Operating Principles

Once it has been determined to use a warehouse, the next step is designing it. Whether the warehouse is a small manual operation or a large automated facility, the following three principles are relevant:

• Design criteria
• Handling technology
• Storage plan

Various principles for warehouse operations are

• Keep optimum stock levels – Holding excess stock is costly, while not being able to fulfill orders fails to maximise your profitability. The accurate and efficient receipt of stock and returns into a facility enhances warehouse management and means that you’re prepared for all eventualities. Warehouse management software can make it easier than ever before to optimise your stock levels at all times.
• Process sales order speedily – The swift and accurate processing of sales orders doesn’t just happen at the point of sale. It starts way back in the warehouse, when sales orders are first lodged and filled in your storage facility. Being able to enhance your warehouse management further enables fast and accurate sales order processing.
• Control the movement and storage of materials – Accurate detailing of stock levels and the correct fulfillment of orders can only happen in your warehouse where both the storage and movement of stock is tightly controlled. It’s not easy, but the rewards are huge for your profit margins.
• Process associated transactions efficiently – All transactions associated with the warehouse have to be processed efficiently for the supply chain to work well as a whole. An efficient warehouse management system can assist, helping you to process shipping, receiving, put-away, picking and pick face replenishments.
• Link warehouse management to sales order processing – Given that warehouse management is a vital part of the supply chain, it is essential that it is linked to your other operational areas such as sales order processing and logistics management. This is in order to pick, pack and ship your products out of the facility effectively and efficiently.

Design related principle and guidelines, which affect warehouse operations, are

Determine the objective of the facility – The first step must involve defining the objectives and goals of the facility. What is it there for, what market does it service, is it part of a network, what types of goods will be stored, what is the anticipated life of the facility, will it be a greenfields site, or an existing facility?

To press the point, it is useful to write the objectives down so that all associated parties remain cognizant of the expected outcome – especially if timing, budget or resource issues during the project life tempt stakeholders to compromise operational or design goals.

Define volumes and functional requirements – The famous British Physician Dr Thomas Fuller once said: “Get the facts, or the facts will get you. And when you get them, get them right, or they will get you wrong”. This is an important lesson that was also affirmed by my learned web colleagues, and certainly one that has guided my own work throughout my career. Quite simply, the facts needed are:

• Quantities of products to be stored.
• The throughput velocities, including incoming goods, customer orders, interfacility transfers, dispatches and returns.
• The nature of orders and specific picking requirements, e.g. is picking performed in containers, pallets, cartons, inners, or single units?

This is one of the hardest and most time-consuming components of a design project. Rarely do enterprises have such data readily available. Designers must therefore ‘mine’ it from the enterprise as best they can. In cases where data is piecemeal or nonexistent, the designer must draw from his/her own experience to fix assumptions around volumetric estimates. This can be particularly challenging when heavy scrutiny is placed upon the designer to prove the concept, and is best performed with collaboration and agreement from the stakeholders involved.

• What functions need to be provided for? It’s imperative that the designer understands all of the functions that are to be included on the site footprint, e.g. warehouse, offices, gantry cranes, loading docks, forklift charging areas, dangerous or hazardous goods, cool or cold rooms, clean rooms, manufacturing or packaging operations, staff facilities, etc. Equally important is that relative dependencies between functions are determined so that the designer can correctly frame functional proximities for best flow and operation by staff.

Match storage modes, it systems and mechanised technologies with volumes – Once the data has been analysed, the designer is ready for equipment selection. Be it static racking equipment, mezzanines and the like, or mechanical equipment such as conveyors, carousels, stacker cranes etc., all equipment and systems must be applied according to their purpose, limitations and fit with the volumes handled.

For instance, it is a waste if an automatic storage and retrieval system is installed, when a conventional racking system will suffice. Conversely, if the facts point to justification of a high-velocity automated system, it is foolish to ignore them for the sake of a more conventional system. A critical aspect of equipment selection is that the designer has expert knowledge of available equipment and technologies, and how to apply them.

This is a complex area that deserves careful consideration and the novice designer is well advised to seek advice from materials handling equipment and software suppliers, builders, and industry specialists to ensure that their design is well founded, robust and practical.

Flow – This aspect incited some interesting comments from my web conference colleagues. From their wise counsel and my own experience, I suggest that the skilful designers apply two immutable laws of flow.

One-way flow – The best warehouse operations are those that apply this principle. Whether straight, clockwise, counter clockwise, up or down, make sure it flows in a one-way direction. But here’s a tip. Be cautious when dealing with international customers, where cultural and religious beliefs point to specific requirements.

Flow vs. Capacity – An important rule of flow is that free movement has priority over storage capacity. If you are pressed with a choice, the pundits agree that it’s better to hold flow sacrosanct, compared with building more stock or storage equipment. Why? Long after the warehouse construction has been completed, a team has to operate efficiently and safely in the warehouse year after year. If the design compromises on the size and quantity of aisles, for sake of more stock holding, beware: this can cause suboptimal performance over the life of the facility.

Close to zero materials handling movements – A simple rule that says it all: keep the product handling by people to a minimum. Ideally from 3-5 touches of the product, while goods are the in the warehouse. Sadly, I have witnessed operations that handle goods up to 8 to 10 times. Normally there is severe design or building constraints applicable to such situations. But the outcome is evident in the maxim: ‘more touches, more cost’. Take note!

Evaluate your options – The developed concept design options must be evaluated to ensure that the objectives are achieved. The two common approaches to assessment are:

• Quantitative analysis: return investment, payback, cost per order to supply, cost per order cubic metre to name just a few.
• Qualitative analysis: reviewing the advantages and disadvantages of options considered. Ideally the evaluation is best performed both individually and in a team workshop environment. It’s amazing what can be revealed when a team collectively focuses its attention at a project. Despite the meticulous job the designer may have performed, a workshop can often reveal a late insight, idea, or missed detail that can significantly impact upon the end design.

Consult widely – The design process is multifaceted, and normally involves executives, managers, and operators – not to mention equipment suppliers, builders, architects, and councils. As part of the development process all should be regularly consulted as to planning and legal requirements, operational needs, preferences, ideas and opinions.

No one party has all the background and knowledge to implement a DC project. The best implementations typically features a cohesive and dedicated team charged with managing the project from early design phases through to completion.