There are many factors to consider when designing a warehouse layout, and every design decision can have a significant impact on operational efficiency. According to F. Curtis Barry & Company, labor comprises more than half of a warehouse’s total operations costs. A poorly designed warehouse floor plan means warehouse associates must walk longer distances to accomplish tasks, resulting in wasted time and resources. More walking results in greater physical strain and fatigue among your associates, and tired workers are more likely to make mistakes — ultimately driving up picking error rates, which can have a negative impact on customer satisfaction. In other words, your warehouse layout has far-reaching effects that impact every facet of your operations.
With so many considerations to weigh when designing a warehouse layout and every warehouse having unique requirements, it’s not always easy to determine the most important first step. The type of warehouse automation equipment a warehouse uses can impact design requirements. For instance, conveyor systems are bulky and fixed in place, so warehouses with conveyor systems often must design the warehouse layout around this infrastructure while allocating adequate space for other warehouse functions, such as sortation and packaging and shipping. Warehouses that make use of flexible automation solutions like collaborative mobile robots, on the other hand, have greater design flexibility. Collaborative robots require no costly, permanent infrastructure, and they use sensors to navigate the warehouse and move around humans and other equipment, so they’re easy to integrate in any warehouse layout.
To learn more about the most important first steps when designing a warehouse layout, we reached out to a panel of warehouse professionals and business leaders and asked them to answer this question:
“What’s the single most important first step when designing a warehouse layout?”
Meet Our Panel of Warehouse Professionals and Business Leaders:
Read on to learn what our experts had to say about the most important first steps to take when designing a warehouse layout.
Jake Rheude is the VP of Marketing at Red Stag Fulfillment.
“Having a deep understanding of the product has to be that first step…”
You need to understand the load unit used, the dimensions, the maximum and minimum weights, etc. Is the product sensitive to temperature? Being aware of the nuances of the items you’re going to be dealing with plays an important role in determining the storage system you’ll be using and the dimensions of the shelving, among many other things.
Mike Kasperski, Managing Partner, leads enVista’s Facility Design practice and brings more than 30 years of experience in the material handling industry, including system design and implementation. Throughout his career, Mike has provided material handling solutions for companies such as The Sports Authority, Random House, McGraw Hill, Staples, Kohl’s, Anheuser-Busch, Kimberly Clark, FedEx and many more.
“The proper design of a warehouse starts with identifying where you are, so you can get to where you want to be…”
The client is far more knowledgeable about its operation, and it is the designer’s responsibility to understand in detail the as-is in order to get to the to-be state. A minimum of 12 months of data is required at the start to get a complete picture as to what the operation looks like in a calculable form. Frequently, averages, peaks and valleys do not tell the complete story. Anomalies in product movement, whether inbound or outbound, need to be flushed out to get to a steady idea of what the system should be designed to achieve. This research step uncovers the true movement of items, not only on a yearly basis but also on a seasonal level. Having clean, empirical data about the current operation is key to a successfully designed warehouse.
Camille Chulick is the Co-Founder of Averr Aglow.
“First of all, assume you’re going to grow…”
You don’t want to be incapable of packaging and shipping your product if your business booms and end up losing customers immediately. Maybe you won’t grow quickly right out of the gate, but you could, so be prepared.
Plan for the flow from production to packaging to shipping. Your products move throughout your building, and there’s an efficient way to do it that will cost less, allow quicker production times and maintain a safe environment for all workers.
Before you even begin to plan your warehouse, you need to plan your workflow.
And finally, especially for small businesses or first-time proprietors, be extremely familiar with your location’s building codes. You’ll need to know about fire safety codes and guidelines for things like shelving height, hanging weights, human capacity, etc. You don’t want to make a mistake just to have to go back and start a whole chunk over to meet code requirements.
Will Ward is the founder and CEO of Assistive Listening HQ, an eCommerce company dealing with assistive listening equipment. Before being an entrepreneur, he was a consultant helping NGOs and international organizations purchase the right audio equipment for events. He loves playing banjo and resides in Northeast DC.
“Designing a warehouse without knowing the area required for peak season is the biggest warehouse design mistake…”
Calculating your warehouse requirements during peak season is the very first step to complete. If you get this wrong, everything else falls flat.
Warehouse requirements do not denote storage alone. There is an array of other things to keep in mind:
- Sequence of operations: Many activities happen inside the warehouse, from packaging to counting. The layout of the warehouse should be designed such that there is no cross-flow and confusion.
- Access: Not all of your products will be moving fast. The ones that do should be easily accessible for easier movement in and out.
- Security: The type of security and the area it requires will depend on your products. If you’re storing expensive equipment, you need high level security compared to what you’d need for storing soda.
- Storage area: Last but not least, the total area required to store items should be estimated.
The key point here is to design everything while keeping the peak season in mind. Renting extra warehouses during peak season can be expensive in so many ways.
M. Ammar Shahid
M. Ammar Shahid is the Digital Marketing Executive at SuperHeroCorp.
“Identify your production and supply chain methods first…”
For instance, if you’re following the Lean Production Method, it means that you don’t need to stock minor accessories because most of your inventory consists of the finished products.
Likewise, if you’re dealing in fast-moving consumer goods, focus on the smooth functionality, or the frequency of the stock ins and outs, and then design the layout of the warehouse accordingly.
Alex is the Director of Latham’s Security Doorsets Limited.
“Arrange the stock locations based on usage data…”
Don’t arrange the stock in an order that looks nice or satisfies your OCD.
We made the mistake of arranging our warehouse product locations using the stock code numerals, so code 1 was at the front and code 1000 was at the back. It looked nice but made for an extremely inefficient pick. We rearranged the stock locations based on usage data and moved the most popular items closest to the packing benches and dispatch area. Imagine code 900 being our most popular range. We had to walk to the end of the warehouse numerous times a day. There is now no sense to the stock locations on the face of it (variant codes are in no visible order at all), but they are arranged using data. Data always wins; if you have it, use it!
Albert Laster is founder of Home Living Lab, a company centered on home improvement solutions. He is extremely passionate about sharing his experience and knowledge with people seeking to build their perfect home.
“The single most crucial first step is to speak with the ground staff who are involved in the day to day running of the warehouse…”
And really listen to their ideas. When we had to redesign our warehouse a few years ago due to expanding inventory, we pushed on ahead without seeking feedback from our staff. On the day we were to go operational, to our horror, our tow truck with a trailer could not make the turn into our warehouse due to lack of space at the corridor!
Jeff is the Co-Owner of the McLean Company.
“The first thing you should do when designing your warehouse layout is to consider every asset to your business…”
For instance, you will have trucks coming in, so where should the loading dock be? You need to store inventory, so there needs to be a space allocated for storage. You need to consider all these aspects while still keeping in mind that there needs to be enough space for your employees to safely move themselves and inventory around the facility.
Laura is a major sports fan and operator of Infinity Dish, a website that sells high-speed internet and satellite TV. Before becoming a CEO, Laura came from a technical background and worked as a content marketer on the side. Now she’s an expert in business and innovation.
“All warehouses come with ground plan specs…”
What I didn’t realize (until too late) was that they have a tendency to over-exaggerate space or round up to the nearest number. You may not think a few meters difference would be a huge deal until you try to install your perfectly mapped layout into it and realize there’s no chance. Instead, before you start planning, grab a tape measure and get the exact measurements yourself. It may seem like a small, useless task, but it will save you considerable time and money if you do it before ordering all your storage and shelving equipment.
Tony has 30 years’ experience in the moving industry. Now, he consults and helps moving companies become more profitable.
“The warehouses I’ve been involved in were all for household goods storage…”
You have a point in the warehouse where you unload the truck. Hopefully, it has as much open floor space as possible. From there, the most important consideration is forklift access to all your storage lots. A rule of thumb is a 11′ swing radius for a typical 48″ x 40″ pallet. Movers use plywood vaults larger than that and would allow even more space for working with the forklift. Some warehouses could get away with less aisle width if it was only foot traffic, and some need more for larger equipment. If you skimp on the aisle width, you will have to handle everything multiple times, often the storage lots near your target, and you will have a huge increase in damages. The loss of time and product loss both affect the bottom line.
Elizabeth Brady currently teaches the Supply Chain and ERP course at Mira Costa College for the Bachelor of Science in BioTech Manufacturing candidates. She has over 30 years of industry experience including executive leadership positions at Dexcom, Illumina and Tellabs. She sits on the board of Arima Genomics.
“The single most important first step in designing a warehouse layout is to make sure that the layout will support the longer-term business strategy…”
Leverage your company’s business strategy to project what the warehouse needs will be three to five years in the future and design a warehouse that you will not regret.
When reviewing the strategy, look deeper than revenue growth. Ask the following questions:
- Will units grow at the same rate as revenue growth? With the deteriorating average selling prices that most products experience, to maintain the same revenue, the number of units will increase. Is your warehouse able to manage the flow and storage of the projected volumes?
- Will the products you are warehousing in future years be the same weight and dimension as the current products? If your company is planning on changing the number and type of products it sells, you will want to be sure your physical storage and movement will be able to keep up or consolidate down.
- Likewise, will changes in the product offering change the space required by condition type? Your company may be planning on expanding in cold storage products in the future. You do not need to put in the freezers now, but you want to know where they could be placed in the layout in the future.
- Are there any plans to change the distribution model? If your company is currently wholesale but plans on going direct to consumer, you are going to be handling many more and much smaller shipments. Is your layout able to flex to be able to support the new strategy?
- Is your company likely to continue its investment in warehouses, or will they switch to an outsourced model? Knowing that will help you determine how much flexibility you should plan into the layout and how much to automate the warehouse.
Businesses change quickly today, so there is value in creating a flexible warehouse layout. However, that flexibility comes at a price. By carefully evaluating the company’s strategic plan, you can make a smart decision about the investment and be a hero for years to come.
Baron Christopher Hanson
Baron Christopher Hanson is the lead consultant and owner of RedBaronUSA.
“The most important first step in designing any warehouse layout is your incoming and outgoing shipping and/or delivery path…”
Storage and stagnant areas will somewhat take care of themselves, yet your critical picking, packing, boxing and labeling path is the most important first step to scope out — almost like your seat at the Masters at Augusta or where you should be seated at your wedding. It’s very important for any business to bring, ship, sell and account for items small and large coming in and out of the business, so think procurement and shipping first and everything else second.
Jay Wang is the CEO at AmazingBeauty Hair.
“The secret to creating a reliable warehouse layout is to consider plans for…”
A warehouse management system, preferably with proprietary management software.
With a warehouse management software considered, businesses can create a corresponding system that supports an organized inventory retrieval and storage process. A more robust, detailed plan helps make warehouse operations easier compared to designing a warehouse layout without anything in mind.
Business can do this by hiring software developers to create a warehouse management software that effectively captures the essence of your planned warehouse management system. The software will help your employees keep track of and organize warehouse inventory and streamline operations.
Zachary Weiner is the Owner and CEO of Restaurant Accounting.
“Before designing a warehouse layout, businesses should establish a system for warehouse inventory management…”
Otherwise, the warehouse layout design process will have no solid basis.
Plan the system based on your needs. You can try to mimic and ask for advice from more seasoned business people in your network. Then, test it out on a small-scale setup with your employees.
If the system is reliable and useful, use that as a basis to create your warehouse layout. If you skip this step, the lack of a system as a basis might harm the final output’s effectiveness if you create a system that is not compatible with the layout.
John Moss is the CEO of English Blinds.
“One of the most vital but commonly overlooked aspects to designing a warehouse layout is…”
Concerned less with the interior of the layout and more with its entrances/exits and how well they serve the limitations of the wider environment outside of your direct control. For instance, consider site entrances and exits, access to freeways, loading and idling areas and how and where trucks and vehicles can turn and lay up.
This means that before you even begin looking at the internal layout of your warehouse, your first step must be to determine and factor in the wider external planning and limitations and work your way inwards from there.
Mohammed Ali is the CEO of Primaseller.
“The single most important consideration for any warehouse should be its usability…”
With that in mind, any tools, layouts or technology that help retailers navigate the warehouse efficiently, fulfill orders on time and help keep the warehouse in order should be given first priority.
For example, as a warehouse gets bigger, there can be problems if there are no designated areas for picking, packing and sorting as well as receiving items and processing returns. Thinking through these aspects at the very beginning can help save immense amounts of time searching for products and also prevent stock loss.
Garrett Greller is the Co-Founder of Uncle Bud’s Hemp.
“The single most important thing you can do when planning a warehouse layout is to understand what you plan to do with the space…”
You have to consider how you will lay out the aisles and shelving, know where you plan to put necessary equipment and how your warehouse design on paper will scale up to a full-sized plan. Without mapping out these details, it is very easy to end up with a warehouse layout that is nothing like what was planned and that doesn’t serve the best interests of the company or its workflows.
Konstantinos Tsilkos is the CEO of PharMed.
“Your first move should be to understand where your busiest area will be…”
Being able to pinpoint the fastest-moving retrieval areas will allow you to route traffic directly to that area rather than stocking products near the back and having to move through slower-moving areas or around heavy equipment.
When it comes to warehouse design, planning everything out on paper according to the needs of the business is by far the most important step.
Nazir Khalfe, AIA, RIBA, RID, a principal with Powers Brown Architecture, has demonstrated the ability to design and document buildings that are attractive, economical and durable throughout his career as a project manager in the Houston, Austin, San Antonio, Denver and Washington, DC markets. His completed projects include industrial and office master plans, spec and corporate office buildings and distribution, and assembly and manufacturing facilities.
“Having designed industrial buildings for more than 18 years, I think the single most important first step when designing a warehouse layout is to…”
Familiarize yourself with the site plan in every aspect — where is the site located and the location in relation to key transportation links: airports, ports, freeways and rail. Understanding access in and out of the site for the type of vehicles that the building will be serving and ensuring that there’s a clear, identifiable path to the loading docks for trucks and a clear path for passenger vehicles at office areas is critical. Site logistics and the understanding of trip rates, spacing, storage and traffic patterns affect the tenant’s processes, thus the success or failure of the facility.
The conceptual site plan also generates options on the type of building that can be planned. The site may be orientated in a manner that only a certain type of building will function, but the matter of function is a variable. The site may determine a certain type of building would provide more site coverage; however, market factors (availability & demand) may dictate otherwise. At the end of the day, a successful building is a building that is leased and not sitting vacant.
Many industrial buildings are designed with an exit strategy and also designed with an industrial classification: Class A, Class B and Class C. The higher the class, the better the quality, thus, a higher requirement is placed on the building. Classification determines certain bay dimensions, clear heights, building styles, building materials and critical site dimensions (truck courts and trailer storage). All of these are critical items that play into the initial site plan.
All of the items above also have to coincide with the site constraints. It’s important to bring a civil engineer on board at an early stage to understand all site issues, from site drainage and detention/retention to site topography and flood zone requirements.
Peter Christian was a founding partner of Enterprise Systems Partners Inc., a prominent business consulting company in Bethlehem, PA. He was president for 17 years until he retired from there in 2018. He is the author of the Amazon bestselling business book, What About the Vermin Problem?, released in February 2020. He has been published in IIE magazine, Industrial Management magazine, the Packaging Journal, the ASQC Journal, IIE Solutions, Design 2 Part and Consulting magazine.
“The key to a successful start is to establish the current requirements and then a five-year projection of future needs…”
By starting with current requirements, you build a baseline from which to start the longer-term projections. If this is a startup, there probably aren’t current needs, so I go directly into the five-year plan.
The warehouse plan should identify the type of facility needed in the coming five years, the geographic location of the space, the expected costs and a timeline for achieving the goals set out in the company’s strategic plan. The plan is built by gathering and analyzing data on current space requirements and utilization, and then forecasting future needs and expectations. This is done by:
- Establishing current needs and capabilities: This helps to establish a baseline from which to develop not only what will be needed in the near term but also what will be required for the long-term. By knowing what the current capabilities are, a projection of what needs to be added for the future is more easily established.
- Establishing future needs: Planning only for the here and now is very short-sighted. By taking growth into account, we can project what will need to be considered for the future. Even if we do not build that capacity immediately, there will be a plan in place to add capacity as we go along, recognizing at what point or points additional capacity will be needed and be added.
- Setting the stage for the layout: Much of the information gathered during the planning process will be used to ultimately develop the layout that will be required. The key to good facility layout and design is the integration of the needs of people (personnel and customers), materials (raw, finishes and in process) and machinery in such a way that they create a single, well-functioning system.
- Allowing for efficiency and flow: The basic objective of a layout is to ensure a smooth flow of work, materials and information through a system. The basic definition of a facility is the space in which a business’s activities take place. The layout and design of that space will impact how the work is done covering the flow of work, materials and information greatly.
The requirements to be gathered in this initial stage should include, but not be limited to:
- Materials to be stored — types and quantities
- Items to be discontinued or added to the mix
- Type of operation (bulk storage, case picking, less than case picking, all types of picking)
- Number of loading docks used and for what
- Number of shifts the operation runs (1X5, 3X7, etc.)
- Types of storage used (racking, shelving, automated, etc.)
- Other needs for the warehouse (offices, conference area, restrooms, secure areas, areas for drivers to sit, etc.)
- Current size of warehouse
- Problems with current warehouse size and arrangement
From this start, you can now build a successful plan that allows the company to successfully move ahead with a new or expanded warehouse operation. This is how I approach this work. It has been successful in dealing with over 100 companies and their facility plans.
One of the most important first steps in designing a warehouse layout is to determine space and other requirements for warehouse automation solutions and other equipment. Many traditional automation solutions, such as conveyor systems, are bulky and fixed in place, which can limit your warehouse layout design options. Download our white paper, 7 Reasons Why Warehouse Robots Beat Traditional Automation, to learn more about the benefits of collaborative mobile robots for warehouse operations.