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Warehouse Designing by Aakash Deep, Consultant, MGH Consulting Ltd.

Warehouse Designing

By : Aakash Deep, Consultant, MGH Consulting Ltd.
Functional Area : Logistics & Supply Chain
Keywords :

Planning

Designing

Warehouse

Designing Building Warehouses

Activity:  1 comments  877 views  last activity : 07 06 2010 20:18:04 +0000
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Everyone is talking about Supply chain everywhere especially in India where there was no focus on other areas apart from production & sales. SCM has become a buzz word with every organization trying to do something in it. The increased awareness has brought the spot light on the fields of Supply Chain Management (SCM), Logistics & Reverse Logistics. Since, the initial learning phase of the curve is over, Indian industry is seriously looking at SCM as a management tool. Most of the organizations are trying to optimize their supply chain & have put a renewed focus on the forward as well as the reverse logistics field. If we review the Indian scenario, we will find that the most lacking part of the SCM & logistics industry is the infrastructure. In my various roles in different organizations whenever I decided to upgrade the infrastructure it was very difficult to find readymade solutions in the market. Even the 3 PL companies operating in India are on the Non asset based model and as a result there is dearth of good “world class” infrastructure or suppliers. Just to quote the statistics approximately 90% of the transportation & 96% of the warehousing infrastructure is controlled by the unorganized sector. For the organized players quick ROI & increased costs are big deterrents in putting money in SCM & logistics infrastructure. In this article I would like to focus on designing a warehousing. Warehousing is the most crucial part of the supply chain as every one needs to store material properly before handing over to the next level in the chain. But surprisingly no one seems to give much importance to this aspect. Many MNC’s in India are operating from warehouses which are far from any good standard. I remember an instance when I was the regional Logistics Manager for North & Central regions of India for a consumer durables company. One of their Central regional warehouses was located in a residential area and moving of transport vehicles from it was very difficult resulting in low service/TAT levels. This was one of the most prominent markets of the central region. When I inquired the reason for this choice I was told that earlier the warehouse was on a plot of land free for use but slowly the burgeoning Indian population surrounded it with residences making the warehouse literally inaccessible. The low rental costs were pushing the organization to stay in the same place. Due to my continuous pestering the senior management asked me to find a new warehouse. So then started my project of locating a good warehouse. Surprisingly during my initial start I was not able to find a single good warehouse which would serve the organization well. Then I decided to venture out further and started scanning the outer most areas. To cut a long story short after 30 days of scanning I could find a landlord who had built good quality warehouses. Still that place couldn’t be taken due to the cost disadvantage which the organization think tank decided was too much as compared to the low operational performance which was hitting the service quality. The crux of the matter is that warehousing is the most neglected part of the SCM & logistics field in India. As I said earlier organizations are operating from barnyards and some of the most inefficient places which cannot be termed warehouses in any way. This is in fact a golden period where in rolling out huge integrated warehousing projects will give a boost to the industry as well as the investors.In spite of the bleak picture even then I am extremely lucky that I got opportunities to design and roll out new warehouse projects including the one my current role. Aside to this it all started with a place we (MGH) lovingly named the pillar palace which, by the way, is extremely inefficient for warehousing. Warehouse designing is the most important & crucial bit. Designing a warehouse is relatively easy if you are involved right from the start. It is tricky if the building is constructed but has to be modified as per the usage. This becomes complex if there is an existing building and it has to be modified as per the requirements. And a reverse logistics warehouse designing is the most complex as many activities take place simultaneously. In a forward logistics warehouse the operations are simple of receiving, storage & dispatch while on the other hand a reverse logistics warehouse normally involves receiving, storage, validation, processing & dispatch. The processes or phases can vary in reverse logistics as per the particular organization’s requirements or the industry it operates in. For me the designing of the warehouse for Material centre was difficult as I was accustomed of working on forward logistics warehouses. But it indeed was an enriching experience.With the dynamic face of the business we today operate in we need to look at broad parameters to design a warehouse apart from the regular metrics of operation per unit handled or order fill rate.Following parameters affect the initial decision making:§         New demand profiles§         Changing sources§         Changing geographic trends§         Redesigned networks§         New products and lines§         Shortened product life cycles The above factors need to be considered and as a result flexibility and adaptability will come out as the two major parameters. That is the warehouse should be flexible enough to change as per the future requirements as well the structure/space should adapt to the increased volumes.Overall, as part of the strategy, site/location selection has to go through a thorough analysis and network modeling. Broadly, this covers the review of the §         Tax structures which can hamper the movement of goods, §         Availability of transport infrastructure & §         Connectivity of the siteOnce this is done and the warehouse site is selected then one has to start the conceptual designing. Concept DesignApproach: Before getting into the concept design, the recommended approach is:§         To conceive the warehousing as an operation, conceptualizing the complete processes and equipment based on the operational requirements and thereafter,§         To conceive an infrastructure around the basic design to facilitate the operations withinAny warehousing facility project could be further subdivided into 2 main parts, viz.1) Warehousing Operations and interiors:§         Receiving processes§         Storage and handling processes§         Validation processes if any§         Picking systems§         Shipping processes§         Product identification and location control processes§         IT system§         Standard operating procedures and work instructions2) Infrastructure and Exteriors: This involves§         Floor layout design§         Electrical installation§         Provision for equipment installation§         Environment control (AC/Humidity etc)§         Roads, Security Cabins, Office and related infrastructure.§         Fire and Safety systems To understand in detail one has to analyze the main aspects of the operations which will decide the main operating cycle. This becomes the core of the warehouse operation.For example a consumer durables forward logistics warehouse core operations becomes the storage of goods in such a manner that the service of orders can be done within the stipulated SLA. The main aim of the warehouse is to service the customer with minimum wait time keeping the inventory cost down with the optimum product model mix availability. On the other hand a reverse logistics warehouse core operations could be receiving of material, validating it and then providing solution within the SLA. Also the reverse logistics warehouse should be able to store material in such a way that the claims for vendor recovery can be filed as well as the material can be sent for repairs and received back to be dispatched again to the customer.Although both the forward & reverse logistics warehouse have the basic operations of receiving, storage & dispatch but the treatment of the material is different. Therefore, one has to keep in mind the way the floor layout is being designed.If one doesn’t design the material flow & the floor layout around the core operations then there will be chaos in the warehouse. The personnel will be confused in handling the material and the error rate goes up. Let us discuss the main components which play a pivotal in any operations. Receiving: The design of the receiving area is very vital as it is an integral part of the receiving function. The following factors decide the designing of the receiving bay:§         Approach to the warehouse§         Type of material to be received§         Condition in which the material is received like whether they would be on pallets or mother bags etc.§         Vehicle type bringing in the material§         Average load of vehicles coming in§         Material flow pattern in the warehouse that is would it be needed to store the material temporarily at the receiving area or would be taken to its respective zones for inspection§         Requirement of checking of consignmentsAnswers to the above will help in setting a receiving area with suitable equipment and space. Depending upon the requirements the receiving area can be designed to handle multiple vehicles at a time or could be fitted with hydraulic ramps, automatic doors, vehicle restraints etc. There could be many permutations combinations which can be used for designing the receiving bay. However, a proper analysis always helps to design a good receiving bay otherwise the project team can sometimes go overboard and order costly equipment which might not be required for operations. So it is always better to do case by case analysis.For example: Even in two different warehouses the receiving bays can be designed differently due to the different vehicular traffic handled by them. The bigger warehouse can have 6 to 8 receiving bays while the other one can have only 2 receiving bays. Storage: Next comes the storage part which is the logical step after receiving the shipment.  Detailed and comprehensive knowledge of the material stored in the warehouse is definitely required. Storage is also affected by the different processes the material might have to go through. A simple example can be that after receiving a shipment of small electronic items the physical counting and then repacking of the material has necessarily to be completed. Also in certain cases QC and then re-packaging of the material is undertaken. While my tenure with one electronic giant company we faced a peculiar problem in mobile phone theft. The analysis of the situation threw surprising results. The theft was happening from the origin only. Due to this we had to open each and every mobile phone sales pack, check its contents and re-package it for further dispatch. All this made us change the storage structure so as to accommodate the validation process in a secure environment. There can be many other factors which affect designing the final storage solution. It might happen that for one product type there is no rack storage needed while for the other type 4-5 kinds of racks as well as boxes need to be designed.Similarly as receiving part some of the key factors can be listed as:§         Characteristics of the SKU’s defining the conditions in which they need to be stored as some of the SKU’s need special storage containers and environment§         Volumes to be handled by the facility§         Movement of the material inside the warehouse facility as well as the different number of processes the products might have to go through§         Frequency of dispatches§         Whether the material will be stored in bulk or in retail packs and in what condition it will be shipped to the customer§         Kind of packaging in which the material is to be stored and would it need some racking solution or not§         Kind of equipment needed for handling the materialAll these factors throw up different kinds of solution which then need to be analyzed properly as per the requirements of the operations. A cost-benefit analysis will also help in analyzing whether some equipment is better suited or not.Since it all boils down to the amount of money the organization wants to put in for bringing up their warehousing solution. The saying, “the sweetness of tea will depend upon the amount of sugar added to it”, is quite adept for the situation. So it depends on the organization readiness to invest money as one time investment for equipment & infrastructure that will make the facility better & serve the organization longer. The other option is to go modular adding on to bits as and when required. But this can disrupt the already running operations. The third option could be to go with the least cost and put up a bar minimum set up for the current requirements.  Picking: After storage is done then comes picking which can be conceived as an integral part of storage and material handling. However, considering the critical role it plays in the final warehouse performance, the picking activity needs to be given individual attention. The picking strategies could widely vary depending upon: §         Type of SKU’s stored§         Frequency of orders to be handled§         Average volumes being handled§         Storage layout design§         Number of customers handled by the warehouse§         SLA & TAT§         Inventory accuracy §         WMS or the IT system used  Dispatch/Shipping: When picking is done the material has to be readied for dispatch. Different operations have different requirements & standards of the packaging used. Also it is very important to note the process of packing of the material. In certain high cost goods like mobile phones, laptops etc. extra care needs to be given to the packaging of the goods other wise the loss percentage increases.Currently, there is an industry norm to put security seals, do shrink wrap & use other secure packaging methods on high value items. All this needs to be considered while designing for the dispatch area. It is not simple a sending of the goods but sending them in a secure manner. It is quite similar to receipt planning; the only difference is that the flow of material is in the reverse order as compared to the inbound shipments. Additionally, the ‘Vehicle Turn-around time’ needs to be critically looked upon to decide on ‘Staging’ requirements. Staging is the activity of keeping the goods ready for dispatch, even before the vehicle had docked in the outbound area. There should be enough space to store the ready material in the staged area in a manner that no mix up happens.Even today many organizations do not give much focus on designing the proper goods outbound area with proper packaging & staging areas. This in most cases leads to the below par performance of the operations. Detailed Design:After all of the analysis a clear picture will emerge which will help in preparing a detail design of the warehouse. This would also involve comprehensive knowledge on the various kind of equipment to be used as well as the use of proper technology to aid operations with proper considerations to the costs & operating environment.In the end when all this data is collated a detail document takes shape which gives out the warehouse layout as well as the design with clear understanding on the objectives of the set up. It would be quite easy to say that doing this is fun and easy but it is not exactly right. I have been through this situation and believe me in today’s fluid market dynamics something or the other always crops up which will prompt you to go back to the drawing board sooner than later. Numerous times I have to go tinkering with the floor layout to accommodate certain operational pressures or sudden need of business. Still I have enjoyed every time I have been through designing, implementing a warehousing project. It’s like seeing your thoughts materialize in front of you like an artist who crystallizes his thoughts on a canvas with different colours.

 

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1 comments on "Warehouse Designing"
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  Commented by  Davies francis, Direct Marketing Executive, caravel    | 02 25 2010 14:44:32 +0000 
the awareness was also  due to the efficent material handling by reducing the damages as well as Indias foreign poliy&efficent and freight movement
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