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1 октября 2012

Developing a First-Class Warehouse: Vital Steps

siouxfallswarehouse.jpgWarehouse is an essential element in any supply chain, so it is crucial to execute an upgrade of an existing facility, as well as the development of a new one, on a proper level.  Several primary strategies will help you to come up with a relevant solution, offering new value to the existing supply chain. 

Since each warehouse has a purpose of its own, the requirements for each facility will differ as well. The circumstances and the environment are variable, and so is the demand. That is why it is hardly possible to enumerate any fixed rules or guidelines. Still, certain advice might be prove useful for any warehousing business.

Find a competent logistics consultant

Unless you are the expert yourself, you will need a professional to help you through the development stage. Professional consultant will be able to analyze your situation, outline possible strategies, as well as relevant infrastructures and technologies. It would be wise to analyze different approaches to become aware of the best practices in your area of business, thus, gaining an ability to come up with insightful competitive solutions for your business. That is why a right choice of an advisor is crucial for your success – if you receive bad advice, your standards will be low; on the contrary, if you receive good advice, you will be able to maintain a top-notch advantageous facility.

While choosing a logistics consultant, pay attention to his experience (that is, how many facilities he has actually helped to build), expertise (if his education and previous experience is enough for the job) and corporate culture (whether it matches your corporate policy).

Consultant's rate should not be your primary concern, since the costs you spend on consultant's salary will be a tiny drop of the costs you spend on the development. Be prepared to pay for the best quality, do not try to save on each detail – always go for the best if you intend to work long-term.

If you decide to undertake your development in-house you will unlikely require a consultant. However, you will still need advice from people with broad knowledge and real skills if you want to reduce risk options and optimize your operations.

Review your business strategy

Before starting to build anything, you have to think over your derailed business strategy. It will ensure logical and efficient operation of your business, so make sure to weigh it over carefully. It would be senseless to build a new facility without proper identification of its purpose. That is, prepare a business plan first.

Make sure you do not embark on the creation of the new facilities just for the sake of it. Think over the ways you or your clients can benefit from a new warehouse. Consider if it will be able to help you improve your customer service, how it can be useful for you and whether you will gain any profit.

While working on your business plan, develop short-tem goals (you will be able to fulfill them in five years or less), medium-tem goals (fulfill them in 7 years or less) and long-term goals (in 10 years or less). Even though the development of warehouse facility us a long-time project you have to pay attention to short-term goals as well. This will help you to create a more detailed plan, showing you where you business is going.

As a rule a warehouse should be able to function for 10-15 years. During the first 5 years a warehouse should be fitted, and you can hope for re-fitment in 5-10 years. Your long-term projections are crucial factors of the decision-making process.


Make sure that you examine the potential constraints limiting the future of your business. The most important questions you have to consider are as follows: will the new facilities help your business growth; while developing new infrastructures, what constraints can you eliminate; how can an existing infrastructure be modified to reduce the constraints?

Make sure that you carry out an objective risk analysis. While analyzing potential risks, pay a special attention to your actions in case you are unable to meet growth targets; also think over what may happen if your business grows faster than projected; consider things you are going to do if a market changes; evaluate the chance of governmental/local/world instability; what happens if the rand appreciates/depreciates; the possibility of acquiring another company; the chance of another company acquiring yours; how can a potential disaster in the facility affect your business; in case you develop a new facility, how will it affect your operation efficiency, etc. That is, be objective with all potentials dangers and risks.

Own or outsource

Consider whether your company should own the facility or rent it from the developer. Before making a final decision, consider the following:

  • Corporate police (is it typical of your company to own warehouses, how it can be beneficial)
  • Costs (do you have enough resources to cover the costs or will you have to borrow money)
  • Time estimates (how long will you be in need of the facility)
  • Time estimates for all necessary approvals (if you decide to own the facility, how soon can you expect to have all the required approvals)
  • Local risks (is local environment stable for being an owner of the facility)
  • Local market stability (is the local market stable enough)

Suitable location

Apart from your business strategy, pay attention to the location of a new warehouse. While considering a place for the construction, determine the following: if industrial land is available; how far is the building to potential customers; how far is it from supplies; how far is it from ports/ airports/ highways; if the local labour is stable; if the local environment is secure; if local freeways and infrastructures suit your business; evaluate road congestion; is the facility easily accessible for workers, personnel and transport; is the local service (electricity, water, telephone, internet, sewerage, power, post offices and banks) enough to meet your needs; are local taxes beneficial; will you be able to get a planning permission; finally, pay attention to the local environment, since weather and pollution can become crucial factors for your business.

Understand warehouse processes

For the development of an efficient warehouse infrastructure, you should have a thorough understanding of its operational processes and be able to project them in future. You have to analyze your business needs and requirements in terms of: input/output, service, customer profiles, storage needs, transportations, logistics, quality, security and control.

To become successful, you should pay attention to macro processes, without neglecting micro ones. A good owner should be able to implement both macro and micro processes, at the same time continuing with already existing ones, and efficiently optimize all warehouse operations in future.

Once you have determined your overall business strategy, your future operations, environment around the facility, and the general nature of its operations, you will be able to design sketches of your new building, based on its approximate size, costs and funding, as well as land requirements.

Your primary concern should be the development of an infrastructure that meets the requirements of your business needs, confirms your strategy, location, environment, as well as many other factors, like funds, sooner or later arising in the process.

Logistics planner is the primary person responsible for this stage. It is as well characterized by frequent necessity of brainstorming, helping you to define the best infrastructure design and optimize the initial operational processes.

You will be able to optimize your building operations, support services, equipment choices, customer responses, operations and life-cycle costs if you properly examine operational methodologies and alternate technologies.

Land procurement

Once you have finished with the development and design stage, defined the best location, you should identify and procure the land on which you are going to establish your new facility.

While considering land purchase, you should evaluate a great number of factors, for instance:

  • Land shape: it must suit the facility needs
  • Site slope: earthwork can become costlier than the land itself, so buying land that requires excessive earthwork is uneconomical
  • Soil condition: not all soil types are suitable for constructions, so make sure to consult a professional first
  • Accessibility: make sure that your land is easy to access, so you could facilitate goods moving in and out of the facility
  • Building lines and servitudes: even an excellent building site can be carved up by servitudes
  • Taxes and rates: if you spend excessive costs on rates and taxes, construction can appear to be uneconomical
  • Zoning: development can be delayed if your site is not easy to zone

Your professional team

Warehouse building cannot be successful without a wide range of professionals, responsible for the detailed engineering of the facility. Make sure that you select each individual based on his skills and expertise he brings to your project:

Project manager: an individual controlling the development and managing the project
Land surveyor: engineer, determining site boundaries and contours
Soil engineer: employee evaluating the ground, as well as founding conditions
Civil engineer: individual, managing earthworks, foundations, concrete, roads, drainage and some parts of the structure
Structural engineer, managing the steelwork
Environmental engineer: person assessing the development and monitoring environmental impact
Architect: individual, designing sets of plans, offices, developing a site development plan, detailing the infrastructure and submitting plans to the local government
Quantity surveyor: person, controlling costs and finances
Electrical engineer: professional, designing electrical reticulation, access control alarms and CCTV
Mechanical engineer: individual, designing mechanical equipment, such as air-conditioning and ventilation
Fire consultant: professional, responsible for the design of fire systems
Space planner: employee, designing and laying out the offices
Material handling engineer: professional, designing the material-handling infrastructure
Landscape architect: person, designing landscapes, such as gardens, etc.
Legal advisor: professional, responsible for all legal documentation

This vast team of professionals needs a person who will manage, guide and control it. Typically, a project manager is an employee responsible for that. So, your right choice of the project manager is crucial for the success of the entire project. For a warehouse project, logistics consultant or an architect may become a successful project manager. Still, for a larger project, it would be better to hire a professional project manager.

Even though the professionals' rates are high (about 10-14% of the project value), your right choice of these professionals is crucial for the success of your project. Unqualified consultants can give you poor advice, increasing your costs and leading you to wrong decisions. So, to ensure best quality and great operational efficiency, you should hire only professional and experienced employees. Be very careful with your employee choice, since high fees are not always an indication of quality.

Detailed design

Full professional team, working in unison will be able to undertake the detailed design of the facility. A development plan of the site is as well included in the overall plan, enabling up to 5 percent accurate costing.

Infrastructure supply can be put into the marketplace after the design stage is finished. Typically, a quantity surveyor is responsible for that, providing a bill of quantities in the suppliers tender.

After completion, tenders are evaluated and often shortlisted. The lowest tender is not always the best solution, so you have to be very careful revising the tenders to make sure your choice is really the most appropriate one in terms of quality, price, reputation and reliability. Only this will ensure the right choice of contractors and sub-contractors.


If a proper planning took place, building and equipping the facility will not be difficult. As a rule, you have to bring together all resources, which will ensure high quality implementation of your facility. While developing the building itself, do not neglect the creation of a reliable warehouse management system (WMS). You can either integrate a new WMS into your warehouse network or upgrade an existing one. Most commonly, long planning and implementation process are crucial for warehouse management systems.

Changes in organizational culture

Probably the most challenging task while creating a new facility is to achieve necessary changes in attitude towards work environment and organizational culture in general. That is, you have to train your staff if you want them to embrace all necessary operations. Appointing new personnel or replacing some of the existing one might become a possible solution. Sometimes this task requires bringing in an independent consultant; however, in most cases, consultation from an expert manager is enough.

Commissioning the facility

You can start commissioning the facility after you fully equip it, install WMA, train your staff and put all the services in place. If you involve an extended plan and properly implement it, your facility will run efficiently and smoothly. However, if you fail to implement it properly, it can lead to facility and staff failure, customer and supplier resistance, as well as constant disruption to the business process.

After the stabilization of the facility, it would be wise to undertake an audit and evaluate whether the facility has met the original objectives. Make sure to carry out a complete facility audit, benchmark it against cost, efficiency expectations, as well as customer service. To ensure that your facility is operating at its full capacity, conduct audits on a regular basis, at least annually. Thus, you can implement corrective actions (if necessary) before it is too late.


Источник: www.sklad-man.com

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Warehouse, logistics

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