Warehouse Makeover: Blueprint For Change
To meet new shipper and consumer demands, modern warehouse design plans are larger, taller, wider, brighter, smarter, and more flexible.
When it comes to realignments in the global supply chain, mega-retailers such as Amazon, Alibaba, Target, and Walmart flooding today's headlines with announcements of strategic acquisitions, new distribution and fulfillment centers, and multi-million-dollar investments to overhaul existing supply chain operations.
But, it's not only the global retail giants that gain market share and operating efficiencies through flexible supply chain strategies. Achieving flexibility should be the goal of every supply chain leader, especially in today's complex operating ecosystem. One area of progressive solutions is flexible distribution center (DC) design. The warehouse has evolved from its basic function as a storehouse to an intelligent component of the entire global supply chain. The warehouse design of tomorrow is transitioning to meet the physical needs of the basic warehouse operator as well as the more highly automated e-commerce fulfillment center.
Along with agile and lean, flexible is a common supply chain buzzword these days. But what does it mean to be flexible from an operations standpoint? Academically speaking, the word flexibility in supply chain terminology refers to the ability to adapt quickly to market demands and deliver products and services to customers promptly, according to Marc Schniederjans, author and business professor, University of Nebraska.
It's important to fully grasp the concept of flexibility—not only its definition, but also its real-life operational applications. Flexibility leads to agility, and agility provides organizations across the supply chain a competitive market advantage. In supply chain speak, flexibility can convey a multitude of applications. As DC managers transition from tactical to strategic approaches in supply chain management, companies of all sizes are evaluating flexible alternatives in building and network design, expanded value-add customer services, and strategic software applications.
When Walmart took a strategic overview of its supply chain in 2005, one area of focus was maximizing throughput in its distribution network. At the time, with almost 300,000 SKUs, the global retail giant assessed how its perishable commodities and dry goods functioned in the distribution system.
In a strategic move to promote flexibility, the company elected to open 40 high-velocity cross-dock distribution centers designed specifically for perishables distribution to store locations. Built on a smaller footprint, these temperature-controlled facilities required less automation, thus promoting quicker inventory turns than the larger DCs in Walmart's distribution network.
Soon thereafter, Walmart's supply chain managers were so enamored with the idea of high-throughput DCs that the company elected to consolidate fast-moving, high-turnover dry merchandise—such as paper goods, seasonal items, and toiletries—in the perishable facilities. The consolidation strategy of combining high-demand dry goods with perishables paid off, further enhancing efficiencies and flexibility in Walmart's supply chain. Fast forward a full decade and Walmart is realigning its network design to capture the emerging e-tail market with a $1-billion investment in specialized fulfillment facilities, automated high-throughput equipment, and new supply chain talent.
When it comes to DC network designs, Amazon wrote the book on flexibility in facility specialization. With a total of 160 (and growing) current U.S. distribution facilities, Amazon has seven distribution facility prototypes across its North American supply chain. The distribution focus and number of each warehouse facility type are:
- Fulfillment and redistribution centers (75)
- Sortation centers (26)
- PrimeNow hubs (43)
- Delivery/sortation stations (16)
In Amazon's ever-evolving delivery network, new facility prototypes include Delivery Station Networks, which are located close to metropolitan population centers and smaller in size—less than 100,000 square feet. Amazon has also introduced two new delivery concepts for groceries that require independent operating facilities: Amazon Fresh for perishables and Amazon Pantry for same-day delivery of dry goods. As delivery channels evolve from the point of production to the point of consumption, Amazon and other multi-channel retailers are realigning supply chain strategies.
DC Design Dynamics
Today's modern warehouse design is larger, taller, wider, brighter, smarter, and more flexible. Basic design in the 21st century DC includes higher ceiling heights (36 feet and higher), flat concrete floor surfaces, LED and natural light features, expanded trailer storage, and highly automated materials handling equipment operated by intelligent software.
Mandated by a more sustainably conscious corporate mindset, LEED-certified buildings were more commonplace in the pre-recession era. In today's more cost-driven environment, LEED is no longer the required standard in warehouse design.
"Developers or tenants don't want to pay for the extra cost of upgrading to LEED certification," notes Stuart Price of Conlan Construction, a general contractor that specializes in constructing distribution facilities. "Today, we build to what we call LEED-light."
Does this Product Make my Floor Look Flat?
Just when it seemed industrial developers had introduced every imaginable upgrade to improve operating efficiency and throughput, the issue of a better warehouse floor has surfaced. Similar to warehouse roof systems, floor slabs are an entity unto themselves, producing various operational optimization complexities.
The latest trends in DC building design include super-flat floor surfaces and specialized concrete to ensure a level and solid pour. Known to settle, curl, crack, chip, and sweat, warehouse floors have progressed from rough concrete slabs to a smooth, flat, and sheen surface, designed to enhance floor-load capacity.
"A level floor slab is more important than ever," says Mike Gray, president of Ridgeline Development, a real estate developer of bulk distribution properties in major North American markets. "Requirements for a flat and level floor system are increasing due to the materials handling equipment servicing higher cube heights and narrow aisle widths in modern warehouse facilities."
An Illinois-based concrete innovator recently introduced a new design—Ductilecrete—in floor slab structures. The concrete product is stronger and more durable than traditional warehouse floor systems. The floor guarantees against curling, shrinkage, and moisture—issues that plague an aging floor slab.
The concrete surface is not only more resilient but contains fewer expansion joints, which equates to less floor damage and wear on materials handling equipment and lower maintenance costs. The surface also provides a light-reflective sheen that minimizes glare and mitigates risk for forklift operators.
"No other occupant of a warehouse facility benefits more from a slab system with fewer expansion joints than today's e-commerce user," Gray says. "A flat and expanded floor surface area enables higher and tighter rack configurations and level conveyor installation."
A slab with up to 75 percent fewer expansion joints maximizes the floor surface area for flexible applications. The flat floor throughout the warehouse enables more solid footing for high-bay pallet racking, heavy machinery, and high-speed conveyors used in e-commerce fulfillment centers. Fewer expansion joints, combined with today's wider column spacing, equate to flexibility in rack systems and conveyor layout design.
"New designs in flat floor slab systems resonate with our distribution customers," explains Thomas Cobb of Oakmont Industrial Group, a national developer that specializes in bulk distribution properties. "The floor strength enables our tenants to increase storage capacity and flexibility due to the heavier floor loads without the increased costs associated with a thicker slab foundation."
In late 2015, Interface Carpets, an international flooring company that specializes in modular carpet tile, leased a 370,000-square-foot cross-dock facility from Oakmont for a southeast regional DC.
"Some of the main drivers in the selection of this property were the 36-foot ceiling clear height and the increased load capacity offered by the super-flat floor system," Cobb explains. "The floor design enabled Interface to maximize its storage requirements with higher racking and a narrow aisle configuration."
In addition to advanced building features, such as higher ceilings and flat floor surfaces, e-commerce facility design also calls for flexibility in truck court and employee parking areas. As distributors demand more on-site trailer parking in DC locations, developers are challenged with designing truck courts and storage yards with higher trailer parking ratios.
Additionally, asphalt truck courts are becoming obsolete in favor of all-concrete designs.
"With heavy truck traffic in a typical distribution center, it makes sense to design the truck court with 100-percent concrete—from a maintenance and utilization standpoint," says Conlan's Price. "Concrete generates less heat than asphalt, providing a practical, sustainable solution."
From Hard Surfaces to Soft Landings
While upgrades in DC design are trending to meet the high volume demands of fulfillment centers across North America, software solutions targeting inventory management and throughput optimization are evolving to address omni-channel distribution models.
Warehouse Management Systems (WMS) were introduced two decades ago to manage inventory, but software systems have advanced as the demand for data flow and supply chain intelligence has increased. From the legacy WMS platforms, Warehouse Control Systems (WCS) were launched to interact with advanced materials handling equipment, such as sortation and picking simulation systems.
The latest evolution in next-generation supply chain software is the Warehouse Execution System (WES)—an IT platform that interfaces with an existing ERP system or WMS to optimize inventory flow and execute more complex picking production commonly found in e-commerce facilities.
"Our WES acts as the conductor in an orchestra concept," says Dave Williams, director of software solutions at Westfalia, a warehouse automation firm based in York, Pa. "The WES conducts the other software applications, allowing a shipper to track inventory downstream in the supply chain all the way to the retail level.
"Our software gives shippers the ability to track inventory from the raw material stage to the consumer purchase point," he adds. In a highly regulated industry such as food and beverage, flexibility is the key to high throughput and lean operating systems to eliminate food waste.
"How a customer rotates inventory is a primary concern," says Williams. "Our WES software enables a distributor to track perishable expiration dates to ensure quality and freshness. The 'first expired/first out' concept is a huge driver in the way our WES interfaces with product flow. We build flexibility into our software tools."
Warehouse Functionality Expanded
Today's modern warehouse encompasses more than just a storage box with four walls to house inventory. Next-generation DCs include value-added services (VAS) and intelligent applications. Across the global supply chain, the 21st century DC offers flexibility to the end customer. In today's competitive landscape, distribution companies across North America are enhancing their value proposition.
Companies are providing customers more value-added services, particularly in modern e-commerce operations. For example, New England-based ModusLink recently partnered with a top tier electronics manufacturer to provide flexible postponement, customized assembly, packaging, and last mile delivery strategies to enhance the shipper's B2C strategy.
"From our solutions center, we provide full flexibility with a custom fit for the consumer's phone," explains Shel Virden, group business director of global account management for ModusLink. "Our process starts with the online order, includes adding personalized phone accessories, and ends with direct delivery to the end user."
Shippers and manufacturers trust third-party providers to execute flexible value-add services beyond traditional warehouse functions. "We manage the customer's inventory supply side as well," Virden says. "We're the last group in the supply chain to touch the phone before it gets in the customer's hands, so we are given a high level of trust from brand execution to final-mile delivery."
When it comes to e-commerce specialization in warehouse flexibility, Mason, Ohio-based Intelligrated provides advanced sortation automation with its Dynamic Discharge Compensation (DDC) technology. DDC provides for high-speed conveyor processing up to 25,000 units per hour with 99.99 percent accuracy.
Through enhanced vision technology, DDC detects each item's exact size and location on the conveyor and relays the data to intelligent software, adjusting the product's discharge timing from the belt to enhance throughput and order accuracy.
"The high-speed conveyor provides near perfect intelligence and precision to compensate for the product size and location on the belt once the item is discharged from the belt," says Satyen Pathak, Intelligrated's senior product manager.
Gaining a Competitive Edge
Keeping pace with the latest in materials handling equipment, software solutions, and facility design features can be daunting for supply chain managers. Where does an organization invest resources to help maintain a competitive edge in the distribution game?
Senior management scrutinizes key metrics such as ROI, so deciding where to invest capital to enhance DC flexibility and functionality can be the difference between gaining or losing market share.
Taking flexible warehouse solutions to a new level, newcomer Flexe has introduced the ultimate in warehouse space utilization. Through a cloud-based platform, the Seattle start-up connects short-term users of warehouse space with companies across North America that have excess storage capacity.
"Our platform works well for companies that can't predict what the next three to five years will look like," according to Ryan Morel, Flexe's general manager of market development. "We can coordinate storage for a single pallet or meet a large seasonal storage need where a 3PL may not be the answer."
In the end, flexibility is about service to the customer and providing operating efficiency across the supply chain. As updated building design features support higher throughput and storage capabilities, advanced warehouse execution software complements a synchronized distribution platform.
Technology applications, advanced automation, and progressive building design all add up to provide flexible support to the end-to-end supply chain.