Warehouse Design Approach

Warehouse design is critical to running efficient operations. But warehouse design is a complex problem with many inputs and just as many, if not more, possible solutions. And it has to be done for every warehouse startup.

It’s important to have a philosophically and analytically sound approach to developing the solution, because you’ll spend huge amounts of money and time implementing it and the operations team will have to live with it for years.

So how do we go about designing a warehouse?

Yes, you must understand your processes, volumes, and profiles. A great resource to introduce this type of analysis is Ed Frazelle’s “World Class Warehousing and Material Handling“. Cisco-Eagle has some useful posts on on warehouse design and facility layout. But let’s get down to a basic truth:

At this point, you’re conducting business analysis even before getting into design.

First, Design Philosophize…

Before getting into business analysis with all the process flows and data profiles, you should define your design philosophy. That’s right. Getting full alignment from the design stakeholders is critical to moving forward on design. Don’t try to do this after you have a full concept in hand.

Do some philosophical grounding: what will the facility do? How will the warehouse and its operations fit into your company’s values and operating principles? A design philosophy statement will often help resolve design questions that come up later.

“Simple as it can be, as complex as it must be.”

“The site is the most cost-efficient DC”

“We are customer-centric and employee-driven”

The site is automated, efficient, and flexible.”

Those are some examples of design tenets. Sometimes the tenets track with the company values. But pay attention – they may not always be in sync. Is there tension between cost-efficiency and flexibility? Well, there may be. For example, a lot of conveyors may be cost-efficient but not flexible. But the synthesis of principles will often lead to the best design.

Sun Tzu said:

If you know the enemy and know yourself, you need not fear the result of a hundred battles. 

If your design philosophy is cohesive, you have a great guide in the rest of the design process. If you skip thinking about your design philosophy, you may end up going down a design path that is incompatible with your organization’s approach to distribution.

The philosophy may answer questions like: How long does your company plan to operate the facility? How flexible does it need to be? Is the business culture formal and process-driven or Just-Do-It driven? What approach to employee communication and well-being will the site have? How automated will it be, and what is the organization’s appetite for new technologies vs tried-and-true solutions?

For example, what works conceptually and culturally for one company may not work for another. A high-touch premium DTC retail company may need a focus-factory setup for different product lines and VAS, extra space for customer service, finishes and amenities for visitors, and processes for extremely rapid issue resolution. A low-cost, super-lean e-com business, on the other hand, might be highly automated with mass pack stations to meet the volume fluctuations.

Ultimately, warehouse design is deterministic. That is, there is a single optimal solution for a given set of operational requirements. But those future requirements may not be known in detail or they may change. A design philosophy will help guide the design decisions to be compatible with the widest range of circumstances possible.

…Then Data Analyze

After defining the business and design philosophy, then move on to completing your data analysis. A thorough review of data will inform you about your business. What are you handling? How–in what units–is it being bought, received, sold, and shipped? How quickly does it move through the facility? How much space does it take up? Who are you shipping to, when, how frequently, in what volumes, and by which modes of transportation?

Do These In Order

Once data analysis is complete, you can go on to the fun part–block diagrams, checking flow through the facility, and making space for people and equipment.

But don’t skip the fundamentals of philosophy and analysis. If you do, you run the risk of developing a design that is incompatible with the organization’s approach to the business. I saw an entire warehouse design scrapped by a CEO because it wasn’t flexible enough, leading to huge rework and a lot of stress. If the process and operations leads had discussed the key points of the company’s design philosophy, this would have been prevented.

Having the foundation laid before getting deep into design prevents fundamental design flaws. Make sure you take the time to do it.

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