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The Dos and Don’ts of Optimum Facility Planning and Design

Packages on a conveyor belt

Distribution center design calls for strategic thinking that identifies long-term goals and sales strategies. Here are the right and wrong ways to proceed with your planning.

The Dos of Optimum Facility Planning and Design

Identify the resources that will be involved and identify their specific roles.
Team members should be kept informed of the project status at regular intervals.

Document your design assumptions.
This includes who made each assumption and what was the logic behind each assumption.

Document your current operational functions.
Use cross-functional process flow techniques that capture the interdependencies among systems, processes and people.

Analyze your distribution center mathematically in order to define your future capacity requirements.
Evaluate at least one year’s worth of data to capture inventory level and sales volume fluctuation and the seasonality of different SKUs.

Complete three data profiles:

  • Receipt Profile: This requires the purchase order header and detail by day. Analyzing these receipts allows you to understand the daily, weekly and monthly trends in inbound demand.
  • Inventory Profile: The inventory data required is the on-hand inventory at the end of the month for 12 consecutive months and includes every item by unit of measure and total quality. This profile enables you to determine the amount of inventory required to support demand by period. Do develop a space standard based on proposed storage mediums for your facility. Using the space standard, along with your inventory profile, can serve as a check on whether the size of the facility you are designing will meet your needs.
  • Order Profile: This profile requires the order header data and detail of your outbound demand. Don’t assume all orders are the same. Evaluate your order profile by sales channel and order type and evaluate affinities across the order profile. Do not use averages to design your facility; instead, evaluate your orders and order lines by hours of the day.

Accommodate dynamic locations in designing forward pick locations.
These locations should be used for the seasonal fast mover SKUs.

Consider pick rates when slotting SKUs.
Don’t design a bottleneck and overburden a pick zone by putting all fast-moving items in a small area. Create your Golden Zone to maximize picking efficiency with your fast moving items.

Define storage and picking strategies and define future processes.
Consider the way you will be releasing work when you develop future processes.

Validate the throughput requirements in terms of units, lines, orders, cartons and pallets when using material handling equipment.
A conveyor system will create bottlenecks in your operation if you don’t look at the different throughputs for all the processes that are performed along the conveyor.

Identify the material handling equipment you will use.
This will impact the size of the aisle ways in your facility.

The Don’ts of Optimum Facility Planning and Design

Guess at sales numbers.
Take the time to work with your sales and marketing team to understand sales trends and consider any potential changes in your sales strategy.

Interview only management during the documentation of current operational functions.
Complete the three actuals:

  • Visit the actual place
  • Watch the actual process
  • Speak to the actual people who perform the task

This matches the management and operator’s version of the process and fills in the missing gaps.

Use only order profile and slotting to design your facility.
Slotting should be used to determine where a discrete item should be located in your facility but not as the sole analytical tool to design your warehouse. If you are using a static slotting tool, do evaluate the life cycle of the SKU over a 12-month period.

Assume that there is only one solution for your design.
Create at least three design alternatives that meet your criteria. Once all the concepts have been generated, select the final option and ask for management approval.

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