IndustriesAbout usPublicationsVideosEvents

Should you move or optimize your distribution center?


Companies are concerned about reducing costs in an increasingly competitive marketplace.

Reducing inventory while maintaining a high level of customer service is a necessity. To achieve this goal, inventory turns must be continuously evaluated. A new approach to increasing inventory turns can, in some cases, increase warehouse capacity and even avoid expansion or relocation.

There are three guiding principles to ensure you are getting the most out of your current facility:

  1. Maximize space utilization,
  2. Optimize your productivity in all aspects of the operation,
  3. Control your process, i.e.: labor, product, orders, equipment and costs.

1. Maximize space utilization

One of the most important elements is the development of a detailed site plan. Columns, ceiling heights, different warehouse areas and racking are displayed on this plan. A complete inventory of all equipment is also drawn up in this phase of the assessment. All of this information will have an impact on the analysis of appropriate technologies for a better warehouse layout and space utilization.

A product database containing logistical information, inventory performance and annual transactions for each product will be a basic tool. As a result of this information gathering, it is possible to obtain a global picture of the warehouse activity. In fact, Pareto's law is often confirmed, about 20% of the products represent nearly 80% of the space and transactions. Another advantage of doing this analysis is to examine in detail the problematic cases. For example, an item with no inventory transactions and an excess inventory level are often a good source of space savings.

In addition, a good pre-location analysis would indicate the best storage and configuration that should also guide better space utilization. It is important to work closely with company management during this database review. The policy regarding the amount of product to be kept in stock must be rigorously established, as well as the policy regarding new products and additional transactions.

2. Optimize your productivity

One of the most important cost factors is the labor used to perform all activities in the warehouse. From product receiving, put-away, picking, packing and shipping, all functions need to be examined in detail to reduce non-value activities, reduce travel time, consolidate activities, reduce exceptions and standardize processes.

To support this important review, a good mapping of existing processes should be done involving, if possible, the people doing the work, review these processes with an eye toward increasing productivity, test the new review process, and adjust according to the goal set.

The industry benchmark can guide you in reviewing and optimizing your productivity. New fixtures, equipment, infrastructure and technology would certainly facilitate the transformation process. The most important point is also to involve employees in the process and have them participate in testing and validation. Documentation and definition and tracking of KPIs would ensure continuity.

3. Operations Control

There is no such thing as a good operation, if the control of the operation is not optimal. The best support tool to ensure control is the WMS (Warehouse Management System). Products, stocks and transactions have been monitored, tracked and optimized with WMS for years. Unfortunately, many companies have not yet entered the optimization phase due to the amount of effort and transformation required to ensure that these systems are properly integrated, configured and maintained.

There are also many challenges that are part of this optimization opportunity, to name a few, full ERP integration, customer and client data integration, product logistics information to maintain, WMS warehouse labor and knowledge retention, customizing customer excesses and many more.

Having worked in this field for over 30 years, I would say that about 50% of the offshoring or expansion could have been avoided if companies had looked at these points in detail and invested in process changes instead of brick and mortar.

Similar publications
4200 Saint-Laurent BLVD
Suite 900, Montreal, QC H2W 2R2
Follow us
Stay informed with our newsletter

All rights reserved - Credits Hamak 2021