Owning and running warehouses is often a significant cost to a business, but it can also be a real customer service differentiator. In some businesses, owning and running warehouses is the business.
In many businesses, warehouses represent disproportionally high labour cost centres and, after manufacturing centres, high capital cost centres as a well. Understandably, they attract a lot of attention from cost conscious owners and boards. They also attract a lot of attention from customer facing interests. Warehouse managers deal with many competing interests and can run complex operations at the same time. They often need to understand:
- If their warehouse has the capacity it needs to deal with the volume of product
- If it is laid out the best way for efficient pick and put-away flow
- Does the technology and capital suit the type of product and demand profile?
- Is there sufficient space to receive, sort, inspect incoming deliveries and stage, configure and process outbound deliveries?
- Are the processes and systems able to support the level and type of activity?
- Are they keeping up to date with current regulatory and OH&S requirements?
- Do they operate at best practice, or are they lagging behind the benchmark?
Operational constraints, cost pressures, regulatory changes, capital lifecycle and product mix changes can all create a need to review the warehouse design, layout and equipment. Warehouse design and planning can:
- Increase the working life of an existing facility
- Reduce labour and overhead costs and increase margins
- Ensure a greenfield site or a redevelopment has the capacity to satisfy demand and the right capital & technology to achieve efficient operations
- Decrease regulatory or injury risk
- Increase operational flexibility and improve customer service
When all of the inputs are considered, even modest warehouse re-designs can be complex endeavours. Whether a re-design, expansion or greenfield design, GRA’s warehouse management approach is to firstly understand exactly what is driving the need, and what the business sees as its critical outcomes.
We can analyse transaction data, growth and range projections, product characteristics and inventory profiles to build a picture of what will be stored and how it should move into and out of a warehouse, today and tomorrow. We create options and explain the relative merits of them all. We can work through the spectrum from conceptual drawings to detailed, fully costed build-ready designs, and we can partner with design and construction firms to ensure continuity from concept to operational ready hand-over. We consider:
- Growth, seasonality and service promise/customer behaviour (eg in by 3, despatch the same day)
- Inbound order patterns or material flow
- Environmental requirements in handling and storage
- The appropriate equipment for the material and flow (for example ARAS, CLS, PLS, racking and sortation)
- Technology (WMS and picking technology (PLT, PTV, RF)
- Inbound and outbound staging requirements
- Value add processes (for example sales kits or assembly)
- The operational capability of the warehouse function
Ultimately, we provide warehouse designs based on the requirements of your business to the level of detail you require.
The following are outcomes of this warehouse design approach:
- Clearly enunciated design options that:
- highlight the trade-offs between operating and capital expenses
- consider the expected volume and throughput, including high and low estimates
- match technology and environment to product
- A definition of costs associated with the options
- A considered assessment of capability
- A recommendation of an outsource/insource plan
The benefits of this approach include:
- Confidence in a design process that is best matched to the business need and nature of the product
- A clear business case that outlines the compelling story for the design
- A potential increase in product availability and customer service
- Reduction in operating costs – typically in the range of 5%
– BACK TO CONSULTING
With a focus on both cost reduction and service improvement, we engaged GRA to design and lead a company-wide Procurement Transformation. GRA worked closely with us to design and implement a new operating model and deliver significant improvements in procurement governance, processes and systems, whilst also managing a program delivering multi-million dollar savings.
– David White, Manager Enterprise Procurement, Aurizon
- 20-40% inventory investment reduction
- increased service levels ranging up to 99.9%
- 10%-15% reduction in supply chain operating costs
- 5%-20% spend management savings
- the ability to fund business initiatives from operating cash flow (OCF) improvements
- improved return on capital employed (ROCE)
- a minimum 3:1 ROI (10:1 to 30:1 typical)