Warehouse Layout Optimization for Distribution Centers

The importance of proper space utilization in a Distribution Center (DC)

In a DC, more than space is required to store all the merchandise buyers want to acquire over time. It is a situation like the closets in a house; you always end up filling them with things. Optimizing space usage is a challenge faced by all logisticians.

Why does this happen?

• Your business is booming, and customers are quickly purchasing the product, requiring you to acquire larger quantities or expand your product offerings to continue the boom.

• Some products are overbought due to a "supposed better price," although buyers often overlook that the cost of maintaining inventory exceeds 16% of the annual product value.

• You have low-rotation or obsolete inventory, which moves little or almost not at all, occupying the best locations in your warehouse.

What do I need for better use of space in my DC?

According to the DNA Logistik model (www.dnalogistik.com), we must align four important factors: 1. Infrastructure, 2. Systems (for example, a Warehouse Management System or WMS), 3. Work processes, and 4. Workforce. We will focus on the first two points related to warehouse layout optimization:

1. Infrastructure

Some good infrastructure practices to take advantage of DC space are:

• Design the best warehouse layout for your products and make the best equipment selection, such as racks, so they provide optimal use of space, allowing you to grow vertically and horizontally.

• Consider the correct mobile equipment; you must have suitable forklifts to avoid wasted space in aisles and, simultaneously, grow vertically within the DC, making the most of the height.

• Doors and docks are another fundamental point because space problems do not necessarily arise from storage capacity but from the ability to receive and dispatch merchandise.

2. Warehouse Management Systems (WMS)

A good WMS allows you to orchestrate all elements and processes to make the best use of space and achieve more significant movement of merchandise in the DC. With a warehouse management system, you can coordinate:

• Dock appointments

• Goods receipt

• Proper merchandise placement in the correct warehouse layout location so that it has the least possible movement and thus makes the most of your space.

• Assignment of qualified operators for a task with the optimal equipment to perform it (assign floor pallet placement to operators with pallet jacks and reserve second to sixth-level tasks for forklift operators).

• Replenishment to the picking lines

• Loading and shipping of merchandise.

What differentiates a mature WMS?

A mature WMS must have the functionality called “task interleaving” or a “task assignment engine.” It ensures that each task is assigned according to its priority to the operator with the permissions and the necessary equipment to perform that task with the correct staff nearby. Many WMSs do not have this functionality, so we end up restricting space for certain goods operators and equipment to some regions of the DC instead of optimizing resources globally for each task.

A good WMS will allow you to combine different tasks - interlace them - on a single trip within the DC. So maybe a warehouse worker will pick up, store merchandise, and replenish a nearby product on the same trip instead of making separate trips.

Also, remember that merchandise flows through the warehouse so flow-through can multiply depending on the speed of the flow. In other words, the faster you can receive, store, replenish, pick, and ship, the greater the flow-through of your DC. Thanks to this, if your DC has 5,000 pallet positions per week, you could process 35,000 pallets per week if you receive, store, and dispatch the 5,000 pallets every day of the week.

Benefits of fast flow-through in the Distribution Center:

• Double or triple the processing capacity of the same space

• Have a more agile response to the customer, shortening and guaranteeing delivery times to the customer from the DC to their door

• Eliminate downtime for people inside and outside the warehouse, with directed work for operators and dock appointment management to receive and dispatch trucks

• Enable cross-docking or dock crossing where incoming warehouse layout merchandise is arranged for picking or shipping without the need to be stored.

Now that you know some of the strategies to achieve space optimization in warehouses and the benefits this provides, do not hesitate to contact our experts to learn more about warehouse layout optimization and streamline your operations in the DC.