Warehouse projects come in a range of sizes. There are small brownfield startups. There are large, million-plus square foot automated distribution and fulfillment centers. Some are done by companies for themselves. Some are done by third-party logistics companies for their customers. Some are done to support businesses shipping out a handful of SKUs, others have hundreds of thousands of products to return and process. But they all share some key characteristics that make them complex.
Combinations of workstreams
Starting a new site requires a physical site, people, equipment, and IT systems. This is a set of several very different functional groups that have to work together for the startup. If an organization has not done it before, or only does it infrequently, it can be daunting.
For example, project management methodologies for IT Systems projects and Construction projects are very different. Programming projects may be Agile and iterative.
Construction projects are typically waterfall-style project due to the nature of the physical items, the design and ordering sequences, and dealing with contracting landscapes. The expertise to deliver on both of those types of projects is very different.
But so far we’ve discussed only one interface: IT and Construction workstreams. It might be enough to have the building and the Warehouse Management System (WMS) to support it.
As the commercial goes: But wait! There’s more!
Then we may add in a large logistics automation project. These types of projects have dependencies on parts of the IT project and on the construction in order to succeed. Now there are three interfaces: IT /Construction; IT / Automation; Construction/Automation.
But even those all have more-or-less established methodologies. Now let’s talk about People.
You need people to run a site. This means we have to do Recruiting and Hiring and Training.
Hiring and Recruiting projects require working with an organization – recruiting and HR – that is typically not heavy on project delivery expertise. So the work of finding requirements, planning lead times, and executing the campaigns may not be well-defined in the organization.
It requires management of an entirely different function with the probabilistic outcomes of recruiting… sort of like managing a fishing project for a group event, where you have to catch specific types of fish to make dinner.
We can add a workstream of changing business processes to support a new distribution or logistics model. That can become super-complex with dependencies throughout the organization and requires much planning before the warehouse requirements can even be identified.
And there are often supporting functions that have to interact on the project, including:
- Managing local municipalities
- Legal concerns and risk mitigations
- Managing local labor scenarios
- Tax and finance planning
- Safety, quality, environmental, and compliance processes
- Various others depending on site requirements
Starting a warehouse is a common-enough activity that most of the work is understood and can be planned. However, that doesn’t change the fact that there are a lot of long-lead items in planning. To name just a few:
- Procuring a Site
- Signing customer contracts
- Construction long-lead item to Certificate of Occupancy
- Making first key hire(s)
- Site internet circuits
- Automation equipment such as conveyor installation or robotics
- Material handling equipment
- as of this writing, servers & switches
Some companies can plan 90-day startups from the word “go” . This is because they have often already reviewed this list, have standard business processes and systems, and have access to the resources to avoid the long lead times. But make no mistake, failure to plan adequately for those items will lead to delays on top of delays.
In general, any type of non-routine procurement, and anything requiring contracting, extend lead times beyond what most initial team estimates.
When warehouses get big, the complexity increases quite a lot.
There are some areas that scale quite easily. After all, a work instruction can be defined once for 10 or 1000 employees.
But as size grows, then functionality grows. As functionality grows, construction requirements go up. Systems and IT infrastructure requirements go up. As requirements go up, scope goes up, and risk/uncertainty in planning and delivery goes up.
The range of available technologies in large, high-volume facilities is much larger than for small facilities (though this is trending to change with micro-fulfillment tech). This means more decisions than at smaller scales.
It is a whole different ball-game to design and plan a one-million square foot facility than a 40,000 square foot facility. The planning for employee requirements alone grows geometrically.
So one key driver of complexity in warehouse projects is simply: size.
“It is difficult to make predictions, especially about the future.”
This is true about many areas of business, and it drives complexity (read: cost) in warehouse projects, too.
Should you design for a 5-year forecast? 10-year? Longer? Optimistic or pessimistic business cases? How much variability? Will the business model change? What happens to the design if it does? Should you plan to sell the building at any point? What sort of crazy things might come up that you have to plan for?
These are some of the considerations in warehouse planning. Contemplating change is part of the design process. Unfortunately, it’s impossible to know the future, and we can only make guesses. This means that there are hard decisions to make about the site, its capabilities, technologies, and level of investments to make.
Even if the site is a small, 40,000 square-foot forward distribution warehouse, many of these complications apply. There is no getting around core functionality, and it becomes harder to deliver at scale.
With a lot of complexity comes a lot of risk. It is important to address that risk and avoid the delays, costs, and disappointed customers that can happen.
So if you find yourself or your organization starting a warehouse for the first time, or with new tech, scale, or requirements, you may want some help. Reach out to us at https://warehouseimprovement.com/contact/ to talk about how to make your project successful.