Warehouse Location Analysis
Identifying optimal locations for warehouses and other fixed facilities within the supply chain is a major decision for any business. Warehouse location drives transportation costs, and where new supply routes are being introduced, or an existing supply chain is being re-engineered, then full and comprehensive warehouse location analysis needs to be undertaken.
Location analysis requires applied mathematics and is often referred to as ‘Centre of Gravity Modelling’, although it’s also known as p-media and the grid method. In principle, the aim of the centre of gravity model is to identify the geographical location where distance and/or transport costs are minimised.
How Our Warehouse Consultants Can Help
As transport costs usually have a linear relationship with distance, and also have a greater degree of variability than warehouse costs across the UK, then identifying the right location for your warehouse can significantly reduce operating costs.
Using our own in-house developed tools, we are able to support you in undertaking centre of gravity modelling, and warehouse sizing and demand allocation, based on a range of possible drivers including transport costs, distance and service lead times.
The location of warehouses and distribution centres within a logistics network is a major decision and requires detailed analysis of service and cost implications. The investment and implementation costs of new facilities are high, and it is a long-term decision that needs to be supported by a robust business plan and thorough scenario modelling.
Our warehouse consultants, using a combination of proprietary tools and 3rd party mapping software, are able to perform location analysis either using discrete modelling (where location or site preferences exist) or continuous modelling (where no location or site preference exists).
The location analysis modelling can also be performed on varying time horizons using different levels of aggregation in the data. So, for example, a business may have a relatively detailed 1- year forecast, but an aggregate 3-year plan. In this instance the warehouse consultants can model both time horizons separately, assessing how the optimal location may be impacted between year 1 and the realisation of the 3-year plan.
Undertaking warehouse location analysis for multiple facilities needs to consider a number of additional variables in addition to the analysis required for a single location. A determination firstly needs to be made on the optimal number of warehouses, and this is calculated through the balance of warehousing costs, transport costs and service time parameters. Furthermore, the allocation of demand between each warehouse needs to be considered and this may vary in line with seasonality.
As with modelling a single warehouse location, our warehouse consultants are able to perform all required analysis using a combination of proprietary tools and 3rd party mapping software.
When the number and location of warehouses is known, our warehouse consultants can then progress to developing ‘first pass’ schematics of the required size and configuration of each warehouse. These first pass schematics provide the blueprint so suitable warehouses can be identified through property agents in each location.
Further information on designing warehouses can be found in the warehouse design section of our website.
Following through from warehouse location analysis, our warehouse consultants are experienced in the implementation of new facilities. From design concepts through to final design and implementation, our consultants are able to fully support the entire process of establishing a new warehouse.
Following a lease or purchase of a new warehouse being agreed, and once our consultants’ warehouse designs have been agreed, the team are then able to progress into managing the full warehouse implementation. Typical tasks the consultants may manage, or undertake themselves, include:
- Tendering for MHE;
- MHE installation and testing;
- WMS specification;
- Recruitment and staff transfer;
- CAD schematics for ancillary areas;
- General site-works;
- Lighting & heating layout;
- Security, waste and cleaning contracts;
- IT hardware purchase and software provision;
- Network installation;
- Fire systems specifications & installation;
- Security systems & installation;
- H&S compliance checks;
- Standard Operating Procedures (SOPs).
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