Warehouses are typically designed around the primary functions of receiving, storage, retrieval, and despatch.

The objective of effective warehouse design is to ensure each function is optimised and that material handling, which is the movement of goods between each function, is as efficient and has as few touch points as possible.

Whether you are looking to redesign an existing facility, or design a brand-new facility, there are five steps to be addressed to ensure that the warehouse design is comprehensive and effective.

Step 1: Business Case – Be Clear on the Objective for Change

The very first step towards creating a new warehouse design is to establish what the issues are with your current facility and how it’s designed.

For some companies, the issue may be insufficient storage space and poor racking configuration; for others, it may be the need to increase throughput capacity, reduce operating costs or accommodate added-value operations such as kitting, assembly, or customisation.

It’s important to be clear and fully document the primary objectives for the warehouse design so you know how to assess its success when complete.

Once the primary objectives are established and documented, it’s time to engage with and gain consensus from potential stakeholders.

Sales, finance, manufacturing, transport, and customer service all have a vested interest in how effectively a warehouse performs, so make sure they’re informed and, if appropriate, given the opportunity to input to the objectives.

Having a consensus from the start will make the sign-off, and ultimate implementation, of the warehouse design a smoother process.

Following stakeholder engagement, the agreed objective must be detailed at a granular level to provide a baseline to test the warehouse design that is being developed.

For example, if the objective is to increase throughput capacity and reduce cost by reducing picking times, build a report on the pick performance metrics of the current operation.

It’s often the case that the baseline can be taken from current KPI reports, but if KPI reports aren’t available then build a report specifying the relevant metrics such as cost per line item picked, orders picked per hour, and the total order cycle time.

Step 2: Operational Profiling – What Processes and Throughput Need to be Achieved?

The second step for effective warehouse design is to build an operational profile of the processes, and expected throughput, that the design will need to meet.

There are potentially many activities that need to be captured within each primary function of the warehouse.

For example, receiving may require separate tasks for break-bulk, putaway and returns; storage will have different requirements for slow-moving items versus fast moving items; retrieval may need separate processes for picking and then packing; despatch may have different processes for container shipments versus parcel traffic.

Every required activity needs to be captured and the volume associated with that activity detailed.

How that volume will be configured also needs to be considered – for example, some picking may be by item whereas some picking may be by full pallet.

In this instance, the warehouse design will need to account for both full pallet and item retrieval in the picking cycle and the routing design around the warehouse will need to reflect this.

The operational profile is effectively a process map, overlaid with information on the volume and configuration of the material flowing through each process.

It’s also important to remember that the operational profile should not just reflect the current material flow, but also any forecasted changes.

The implementation of a new warehouse design can be time-consuming and expensive, and consequently, any design needs to be future-proof wherever possible.

Step 3: Material Handling – What Equipment and Resource will be Needed?

This is where warehouse design can get very interesting, as there is no one single method or piece of equipment for any activity in the warehouse.

Storage of bulk material on pallets can be accommodated in block stacks or multiple different types of racking configuration; picking can be done with trolleys, low-level order pickers, high-level order pickers, forklifts or even robots.

The number and types of equipment, and the varying level of labour resource they require, are numerous, and the objective of step 3 is to identify the most suitable types of equipment and model their different impacts on the operation.

In most cases, the capital cost of equipment has an inverse linear relationship to the operational cost savings it can generate.

Manual picking on trolleys will have the lowest capital cost but the highest operating cost, whilst robot-driven picking will have the highest capital cost and the lowest operating cost.

All the varying options must be modelled, compared, and overlaid to the constraints of the business.

Robotics is not going to give the required return on investment for slow moving or low-value products, whereas manual picking with trolleys may not suit a high-velocity e-commerce operation.

Step 4: Site Configuration – What Size, Layout, and Flow is Required?

Once the operational profile has been established, and a decision has been made on equipment types, then the fourth step of warehouse design is to determine the warehouse size, layout, and flow.

The first principle of warehouse design is to minimise the number of ‘touch points’ and the time required for each activity – this will drive the layout, flow and size of the facility.

To do this, consideration needs to be given to the process, routings, slotting, and proximity for each activity.

Special consideration should always be given to retrieval, most especially order picking.

Order-picking is one of the primary determinants of the warehouse layout and it is usually the area that absorbs the most labour, and consequently, cost.

At a basic level, having fast moving products at the back of the warehouse furthest away from the despatch bays would be highly inefficient.

Furthermore, pick routes that criss-cross with replenishment activity or cross-dock activities would create potential bottle-necks and safety concerns.

There are many approaches taken to ensure that the layout and flow, and consequently, the size of a warehouse minimises waste in terms of motion, waiting, double-handling and non-value add activities.

Whichever approach is used, the overriding objective is to make sure that the layout allows each activity to be conducted as quickly and safely as possible without creating bottle-necks or impairing the performance of other activities.

Step 5: Scenario Modelling – Repeat Steps 2 to 4…

Businesses change, customer ordering patterns change, and product portfolios change – sometimes these changes are planned, sometimes not.

Over the last few years, as lead times get shorter and with an increasing requirement to drive inventory costs out of supply chains, order profiles for many businesses have moved from low-frequency, high-volume to high-frequency, low-volume.

This change, amongst many others, can have a dramatic impact on the efficiency of a warehouse that has not considered the change in its design.

Step 5 is a critical step in effective warehouse design – it’s the opportunity to test the design by considering the impact of different ‘what-if?’ scenarios.

Going back to step 2, build in any potential business changes and test the impact through steps 3 and 4.

Consider, through consensus with the stakeholders, what the impacts will be if volumes increase or decrease, the number of SKUs change, or new product families are introduced.

Perhaps new legislation may mean you must segregate products or the introduction of higher value products may mean you need secure areas.

Whatever the scenario, test your design against it, and keep iterating through steps 2, 3, and 4 until you arrive at a design that is both optimised and flexible enough to accommodate future business change.