Five Dos and Don’ts: How to Optimize Your DC Design

Today's distribution centers (DCs) are complex webs of fast-moving material handling equipment (MHE), automation software and people. By Jeff Ross

December 10, 2015

Rapidly changing customer demands require flexibility and innovation to succeed at multi-channel fulfillment.

Businesses face unique warehouse challenges because of the variety and volume of SKUs, physical layout and location, and how customers want to buy. And no two warehouses are alike.

Given all that, it’s a stretch to suggest that all of our insights into how to optimize DC design and operations can be boiled down to a short list of dos and don’ts. There are no one-size-fits-all answers. Run from anyone who tells you otherwise.

There are, however, common ways to approach these challenges that do improve efficiency, productivity and profitability. Here are our top five:

1. DO - Design a DC to be flexible and scalable.
This requires a modular design to accommodate expected growth in the number of SKUs or sales volume - or both. The danger is overinvesting in a DC to handle a future state.

The better business decision? Invest in components such as a multi-tiered, walk-back pick module that can be expanded to accommodate additional SKUs over time. This enables incremental growth and helps you avoid committing precious capital too early.

2. DON’T - Overdesign to handle every SKU and order.
You’ll add unnecessary costs and complexities by designing a DC to handle every possible ordering request. Our advice: Always take exceptions offline. That includes custom or seasonal products, extraordinary expediting and sensitive requests from customers.

Concentrate instead on making the flow of mainline material - the top-selling and fastest-moving SKUs - your distribution design priority.

3. DO - Trust Your Employees and What They Know About Your DC.
There’s an exhaustive amount of data available about how your DC operates. Certainly, information captured by enterprise resource planning (ERP), warehouse management software (WMS) and other systems should be collected and evaluated. This data is critical in projecting future operational requirements as well as assessing fulfillment capabilities.

This information is, however, only one piece of the puzzle.

Be sure to talk with employees at all levels of your warehouse operation. Their frontline observations are sure to add to your understanding of inventory, order accuracy and operational efficiency. You’ll be able to balance statistical data with the human experiences that expose the disparities between what the computers count and what employees live with every day.

Secrets of the Smart Warehouse
Whether addressing the Rubik’s Cube riddle or the distribution center puzzle, the use of mathematical algorithms is key to finding a correct solution. With the latter, however, it requires more than the consistent application of complex calculations.

Unlike the Rubik’s Cube, the distribution center is dynamic, with the need to adapt to changing market opportunities, competitive pressures, product mix, technology and other variables, especially those unforeseen. Data-driven analysis and metrics alone are insufficient. They must be tempered with experience in the day-to-day operation of a distribution center and its all too surprising vagaries.

4. DON’T - Ignore bottlenecks.
Our engineers and experienced operations managers share this saying: “The maximum throughput of any DC is only as great as the most constrained point in the system.” Trouble spots in your DC could be underperforming MHE components. Or a pick zone congested by too many workers and lift trucks. Or fast-moving SKUs that are out of reach of pickers. Bottlenecks inevitably occur. Not planning to reduce or eliminate them is liable to cost you time and money.

During the design stages, identify the most constrained points and plan for dynamic options to eliminate the bottlenecks; or, if that’s too expensive, route work around congested areas. Make sure that all designs for a new DC or automation of your existing warehouse include equipment and software that can expedite material flow.

5. DO - Catch the biggest waves.
The unrelenting growth of multi-channel fulfillment means DC operators better be able to anticipate the rhythm of waves. That’s what good surfers do. They develop a sixth sense to see waves building beyond the surf so they know where and when to paddle to get out ahead of the swells. In the warehouse, managers can use data to predict when and where orders are likely to crest.

Wave data to watch should include case picking, repack or split-case picking, pallet movement and pick-position replenishment. When designing a DC and automation systems, make sure that you can control how products are released to the floor. Plan to group orders to balance their flow through picking and packing stations. When congestion occurs, make sure you have the MHE and software to bypass pick faces and reroute and recirculate products until all work zones are operating at capacity.

Often the best solution includes warehouse execution software (WES) that can quickly scale up and down. This new breed of software adds just the functionality you need to handle fulfillment waves without changing or disrupting existing systems.

Perfect Fit for Your DC: Blend the Right Mix of MHE and Software
Optimizing the design of a DC requires careful planning for equipment and automation software that’s flexible and scalable to meet your current business needs. Likewise, you need a design that can cost-effectively accommodate future growth in SKUs and orders as well as advances in technology.

It’s too easy to fall into the trap of designing around the promise of an MHE brand. Instead, aim to blend the ideal equipment and software, including innovative WES, to meet the discrete demands of each company’s distribution operation.