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4 Steps to Successful Warehouse Design

How do you know what is the best design and layout for your warehouse? 

Among all the variations available, only some of them will have practical application for your business. Trying to make sense of all the new gadgetry and technology that is available is overwhelming, especially during these periods of economic change, business disruption and changes in customer preferences.

Step 1: Know your business


Understanding your current situation is the first step. It sounds obvious but you have to have answers to these questions:

  • What business need are you fulfilling?
  • What is your current storage requirement for each of your products?
  • How can current warehouse operations be made more efficient?
  • What throughput, i.e. “speed to market” are you achieving?
  • What are your seasonal peaks?
Step 2: Project your future needs

Next, consider your future capacity and resource needs in the next 3 – 5 year period, both internally and externally at your facility. The answers to these questions will help define your strategy and therefore your design and layout.

  • What new processes and activities will take place in the warehouse?
  • How much capital investment is needed?
  • What type of storage equipment and media will be needed?
  • What type of automated systems and technology are required to support this?
  • What will the effect be on space and resources?

Accurate historical throughput data will assist in the planning process and will help reduce your future risk. Perfect data is not always possible, but we have to do the best with what is available.
Getting your warehouse design right from the outset will have a direct influence on the useful life of your facility. Without proper planning, there will be expensive layout and design issues later and the financial implications are significant. Increasing your throughput reduces the cost per case or item handled.

Dr Peter Baker of Cranfield School of Management says “warehouse design is a highly complex process. Warehouses may handle tens or even hundreds of thousands of product lines, they may provide different roles in terms of stockholding, cross docking centres, product assembly, handling reverse logistics and returned goods and therefore there is a need within a warehouse for this to be designed very precisely”.

Step 3: Consider design and layout options

3.1. Flow

The goal is to achieve a logical sequence of operations in which each activity is located as close as possible to the operation before it and also to the function that follows. To do this, we avoid: 

  • unnecessary movement or travel
  • cross-traffic and bottlenecks
  • areas of high traffic
  • too little space between processes and activities

We are also concerned about where storage media, materials handling equipment, vehicles and other supporting items are located in the system.

A smooth flow of operations with the minimum of disruption is the aim and this can be improved by some forethought about managing handling equipment.

TIP: Create a detailed flow chart of the ideal operation

3.2 Space

Documenting the building size and dimensions and its position on the site provides input to the design process. A warehouse is essentially a cube: remember that within it there is both floor space and vertical space available.

The storage media available today makes the best use of stacking and allows for the optimum use of the cubic capacity of the available space. As most of this type of equipment is free standing we can change it as future requirements change, with minimum disruption.

The most space should be allocated for operations, storage and throughput activities. The least space should be given up for administrative functions such as offices, rest areas, pallets storage, vehicle parking, battery charging, etc.

TIP: Get the best use of vertical space that you can

3.3 Configuration

What is the right layout for you? Compare a range of warehouse layout configurations to find one that fits in principle. Consider multiple equipment/ process options and produce a high-level cost/benefit analysis for each. The next step is to create drawings to illustrate the best solutions and from each one, develop capital and operating cost schedules for each one before settling on a preferred option.
The best designs possess the qualities of flexibility and scalability. Your fulfilment requirements can change unexpectedly. If the only option available is an expensive re-configuration, throughput will suffer and business will be impacted.

Warehouse Layout

Figure 1: A possible warehouse layout diagram.

TIP: Research successful warehouse layouts in your industry

3.4 Productivity & Labour

Travelling time is an issue in an efficient warehouse layout. More than half
of total labour time is spent on walking from one point to another which impacts productivity negatively. An effective layout helps to reduce distances between activities and therefore limits foot traffic.

3.5 Technology

The choice of the right systems and technology, both manual and automated, for a new or revamped warehouse may require some external expertise. The sheer amount of software and hardware solutions available is extensive and the wrong choice could be expensive in both finances and time wasted.

Step 4: Be aware of the pitfalls

Lack of proper warehouse planning can lead to problems later. Some of the potential risks are:

  • Choice of the wrong materials handling equipment and storage media
  •  Overspending on installation and roll out costs
  •  Poor technology selection and difficulties in implementation
  • Lack of capacity to meet business growth over the medium term
  • Errors in order fulfilment leading to service disruption to customers
  • Low labour productivity

As Dr Peter Baker says, implementation has got to be planned in minute detail like a military operation – otherwise, things can go badly wrong. He feels strongly that the warehouse has got to be an integral part of the overall business solution. “Your supply chain is serving the market place and the warehouse is an integral part of that. And that is how it has got to be measured; not measured in isolation with regards performance, but measured as regards to the contribution to overall business performance”, he says.

One Last Thing

When designing a warehouse, don’t forget what happens on the site outside the building. Consider the flow of vehicles in and out of the yard, queueing and parking facilities for both trucks and trailers. Remember the employees and visitors; they need safe pedestrian walkways and a place to park their cars.

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