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Designing a Warehouse (Warehouse Design)

1. Location: The primary considerations while locating a warehouse are cost and customer service. Warehouse can be located near the market or near the production plant or at some intermediate place.

• Warehouses are located near the market in order to service the customer well.
• Warehouses are located near the manufacturing plant to store raw material and work in progress to support manufacturing or to store final goods for shipment to the customers.
• Warehouses are stored in the in between the manufacturing and market area so the goods from various plants can be brought to a central location and consolidated to send full load of goods to the customers.

2. Site Selection: Once the location is finalized, the site at which the warehouse has to be located is to be finalized. There are three sites that can be looked at – commercial zones, outlying areas served by motor trucks only and central Areas. The considerations that would decide the site would depend upon capital cost of setting up a warehouse and operating cost. These parameters are apart from other consideration such as services available, scope of expansion.

• Capital cost involves the initial cost of setting up a warehouse. Taking services of a public warehouse or a leased warehouse could reduce the capital cost.
• Operation expenses involve cost of running the warehouse, taxes to be paid, transportation cost to and from the warehouse, etc.
• Services such as availability of water and electricity, good road leading to the warehouse to transport goods, availability of manpower should be looked into.
• If the demand for the product picks up, there could be need for expansion. So the warehouse should have a scope of expansion.

3. Product Mix considerations: The design of the warehouse depends on the various products to be stored in the warehouse and their mix. Some of the factors related to the product that has to be considered are characteristics of the product, its weight, its size and shape, volume of sales, variation in demand of various products. This information will help to determine the size of the warehouse, its layout, design of the storage space, material handling equipments and the operating procedures.

4. Material Handling System: Depending on the product mix, sales volume of the products and the size of the warehouse, material handling equipments need to be selected. The material handling equipments should facilitate maximum product flow, as one of the main functions of the warehouse is movement of goods.

5. Warehouse Layout: Layout of a warehouse depends on the material handling system and requires development of a floor plan to facilitate product flow. Following are some of the steps while designing the layout:

• Determining the pallet size (if pallet has to be used) or the size of the goods to be stored. The size of the pallet should be selected in such a way that as far as possible it is able to fit the various products to be stored in the warehouse. As far as possible it should be ensured that the pallets are of standardized size and of uniform size for the entire operation.
• The positioning of the pallets has to be determined. One of the basic methods of placing the pallets is positioning it perpendicular to the aisle.
• It should be ensured that the material handling equipment is integrated into the final layout.

1. 6.      Determination of warehouse space: Determining the warehouse, space begins with the sales forecast. Once the sale is forecasted, the base stock and the safety stocks are determined depending on the variation in demand throughout the year. A good rule of the thumb is to allow 20 percent additional space to account for increased volume new products and so on.

1. 7.      Warehouse design: The size, layout and the path of movement of materials is a prerequisite for designing the warehouse. While designing the warehouse care should be taken that the product flow should not be hindered. Some of the other considerations while designing the warehouse are as follows:

• Overhead obstructions such as lights, sprinkler system, etc should be higher than the material storage and should not hinder storage of materials.
• Supporting columns should not restrict storage areas and should not come in the path of material movement.
• Floor area should be hardened so that it does not get damaged when the material is being moved.
• As far as possible maximize the use of the cubic space available.