Information And Tips
Distribution Center Planning
The Five Most Common Mistakes When Planning a Distribution Center
By Craig Bertorello
At some point in your life you may have heard the age old saying, “planning without action is futile, action without planning is fatal” applied to different tasks, but never has it been more literal than when planning a new distribution center. In today’s marketplace, every minute and every dollar counts. Achieving maximum efficiency is not just a goal; it's a necessity.
In the past, it may have been possible to tolerate certain types of mistakes, but not now. Getting the new distribution center project completed quickly, and operating efficiently is a business essential.
With distribution costs escalating daily, finding more efficient and cost-reducing ways to get products to customers is an absolute must. A warehouse or distribution center may be a company’s largest capital investment, as well as the final stop before product reaches the customer; it is imperative that the planning process is done perfectly the first time.
A critical component of this process is, of course, the distribution center. As these facilities increase in both numbers and size, any mistakes in planning only escalate the costs, create unnecessary delays and reduce the ultimate operating efficiency of a facility.
Experience suggests that there are five major mistakes in planning a distribution center that, if avoided, can result in much more satisfactory project results.
Mistake #1. Planning without involving a material handling systems integrator early enough in the process. Since a distribution center's primary function involves material storage, picking and handling processes and systems, the overall planning for a new facility should include and incorporate these functions from the start.
While this may seem obvious, it doesn't occur as frequently as might be expected. Rather than a deliberate oversight, it often results from focusing on getting the project underway -- permitting for the building, obtaining construction bids and starting to show physical evidence the project is underway (turning the dirt).
However, there's a major benefit to concurrent planning and careful coordination between the design of the facility and the material handling system requirements. The key is making certain every aspect of the facility is laid out and engineered properly from the start, so that all functions integrate seamlessly with the building design and fit like a round peg in a round hole, as opposed to trying to force the proverbial square peg in the round hole. While it can sometimes be done, it's never the right solution.
By not involving the systems integrator with the architect and the contractor with the layout design for the facility, the integrator can often be faced with problems such as insufficient turning radii for lift vehicles, travel aisles that are either too narrow or too wide, building column placement that results in less than optimal layout of pallet racks and space utilization, misplaced power sources, improperly sized roof joists (needed to support overhead conveyor), slab designs that do not account for required mezzanine footers, ceiling heights that are either a hair too low to get an additional pallet position, or a hair too high such that an additional pallet position could not be accessed by the forklifts. This leaves management suddenly realizing, "we're stuck." Additionally, another critical element in the design of the building and the material handling equipment inside it is the satisfaction of emergency egress codes. The location of conveyor paths, multi-story pick modules and pallet rack aisles all affect the location of the personnel exit doors. If the design of the material handling system and the building are done independently, then the operational flow of the material inside the building might be sacrificed due to last minute changes needed to satisfy emergency egress requirements.
“As part of the manufacturing and distribution supply chain, we see projects of all shapes and sizes, but the most successful of those projects occur when a material handling systems integrator is involved from the beginning,” shares Phillip Poston of Hytrol. “The use of an automated conveyor system gives the client the ability to decrease labor and foot traffic throughout their facility. These benefits can be seen both in the company’s safety standards as well as their ROI.”
One architect points out that the focus is often on the building itself and everything involved with getting into the ground; while the material handling providers may not be called in until after the plans have been approved and the contracts are signed. Once those are out of the way, then the owner's attention moves to material handling considerations.
At that point, the placement of columns, footers, joist spans, clear heights and utilities may need to be re-engineered to accommodate the material handling equipment, creating undesirable delays and costly change orders. The preferred practice is to have the material handling provider onboard at the start of the project, along with the architects.
But it's not just architects. The contractor is also an equally important factor in the overall equation. Cameron Pinzke, Vice President of St. Louis, Mo.-based ARCO National Construction Company, has overseen the construction of a substantial number of distribution centers and warehouse facilities. "Having the systems integrator phased into the construction process is a positive move since it only helps in coordinating such tasks as power location, lighting layout, and the placement of the fire suppression system," says Pinzke.
"It's also to the owner's advantage because it can be helpful when choosing the overall shape of the building, whether it should be rectangular, or square, where the pick area should be, and so forth," he adds.
Pinzke says of all the projects he has worked on, only about half of his customers have involved a systems integrator in the earliest stages. And some have paid the penalty. "If a problem arises it could easily delay when they can start shipping product out," offers Pinzke. "You might have to start making adjustments to the building, like moving power sources, cutting the floor, all of which can be very costly."
Upon completion of a multi-million dollar distribution project, our client shared his sentiment on involving TriFactor from the beginning. The Vice President shared, “In fact, if I were to do the project all over again, I would involve TriFactor even earlier than we did when we were establishing concepts, budgets and timelines. Your engineering group has dedicated professionals whose experience should be leveraged from the first moment a complex project such as ours is conceived.”
Having the integrator involved early can result in improved space utilization and storage efficiencies, which result in productivity and throughput benefits.
Mistake #2. Planning without the proper data and slotting analysis. Since effective slotting brings improved space utilization, reduced replenishment requirements and increased picking productivity and throughput, slotting should not be overlooked or taken lightly when planning a distribution center.
Operating efficiency and throughput can be improved by identifying the fastest moving products and providing for a forward, or fast, pick area instead of utilizing general storage and picking areas. This allows for an appropriate balance between storage and picking functions and the necessary labor requirements.
Whenever possible, a smaller storage area and larger picking area is preferable, since space is generally cheaper than labor, and a smaller storage area/larger picking area promotes fewer stock outs and replenishment. This keeps picking efficiency and throughput up, and labor costs down.
Mistake #3. Planning while ignoring the re-slotting process. While it's critical to use a slotting analysis when considering initial distribution center design, setup and layout, it's just as critical to accommodate re-slotting on a regular basis to adapt to seasonal changes, new products, aging products, promotions, sales events, etc.
Inadequate initial planning results in inefficiencies in the picking and replenishment processes as newer, faster moving items may not be in the forward picking area, or may be stored in an inappropriate storage medium. Meanwhile, products previously considered fast moving items that are now moving at a much slower rate, may be occupying prime pick locations. A new facility can literally become hamstrung due to poor product slotting or the notion that a product slotting analysis is only required for the initial layout and setup of the facility. A very successful facility design, setup and startup may not look so successful over time if the slotting and re-slotting process is ignored.
Mistake #4. Planning without knowing the storage media to be used. This is a potential major roadblock to picking efficiencies. While some owners tend to avoid using different types of storage equipment in the process, there are times when it is essential for maximum efficiency.
Placing columns in less than optimal locations can be avoided if the integrator has the opportunity to review the initial plans. Like a soothsayer, an experienced integrator can look into the future. Does the system need to handle goods that arrive on pallets and go out on pallets? Does the system need to handle goods that arrive on pallets and go out in cases? Does the system need to handle goods that arrive on pallets and get picked as eaches? Can similar SKUs be grouped in a smaller area so a picker can make frequent picks with minimal travel? Is it possible to stock and replenish concurrently?
Whether distribution needs call for pallet flow, pallet rack, or carton flow and shelving, it's imperative that the floor design be able to accommodate not only the appropriate storage, but also the workers and equipment.
A project TriFactor worked on for a major beverage distributor in Phoenix, Arizona illustrates the need for accurate equipment data. "We had to install pallet elevators, which are extremely heavy pieces of machinery," explains Paul Hansen, TriFactor's project manager on the $70 million project. "They require special floor footers, so it was very important that the concrete floor in that area be properly designed and supported. We supplied the information to the customer early in the planning stages. Otherwise, it could have resulted in the floor cracking, which would have been extremely costly to the customer to replace".
Mistake #5. Planning while living with the illusion of thinking that problems can be avoided. Expecting the unexpected should be a key component of any planning process. By anticipating issues along the way, it is much easier to deal with them should they occur by modifying and adjusting the plans. It is much easier to do this knowing you have a contingency plan, rather than attempting to stay with the original plans, only to discover that the situation could potentially lead to downtime while attempting to make adjustments.
The material handling systems design integrator, and distribution center's architect and builder can usually live in harmony, especially if they meet in the early stages of the project.
Still, it's not a do or die situation if it doesn't happen. A competent integrator can usually work within the confines of any space, although there can be significant disadvantages. Having to modify an existing facility to try to make it larger, or to reconfigure the system to meet the spatial design, can be disruptive and costly, and oftentimes leaves the customer with a system with inherent inefficiencies. And with escalating construction costs, it makes good business sense to do it right the first time.
After having to make adaptations to a new facility strictly because the distribution center had not been properly planned with the help of a material handling systems integrator from the beginning phases of design, a CFO of a large distributor recalled, "The cost to make the changes wasn't tremendous, but I could have avoided them if I knew at the beginning what I know now." The ability to conceptualize a functioning facility before a slab has even been poured takes the experience and knowledge base of a team of professional engineers.
That's good advice for any company planning to build a new distribution center.
Craig Bertorello is Vice President of Operations at TriFactor, a material handling systems integrator based in Lakeland, FL. He can be contacted at 904-493-2171 or firstname.lastname@example.org. For more information, log on to http://www.trifactor.com/