What is Activity Analysis? Part 2, Warehouse Layout and Re-Layout

Last week we posted a blog about Activity Analysis, we learned this is basically the task of delving into and capturing the complexities and nuances of whatever complex process you are attempting to manage or improve.

Now let us consider the layout of a new warehouse or the re-layout of an existing warehouse as this requires an extensive activity analysis. For the purpose of this discussion, let us assume our product is consumer packaged goods.  Warehouse layouts cannot and should not be done on the back of an envelope even though this is done surprisingly more often than one might guess. In this kind of analysis, the buffer sizes of the various materials that will be stored in that warehouse must be calculated as they need to be known at the peak demand period. This requires knowing the demand by month on each material. If the warehouse is for finished goods, another level of analysis must be considered.  The demand analysis referred so far is only useful in determining the storage requirements for the materials or SKUs. Frequency of inbound deliveries and size of the deliveries will be needed to determine the number of receiving doors and unloading staging areas.

To determine where in the warehouse the materials will be stored and in what kind of racks requires knowing the profile of the sales orders. This will determine how often an item is picked and in what quantities. For instance, are the goods picked in pallets, layers, cases, or individual units? This will determine if a pick area is needed. The order profile will help determine the number of shipping doors needed as well as the unloading staging areas.

In putting it all together, it can be determined average and peak product movement and flow through the facility. This will be used to determine the variety and numbers of material handling equipment (think lift trucks) and the shift and staffing requirements for the facility.

Even this description does not do justice to the depth and level of data needed to drive a proper warehouse design project.  It does however give a flavor of the mass of information needed in conducting an Activity Analysis.

Is it any different for Inventory Planning? Absolutely not! The detail of the data and the organization thereof into actionable information is the lifeblood of inventory planning and optimization. I will look forward to discussing this further in our next posting.