Warehouse design
4Supplychain provides warehouse consultancy services, helping clients develop the most suitable design for new warehouses and optimize existing warehouse facilities. Below, we briefly explain our structured approach to new warehouse design
Design in three steps:
1. Preperation
- Business case en feasibility
- Choosing between owning (lease or purchase) or outsourcing the warehouse
2. Design
- Mapping material flows and location requirements
- Selecting the storage and order-picking method
- Calculating capacity requirements
- Warehouse layout design
3. Final stage
- Technical design and tender
Step 1: Preperation
In the preparation phase, the warehouse costs are estimated and the feasibility of the investment is assessed through a business case. At the same time, it is considered whether the warehouse will be managed in-house or if a service provider will be engaged (insourcing vs. outsourcing). For an in-house warehouse, options include purchasing, leasing, or constructing the building. While purchasing or constructing a new building allows for a fully customized design, the project timeline will typically be significantly longer.
Step 2: Design – mapping process flows and location requirements
The position of the warehouse within the supply chain, as well as its suppliers and customers, has a significant impact on the design. If a warehouse is intended to receive stock from a factory producing goods in large batch quantities and also ships in bulk, high-density storage will be a key design consideration. Conversely, if the warehouse fulfills consumer orders, such as e-commerce shipments, detailed order picking is required, necessitating a carefully designed picking circuit. Therefore, the first step is to determine the warehouse’s position in the supply chain and the flows that will pass through it.
The ideal warehouse location can be determined through network analysis, which maps inbound and outbound transport movements. Minimizing travel distances helps identify the most optimal location..
Storage and Order Picking Methods
In traditional warehouses, operators move to the goods using forklifts or other equipment, following the “man-to-goods” principle. With advancing technology, more warehouses are adopting the “goods-to-man” principle, where items are brought to a fixed picking station, often from a bin or tote.
Technological developments in warehouse mechanization are advancing rapidly. Below, we share several useful links covering different categories of mechanization:
The main difference between a mechanized and a manual operation is that mechanization requires a significant upfront investment and a complex implementation process. Before the operation can run, the mechanized components must be purchased and installed. Manual operations also require an investment, but it is considerably lower, and operations can usually start more quickly. However, recurring variable costs are generally higher.
This highlights the key dilemma: is the organization willing and able to invest upfront in order to achieve lower costs over the long term? Rising labor costs and workforce shortages will naturally influence this decision.
It is important to note that this is not an all-or-nothing choice. Organizations can opt for partial mechanization and gradually invest in further automation over time.
Calculating Capacity Requirements
Once the previous steps have been completed, we calculate the warehouse’s capacity requirements. The main components are:
- Inbound and outbound traffic: the number of orders, order sizes, and their distribution over time, which determines the necessary receiving and shipping space.
- Buffer stock: inventory that may remain in the warehouse for extended periods due to economic or minimum order quantities, long lead times, or in anticipation of new product launches or promotions.
- Pick stock: inventory from which order pickers collect smaller quantities to fulfill specific orders, positioned in easily accessible locations to enable efficient picking.
- Workload and task distribution: analysis of the number of tasks and their timing to determine the required workforce and equipment.
- Future scenarios: assessing whether demand is stable or shows growth trends, allowing for informed capacity planning decisions.
An example: to determine the correct storage capacity, we analyze the volume of incoming goods, the duration of storage, and fluctuations over time. Historically, certain peaks in inventory levels may have occurred. These peaks could happen again in the future, but they are often difficult to predict. Therefore, a decision must be made regarding the level of certainty with which the warehouse should be able to handle capacity peaks.
Typically, organizations do not design the warehouse to accommodate all possible peaks, as this can result in prolonged overcapacity. A common approach is to plan for 90% to 95% of expected cases. If inventory levels temporarily exceed this capacity, planners can decide to store goods elsewhere temporarily. This prevents the warehouse from being sized for rare exceptions, which would lead to long periods of low utilization and relatively high operational costs.
Pick stock
Pick stock refers to inventory located in areas where order pickers collect goods to fulfill orders. Managing pick stock requires careful consideration. To enable order pickers to work as efficiently as possible, it is important to keep the pick zone compact by using small pick locations. However, small pick locations require frequent replenishment, which increases costs. Additionally, order pickers and replenishment staff can interfere with each other’s work, although there are ways to partially mitigate this. In short, the design of the pick zone must balance the costs of picking, replenishment, and potential congestion in the aisles.
Other Operational Spaces
For other operational areas, such as receiving, packing, and shipping zones, capacity is calculated based on order patterns. The key question is how much volume—orders, order lines, handling units, and individual items—needs to be processed per hour, day, or week, and how it is distributed over time. Depending on operational hours and shifts per day, the required capacity can be determined.
Other Secondary Spaces
In addition to operational spaces, a warehouse includes various secondary spaces, such as offices, break rooms, facilities and security areas, battery rooms, and so on. These can be designed according to standard norms.
Determining the Layout
Once capacity requirements are established, the warehouse layout can be designed. All required spaces are arranged within the available area to maximize capacity and minimize travel distances inside the warehouse. A logistical flow is first defined, for example, with goods entering from one side and leaving from the opposite side, or with receiving and shipping on the same side to reduce travel distances. The final choice depends heavily on the type of operations and external conditions, such as access roads.
The layout also considers the product assortment and placement of fast-movers, medium-movers, and slow-movers in optimal locations. The following is a simple example of a layout divided into zones for fast- and slow-moving products.
Step 3: Final Stage
Once the capacities and design have been validated, the plans can be handed over to an architect for the technical drawings. This is followed by the tender process to select the best contractor for construction, after which implementation can begin. Obtaining the necessary permits is an essential step that must not be overlooked, as it can significantly impact the project timeline.
Want to know more?
We’d like to get in touch to provide you with the right information.