There are so many concepts that go into designing and running an effective distribution centre.  Here is a concept that I first learned during a lecture at Georgia Tech.  What is the best process for receiving?  Don't receive it.  What is the best method for storing inventory?  Don't store it.  The point is to start by not having to do the work in order to avoid the cost of doing the work.  This leads to concepts and practices of drop shipping from your supplier to your customer and cross docking. 

After giving those concepts some thought, let's review some of the basic concepts that can help in making a distribution centre more efficient.

Material flow - This concept considers the movement of material through the distribution centre.  Ideally, material should come in one end of a building and be shipped out the other end for a nice linear flow.  If this is not feasible, look at a U flow where the material come in at one end of a building, but flows out another end.  The idea is to not receive and ship from the same area whenever possible.

Material storage - It is important to think in 3 dimensions when it comes to storage.  Many times when I walk through a warehouse, the sizing of racks has not been optimized to use the vertical space.

Material storage for efficient picking - This concept simply tries to store higher running items closer together so that the picking process is quicker.

Efficient picking - We already discussed the concept of storing higher run rate items closer together.  There is also the concept of wave picking.  This method is more efficient for picking because the picker is efficiently moving through the warehouse once.  There are some things to consider though.  Should the wave be for one order or many orders?  If the wave is for many orders, then the picks need to be sorted after the pick which can then lead to inefficiencies.  In the case of picking, one size may not fit all.  What I mean by this is that some orders may be good for wave picking and others, like large orders that can take a day or longer to pick and ready for shipping may  make more sense to pick on an order by order basis.  It is important during picking to have accurate information available to the picker.  They should be able to go to a location and find the product they are looking for.

Packing and Shipping - The process of shipping may be directly or indirectly involved in the quality control aspects of the operation.  Someone should confirm that the pick is accurate.  Packing an order for the lowest cost transportation takes some consideration.  The concepts of lowering the weight and dimensions is important.  Loading trucks to use the cubic space may be a consideration.  Loading product on pallets and shrink wrapping to insure product is not damaged during transportation is also a consideration.  In fact, this consideration should start with the product packaging itself.

Paperwork - When used, paperwork design can lead to more efficient processing throughout the warehouse.  In a paperless environment, there is still usually paperwork that is generated for the delivery.

Metrics - I am a strong believer that ALL aspects of a business should be measured including the distribution centre.  Everyone needs to understand if you are winning or losing the game.  The concept of measuring performance is the "religious" part of business to me.  There is no value in measuring for the sake of measuring.  The information must be used to continually improve.  If the information is not going to be review and executed upon, there is no need to waste time gathering the information, measuring results and tracking against goals.

Although the concepts above are not exhaustive, they are some of the basics.  The information systems used should help with providing information to help apply the concepts that make sense.  This means that the system should provide information that shows you the high runners, what your space usage is, what the cheapest transportation method for delivering product is, helps in replenishing pick locations and so on.  The information system may include the ability to use bar codes or RFID for more accurate receiving, picking, sorting and shipping.  The information system should easily provide the metrics you need to use.

One caution when considering the information systems to support the distribution centre.  I am not a fan of stand alone warehouse management system that include their own inventory balance (or ledger).  Although these kinds of systems usually offer the best functionality, it is very difficult and somewhat impossible to keep two inventory systems reconciled which leads to errors in order taking or manufacturing or to very expensive interfaces between the systems that never seem to reconcile no matter what you do.

As you can see, there are many considerations in building an efficient warehouse distribution centre.

There are so many concepts that go into designing and running an effective distribution centre.  Here is a concept that I first learned during a lecture at Georgia Tech.  What is the best process for receiving?  Don't receive it.  What is the best method for storing inventory?  Don't store it.  The point is to start by not having to do the work in order to avoid the cost of doing the work.  This leads to concepts and practices of drop shipping from your supplier to your customer and cross docking. 

After giving those concepts some thought, let's review some of the basic concepts that can help in making a distribution centre more efficient.

Material flow - This concept considers the movement of material through the distribution centre.  Ideally, material should come in one end of a building and be shipped out the other end for a nice linear flow.  If this is not feasible, look at a U flow where the material come in at one end of a building, but flows out another end.  The idea is to not receive and ship from the same area whenever possible.

Material storage - It is important to think in 3 dimensions when it comes to storage.  Many times when I walk through a warehouse, the sizing of racks has not been optimized to use the vertical space.

Material storage for efficient picking - This concept simply tries to store higher running items closer together so that the picking process is quicker.

Efficient picking - We already discussed the concept of storing higher run rate items closer together.  There is also the concept of wave picking.  This method is more efficient for picking because the picker is efficiently moving through the warehouse once.  There are some things to consider though.  Should the wave be for one order or many orders?  If the wave is for many orders, then the picks need to be sorted after the pick which can then lead to inefficiencies.  In the case of picking, one size may not fit all.  What I mean by this is that some orders may be good for wave picking and others, like large orders that can take a day or longer to pick and ready for shipping may  make more sense to pick on an order by order basis.  It is important during picking to have accurate information available to the picker.  They should be able to go to a location and find the product they are looking for.

Packing and Shipping - The process of shipping may be directly or indirectly involved in the quality control aspects of the operation.  Someone should confirm that the pick is accurate.  Packing an order for the lowest cost transportation takes some consideration.  The concepts of lowering the weight and dimensions is important.  Loading trucks to use the cubic space may be a consideration.  Loading product on pallets and shrink wrapping to insure product is not damaged during transportation is also a consideration.  In fact, this consideration should start with the product packaging itself.

Paperwork - When used, paperwork design can lead to more efficient processing throughout the warehouse.  In a paperless environment, there is still usually paperwork that is generated for the delivery.

Metrics - I am a strong believer that ALL aspects of a business should be measured including the distribution centre.  Everyone needs to understand if you are winning or losing the game.  The concept of measuring performance is the "religious" part of business to me.  There is no value in measuring for the sake of measuring.  The information must be used to continually improve.  If the information is not going to be review and executed upon, there is no need to waste time gathering the information, measuring results and tracking against goals.

Although the concepts above are not exhaustive, they are some of the basics.  The information systems used should help with providing information to help apply the concepts that make sense.  This means that the system should provide information that shows you the high runners, what your space usage is, what the cheapest transportation method for delivering product is, helps in replenishing pick locations and so on.  The information system may include the ability to use bar codes or RFID for more accurate receiving, picking, sorting and shipping.  The information system should easily provide the metrics you need to use.

One caution when considering the information systems to support the distribution centre.  I am not a fan of stand alone warehouse management system that include their own inventory balance (or ledger).  Although these kinds of systems usually offer the best functionality, it is very difficult and somewhat impossible to keep two inventory systems reconciled which leads to errors in order taking or manufacturing or to very expensive interfaces between the systems that never seem to reconcile no matter what you do.

As you can see, there are many considerations in building an efficient warehouse distribution centre.