8 Numbers to Know Before Talking to a Warehouse Design Consultant
There is no doubt that engaging in a design build project is an exciting time for any facility manager and their team. Whether designing and building a new DC or warehouse from scratch or retrofitting an existing facility with new layout, systems, and technologies, the start of a design build brings with it a sense of hope and enthusiasm that all of your operation’s problems can be resolved.
While all of this is true—a design build should be a time of excitement and potential—the ultimate success of the project takes a lot of work, specifically up front. If you want to be satisfied with how your project comes together, then you must first have a clear understanding of your current situation, your challenges, and your goals. Otherwise, you can’t communicate these things effectively with your warehouse design consultant, and gaps will inevitably appear.
Free Guide: Top Order Fulfillment KPI Indicators
That’s why it’s important, before you even contact a potential partner, that you have a firm understanding of your business’s metrics, the resources you have available to complete the project, and what you would consider “success” after the project is completed.
To help you frame your thinking about the design build process, we’ve pulled together the following list of numbers that you should know before embarking on the journey. In addition to framing your thinking, these numbers will also be needed by your design partner once discussions begin; by having them on hand ahead of time, you can streamline the process and get to work building the warehouse of your dreams.
The Numbers You Should Know Before Beginning a Design Build
Ideally, before you reach out to a design build partner (such as a warehouse design consultant or systems integrator) you should have a sense of your project’s cost savings requirement or your company’s ROI term guidelines (in months) that will help get the project funded. These numbers are important for both you and the design build partner to know, as it will impact the technologies and systems that you are ultimately able to cost justify and implement in your operation.
Additionally, your design consultant will use your this information to determine whether or not your goals for the project are realistic. Some project goals or facility limitations may require technologies that will not meet your financial requirements. Your design consultant will help steer you in the right direction. Your design consultant or systems integrator can help you understand what a realistic budget for your project would look like, and will often be able to provide a “Good, Better, Best” model of price options for you to choose from.
Is there a business event like an acquisition or a peak season that the project needs to be completed by? Is there any wiggle room in that date?
Knowing these dates will help you and your design consultant to set the right strategy for the project. They will also be able to tell you whether or not the schedule is too ambitious for your critical dates, and may recommend an amendment to the timeline if it will make for a smoother process. After all, a facility built right will always win out over a facility built hastily.
It is also important to leave yourself extra time to allow for unforeseen issues that can arise during large projects. Sometimes certain steps in the process—for example, getting data out of your system—can take much longer than one would initially expect, and it is important to build some buffer time into the schedule to allot for these and other unexpected issues.
Are you building a new facility to fit your operation or are planning to move to an existing building? Fundamentally, either choice does not change the design process, but if you have time before the new construction is designed, your design-build partner may be able to develop a design that requires fewer square feet of new building and create even more cost savings.
How much ancillary space is needed for office space, manufacturing, returns, etc? If you are retrofitting an existing facility, are you strictly limited to the existing square footage, or is an expansion possible if it is determined that expanding would allow for more efficiency? Does the ceiling height allow for a mezzanine for additional equipment or storage?
Knowing the answer to these scenarios will help guide the conversations that you ultimately have with your warehouse design consultant and will help you end up with the solution that has the right combination of automation and cost savings.
Before embarking on a design-build project, you must first quantify your current costs. This should start with your labor costs. What are your annual labor costs (by task) in your operation (including overtime and other benefits)? What would they be to meet volumes at your projected growth? The more accurately you can attribute labor costs to each task the more accurate your costs savings estimates will be.
If your current operation is mostly manual and your new system design is more mechanized or automated, you will also need to allow for the cost of maintenance personnel. Maintenance is a critical part of keeping your new system running smoothly, and your people working more efficiently.
While measuring the amount and cost of labor, it is just as important to know the productivity of your people in each task of the operation. This will be used to forecast future labor costs in a “Do Nothing” scenario to measure the savings of adding automation to the operation. Knowing current productivities will also help to qualify or disqualify technologies during the Design Phase of the project.
5. Number of SKUs
As you know, the number of Stock Keeping Units (SKUs) that your operation handles and stores on a day-to-day basis has the potential to have a huge impact on your ability to efficiently and effectively pick, pack, and ship orders. For this reason, it is critically important for you to have a clear understanding of the number of SKUs currently active in your facility and whether or not you have intentions of growing, shrinking, or keeping this number stable in the future. It’s also important to have a clear understanding of the cubic velocity of each SKU, so the right technology can be applied to slow, medium, and fast movers.
The answer to these question will help to inform how much storage space is required in your new facility and will help your design consultant plan an effective slotting process for your facility.
6. Order Volumes and Profiles
It is important for you and your warehouse design consultant to know what the typical day at your facility looks like from an overall flow standpoint. Breaking down what a “typical” order looks like is called the Order Profile, and it is comprised of the number of order lines and units.
This is important because all order profiles are not treated the same. Single or two-line orders are handled very differently than orders that may have 10 lines and 20 units. Do your orders have a combination of picking types (pieces, cases, and/or pallets)? All of this information will help determine the best solutions and technologies for your operation.
The next step is quantifying the volumes you will have to handle. Designing for the right volumes can be tricky, especially if you have peak periods that are significantly higher than the average.
The average day’s volume is important because that is what is more closely tied to annual labor costs, but you still have to handle all of the peak periods during the year. Once you have identified what the volume and duration of your peak, you want to compare the current length of day (hours worked). Many times single shift operations can benefit from applying automation and expanding the length of day to 3 shifts. It can reduce capital costs and handle peak volume periods.
Just as important as knowing your current business metrics is knowing your future expected business metrics. Do you expect business to grow? If so, at what rate? What does the growth look like: A greater number of smaller orders, a smaller number of larger orders, or some mix thereof?
Though it is impossible to know 100% what the future holds for your operation, by relying on past data and order history and viewing it through the lens of key stakeholder expectations, it should be possible to create a forecast with enough accuracy to be actionable. This forecast will be critical during the design-build so that your new space can accommodate the expected growth and prevent a costly redesign a few years down the road.
8. Service Levels
You need to not only understand your current service levels but also be able to anticipate how they will change (if at all) in the future. For example, only very few e-Commerce companies offer same day delivery, but it may be the norm in five years. For those who offer same day shipment of orders received by the cutoff time (say 5pm). If your freight carrier picks up at 9 pm, you have four hours to pick a percentage of your daily volume. Whatever the order volume is during this period is the rate any new systems will have to handle for you to be successful.
The Bottom Line
Before you even have your first conversation with a warehouse design consultant or systems integrator, you must have a clear understanding of your current business and the goals that you want your design-build to accomplish. Having this understanding will not only allow you to better frame your thinking and expectations but will allow you to better communicate these expectations with your design consultant, making for a more efficient and fulfilling process.