to ensure proper inventory management, workforce planning and ensuring quality reporting. It’s important that before setting up any system, the solution is properly scoped out. I see in some cases that customers have systems but that they don’t fully full their requirements and that operators are there for often developing work-around-solutions to do their tasks. Technology is such an important factor these days in logistics and in CEVA logistics this also part of our service offering to complement our solutions. But the right technology solution should be supporting processes, working in the background to achieve further proactivity and quality improvements.”
Keep Reviewing and Improving
Apart from all these common mistakes, Mr. Burger also had additional tips that should be used to improve and make warehouses more workable. “When designing a warehouse, people usually prioritize on how to have the largest area of the warehouse and often overlook the other areas like truck yard and turning space, employee’s accessibility, locker rooms and other areas for employees. I’ve seen now developers are starting to incorporate canteens, even though they’re still on the road side. Designing and including decent worker amenities makes coming to work at the warehouse much more accommodating for the workers. An alternative for additional office or value-added-service space to build them on the floor inside the warehouses, we’ve offer solutions to customers to have mezzanine offices to improve space utilization.”
Yes, a warehouse is a just a building, but there are many things that should not be overlooked. Developing a well-designed warehouse is an ongoing process. Having consultancy with a warehouse expert could also help as well. Employees should not only think short term in terms of direct cost but look at the bigger picture on how certain investments like having additional space could have a positive impact on performance, quality and safety. Constantly review and analyse the warehouse regularly, “I’ve started seeing a lot of landlords now taking the initiative to learn from other countries like Europe and Australia, in terms of best practises, safety and standards.” Mr. Burger added, “Even though there’s still much to improve upon and it does take time, but this is a good signal that the development for warehouses in Thailand are on the right path.”