Creating a warehouse is not an easy task. On the one hand, it is not rocket science. On the other hand, there are a large number of factors involved and a lot of assumptions that have to be made.
Regardless of whether we decide to build a warehouse from scratch, which means a Built-to-Suit facility, or we are looking for a ready-made warehouse, a minimum of several months will pass from the moment of making the decision to the first acceptance and release of goods.
Business conditions may change during this time. Many of these assumptions may not be true anymore. As a result, we may not achieve the goals of our project effectively.
I have seen many warehouses that had to be redesigned after 3 months of operation…
So how do you avoid this kind of spectacular project failure? It is best when everyone in the company answers a series of questions. And I do mean everyone, not just the manager or Logistics Director.
Because opening a new warehouse is a project for the entire organization, not only the Supply Chain team.
It does not matter if we are talking about a company in which this will be the first state-of-the-art warehouse. Or whether we are talking about an international organization.
However, this approach is not so popular. Few companies treat their Logistics in a conscious way. The opening of a new distribution center for Wójcik Furniture is a good exception. It is a story that is worth looking at.
The story will be first-hand because Andrzej Lada-Kubala, who is currently the Operations Director, agreed to share his experience. Previously, as the Supply Chain Director, he was responsible for the construction of the Logistics Center which we mentioned before.
I met Andrzej at one of the Puls Biznesu conferences devoted to Sales & Operations Planning. Later, I developed a scheme to implement integrated planning for Wójcik Furniture.
But that is a topic for a separate article. If you are interested in the S&OP issue, make sure you read the previous blog entries:
- How to increase profits with S&OP?
- How to implement S&OP in a company? Good practices.
- Why is it so difficult to implement S&OP? And how to deal with it.
In the meantime, let us get into the logic of the investment process conducted by Andrzej. A few years ago, I learned a lot by watching the things he has been doing.
Why do we need a warehouse?
— Andrzej Lada-Kubala
In the initial phase of project analysis, we considered what basic functions the new Distribution Center would perform in our processes. We came up with the simplest answer – stockpiling functions.
Stock is a cost and no one likes to incur excessive costs when it is not necessary. In our case, however, building stock allows for streamlining production processes by optimizing production series.
The high frequency of small quantity orders results in fragmentation of the production series. Building stock allows for periodic production in larger quantities and then fulfilling orders from the warehouse.
The second effect is equalization of production capacity. Many industries, including the furniture industry, are characterized by seasonality. This means that there is insufficient production capacity at peak sales and overcapacity at other times. Building seasonal buffers may be the solution.
Source: Wójcik Furniture. Press Materials.
In such a situation, during the period of increased sales, we release the stock and this way balance the demand and production capacity. So if the warehouse should primarily allow for the storage of stock, then we put the storage functions in the first place.
In that case a high-storage warehouse becomes a natural choice. It is sometimes referred to as a silos warehouse. Warehouses of this type are up to 40m high, self-supporting structures, with cranes and fully automated storage processes. Sounds beautiful. However, as is usually the case at the implementation stage, there are doubts.
Warehouses differ. Depending on the type of products it handles and the sales channel, a warehouse may require a completely different layout and equipment. Just like with cars. Both the F1 bolide and the Monster Truck have their functions, although their specifications are different. Meanwhile, I often encounter a lack of understanding that a given warehouse cannot perform a desired function. That’s why I once posted this entry on LinkedIn.
Adam Sobolewski
Warehouse project
Formal requirements
— Andrzej Lada-Kubala
Doubts that arise during the implementation of the warehouse project are both formal and functional. For example, what are the building conditions and what does the spatial plan look like?
In our case, the conditions indicated buildings with a maximum height of 25m. So we reduced the height of the original building plan by 40%.
Instead of 40m, we had to close the bulk of the building at 25m. Even with these parameters, the fill rates per m2 were still good. In the case of standard development buildings, the height is usually up to 12m.
Another issue that we needed to consider was the ground. Will floodplains such as Żuławy allow for a floor load capacity of 10-12 tonnes per m2?
The conducted analyses showed that without the so-called piling process, it would not be possible. It was an expensive and time-consuming operation. But absolutely necessary.
The feet of warehouse racks are usually less than 300mm2. As a result, the floor used must have a puncture resistance of 30 tonnes per m2. THAT’S A LOT.
Source: Wójcik Furniture. Press Materials.
Such requirements mean that a specialized floor must be used. It is additionally sanded to achieve smoothness and uniformity suitable for system trolleys (according to PN-EN 209-1, DIN 1045-1, and DIN 18202 standards).
In warehouses with a standard height, the appropriate smoothness and evenness can be obtained at the stage of pouring the floor. However, in the case of high-altitude storage, this is not possible without grinding. With the construction of the center on 24,500 m2, this means additional hundreds if not millions EUR in the budget.
While we were analyzing the fire protection issues, it turned out that a high-class facility requires a certain fire load to place sprinklers on each rack level. We assumed that there would be 14 to 16 levels in the building. This meant several times the cost of the fire protection system compared to a classic warehouse.
As usual in this type of projects, the farther you go, the less you know. Along with specific business requirements, there are more issues related to the equipment and project of the building itself. Additional restrictions appeared as a result of the pandemic. Such as the capacity of locker rooms, toilets, installation of air filters or decontamination systems. Designing a warehouse has become even more complex compared to what Andrzej has written about.
Adam Sobolewski
Safety above all
— Andrzej Lada-Kubala
At this stage, I asked myself a question. Maybe it’s better to opt for a classic warehouse?
Unfortunately, I also couldn’t stop thinking that we were located in the floodplains… What would happen if, as is the case with standard projects, we raised the warehouse only 0.3m above the ground?
The development standard is based on this exact assumption. Elevating the facility itself at 0.3m and selecting 0.7m near the ramps to obtain a loading height between 1m and 1.2m, which is required to unload a classic 13.6 semi-trailer.
However, when working on difficult terrain, you need to take into account the water level of floods from 100 or even 500 years back. The search for the optimal cost and maximum filling led us to an unconventional solution.
Source: Wójcik Furniture. Press Materials.
The final project assumed elevating the building to the limit height of 14m. It also involved designing a special roof truss and using a special sprinkler system. As a result, we were able to increase the usable height by almost 2m.
Thanks to this space, we were able to include an additional storage level in the plans. This increased the storage capacity of the warehouse by 8% with an increase in the budget by less than 3%.
Solving the problem of water safety resulted in raising the height of the object by 1m. Of course, it was a considerable cost related to the additional 24,000m3 of ground that had to be purchased and brought in by over 600 dump trucks, but “water is no joke”.
You must remember that even the most beautiful and modern warehouse flooded with water up to 0.5m would lose 100% of its operational capacity.
The safety-first approach prevails in all organizations that are successful in the market in the long term and conduct serious Logistics operations. Ensuring the safety of people and business begins at the project stage of a warehouse. The example of Wójcik Furniture is a good proof of this.
Adam Sobolewski
Warehouse project. Nobody will run it alone.
As you can see, designing a warehouse requires taking many factors into consideration. Otherwise, the final shape of the investment may not meet the cost or operational requirements.
The listed issues do not present the whole catalog of problems. There are still a number of topics related to the process inside the building and the analysis of technical solutions.
Not to mention the idea for the square and parking lot for employees. Or the optimal use of the plot in terms of possible future expansion, etc.
If we are creating a warehouse project, it is worth inviting the architect, contractor, equipment supplier, as well as future direct users to express their views on the process. It is also worth listening twice as much as talking about the requirements and asking as many questions as possible.
Ask as many questions as you can. Rarely does a Logistics Manager have in-depth engineering or construction knowledge. On the other hand, the designer rarely knows and fully understands the operational concept invented by the Head of Logistics.
If you are interested in how to organize your Logistics to take into account all these criteria, make sure you subscribe to the newsletter. You will always be up to date with business and Logistics news and you will receive valuable content in a nutshell every month.
In the meantime, until the next post. Andrzej and I will talk about what issues to consider when planning equipment inside a warehouse.
However, if after reading both entries you start thinking about outsourcing – then I am also planning another series of articles on this subject. More details coming soon.
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