Setting up a new distribution centre (DC) or upgrading an existing one is a complex task and requires astute project management to ensure minimal stress, lost time and cost.
This article covers the top twelve issues encountered in DC projects which cause contention, stress, cost blow outs, delays and embarrassment during implementation. Under each heading, check points are listed so that users can ‘tick off’ for their own projects.
1. MHE Design
The design process is complex and requires a multi-functional team to address the following.
- Storage quantities
- Volumes received, put away, picked, packed, dispatched and returned.
- Flow of Materials
- Technologies to be used. g. low tech, medium tech, high tech
- Automation: e.g. zero automation, medium automation, high automation
- Functions, value adding activities, proximities, and dependencies
- Mechanical Handling Equipment Layout and Design
- Building and land size
- Internal and external activities
- Special uses e.g. air conditioning, cool / cold rooms, dangerous goods rooms, safes, fork lift charging zones, types of docks etc.
- Site Traffic and load/ unload scheduling
- Fire Systems
- Security Systems
- Offices and amenities
- Dock Design
2. Static Equipment
Static equipment refers to storage racking and binning, fixtures and mezzanines used to store products.
Things to take into account are:
- Pallet Capacity? Note that if you plan to store 80, design for 100.
- Loading: What is the pallet and shelf capacity required for the installation?
- Racking Beam Levels: What is the planned height of the pallet, and is there enough clearance between beams to allow for operators to safely place stock?
- What is the operating environment? Inside, outside, moist or corrosive? The racking will need to be finished to suit.
- Floor: Can the concrete floor accept the uniformly distributed load and point loads exerted by racking uprights. Is the floor flat, or will it require packing to make sure that all is level?
- Aisles: Are operating aisles wide enough to allow for free and spacious movement of mobile equipment? Note: make sure that when specifying aisle sizes that you plan for pallet to pallet clearance, and not rack to rack. This is because the Standard Australian Pallets are designed to overlap pallet racking beams with the bottom board by approx. 165mm.
- Safety: is the racking suitably braced, and will the supplier add signage indicating allowable capacities?
- Does the installer have the same set of drawings (or revision) as the designer? Don’t laugh; you will save yourself lots of time if you check.
- When the racking is being installed will the area be free of stock or debris? (If not, you will need to allow more time for installation)
- Fire Systems: Is there an early suppression fast response system installed in the roof, or will sprinklers be required within racking?
- Lighting: Are lights positioned over aisles to aid operators during operation?
- Operator Training in basic maintenance and safe operating procedures.
3. Mobile Equipment
Mobile equipment refers to equipment that is driven by an operator, or guided by automatic means.
This is a complex area, and it’s important that the right types of equipment are specified and selected for a DC. Typical equipment to choose from includes: counter balanced fork lifts, reach trucks, order picker machines, turret trucks, articulated reach trucks, pallet trucks, automatic guided vehicles, automatic storage and retrieval machines, satellite systems and more.
Design and implementation of equipment should include a review of:
- Load to be handled: mass, width, depth, and height.
- Environment that the machine is operating in e.g. Ambient, low temperature, freezing, corrosive, wet, flammable etc.
- Ability of equipment to comfortably work within specified aisle widths.
- Hours of operation and what type of batteries are required?
- Charging areas: Are they adequately ventilated, and bunded to contain spillages? Do they have adequate apparatus to change and charge batteries?
- Operator Training in basic maintenance and safety procedures.
4. Product Slotting
Product Slotting can be a major head ache for warehouse teams, and while it is a relatively simple process, it can be loaded with unanticipated complexity, resulting in anxiety and lost time.
Therefore, it is important that stock is correctly profiled prior to moving from one location to another.
The process should include:
- A complete review of Stock on Hand including:
- physical dimensions and mass of all items,
- review of stock movement to understand the dynamics of each product and range of products in terms of fast, medium and slow movement,
- provision for reserve, and order picking slots,
- identification and removal of obsolete stock,
- additions of any new stock items expected in the new DC.
- A SKU allocation process which firstly allocates products in storage locations by movement i.e. fast, medium and slow velocity then subsequently, by location based on the cubic size and mass of stock to be held.
5. Slot Numbering
Just like your home address, it is important that every location in a distribution centre has a unique address. There are various protocols that can be followed for slot numbering sequences, but the most important point is that the warehouse management system can be configured using address codes to logically and sequentially execute put away and picking operations. The check list for slot numbering is as follows:
- Is your slot numbering protocol easy to read, understand and follow by staff?
- Are there enough digits in the WMS field for the number that you propose?
- Is the protocol system logical and sequential?
- Can the address codes be printed to labels in both human readable and machine readable (barcode) formats?
- What type of labels will be used: Paper, poly-propylene, vinyl, magnetic etc.?
- Code format: Barcode EAN 128, ITF 14 or other?
- How are pallet racking, shelving, small parts bins, and flow lane slots configured and labelled?
- Posting: Charting where SKUs are currently located, and pre posting each to a future location.
6. Stock Transfer and Traceability
It is important to manage stock during relocation in the same manner that you would supply it to a customer. I.e. with full traceability and care.
- How will storage media be unloaded and how will goods be packed? E.g. at random, or zone by zone.
- What types of packing crates will be used for less than pallet quantities and shelf stock?
- Will crates need to be hired?
- Is stock fragile? If so how will you handle it?
- What documentation system will be used to tightly ‘check out’ stock, and ‘check in’ to the new location? How will this be monitored to ensure 99.9% control of stock during relocation?
- What is the process for quarantining and identifying stock which is lost or misplaced?
7. Operating Procedures
With a new facility, new equipment, new layout and new methods of performing work tasks it is important that new operating procedures are prepared for each warehouse process.
- Work Instructions – Who will write them, and test them?
- Physical logistics procedures,
- Information System procedures.
- Quality Assurance processes and instructions – What QA requirements are there within your business and from external entities? e.g. GxP, OH&S etc.
- How will staff be trained, by whom and by when?
8. Goods Labelling
Consideration must be paid to how stock will be labelled to identify product entering and leaving your new facility.
- How will goods be labelled in your new operation?
- SSCC labels for pallets, ITF for cartons, EAN for eaches?
- Do you have the printers and equipment needed for labelling and tracking of product?
If safety is not planned during the design phase, and /or discussed with safety OH&S teams and auditors, it can be an expensive and unexpected addition to a project. So it’s better to include Safety personnel early in the project.
- Has the Safety Committee and Safety Auditors been consulted?
- What line marking is required for storage, out of bounds areas, safety zones, truck queueing, staging of goods etc.?
- Where will pedestrian walkways and gates be established?
- Where will guard rails and fencing be located?
- Are bollards required to protect docks, racks, offices and other equipment?
- What other equipment is needed?
10. Physical Relocation
Physical handling of goods to your new DC is best performed by qualified removalists with a proven track record in relocation management. Questions to cover are:
- How many vehicles are required to transfer stock?
- Which transport company will you choose, and can they handle the relocation in the time period that you have stipulated?
- How will loads be consigned, monitored and received?
- Over what hours, days and weeks will the relocation be executed?
- What is the proposed audit process to ensure that all stock is packed, transported, received, and put away correctly?
- How will you staff the relocation process and in what time buckets?
11. Commissioning of the Warehouse
It’s one thing to build and install equipment, systems and move stock into the new facility, but how do you ensure a smooth transition from bedding in the system to full operation? Points to be resolved are:
- How long will testing of static, mobile and automated systems take?
- What is the process for project payments, variations, time violations and testing for performance against contract?
- Who will be the superintendent authorising payment of contractors, builders, and MHE companies for work done?
- How do you coordinate systems implementation with mechanical equipment commissioning?
- How do you manage the operation for a progressive start up leading to ‘go live’ status?
- How will Practical Completion be established?
- How do you run business as normal, supplying customers, while all of the above is going on?
- How will the post Practical Completion warranty period be monitored and what is the process for warranty claims?
12. System Migration
A critical part of the project is to manage the migration of ERP and WMS software and equipment for the new facility. Tasks include:
- Engaging Systems specialists early in the project to manage IT migration.
- Installing telecommunication cabling, access points, PCs, printers etc.
- Specifying and building WMS functionality which ensuring alignment with operating procedures.
- Integration of ERP with WMS including stock on hand, advance shipping notices and transactional information.
- Desk top or Factory testing well before ‘Go Live’.
- Allocation of personnel to testing and run in operations.
- Ironing out bugs, anomalies and overlooked requirements prior to ‘Go Live’
- Organising migration to occur with minimal down time in a seamless manner.
As you can see there are many tasks, to be undertaken during a DC implementation.
A delay caused by failure to consider any one or more of the above can cause late completion and cost overruns. Therefore, for DC projects it is recommended that a project manager armed with a reliable project management scheduling tool (e.g. MS Project), a risk register and issues log) is appointed to manage the critical path until completion. Work should include constant review of scope, timing, performance of work and costs.
The project manager must be attentive in ensuring that project resources and inputs are applied assiduously to achieve the desired outcome. Along the way specific attention aimed at foreseeing, identifying, and mitigating project risks will pay dividends.
In this short article, I have covered twelve of the most prominent issues in DC implementation. Of course there are many more, but as you embark upon warehousing projects, please keep them in mind so that you may avoid (as best you can) project stress, losses and time delays.
Email: [email protected] or call: 0412 271 503
Mal is Manager Consulting with Logistics Bureau where he leads the Warehousing and Distribution Centre Design Practice. He works with local and international organizations and has over 35 years experience in warehouse design and performance. He is a Life member of the Logistics Association of Australia, Member of the Council of Supply Chain Management Professionals, and holds qualifications in Engineering, Logistics and Business Administration.
This is a great article and helps me out a lot with a project i am working on currently. I am in the process of managing a project that involves relocating a distribution center. I am having a difficult time finding good relevant examples of a project scope. Do you know of any good resources i could use to either find examples of a scope, or find good advice on what info should be included on a scope.
I don’t have anything I can share at this stage, sorry.