Designing a warehouse: definition, options, factors and goals.

Last class, we were focused on how to design a warehouse. For this reason, I wanted to write a post compiling some elements that should be taken into account when designing one.

When designing a warehouse, some questions may come to your mind: How should a warehouse or distribution center look like? What factors influence the warehouse layout plan? What goals should the warehouse design achieve? What is the best way to set up a warehouse layout? In this post, I will try to respond to these inquiries.

The process of distributing both the external and internal space of the facility shown on a plan is referred to as warehouse design or layout. It should represent the most efficient method of managing the stocks that will be stored there and the following elements must be included: The warehouse’s interior and external layout, the total number of levels, principal installations and its areas. As an example, here we can see one:

Source: https://www.camcode.com/blog/warehouse-organization-charts/

As factors that influence the warehouse layout plan, the following ones should be determined:

1. Merchandise flow in the warehouse (the sequence of actions required by stocks or the manufacturing process).
2. Rotation of products (how frequently different sorts of commodities in the inventory must be replaced over time).
3. Desired stock level (keeping storage costs to a low while serving client demand).
4. Product requirements (types and quantities of each tool that will be required for efficient operation in the work area).
5. Essential stuff (also providing safety and training).

When all these factors are in place, the following objectives should be met:

1. Space optimization in the warehouse.
2. Removal of any processes that aren’t adding value.
3. Improve the flow of commodities and people information, also providing flexibility and facilities for the access and control of product units.
4. Increase of profitability.

Finally, for considering the different types of warehousing configuration, here I upload a video that explains three different types of flow options: U-shaped option, I-shaped option and L-shaped option. For each of the options, the advantages and disadvantages of implementing them are explained:

Warehouse Layout & Product Flow Options
Source: https://www.youtube.com/watch?v=0OeStxbzKsM

Resources:

https://www.ar-racking.com/en/news-and-blog/storage-solutions/quality-and-security/layout-and-design-of-a-warehouse-key-factors-and-objectives/

10 Great Warehouse Organization Charts

E-logistics: What is it? What are the main advantages of this new method?

Globally, the rapid expansion of digital commerce illustrates the future of shopping as well as the new job opportunities that e-commerce creates. E-logistics has been adapted and developed by logistics firms. But what exactly is e-logistics, and how do they vary from traditional carriers?

New methods and technology have been introduced in the logistics business to help e-commerce grow. All of the logistical processes involved in e-commerce are managed by e-logistics. As a result, it focuses on establishing a positive commercial relationship between e-commerce and customers.

E-logistics encompasses a wide range of duties, including user experience in an online store, stock management, order dispatch (and tracking), and even after-sales care.

For a better understanding of its definition, here is a very complete explanatory video:

Three fundamental concepts arose from the birth of the term e-logistics: e-fulfillment, mass customization and e-procurement:

• E-fulfillment: Collection of processes that ensure that an order is delivered at the lowest possible cost while meeting the customer’s requirements (price, deadline, and quality).
• Mass customization: Ability to manufacture a large range of items from a limited number of components, combining the commercial benefits of customisation with the cost savings of mass production.
• E-procurement: The use of ICT to integrate the company’s procurement operations with its suppliers.

Between the main advantages this new method has brought to the world of logistics and supply chain management, the following ones should be highlighted:

• Delivery schedules, rapid services, and payment or invoicing flexibility.
• Stock in transit is monitored in real time, and dispatch systems are controlled.
• Effective e-commerce logistics performance due to the existence of technical systems.
• More services are given in order to deliver better service and products.
• Higher level of customer satisfaction with the purchasing procedure.

Because of these and other benefits, it is concluded that the internet will enable greater visibility across the logistics network, as well as integrated planning and management of activities and processes in the logistics network, resulting in superior customer service and competitive advantages for businesses.

Mercadona’s commitment to e-commerce -The expansion of its online operations with the addition of two new logistics centers in 2022 and the development of two new logistics solutions.

E-commerce has become a big part of our life in the last years, it has flourished since the start of the epidemic and it is currently in its golden era. Throughout this time, all businesses, particularly smaller ones, have had to adapt in leaps and bounds to processes that, in most cases, were unfamiliar to them but have become critical to their existence. The impact of this new trend has been so significant that it will no longer be considered an adaptation technique for the circumstance we found ourselves in during the epidemic; instead, e-commerce will become a permanent business strategy.

Photo by Karolina Grabowska on Pexels.com

Among the major advantages of implementing this new strategy could be the capability or reaching a much wider audience and ability to sell/buy all over the world, availability of products at any time without time restrictions, cost reductions largely due to the absence of the need for physical establishments, or even learning about the buying habits of target customers thanks to big data tools in order to increase revenues and strengthen the relationships with consumers.

In 2016, Mercadona decided to relaunch its online shopping business. To accomplish so, it began developing and implementing the Hives model, which consists of warehouses that are solely dedicated to online orders with the goal of optimizing and speeding up both their preparation and delivery, resulting in an increased productivity and time savings. This well-known grocery company has recently announced that it would expand its e-commerce logistics with the opening of two additional logistics centers in Spain, one situated in the city of Seville and the other one in Alicante.

Mercadona Hive in Valencia (Image source: https://elpais.com)

The firm currently operates three distribution centers in Barcelona, Valencia and Madrid, the last of which was established in April 2020 and where online sales were temporarily halted owing to overcrowding during the confinement. According to its 2021 annual report, Mercadona Online has managed to consolidate itself, increasing its sales to 257 million euros during this year. This figure represents a 45 percent increase over the previous year. In addition, the company has increased its number of orders to 1,8 million, up from 1,2 million in 2020.

With the aim of improving its logistics chain and in order to bring the company closer to low density areas, the company has begun to develop two new solutions. The first one named as New Teleshopping, which is currently being tested in Castellón and Tarragona. ‘Customers near these supermarkets place their orders on the revamped website or the mobile application and they are prepared and sent from the stores using the same processes and technologies as in the Hives, which reduces preparation time, makes better use of physical resources and reduces strain on employees’  states the company. An the second one known as Honeycomb, being tested in a store in Gandía (Valencia) which pretends to cooperate with the Hives. ‘Orders are prepared in the Valencia Hive and taken by trailer to this store in the region of La Safor so that the Mercadona Online delivery staff can pick them up and deliver them to the bosses’ as they called their customers.

What steps will Mercadona follow next? Will e-commerce continue to be an important pillar for the expansion of the company?