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October 24, 2007

Warehouse Design

When it comes to product storage in a warehouse there are all kinds of choices. Knowing which one you should use in your operation becomes a little trickier. A lot of people cut out the hassle and simply install pallet rack everywhere and use it to suit whatever needs they happen to have. Need to store a single box of paper? Throw it in the rack! Want a forward pick area? Front, lower section of the rack!

There are a few people that run in the opposite direction and end up with 7 types of storage mediums: Pallet rack, push-back rack, pallet flow rack, carton rack, carton flow rack, bin shelving and floor storage. Maybe this was what they needed during their first look at what they had on hand, but does it help them grow their business? Is it actually making them more efficient?

First let's go over what each type of rack is and what it is used for (in-depth looks within the links from Integrated Storage Solutions a company we have worked with extensively over the years):

Floor Storage / Bulk Storage: The simplest, cheapest, easiest and sometimes most dense storage solution. Highly flexible and if your pallets can be stacked 3 or more high the density is comparable or better than traditional pallet rack.

Single Selective Rack (SSR): Traditional pallet rack installed in a back-to-back configuration. Used for storing pallets of products on multiple levels. It can be installed with varying aisle widths depending on the material handling equipment that will be used in the operation. If you're looking for the most dense configuration you'll have to spend about $75,000 on a Turret Truck, but your aisles will only be 5 feet wide (the so called "Very Narrow Aisle" (VNA) configuration).

Double Deep Rack (DDR): Pallet rack with a twist. Like SSR it is used for storing pallets on multiple levels, however DDR takes puts two bays of SSR together so that you can store two pallets of the same product together. Think of all that slow moving product you have in multiple quantities but can't get rid of. With a double deep configuration you improve your storage densities without sacrificing significant investment in fancy rack. You will have to spring for a double deep forklift and you can't use the VNA configuration.

Push-back Rack (PBR): Double deep rack with a twist. Like DDR, multiple pallets are stored in the same location. Push-back rack is significantly more expensive because of the moving parts but if you product moves at a fairly swift pace and you have wall space to spare this could be for you. One of the great things about it is that you can bring back the VNA configuration because the next pallet will always be in front position. It's a great space saver for expensive real estate like freezers and refrigerators.

High Rise Decked Rack (HRD): Now we move away from the pallet storage to case storage. HRD exists mostly on the carton side but can be used as pallet storage in a pinch. HRD is essentially SSR that is 48" to 66" wide and not in a back-to-back configuration. Even though it is not installed back-to-back, there is a pick face on each side because cases are stored instead of pallets. Picking is performed by hand from an order picker or cherry picker instead of with a pallet forklift. Because pallets are not being stored it is possible to increase the number of beams and create customized slots for your various smaller products. Very good for getting your non-standard products in 2 pallet or less quantities into dense storage. A floor pick can be set up on the bottom levels to increase picking efficiency.

Bin Shelving: Simple 72" tall gray shelving. Used for storing small product in a dense environment. Perfect for non-automated and minimal investment operations. If you are starting small this is generally what you will have. It can be put into a mezzanine configuration to pick from two or three levels. Flexible and more easy to reconfigure than most other types of rack. More expensive than most people realize and usually only cost justified in small areas or operations.

Carton Flow or Pallet Flow (CF / PF): Great for a Forward Pick area. If you know you need a certain amount of a product in a three to five day period and want to minimize the labor to pick it, this is the system you'd be looking for typically. Product goes in the back and slides forward for convenience. This is not a storage medium necessarily, but a pick medium. However it usually gets classified as storage. Forward pick justification will be a topic for another day.

There are additional racking systems including Drive-in Rack, Cantilever Rack, Triple Deep Rack (for the truly brave) or Stacking Rack but for the most part these are used sparingly and for very specific needs.

With all of these choices, how should a warehouse storage solution be designed? The answer, of course, varies by requirements. No warehouse will be the same. The products, building specs, capital available, labor rates and more will vary project to project even within the same company. What flexibility is required for long-term business objectives? How much real estate is actually available for use? What sort of processing areas are needed besides storage? Warehouse design is not a simple process and good warehouse design requires pouring through at least a year's worth of product and ordering history.

Recently we have been working with brokers to help clients develop space models for their needs. They usually come to us with two or three spreadsheets showing their overall product on hand numbers, warehouse turns and some general requirements. Of course this is helpful for the design but it ultimately doesn't tell us anything about the operation. If their operation turns 4 times a year there could still be significant product turning 8 times and significant product turning 1 or fewer times. Overall numbers don't showing seasonal peaking. There may be an average of 30,000 pallets on hand during the year, but if their peak period requires 50,000 the design will be wrong before the design period even begins.

Once the data issues are worked out there is still the problem of balancing capital costs with on-going operational expenses. Almost any operation can operate entirely off the floor or in bin shelving, but the labor costs and real estate costs would be through the roof. Similarly, any company could implement a completely automated warehouse with almost no labor, but the capital cost would put them out of business before the first product was picked. Those are the extremes, but even for warehouses that are entirely SSR there are break points. Different Material Handling Equipment (MHE) has different labor productivity rates and capital costs. They require different aisle widths which affect the real estate costs. Which one should you use?

Warehouse design is not a task that is performed every year or even every third year for most companies. It should be a well though out process to help develop an effective plan. There is a reason that Third Party Logistics providers (3PLs) are adding customers everyday. They offer a convenience service to people that don't want to deal with these issues. Before looking to outsource, bring in a specialist to evaluate what is right for your company. Some networks should be outsourced because of size or regulation issues, but most can be kept in-house for minimized costs or even to operate at a profit to the business. With new Value Added Services that can be performed simply there is opportunity to sell services to your customers before the product even leaves the door. Not to mention the potential to add e-commerce to your existing business.

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1 comment:

Pushback Rack Systems said...

Very informative post. Thanks for posting this!