If you’re reading a post on “warehouse project types,” chances are you’re facing one of two scenarios:
You’re drowning in operational inefficiencies, watching helplessly as your competitors zoom past you in the race for market dominance.
Or, you’re doing well, but you know in your gut that you’re leaving money on the table. Your supply chain isn’t the lean, mean, profit-generating machine it could be.
In either case, I have news that could change everything for you: The secret to revolutionizing your business isn’t hidden in some obscure management theory or the latest tech gadget. It’s right under your nose, in the very foundation of your operations – your warehouses.
Now, I know what you’re thinking. “Warehouses? Really? That’s your big secret?”
Stick with me for the next few minutes, and I promise you’ll never look at your warehouses the same way again.
You see, there’s a whole world of untapped potential in what we call “warehouse projects.” These aren’t just boring logistical tweaks. They’re powerful catalysts for transformation that can:
- Slash your operational costs by up to 30%
- Boost your fulfillment speed, delighting customers and leaving competitors in the dust
- Automate your operations, improving service and reducing cost
- Increase your storage capacity without expanding your physical footprint
- Improve worker safety, reducing costly accidents, and boost morale
Let’s dive in and learn a little bit more.
What’s A Warehouse Project?
“Warehouse projects” can include work at distribution centers, fulfillment centers, warehouses (public storage & in/out handling), and returns centers (also known as reverse logistics centers). There are many specialized types of warehouses. These can include different levels of distribution centers (such as regional or import sites), special environmental conditions such as freezer and cold storage warehouses, or industry-specific sites, such as pharmaceutical, jewelry, micro-fulfillment, beverage, and so on. Each type of site has its own special requirements.
Projects for these sites can include site startups (sometimes called site implementations), site moves, expansions, closures, or improvements. Site improvements can include safety improvements, quality improvements, storage utilization improvement, or operational process improvements (i.e. throughput and cost) and changes.
But, keep in mind: all aspects of operations are intertwined in these efforts. These projects are complex! Each is affected by overall improvement projects such as automation additions or metric-targeted projects.
Project Types
Now we can see the main types of warehouse projects:
Site Startups, Also Known As Implementations
A new site implementation is the process of bringing a new distribution center, fulfillment center, or warehouse to life.
The purpose of the site startup project is to expand supply chain network capability. These projects usually start with business strategy identifying the need for a site and developing a business case based on forecasts.
The Operations team will define the processes and detailed requirements for the site. Construction is needed to build the site. Sites usually include some level of automation or material handling equipment, which requires design and procurement. IT Systems and Infrastructure are needed to manage site data, controls, and connectivity. And of course an Organization must be readied to take over and operate the site, which means hiring and training a team.
Site Closures
A site shut-down is the opposite of a start-up. The purpose of a shutdown is to consolidate operations and reduce cost across a supply chain.
A site is ceasing operations and the ramp-down must be managed to avoid business impacts. This means coordinating the draw-down of inventory and staff with sales, transferring orders to other distribution sites, and eventually liquidating the site’s equipment and leaving the building shell empty.
These projects have several complexities. Often, the most difficult one is managing the ramp-down of labor and inventory onsite and retaining key staff to run the building while it is winding down operations.
Site Moves
Site moves are the transfer of one site’s activities to another. This is usually to consolidate a supply chain network and/or take advantage of better cost positioning in one market over another.
The costs can be driven by lease costs, labor costs, and transportation costs. A site move must simultaneously ramp down inventory and activity in one location while starting up another location. A move is defined by the transportation of the site’s inventory (and sometimes staff) to the new location.
These can be difficult because of the complexities of managing orders and minimizing downtime during the move. Detailed planning is essential for transportation of inventory and bringing capabilities at a new site online so the customer service doesn’t skip a beat.
Site Expansions
Site Expansions are projects to increase capacity at a site by adding additional cubic footage, storage, or parking. These projects are meant to leverage existing capital infrastructure and increase network capacity at key supply chain nodes. They do this by building on to existing operations. There is not a fundamental change to operational processes.
Expansion projects are sometimes contemplated as an option to a startup project. The company may buy additional land or leave part of a warehouse un-racked. Then they delay the CapEx until it is justified by forecasts. The benefit of the delayed cash outlay must be measured against possible inflation in the price of the expansion. This can be calculated as a company’s hurdle rate for cash vs the probable cost of expansion at regular price inflation + re-mobilization costs.
The other reason expansion projects are completed is because the original design was just wrong. That is, it was not designed for the uses that the business needs to employ. So the company is forced into the change.
Expansions often takes the form of a building addition (adding more square/cubic feet), adding racking to improve throughput or storage density, or adding yard space to add trailer buffer. Occasionally, sites must be completely revamped internally to meet new usage profiles. This is a huge undertaking which must be completed in phases and planned in great detail.
Optimization Projects
Site optimization projects are often focused on improving existing sites’ safety, quality, storage utilization, or processing cost and throughput. These projects take many specific forms but have common problem-solving strategies. Their characteristics are that they include process changes and/or automation additions to increase processing velocity.
The first step is reviewing data, historical performance, and watching “how it’s done now” to understand the current state. Then a combination of analysis, process reviews, and observations can develop insights into how to improve the process.
The changes can be prioritized based on cost, level of difficulty to implement, risk, and probable return. Then the team implements the changes. Finally, the effects should be monitored and tracked to ensure the improvements are captured.
The steps in a site optimization project can span everything from low-cost management process changes (such as how labor is tracked & planned, and how productivity is managed during shifts) to adding automation and changes in business operational processes.
Conclusion
Projects can range from optimizing small warehouse flow to major new Fulfillment Center startups. But there are common key considerations for success.
The project team must be integrated. That is, it must include the major stakeholders in the end result.
The projects must be planned around the business. Ramp planning, impacts to operations, and the reality of shipping every day must be key considerations in design and implementation. Operability is one of the major success criteria for the projects, and inoperable sites take huge amounts of effort and cost to make right.
Finally, the projects must be resourced and sponsored. They should have enough budget and the right staff for success. Like all projects, these projects start and stop. They provide a defined deliverable or capability. Sometimes it is more efficient to bring on a temporary expert resource to staff projects than it is to hire full-time.
If you have one of these projects coming up, come to the warehouse project experts. Book a short free consultation or send a note and let’s discuss how to make your project a success.