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News release


How to turn your distribution centre from a ‘box’ that collects inventory to a strategic supply chain that gives your company a business edge

​AUSTRALIA, 13 NOVEMBER 2013 – A research paper by Jones Lang LaSalle is urging companies to think ‘inside the box’ when it comes to the way they receive, store, pick, pack and ship goods in their warehouse distribution centres.

The paper, titled, ‘Think ‘inside the box’! Use your distribution centre as a secret weapon’ demonstrates that small efficiencies can make a big difference including:
  • Optimal column spacing can reduce the warehouse footprint and translate into savings of up to $250K per year;
  • Labour Management Systems can improve productivity by as much as 15%, and
  • ​Advances in IT have made the use of automated equipment more affordable and practical at a time when labour costs have increased.
Jones Lang LaSalle’s National Director, Corporate Industrial Solutions Andrew Maher said, “It is easy to regard distribution centres a simply an operational necessity or a box that collects inventory rather than as a strategic supply chain that can improve customer service and profitability.

“The process for receiving, storing, picking, packing and shipping products is regarded by many outside of the logistics sector as a straightforward and mundane task.  However, a focus on labour efficiency, picking productivity, storage density and order turnaround time can make the difference between a merely adequate supply chain and one that gives the company a business edge.

“Small efficiencies can make a big difference. For example, optimal column spacing in a distribution centre can reduce the warehouse footprint by 5%.  This space reduction can translate into savings of $100,000 to $250,000 per year,” said Mr Maher.

The key ways to improve distribution centre efficiencies relate to layout and design, storing and picking technologies and information technology:

Layout and design efficiencies:

The Jones Lang LaSalle research paper says the ideal warehouse design includes a mix of various storage and picking technologies, as well as material handling to reduce operating costs and drive the costs of unit fulfilment for orders as low as possible.

Mr Maher said, “Storage density is key, as the picking travel time is a huge productivity killer.  Companies need to consider the trade-off between storage density and product accessibility.  Product storage is typically the largest user of space in a facility.

“Product can be either stored directly on the floor or in elevated racking locations.  The correct application of storage technology is driven by how many pallets of an item are typically on hand.  Another key factor is how fast the product ships, as smaller storage lanes are emptied faster – freeing up the locations for new product.

“The ideal storage technology minimises aisle space while maximising storage density and allowing the necessary product selectivity,” said Mr Maher.

Storing and picking technologies:

The Jones Lang LaSalle research paper says in today’s just-in-time environment, most picking is either the case level (such as grocery store fulfilment of orders) or the piece pick level (e-commerce fulfilment of orders)  

Mr Maher said, “The ideal approach to designing an efficient picking system is to minimise the distance a picker has to travel and get to the product, which can consume up to 50-70% of his/her work day.”

“Piece picking is the most labour intensive type of picking and several strategies and technologies have been developed to reduce the labour content.  Each approach has strengths and weaknesses and a “sweet spot’ where the optimisation of space, capital, and labour efficiencies are realised. 

“The best solutions include a mix of approaches tailored to each order type,” said Mr Maher.

“The key-tradeoff is the balance between mechanisation – with the associated capital costs – to save labour versus flexibility and accompanying variable costs required to deal with uncertainty.

“Highly mechanised operations have defined limits on speed, types of goods handled and selectivity, and are designed to minimise labour.

“More manual operations have higher operating costs but can handle wide variations in activity and product mixes.  They are a less risky approach when there is high need for flexibility or when the business planning horizon is only a few years into the future.

“Regardless of the level of mechanisation in a warehouse, employees are the critical resource to ensure operations run at peak efficiency.  Labour Management Systems are being increasingly used to schedule, direct, measure, incentivise and monitor distribution centre workers.  These systems have been shown to have a demonstrated increase in productivity by as much as 15%,” said Mr Maher.

Maximise information technology to achieve more with less: 

Advances in computing power, software development and electrical controls have significantly improved the cost effectiveness of material handling automation equipment and software systems.

Mr Maher said, “These changes have made the use of automated equipment more affordable and practical at a time when labour cost increases and availability increasingly affect operating expenses.
“For example, new bearing and motor technologies have made conveyer systems quieter, more accurate and reliable, easier to program, more energy efficient and better at handling delicate products.

“Automated guide vehicles have advanced to where they can actually perform all of the functions of an operator-driven lift truck, including loading the trailers.

“AS/RS technology can be configured for pallet, case and piece handling.  Warehouses that make extensive use of these technologies can operate with minimal labour staffing – the ideal of the ‘lights out’ distribution centre is within reach,” said Mr Maher.