WAREHOUSING [ INSIGHT ]
by Jake Heldenberg Director of Sales Engineering, Warehousing, North America, Vanderlande jake.heldenberg@vanderlande.com | 770-250-2800
Time to Sweat Your Warehouse Assets? Success in the warehouse is often synonymous with warehouse performance. In retail, this means meeting growing throughput and capacity requirements. Those responsible for ensuring materials handling facilities are up to the task, however, must compete for budget dollars by making a compelling business case for investments.
Consider small applications of automation. Are there opportunities to make existing warehouses more ef cient with lightweight deployments of automation? For example, a manual picking process where items are taken out of single SKU cases and placed in order totes can often be dramatically accelerated by using an automated vehicle to deliver the cases. Explore the creation of a greenfield facility. High-growth brands or organizations that rely on fully manual warehouses today should create a business case for a green eld facility that includes the most ef cient automation for their use cases. Improving an existing facility often feels safer, but a new one may deliver a signi cantly higher ROI. Conduct the analysis to prevent investing signi cant capital in a warehouse that fails to deliver optimal returns. Regardless of whether it ultimately makes sense for brands to invest in a new distribution center or to improve an existing warehouse, supply chain leaders must strive to ensure that their materials handling facilities provide them with the exibility they need to adapt to a continually changing landscape.
investments to improve their existing facility? And what steps can they take to make the best choice? Any due diligence should include the following: Analyze growth projections. No one has a crystal ball, but even basic growth projections and expansion plans can help determine whether a new facility is viable. Building a state-of-the-art distribution center can take years. In contrast, a brown eld warehouse can be enhanced within a few months through incremental technology investments. Even adding a single layer of automation can signi cantly impact performance. Determine the lifecycle of existing facilities. What is the expected end date for existing warehouses and what would it be with new automation? Throughput and storage capacity are just some variables to consider when determining the operational lifespan of a warehouse. Notably, the timeframe needed to realize the ROI of automation over the cost of capital and labor can be a few years, a decade, or even two decades depending on the facility being considered.
Is now the time to build new green eld distribution centers, or does it makes more sense to “sweat warehouse assets” with new automation that gives existing facilities new life? There is no cookie-cutter answer. On one hand, ecommerce sales have returned to the stable increases we saw before the pandemic. In the face of such growth, retailers must expand warehouses, increase performance, or build new facilities to keep up. Some might assume that now is the time to build a new green eld operation, but consider these additional macroeconomic trends. First, there is the increased cost of capital. Many businesses are wary to begin signi cant capital projects when the cost of money remains high. In ationary forces also continue to impact consumer buying behavior. What can retail supply chain, ful llment, and materials handling leaders do to determine if it’s the right time to build a new green eld distribution center or make incremental
This ongoing effort should always include the operational leaders who understand how warehouses work, how they are maintained, and where opportunities for improvement lie.
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72 Inbound Logistics • January 2025
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