Warehousing Case Study: Maximizing Return in Investment in a Finished Goods Warehouse
A multinational manufacturer in the food sector asked for our help to optimise their investment in a new finished goods warehouse alongside their manufacturing plant. The warehouse was to be used to store finished product and to pick and despatch orders to markets around the world.
The product was bulky, palletized and made in batch sizes that ranged from 1 pallet to more than 50 pallets. When there are batch sizes in a stock profile that are larger than 12 to 15 pallets like this, there is an opportunity to increase the utilisation of available cubic space in the warehouse by using high density storage solutions such as Push-Back racking and Gravity Flow Racking.
To achieve high average utilisation with these high-density storage systems, experience indicates that the average batch size stored in the racking must be at least 3 to 4 times greater than the depth of the channels in the racking. For example, this would mean that for a 4-deep push back rack we would be looking to store average batch sizes in the range 12 to 16 pallets and in an 8-deep gravity flow rack about 25 to 30 pallets per batch.
For this project, we carried out an analysis of the Production Receipts data over time and projected into the future to determine the average batch size ranges coming in from manufacturing that would have to be accommodated in the facility and we selected three types of storage solution as optimum for this application.
Firstly, 55% of batches were in the range of 1 to 12 pallets and these smaller batches represented about 10% of the throughput. Conventional single deep pallet racking was selected for this group.
Then another 30% of batches were found to be in the range 12 to 25 pallets representing about 30% of the throughput and 4-deep push back racking was specified for this portion of the stock profile, and..
Finally 10% of batches were greater than 25 pallets each representing 60% of the throughput and 8-deep gravity flow racking was specified for these.
Choosing the right storage solution for the right segment of the stock profile, optimised the trade off between space utilisation and product accessibility for this warehouse thus accelerating the return on invested capital and ensuring efficient and cost effective operation throughout the lifetime of the facility.