Decisions regarding a company's new logistics structures, such as distribution centers, are always surrounded by several uncertainties. After defining their ideal locations, logistics managers are faced with several challenges related to the dimensioning of the operations of these new facilities. Definitions of storage and shipping capacity, which consequently influence the total area and structure of the site, are based on the expected demand to be met by the facility, something that invariably has many uncertainties.
Decisions regarding storage capacity influence both infrastructure and labor operating costs. In terms of infrastructure, the total size of the DC area influences the rental price of the facility, which is normally charged per m² (as discussed in the Beatris Huber post in early 2016, in a scenario of recession and a decline in industrial activity in the country), in addition to the no less relevant costs of electricity. On the other hand, labor costs occur with the hiring of forklift operators used to move pallets, especially in cases where vertical storage is possible, that is, the storage of pallets at various height levels.
Shipping capacity decisions, on the other hand, involve more substantial labor costs, as well as space for order picking and investment in vehicle loading docks. The total number of employees required for a shipping operation depends on the size and average fragmentation of orders, variables that influence the complexity of the product picking process. This operation in distribution companies, for example, is considerably complex, since they receive consolidated boxes from suppliers and usually send smaller fragmented orders to several customers.
However, some investments in these new facilities can be postponed, generating greater flexibility in decisions. Normally, the original sizing considers some slack, since, in general, shortage costs outweigh excess capacity costs. In this way, certain spaces may remain empty without the proper structure awaiting confirmation of demand, such as storage areas without a fixed vertical structure for pallets or exit doors without the possibility of serving as shipping docks. In addition, the use of larger trucks for transshipment at other more distant points reduces the need for docks for shipment in smaller trucks directly at the facility, in addition to possibly reducing transportation costs.
And does your company need to open new facilities in the short/medium term? It is certain that installation sizing decisions are complex and many variables need to be considered.
References
<http://www.scdigest.com/experts/Holste_17-06-07.php?cid=12542>
