Supply Chain Enabled

How data driven simulations improve warehouse capital planning

Published: October 6, 2023
Author: Lorcan Sheehan

Planning for warehouse capacity has become particularly important in the context of tight warehouse supply constraints in many markets.  The assumption cannot be made that growth capacity can be sourced at short notice, and planning horizons for new builds tend to be 3 to 6 years.   

Planning capacity leverages the data within the supply chain to build up requirements SKU by SKU, and in regulated industries, it needs to extend beyond simple pallet capacity to considerations of:

  • Material flows and marshalling requirements
  • Pickface and replenishment
  • Temperature requirements: ambient, 2-8, freezer, -40, -70
  • Special storage requirements for hazardous and chemical materials
  • Decanting to non-wooden pallets, controlling physical flows, and environmental conditions
  • Quality inspection requirements, samples, and testing
  • Management of non-conforming and quarantined products
  • Management of expiry dates
  • Definition of hand-over requirements for products to and from manufacturing
  • Regulatory requirements: what is required to be stored on site?
  • Management of material requirements in variable manufacturing processes
  • Managing non-BOM components and material requirements for testing and validation
  • Allowing for redundancy in material policies across batches and, in some cases, storage areas
  • Balancing the risk of supply with product lifecycle and expiry concerns
  • Waste flows

In capital-intensive, manufacturing processes, the warehouse can often be seen as a soft target to enable manufacturing process expansion. Over the last few years, we have seen an increased awareness that well-designed warehouses, materials, and waste flows are critical to the effective functioning of manufacturing operations.

Our approach is data-driven, building an initial baseline of the current physical infrastructure and flows.  We establish an understanding of how effectively the current space is used and how the existing sourcing and planning practices compare with the theoretical expectations of the inventory on hand.  Frequently this provides insights into opportunities to improve current space utilisation and ensures that capacity plans are grounded in the current reality of the business.

From there, we leverage forecast data to model the future requirements across the multiple factors above, creating a data-driven capacity model that can be taken forward as the needs of the business change.    We also develop a digital twin of the facilities to highlight material flows and model KPIs including travel distance, space utilisation across key processes, potential for congestion, and the utilisation of MHE and labour through the operation.

If you are planning your future warehouse and material flows, contact us for an initial discussion on how our tools and approach can support your site materials and capital needs.

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