May 2014 | Commentary | Checking In

You Say You Need a Bigger Warehouse?

Tags: Warehousing

Keith Biondo is the publisher of Inbound Logistics magazine.

If you think you need a bigger warehouse, you are not alone. Seventy-one percent of warehouse operators responding to an April 2014 Motorola Solutions survey have their sights set on expanding warehouse operations. Thirty-five percent of respondents say they want either more warehouse space or more locations, while 38 percent want to expand the size of their existing warehouses.

Why the need for bigger warehouses and/or more space? First, the economy is picking up in some sectors. Manufacturing activity increased in March and April 2014, trucking companies are reporting a noticeable uptick in demand, consumer confidence is improving (and that means spending), and car sales are up.

Second, the retail shift to e-commerce engenders a need for monster warehouses, and more than a few one-million-square-foot behemoth projects are currently underway in the United States. But even if you are not an e-commerce Godzilla, your customers are likely just as impatient and demanding. More transactions and market growth mean you need more warehouse space. Add the growing number of SKUs in many sectors, demand from the finance folks for faster inventory turns, and better reverse logistics performance, and there you are.

Increasing Space Without Increasing Space

If you've had experience with the warehouse bullwhip effect, you may be more careful about expansion. But there may be a way to increase your warehouse space without enlarging your footprint. Just as TMS creates additional transport capacity by better utilizing hard assets, for some, better warehouse technology—both high and low-tech—can push the walls back without calling a contractor.

Many IL readers are undertaking initiatives that integrate "islands of information"—ERP, WMS, WCS, YMS, TMS—realizing that one outdated or cranky link in that chain of technology can de-optimize the whole shebang.

As Suzanne Heyn's article Materials Handling Equipment: Sorting Through the Options shows, faster flawless fulfillment driven by new automation can provide the phantom capacity you need in peak seasons. But so can better handheld and mobile technology—either dedicated or multi-use, like some of those low-cost, almost disposable Android devices. On the low-tech side, something as simple as floor leveling and repair can help you pick up a few productivity points.

I wouldn't be publisher of a magazine dedicated to promoting the benefits of demand-driven logistics if I did not point out that linking the inbound flow more tightly to your demand is one sure way to reduce inventory touches, returns, and customer service fails—making your warehouse bigger than it actually is.