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Right Sizing Your New Warehouse

Quite often JDH Warehousing Systems is contacted to design a warehouse solution for a company that is purchasing, building, or leasing a new warehouse facility. The first question I ask of the manager or owner is what is the size of the new warehouse?
The second question is much more interesting. How did you decide on the appropriate size for the new warehouse? This is an important question!
I rarely get an answer that indicates that there was a rigorous analysis in determining the correct sizing. Most times I hear something like we have been growing and we figure if we double the size of the existing warehouse, we should be good for the next 10 years.
Before you decide to ‘shop’ for a new warehouse, do a right sizing exercise. There is so much at stake in terms of costs, whether it is building new or leasing. Also, there are annual costs related to the day to day operations (taxes, utilities, insurance, etc.) that relate to the size of your real estate commitment.
Although I would highly recommend that you hire a warehouse consultant to conduct this analysis, there are some basic outlines that need to be considered. There is just too much cost exposure to get this part of your warehouse design project wrong.
• What inventories need to be stored. This includes the range of SKUs and most importantly, what are the planned weeks of supply for each inventory category.
• Determine the optimal storage configurations that are required to give you the most appropriate balance between space optimization and worker productivity.
• The method of material handling throughout the different stages of warehousing will have an important consideration in sizing the warehouse (aisle widths, lift heights, loading and unloading, etc.).
• Warehouse work procedures and the associated space allocations needed to support these job functions.
• Forecasted growth over the next 5-year window (anything further into the future is probably unrealistic).
Once you feel you have adequately identified all the above storage needs, ‘draw’ it out. There are many easy to use CAD programs that will help you develop a basic concept drawing. This will allow you to identify the required square footage and height of your new warehouse.
Taking the time to complete this exercise will be well worth the effort.

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