Chapter 3 Warehousing

                                    3.5 Warehouse Design

3.5.1 Size and Number of Warehouses

Some of the most important factors affecting the size of a warehouse are: customer service levels; size of market(s) served; number of products marketed; size of the product(s); material handling system used; throughput rate; production lead time; economies of scale; stock layout; aisle requirements; office area in warehouse; types of racks and shelves used; level and pattern of demand.

As the market(s) served by a warehouse increase in number or size, additional space is also required. When a firm has multiple products or product groupings, especially if they are diverse, it needs larger warehouses in order to maintain at least minimal inventory levels of all products. In general, greater space requirements are necessary when products are large; a high throughput rate exists; production lead time is long; manual material handling systems are used; the warehouse contains office, sales, or computer activities; or demand is erratic and unpredictable.

3.5.2 Warehouse Layout and Design

A good warehouse layout can increase output, improve product flow, reduce costs, improve service to customers, and provide better employee working conditions. Public warehouse are usually designed to handle a variety of items, while private warehouses are more specialized. Prior to designing a warehouse, the quantity and character of goods to be handled must be known. The relative emphasis placed on the storage function and on the distribution function affects space layout. A storage facility having low rates of turnover is laid out in a manner that maximizes utilization of the cubic capacity of the warehouse devoted to storage. Trade-offs must be made between space, labor, and mechanization. Before layout plans are made , each item that will be handled must be studied in terms of its specific physical handling properties, the volume and regularity of movement, the frequency it is picked, and whether, compared to related items, it is “ fast” or “ slow” moving.

The followings should be considered in warehouse layout and design:

(1) Horizontal versus “high-rise” layout

The cubic capacity of warehouse is a function of horizontal area and height. The relevant trade-off in utilizing a high rise operation is between building costs, which declines on a cubic foot basis as one builds higher, and warehouse equipment costs

(2) Order-picking versus stock-replenishing

Should workers who are picking outgoing orders and those who are restocking the warehouse work at the same time? Should they use the dame aisles? How much space should be devoted to “active” or “live” stocks, which are stocks the order pickers pick from the fill orders? How much space is devoted to “reserve” stocks, which are stocks awaiting assignment to the active stock areas. If too much space is devoted to active stocks, the bins are larger and the order picker’s travel time from bin to bin is increase. If the bins are smaller, the active stocks much be replenished from the reserve stock more frequently.

(3) Fixed vs variable slot location

With fix slot location system, each SKU (stock keeping unit) has permanent slots assigned to it, so the pickers always know where a certain SKU is located. However, this may result in low space utilization, particularly with seasonal products. A variable slot location system involves empty slots being assigned to incoming products based on space availability. Although it can achieve more efficient space utilization, it requires advanced information system to keep track with the product locations.

(4) Built out vs build up

A general rule of thumb is that it is cheaper to build up and build out, particularly in certain location where land is expensive. However, a higher warehouse needs special equipment such as high-stacking truck, which generally cost more than the conventional equipment.

(5) Labor-intensive vs mechanization vs automation

As labor costs increase, may warehouses place an increasing reliance on equipment to perform tasks that had once been performed manually? Union Carbige has a12-million cubic foot warehouse in the U.S. State of West Virginia that can hole 64,000 drums of chemicals. Two people (one of whom is a computer programmer) can handle the entire warehouse.

(6) Space devoted to aisles vs space devoted to storage

As aisle space increases, storage capacity decreases. Wider aisles make it easier to operate mechanical equipment, but they increase travel distances within the facility.

(7) Picker-to-part vs part-to- picker

In picker-to-part system, an order picker gets to where a part is located, with forklift or other vehicle. In part-to-picker systems, the parts are brought to the picker with carousel or conveyor. The two systems involves trade-offs between human and mechanized travel time.