There’s plenty of potential for companies that choose to perform a comprehensive facility redesign and process improvement analysis, according to Colliers.
The firm said it can yield a 5% to 15% increase in storage capacity, a 3% to 15% productivity lift, and a 5% to 12% reduction in operating cost, and Colliers has identified several prime examples.
One of the most common problems is related to space constraints within a distribution facility or warehouse. This can be remedied without increasing facility size, it said.
Potential solutions are to eliminate slow-moving or obsolete merchandise through SKU rationalization and/or inventory right-sizing and exploiting any unused vertical space in the building via rack storage or mezzanine systems.
Others can benefit by tunneling warehouse cross-aisles to increase pallet storage capacity and racking dock doors to store indirect spend items such as office supplies, surplus pallets, or dunnage materials.
Colliers pointed to a denim fashion distribution center that improved its design and process to gain an annual rent savings of $440K from increased space utilization and an annual labor savings of $300K from its productivity lift.
A full-service logistics firm used network optimization and site selection to reduce total supply chain OPEX reduction by $7.8M and gain a 27% increase in 2-day service.
An apparel and accessories retail company that explored ways to optimize its network and optimize site selection realized a total supply chain OPEX reduction of $26.3M and a 67% increase in 2-day service.
Finally, also looking at its network optimization and site selection, a manufacturer and distributor of building materials achieved a total supply chain OPEX reduction of $42.6M, including new market penetrations, and a 9.5% increase in 1-day service.
Source: “How to Optimize Warehouse Space Without Increasing Facility Size“
