The characteristics of a resilient warehouse are changing. Rather than just focusing on having the right people, processes and technology in place right now, the industry is becoming much more forward-facing. This shift is driving many warehouse leaders to consider redesigning their facilities.
Behind every warehouse design is—or should be—a robust strategy that is unique to the organization at hand. This strategic foundation is critical for designing a warehouse that will overcome the challenges that are facing the industry today.
Issues Facing Today’s Warehouses
Warehousing has always been a complex industry, but warehouse leaders today are facing a whole host of new challenges. Some of the most prevalent challenges facing warehouses today include:
Labor
The national unemployment rate has been steadily declining since 2020, making it harder for warehouse leaders to staff their facilities. Not only this, but with the average wage rate currently at $25.11/hour, many warehouse leaders are struggling to offer competitive pay.
Space
With the warehouse vacancy rate at 6.7 percent and facility rent prices at $10 per sq. ft, many warehouse leaders are struggling to find sufficient space to store their inventory without exceeding the recommended 85 percent capacity level.
Omnichannel Fulfillment
Omnichannel fulfillment is changing customer order profiles and introducing unique demands to the warehouse. The increasing percentage of warehouse volume that is dedicated to ecommerce and dropship is creating many challenges in current operations.
Bullwhip Effect
The bullwhip effect, characterized as amplified variability as demand signals move upstream in the supply chain, is nothing new and is creating many warehouses that are bloated with inventory. Whether it’s a financial crisis, a global pandemic or international tariffs, demand variability is constant and can risk leaving warehouse leaders with either excess or insufficient inventory to meet customer demand.
Inbound Visibility
Warehouses are often faced with low visibility into inbound shipments, which has repercussions on their volume flow and inventory. This is particularly challenging for international imports, which can face port delays that create supply uncertainty for the warehouse.
Patchwork of Systems
There are more systems than ever involved in operating a warehouse, from warehouse management to enterprise resource planning, inventory planning, labor management, yard management, transportation management and more. Without a strategy that ensures all technology is supporting an end goal, warehouses can end up with a patchwork of systems that create more challenges than they solve.
Designing The Warehouse of the Future
These challenges are not expected to go away, in fact, they may only exacerbate over time. The key to success is to build a warehouse that is resilient enough to withstand them.
Consider the following when designing your warehouse:
You don’t know the future
Even with the proper planning and analysis, the future will always come with a level of uncertainty, so be sure not to build your warehouse design strategy on any rigid, long-term plans. Design your warehouse with a bit of flexibility to accommodate a wide variety of possible futures, rather than creating a rigid forecast that may become obsolete.
Build evolution into your design
Another way to overcome uncertainty is to design your plans across people, processes and technology with the ability to evolve over time. This could include planning your building for the possibility of future expansion, carving out open floor space for potential overflow or implementing warehouse automation and rack profiles that can be expanded or adjusted over time. Whatever strategy you put in place, make sure there is leeway for evolving it without creating massive ripples in your facility.
Focus on the future
Building an adaptable warehouse design requires some understanding of possible future scenarios. Historical data can be valuable in the right context, but it is often not enough for complex decision-making. Start with historical data, then grow it forward to account for corporate strategies that may place new or unique demands on your operation.
Complete sensitivity and what-if analysis
To make your analysis valuable for future decision-making, you’ll need comprehensive data modeling. Run what-if scenarios on different decision paths based on differing variables, such as throughput volumes and wage rates, and look at the stability of the results. This approach will give you much more confidence in your final decisions.
Combine technologies
The best solutions are most often a combination of technology integrated into one system. Focus your investments where they make the most sense and will have the highest opportunity for return on investment (ROI), such as SKUs with the highest velocity with the greatest depth of inventory.
Limit exposure to labor markets
The labor market is unstable at best, so the less you have to rely on it the better. Automation is a great way to reduce your reliance on the labor market, but it needs to fit strategically into your warehouse design to be effective.
Start by focusing on one of the largest labor contributors in your facility, like each picking, and see how automation might increase the efficiency of your workforce in that task.
Find ways to invest in your existing workforce, whether it’s through better technology or processes, to increase employee retention and avoid having to seek new labor.
Foster transparency on the floor
Any forward-looking automation plans in your warehouse design should include a strategy for enabling the facility leadership with proper visibility.
Consider using tools like reporting dashboards, system alerts and equipment monitoring to give your leadership more visibility and autonomy on the floor.
Expand automation justification
Automation provides significant benefits beyond the obvious hard dollar savings in labor and space. When determining the ROI of investing in automation, consider the full breadth of its value, like improved customer service, faster order fulfillment, increased building lifespan, lower utilities, higher employee morale and others.
The Key to a Resilient and Flexible Warehouse
By following the above recommendations, you will end up with a facility design that is resilient, flexible and able to follow a number of different paths based on how your plans actually play out.
A few features that indicate a resilient and flexible warehouse design are:
- Supports changes in customers, suppliers, products and channel
- Can handle disruptions and surges
- Has flexible capacity
- Is proactive instead of reactive
- Leverages strategic technology investments
- Uses visibility systems to plan inbound and outbound activities
- Develops and monitors meaningful KPIs
enVista’s Facility Design Experts Can Help
enVista’s warehouse design consultants have expertise spanning equipment, layout, Lean processes, systems evaluations, labor analysis and more. We have helped hundreds of manufacturers, distributors and retailers adapt to business change with an optimized, future-focused warehouse design.
Ready to learn more? Let’s have a conversation.®
