Planning a New Distribution Center: Steps to Planning and Adequate Implementation

4/27/20 10:30 AM

eCommerce has become a huge industry - which means that having distribution centers in areas that are near your customers is how you are able to actively reduce transportation costs, ensure for adequate fulfillment times, and ultimately increase profitability within your operation. With emerging eCommerce channels and increased SKUs, facilities across the globe are finding themselves in a bind in terms of making the decision to build new distribution centers. 

Planning a New Distribution Center: Steps to Planning and Adequate Implementation

This is particularly a large concern for smaller manufacturers, due to not having the financials or backing that rather large manufacturing facilities are equipped with. Many small manufacturers are finding themselves in this situation, especially during this crisis during the coronavirus. When is a good time to establish a new distribution center? How costly would a new distribution center be? Is it worth it and is there a high pay-off? These are questions you need to ask yourself as you contemplate establishing a new distribution center. As many manufacturers are coming to the conclusion that this is what they need, it is essential to understand the steps you will take to ease the planning process. Therefore, here are the steps needed to establish a new distribution center within your operation. 

Planning a New Distribution Center: Steps to Planning 

Here are the steps needed in order to adequately plan a new distribution center: 

  • Identify Problems - When making the decision to move into a new distribution center, there is obviously a well thought out reason behind it. Whether there is not enough space, you are closer to your customers, or there is a more convenient location for your business, establishing what exactly the problem or issue may be is absolutely essential. Therefore, identify all potential issues or problems that may arise or are already showing their face and what areas need to be improved. Once this is identified, set requirements and objectives within your operation and your distribution center. What is the overall goal within your operation? To minimize operating costs? Have a more efficient and organized storage system for inventory? Establishing well defined goals will effectively aid with this process. 
  • Consider Potential Growth - Establishing a projection for future growth can prevent business from having to relocate anytime soon. Your distribution center needs to be able to meet long-term goals of expansion, which is why considering the growth that your company has seen over the past five years and how growth will continue over the next few years is vital. If you are planning to multiply distributing capabilities, move into a building that will allow room for this growth. 
  • Analyze Distribution Center - When investing in a new distribution center, it is important to take a look at the building’s current condition. Take note of any details pertaining to the amount of cubic space, configuration of the building, floor condition, and the fire protection system. Also take note of the environmental conditions of the surrounding facility and how they could potentially be an issue down the road. Once you have obtained this information, a thorough analysis needs to be conducted to determine if the goals of your company and objectives are able to be achieved in this distribution center. Make sure that your building space meets the set objectives that you established within the potential growth stage before moving forward with any sort of plan. All of these components are extremely important to consider when attempting to analyze a new distribution center. 
  • Create a Detailed Plan - One of the last steps in planning a new distribution center is creating a detailed project plan. When developing a project plan, it is essential to be as detailed as possible. Ensure that measurements are accurate, plan out materials you plan on stocking, and SKU numbers for optimal organization of inventory. What kind of racking or shelving will creative a productive, dynamic, and efficient distribution center? In order to achieve a distribution center that is the one you need, you need to make sure that you layout an adequate and detailed plan that will allow you to fulfill all obligations. 
  • Implement Your Plan - Lastly, it’s time to implement your plan. If you followed the steps and constructed a detailed and thorough plan, your distribution center should be functioning efficiently. Have your goals been met with your new distribution center? A new and improved distribution center gives you a sustainable competitive advantage. If you took the necessary steps to ensure that the project was successfully installed and implemented, your should should be operating smoothly. 

If you are constructing a warehouse for your production facility to send inventory to, then Advanced Planning and Scheduling (APS) Software may be a viable option. Advanced Planning and Scheduling (APS) Software allows manufacturers to develop schedules and plans pertaining to their production process and ultimately enhance their operation in terms of efficiency. This can aid warehouse storage through minimizing inventory holding costs and ensuring for a perfect amount of inventory within the distribution center. Advanced Planning and Scheduling (APS) Software has become a must for manufacturing operations around the globe that are seeking to take their facility to the next level.

Advanced Planning and Scheduling Software 

Advanced Planning and Scheduling (APS) software has become a must for modern-day manufacturing operations due to customer demand for increased product mix and fast delivery combined with downward cost pressures. APS can be quickly integrated with a ERP/MRP software to fill gaps where these system lack planning and scheduling flexibility and accuracy. Advanced Planning and Scheduling (APS) helps planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans.

  • Create optimized schedules balancing production efficiency and delivery performance
  • Maximize output on bottleneck resources to increase revenue
  • Synchronize supply with demand to reduce inventories
  • Provide company-wide visibility to capacity
  • Enable scenario data-driven decision making

Implementation of Advanced Planning and Scheduling (APS) software will take your manufacturing operations to the next level of production efficiency, taking advantage of the operational data you already have in your ERP.

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