IIENSTITU 🇪🇪
HomeBlogKey Decision Area in Warehousing: Location, Size, Layout, Ownership
Logistic Management

Key Decision Area in Warehousing: Location, Size, Layout, Ownership

02 March 2023
Finding the perfect balance between location size layout and ownership is the key to successful warehousing and this scale helps us get there

When I first stepped into the world of supply chain management, I had no idea how integral warehousing would become to my daily life. I vividly recall visiting a sprawling warehouse on the outskirts of my hometown—a massive building that seemed to breathe life into the products it housed. The hum of conveyor belts, the beeping of forklifts, and the meticulous organization of goods left an indelible impression on me. It became clear that warehousing wasn't just about storing products; it's about making strategic decisions that could optimize the entire supply chain management process.

Decision AreaKey ConsiderationPotential Impact
LocationProximity to labour, customers, suppliers, transportation, and infrastructure.Significant impact on efficiency and cost-effectiveness of operations
SizeCurrent and future needs of business considering level of stock-keeping units (SKUs), volume of products and equipment.Costly to build and operate if wrong sizing is determined
LayoutEasy access to inventory items, efficient location of personnel, and proper storage of goods.Improves efficiency and safety, enhances stock rotation
OwnershipWeighing benefits and drawbacks of owning vs. leasing a warehouseDetermines level of control, flexibility, and cost implications
LocationEvaluation benefits and costs of alternative locationsDirect impact on storage and transportation costs, lead times, and customer service levels
SizeDetermination of shelves and racks needed to accommodate itemsImproper planning may lead to space wastage or insufficient storage capacity
LayoutConsideration of safety, lighting, aisle width, and storage capacityAffects ease and speed of finding and moving items, customer satisfaction
OwnershipDecision between lower up-front capital requirements or having complete controlAffects the business operation expansion or shrinking process
LocationMaximizing potential benefits from warehouse locationProximity to key resources can enhance overall business success
OwnershipAlignment with organizational goals and needsAffects strategy, scalability, and long-term planning

  • Location

  • Size

  • Layout

  • Ownership

The Heartbeat of the Supply Chain: Warehousing

Warehousing is more than just a stopover point for goods; it's the heartbeat of the supply chain. A well-designed warehouse ensures that products flow smoothly from manufacturers to consumers, reducing delays and cutting costs. But achieving this efficiency isn't a matter of chance. It requires careful consideration of several critical factors:

1- Location

2- Size

3- Layout

4- Ownership

Let's delve into each of these areas, drawing from personal experiences, anecdotes, and industry best practices.

Location: Finding the Sweet Spot

Choosing the right location for a warehouse feels a bit like finding the perfect home. You want it to be in a neighborhood that's safe, accessible, and suits your needs. I remember when I was part of a team tasked with selecting a new warehouse location for a mid-sized retail company. We had to consider:

Proximity to Suppliers and Customers: Being close to suppliers reduces inbound shipping costs, while proximity to customers speeds up delivery times.

Access to Transportation Networks: Highways, ports, and railroads are the arteries of logistics. A warehouse near these networks can reduce transit times and costs.

Labor Availability: A location with a skilled workforce ensures the warehouse operates smoothly.

Infrastructure and Utilities: Reliable power, water, and internet services are non-negotiable.

We mapped out various potential locations, weighing factors such as transportation costs and delivery times. In the end, we chose a site near a major highway intersection, which significantly reduced our transportation expenses and improved delivery speed. It was a decision that paid dividends in customer satisfaction and cost savings.

Size Matters: Scaling for Success

Determining the appropriate size for a warehouse is akin to planning for a family. You want enough space to accommodate growth but not so much that you're burdened with unnecessary costs.

When we expanded our operations, we faced the classic dilemma: How big should our new warehouse be? We considered:

1- Current Inventory Levels: Assessing the volume of stock-keeping units (SKUs) we handled.

2- Future Growth Projections: Estimating how our inventory might expand in the next 5-10 years.

3- Equipment and Machinery Needs: Allocating space for forklifts, conveyor systems, and other machinery.

Warehousing location and size define opportunity layout, optimize success and ownership, and enable long-term security.

IIENSTITU
Location, Proximity to labour, customers, suppliers, transportation, and infrastructure, Significant impact on efficiency and cost-effectiveness of operations, Size, Current and future needs of business considering level of stock-keeping units (SKUs), volume of products and equipment, Costly to build and operate if wrong sizing is determined, Layout, Easy access to inventory items, efficient location of personnel, and proper storage of goods, Improves efficiency and safety, enhances stock rotation, Ownership, Weighing benefits and drawbacks of owning vs leasing a warehouse, Determines level of control, flexibility, and cost implications, Location, Evaluation benefits and costs of alternative locations, Direct impact on storage and transportation costs, lead times, and customer service levels, Size, Determination of shelves and racks needed to accommodate items, Improper planning may lead to space wastage or insufficient storage capacity, Layout, Consideration of safety, lighting, aisle width, and storage capacity, Affects ease and speed of finding and moving items, customer satisfaction, Ownership, Decision between lower up-front capital requirements or having complete control, Affects the business operation expansion or shrinking process, Location, Maximizing potential benefits from warehouse location, Proximity to key resources can enhance overall business success, Ownership, Alignment with organizational goals and needs, Affects strategy, scalability, and long-term planning

4- Operational Space: Including areas for loading docks, offices, and employee facilities.

We applied a formula from "Warehouse Management: A Complete Guide to Improving Efficiency and Minimizing Costs in the Modern Warehouse" by Gwynne Richards (2014), which helped us calculate our space requirements more accurately. By planning for the future, we avoided the pitfalls of outgrowing our space too quickly.

Italicized insight: It's better to have room to grow than to be cramped from the get-go.

Layout: Designing for Efficiency

A warehouse's layout is like the blueprint of a well-oiled machine. A thoughtful design can improve efficiency, safety, and employee satisfaction. During one project, we faced challenges with bottlenecks in the picking area, leading to delays.

To address this, we implemented the following steps:

Analyzed Workflow Patterns: Tracked how goods moved through the warehouse.

Redesigned Aisle Widths: Adjusted aisle sizes to allow for smoother traffic flow.

Optimized Storage Solutions: Utilized vertical space with higher shelving and installed pallet racking systems.

Implemented Technology: Introduced a warehouse management system (WMS) to coordinate activities.

After these changes, not only did our order fulfillment speed increase by 20%, but our workers also reported a better working environment.

*Bold statement: An efficient layout doesn't just boost productivity; it elevates the entire operation.*

Ownership: To Buy or to Lease?

Deciding whether to own or lease a warehouse is a significant financial decision. Early in my career, I worked with a startup that debated this very topic. The arguments centered around:

Benefits of Owning:

1- Asset Building: Ownership can be a long-term investment.

2- Control Over Customization: Ability to modify the facility to specific needs.

3- Stability: No worries about lease expirations or landlord issues.

Benefits of Leasing:

1- Lower Upfront Costs: Frees up capital for other investments.

2- Flexibility: Easier to relocate if business needs change.

3- Reduced Responsibility: Landlords typically handle major repairs and maintenance.

We ultimately chose to lease, which provided us the flexibility to adapt as the company grew. However, for more established businesses, ownership might offer the security and customization they require.

Underlined takeaway: Each option has its merits; the choice depends on the company's long-term strategy.

Optimizing the Supply Chain: Tips and Strategies

To optimize supply chain management processes, consider the following tips:

1- Conduct Regular Audits: Keep tabs on inventory levels and warehouse efficiency.

2- Invest in Technology: Utilize WMS and automation to streamline operations.

3- Train Staff Thoroughly: Well-trained employees are more efficient and make fewer errors.

4- Embrace Sustainability: Implement eco-friendly practices to reduce costs and appeal to environmentally conscious consumers.

By integrating these strategies, businesses can not only improve their warehousing operations but also enhance the overall supply chain performance.

Conclusion: The Foundation of Success

In the grand scheme of supply chain management, warehousing might seem like just one piece of the puzzle. However, as I've learned through years of experience, it's a foundational element that can make or break a company's efficiency and reputation.

By carefully considering the warehouse's location, sizing it appropriately, designing an efficient layout, and choosing the right ownership model, businesses can gain a competitive edge. These decisions require thoughtful analysis, but the rewards—reduced costs, improved customer satisfaction, and greater operational efficiency—are well worth the effort.

Final thought: Remember, every product that reaches a customer's hands has likely passed through a warehouse. Making that journey as smooth as possible starts with the decisions we make about these critical facilities.

References

Richards, G. (2014). Warehouse Management: A Complete Guide to Improving Efficiency and Minimizing Costs in the Modern Warehouse. Kogan Page Publishers.

Frazelle, E. (2002). World-Class Warehousing and Material Handling. McGraw-Hill.

Ackerman, K. B. (1997). Practical Handbook of Warehousing. Springer Science & Business Media.

Tompkins, J. A., & Smith, J. D. (1998). The Warehouse Management Handbook. Tompkins Press.

Warehousing supply chain location size layout ownership structure competitive advantage stock-keeping units safety lighting aisle width storage capacity stock rotation leased space control visibility.
The man in the photo is smiling broadly at the camera. He has a bright, cheerful expression on his face that radiates joy. His eyes are twinkling with happiness, and his mouth is spread in a wide grin. His hair is neatly combed and his skin is glowing. He is wearing a green shirt. He looks content and relaxed, as if he is having a wonderful time. He is standing on a sidewalk surrounded by tall buildings and other people. His pose is confident and relaxed, and he looks very pleased with himself. The overall atmosphere is cheerful and relaxed, and the man looks like he's having the time of his life.
Dr. Murray Craig
Academic

Dr. Murray Craig is an academic and researcher who has dedicated his life to the study of human behavior. He has a particular interest in how people interact with their environment, and how that interaction can be used to improve their lives. Dr. Craig has spent many years teaching and conducting research at universities all over the world, and he is widely respected for his work in the field of behavioral science.

Related Posts
Our team of experts is passionate about providing accurate and helpful information, and we're always updating our blog with new articles and videos. So if you're looking for reliable advice and informative content, be sure to check out our blog today.
A forklift truck stands in the foreground, with a group of men gathered around it. They are standing in front of a large stack of boxes, which is illuminated by a bright light from above. One man, dressed in a green suit, is gesturing with his hands. Behind him, a woman in a white turtleneck and black jacket can be seen. In the background is a black background with white text. To the right of the group, a blurry image of a person can be seen wearing a green shirt. In the center of the image, a white letter 'O' can be seen on a black background. The woman in the green shirt is the focus of the image, standing at the front of the group, with her arms crossed.
Logistic Management

Optimizing Logistics Mgmt: Production & Distribution Decisions

29 January 2023
A woman dressed in a white turtleneck and black jacket stands in the center of a long, dimly lit hallway in a warehouse. The walls are lined with boxes, and the floor is covered with dust. On either side of her are white letters O on black backgrounds, one on the left wall and one on the right. The woman looks solemnly ahead, her gaze focused on the end of the hallway, the light there giving the illusion of a promise. The shadows of her frame provide a contrast to the dim lighting, creating an eerie atmosphere.
Logistic Management

Logistics Management: Key to Supply Chain Efficiency & Customer Service

29 January 2023
A forklift is seen in the warehouse, positioned in the center of the image. The vehicle is large and white, with a black cab and yellow trim around the edges. In the foreground, a woman in a white turtleneck and black jacket can be seen. To the right, a close-up of a box can be seen, with a white letter on a black background visible in the upper left corner. Above the forklift, a screenshot of a phone is visible, and a white and black truck is parked to the far right. Other white letters on black backgrounds are visible around the image, including an 'O' and two other letters. Finally, a green text on a black background is visible at the bottom of the image.
Logistic Management

Ensuring Delivery Consistency in Logistics Management

29 January 2023
A yellow truck with cargo on the side is sitting in the foreground of the image. On the side of the truck is a stack of metal. In the background, there is a white truck with black text on it. On the left of the image is a woman wearing a white turtleneck and black jacket. In the middle of the image are three white letters on a black background, an O, a C, and an H. There is also a white text on a black background at the top of the image. The background is a solid black. The colors of the image are bright and vibrant, and the contrast between the yellow truck and the black background is striking. The scene captured in the image is one of a busy truck yard.
Logistic Management

Optimizing Delivery Frequency for Logistics Mgmt

29 January 2023
A large warehouse with many tall shelves, each full of white plastic containers. There is a woman wearing a white turtleneck and a black jacket standing near the shelves, and a black background behind her. On the shelves, there are white letters on a black background, the letter O in particular. The white containers are stacked neatly on the shelves, making for a neat and organized warehouse.
Logistic Management

Ensuring Order Fulfillment Reliability in Logistics Management

24 January 2023
This picture shows a red rectangular container with white text. The container is placed on a black surface and there is a white square on the top right corner. A close-up of a man smiling is visible on the bottom right corner. On top of the black background, there are three white characters, an o, an e and a number. The container is surrounded by small objects on a red surface. There is a black rectangular object on the left side and a white square on the right side. The white text on the red container is clearly visible and is in the center of the image. The man in the background has a friendly expression on his face which adds a sense of warmth to the picture.
Supply Chain Management

Optimizing Logistics Management for Business Success

20 January 2023
A detailed map of a city is depicted in the image. The map is presented in a top-down view, showing roads, buildings, parks, and other features of the city. In the lower right corner of the image, a close-up of a man with a smile on his face is visible. In the center of the image, there is a map of the city with white text on a black background. On the right side of the image, a close-up of a box is visible. Additionally, a black background with white text can be seen in the upper left corner. There is also a white letter 'e' on a black background in the center of the image. At the bottom of the image, there is a second white letter 'e' on a black background. In the upper right corner of the image, there is a yellow car with a black background. Lastly, a white number on a black background is visible in the center of the image.
Supply Chain Management

Logistics Management: Strategies for Success

20 January 2023
A man is standing in a warehouse with a stack of crates in his arms. He is wearing a white turtleneck and black jacket. The background is a solid black with white text visible. The ceiling is seen in a close-up shot, and there are several boxes in the room. In the foreground, a white letter o stands out against the black background. The letter is surrounded by other white letters on the same black background. The man looks determined and focused, ready to take on the task at hand. With the stack of crates in his arms, he stands tall and ready for whatever may come his way.
Logistic Management

Maximizing Logistics Management: Value-Added Services

27 January 2023