Part 1 of this series gave a general outline of the types of distribution centers and the functions that happen inside. Now it’s time to dive in to more complex layout and design topics.

Anyone who has ever toured a poorly designed facility, or one that has not kept up with changing demands, can clearly see the effects. Some of these – poor line balancing, damaged product, bottlenecks, flows that are hard to follow – are examples of a poor layout. These issues result in decreased efficiency, higher costs and potential customer satisfaction concerns, which are reasons enough to get it right.

Effective distribution center layout planning is essential for achieving optimal performance in a facility. There are five typical approaches to layout planning, with some producing better results than others.

5 Common Approaches to DC Layout Planning

1.    The “Instinct and Experience” approach basically uses “gut instinct” and the wisdom gained by experience to do a distribution center layout. You can surely think of some reasons why this may not be a good approach.

2.    In the “Get-one-like-Joe’s” approach, someone has seen either a layout or design based on a certain technology, and assumes that “if it works for them, it will work for us.” This method can sometimes work, but like the first, is full of issues.

3.    “Keep Everyone Happy” gets everyone together to design the system by committee. Though it may have good intensions, this method rarely provides good results.  Instead of keeping everyone happy, the design by committee will likely be sub-optimized, making everyone dissatisfied.

4.    The Flow of Materials Approach is not a bad start but lacks some elements that make a robust design. It involves studying all the flows and basing the layout solely on that.  However, flows alone are only one of the considerations that make up a good DC design.  They do not exclusively provide all the information needed to develop a strong layout.

5.    The last, and best, is the Systematic Methodology It involves using information – operational data, operational relationships, business requirements, and material flows – to create an optimized layout design.

Methodology for DC Layout and Design

The Systematic Methodology for layout design uses a tool called Systematic Layout Planning – or SLP.  SLP is used to arrange facilities by locating areas with high frequency and logical relationships close to each other.  It is believed that the process permits the quickest material flow in processing products at the lowest cost and least amount of handling.

Developed by industrial engineering consultant Richard Muther, this method was first published in 1961. There are whole courses taught on how to use this technique. It’s very useful for complex layout setting where there are multiple functional relationships and interactions, including manufacturing, assembly and distribution center layout design.

There are six steps in Systematic Layout Planning:

1.    Chart the Relationships

2.    Establish Space Requirements

3.    Diagram Activity Relationships

4.    Draw Space Relationships

5.    Evaluate Alternative Arrangements

6.    Detail the Selected Layout Plan

In essence, the SLP uses techniques that rest on three fundamentals:

• Relationships – the relative degree of closeness desired or required among things
• Space – the amount, kind, and shape or configuration of the things being laid out
• Adjustment – the arrangement of things into a realistic best fit

These three are always at the heart of any layout planning project regardless of products, processes, or size. It is therefore logical and to be expected that the pattern of layout planning procedures is based directly on these fundamentals. SLP specifies applying these three fundamentals in the order shown above – relationships, space, then adjustments – to assure better decisions and layouts.

Maximizing Systematic Layout Planning

The decisions made during layout planning require five key inputs:

1. Product is goods or services produced, and may also be called items, varieties, models, styles, part numbers, formulations, product groups, or material classes.

2. Quantity (or volume) is the amount of goods or services produced, supplied, or used. Quantity may be termed number of pieces, tons, cubic volume, or value of the amount produced or sold.

3. Routing is the process, its equipment, its operations, and their sequence. Routing may be defined by order lists, process sheets, flow sheets, and the like.

4. Supporting Services are the utilities, auxiliaries, and related activities or functions that must be provided in the area to be laid out, so that it will function effectively. Supporting services may include: maintenance, tool room, toilets, locker rooms, cafeteria, offices, receiving dock, shipping dock, etc.

5. Time, or timing, involves when products will be produced or when the layout being planned will operate (one shift only, during certain hours, Black Friday Rush, etc.).

To answer many of these key input data questions, data needs to be gathered on the operations being studied.  When a layout design project is first started, basic data tables should be requested from the primary business systems or the WMS.  These include the receiving history, order history and shipping container history, which should include at least a full year of transactional-level data.  These could be very large files, and discussion on file transfer methods, file storage, and query tools should be had.

The electronic data is then imported into a software tool where the various fields can be connected to make a relational data base.  Examples of software used for this would be MS Excel (for small data sets), MS Access, or SQL (larger data sets).  The creation of this database allows the layout planner to conduct data analysis and profiles.

There are many useful distribution center profiles that will influence and guide the warehouse design process.  In subsequent articles, I will discuss some of these and how they provide information to help guide the layout design process.

Facility design and layout in the material handling industry affects the productivity, profitability, and adaptability of your company for years. One of the best business decisions you can make is to engage an expert in material handling system design when planning your facility layout.

Author: Marvin Logan