Road Map to Lean Optimized Distribution Processes

Jennifer Maloney
July 13, 2020

CNBC reports that due to the e-commerce boom, the U.S. may need another 1 billion square feet of warehouse space by 2025.

ProLogis, a real estate firm that is Amazon’s largest landlord, estimates that e-commerce companies require 1.2 million square feet of distribution space for each $1 billion in sales. 

Clearly, the US and the worldwide supply chain have gone through dramatic changes due to Covid-19. E-commerce sales have boomed, resulting in both B2B and B2C distribution centers (DCs) now handling substantially increased parcel shipments. 

This is especially true in the growth of essential goods shipments that have shifted from brick-and-mortar stores to e-commerce fulfillment. This trend, while accelerated by Covid-19, is likely to be a permanent shift in behavior in consumer and business purchasing habits.

What Does this Mean for Distribution?

If you are responsible for warehouse operation profitability, you need to operate a lean, lower cost per touch order fulfillment center that can ship a single case or single re-packed line item at a cost comparable to the fulfillment costs of Amazon or Walmart. 

This operating performance is not possible without adapting leaner, more efficient pick, pack, and ship processes that are managed and enforced with the right blend of warehouse automation software and technologies. It’s either adapt, automate, or die off like the dinosaurs over the next few years!

The Role of Warehouse Automation Integrators

A skilled warehouse automation integrator is a true subject matter expert (SME), bringing application expertise, knowledge, and experience in process improvements. They will evaluate the multitude of automation technologies suited to increasing warehouse efficiency and productivity and choose the technologies best suited to that individual customer’s needs. 

The right integration partner is consultative and provides strong engineering, mathematical and analytical skills to understand operational requirements, order profile, and business needs. 

Clients are best served by a partner with in-house engineering skills who will evaluate, analyze data and recommend the proper process improvements and blend of warehouse technologies best suited to improving DC operations while generating the fastest ROI.

Warehouse Design Services to Establish a Roadmap

The warehouse design engineering study starts with the warehouse automation integrator and customer team focusing on a business-first approach to align labor, technology, and operations with business strategy and corporate vision. 

To ensure the final solution matches the company’s order fulfillment requirements, three factors need to be evaluated and aligned – workforce, workplace, and the work to perform.

A well-developed warehouse design study is data driven, based on a year or more of past order data. It should have the ability to project a future 3 to 5-year period for growth, factoring in order profiles, SKU movement velocity, peak periods and how future growth will impact facility capacity. 

For example, many e-commerce businesses see a spike in orders over the weekend, resulting in 40% or higher order volumes on Mondays. The data must account for daily and time window order volume fluctuations. 

Once the entire warehouse design team is aligned, the data essentially becomes a single version of the truth by which all processes and technologies can be evaluated, contrasted and selected to improve an existing operation or design a new DC

If you have questions about developing a DC roadmap, the Numina Group offers expert warehouse design services to help you choose the right technologies, and how to benchmark metrics for improvement, we’re here to help.

Please contact us today to arrange a complimentary consultation with our warehouse automation specialists.

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