How to Build the Warehouse Your Company Needs

There are many reasons for building or expanding warehouses, including meeting growing business needs, entering new markets, avoiding bottlenecks, and replacing old and outdated equipment. Here are 10 best practices on how to create or expand a warehouse.

1.Obtain the numbers required to prove the rationality of the project. The feasibility of major upgrades depends on the correct numbers. Manufacturers should see if it is possible to get a positive return, even if conservative numbers can withstand anything from accidents to fires. Considerations include location, ownership, equipment, structure, and longevity.

2.Give yourself enough time. Projects always take longer than expected and treating this process honestly will prevent future surprises. It takes time to get it right. Don’t rush to decide on equipment suppliers, and don’t forget to consider the learning curve for any new processes or equipment. Sometimes, the learning curve for using a new device may be longer than expected.

3. Decide to renovate or build (and remember, location, location, location). Deciding whether to refurbish or build is always a difficult decision, and the budget is important in the long run. Sometimes, even if the cost is low in the short term, it may not be in your best interest to renovate an existing location. As with most real estate transactions, decisions usually boil down to "location, location, location." Asking the following questions can help you decide easier:

Where do we want employees, suppliers, and customers to be?

What is the best way to get to the interstate highway?

How much does it cost to lay the railway?

Where can I build to get the best tax rate?

4. Consider square feet and maximize space. The first thing you need to look at is the cost of square feet. For industrial sites, it is usually $85 per square foot. The first question is how to maximize every square foot? Any empty square feet put you and your customers at a disadvantage. The next question is how quickly I can move inventory in the building. A rule of thumb is to develop a finished product turnover policy of no more than two weeks and inventory no more than 90 days.

5. Involve every stakeholder. Involve every stakeholder inside and outside the company to prevent any fires that could burn the budget. At the end of the design period, a consensus should be reached to prevent the occurrence of major problems such as incorrect equipment layout. When there is no purchase, you can guarantee that there will be problems. This includes contacting city officials about your plan. Approach the city as early as possible and discuss the number of jobs that will be created. This action allows you to turn over licenses faster.

6. Seek outside help. The most important thing to remember is that managing these projects is a full-time job, and most people already have a full-time job. Therefore, hire a dedicated project management team or personnel to help you. Some will become experts in design and construction; some will have contacts with city officials. Use the product management team, even if the team is the property manager of the leased building.

7. Mobilize the team. An investment of this size is more feasible when you have a team you can trust. Owning new equipment is one thing, but what makes the team different is the team. This boils down to cultivating a good work culture, cultivating entrepreneurship, wise decision-making and learning on the job.

8. Take your time with the latest technology. When choosing the right equipment, timing is important. What's available in one year will be different next year. There are several factors to consider, including the possibility of automation, installation and process time, and lean manufacturing best practices. "

9. Review the contractor. It is important not to cooperate with established suppliers to save time or money. An added benefit may be that some new contractors have the motivation to do a good job, so that they could carry out other equipment or building expansions. This is an opportunity for them, and at the same time, your company will get the best value, technology, and capabilities.

10. Don't forget your existing customers. When building a new location, it is important to consider your current customer base so as not to lose a customer in the process. Focus on communicating accurately as early as possible. Outsourcing to other locations or partner processing companies will help you avoid losing any customers.

Whether you are refurbishing or building, an efficient and modern warehouse is a huge investment, and if done well, it is usually worthwhile. Do it wisely, and you will protect your budget while guaranteeing IRR. There will always be situations beyond your control, and you must incorporate these unforeseen situations into your schedule and budget. After all, the most important thing is that you provide a return on investment. It must always focus on investment and control the budget.