Holste Says: In addition to questions around size and throughput needs, companies also need to consider their potential requirements for or interest in materials handling systems (MHS) when building new or leasing existing buildings. What Do You Say? Click Here to Send Us Your Comments Click Here to See Reader Feedback

As the US economy continues to slowly improve most companies are seeing solid increases in unit volume sales and inventory that are putting the squeeze on existing facility space and design. In addition, many e-commerce retailers are adopting tactics to facilitate direct supplier-to-consumer transactions. Unable to transition from bulk to direct shipping in their current facilities, suppliers are strategically investing in industrial real estate to reduce their shipping times and operating expenses in order to remain competitive.

Retailers like Wal-Mart and Best Buy are adopting drop shipping and third party marketplace arrangements in order to connect customers with a wider array of products and suppliers. This closer cooperation has created a boom in industrial real estate, as suppliers and distributors realize the need for new facilities designed to meet intense fulfillment demands.

As we have reported before, sizing and designing a new facility is not an exact science. It is heavily dependent on the company’s ability to forecast where sales and unit/case volumes are going over the next 3-5 years.

In addition to questions around size and throughput needs, companies also need to consider their potential requirements for or interest in materials handling systems (MHS) when building new or leasing existing buildings. The designs of some facilities are simply more suited than others in terms of support for MHS inside them. Certainly, if a greenfield facility is being planned, companies need to think deeply about what types of equipment/automation may be deployed, and the resulting physical facility requirements (internal & external) before any final agreement with an architect or builder.

While it’s almost always possible to add at least some level of automation to an existing building (you can now even literally “raise the roof” of many DCs, solving the low clear height restriction that used to be a nearly absolute barrier to sortation systems in some buildings), certain building designs may be inherently less friendly to MHS, leading to limitations in system functionality, and/or higher operating costs.

This topic is especially pertinent right now, as leased floor space is generally available in most markets and therefore may look especially cheap (and quick) versus a build-to-suit facility, as those costs continue to increase.

Form follows function is a principle associated with architecture and industrial design. The principle is that the shape of a building or object should be predicated upon its intended function or purpose. Therefore, a new facility project presents a unique opportunity to consider what the optimum DC operation would look like if building design was not a factor. In other words – take the time now to develop the “ideal” internal arrangement for your current and future business requirements and “wrap” the building around it. This approach will guide you to selecting the best facility option(s) for your business.

Below, are a number of key building design criteria that should be considered to optimize performance whether you are building or leasing an existing facility, considering MHS automation or not.

Note: It is possible to have existing floors improved to “super flat” levels, but obviously this is more expensive than building the floor that way to begin with.

A “spec” building will almost never have reinforced roofing. An empty building previously occupied by another tenant may, but likely not consistent with your specific needs. More than you would think, even companies building new DCs don’t get this question answered early enough in the process. While roof reinforcement can usually be added later, it will be a lot more expensive to do so than at the time of construction. That should also be considered in the lease versus build decision.

Dock Doors: The typical warehouse building has receiving doors on one side of the building, and shipping doors across on the other side. While this flow-thru design is often the best configuration, it is sometimes better to look at other arrangements. For example, placing receiving and shipping doors on the same side of the building may allow both functions to share sortation equipment, using one set of diverts to sort received cartons for palletizing and put-away, and another to build outbound customer orders. Another advantage is that you can provide one common and secure space for both delivery and pickup drivers to congregate. While there is usually flexibility to add doors even to a spec building, the final arrangement of doors needs to be closely tied to the MHS layout, especially for fluid loading and unloading applications.

Final Thoughts

Clearly, there are a number of factors that go into deciding whether to build or lease a DC, i.e., the optimal location including proximity to access roads, taxes, parking, future expansion capability and many other attributes. Compromises with fixed assists often have to be made. Therefore, make sure you have thought through the operational impacts of how the facility design will help or hinder current and future business requirements including the addition of higher levels of system automation.