• Step 1: Establish A Project Team / Plan Objectives and Priorities
  A cross-functional project team should be created. This team will consist of warehouse, information systems
  and accounting personnel. The team may consider bringing in an outside consulting resource if determined to be a need. The team should be limited to around five (5) members. They will interact to establish the objectives and priorities for the development of the warehouse design plan. The team will quantify these objectives and priorities for use as a guide in warehouse alternative generation and apply as the criteria for the qualitative analysis. The team will obtain a consensus on the objectives, priorities, and evaluation criteria.
  
  
• Step 2: Establish Database
  The following data should be obtained:
  • Receiving and shipping requirements
  • Storage and throughput requirements
  • Warehouse system requirements, etc.
  • Operating procedures
  • Present warehouse layout
  • Material flow volumes
  • Unit load definitions
  • Present operating cost
  • Economic evaluation criteria and factors
  • Present storage, picking, and packaging procedures
  • Order profiles
  • ABC analysis (velocity movement of product by number of times picked)
    
    
• Step 3: Identify and Document Alternative Warehouse
  Design Plans: Given the database established in Step 2, material handling, storage and control systems should be considered. The methods of receiving, storing, picking, packaging, and shipping, along with the quantity of SKUs (stock keeping units) in every location should all be questioned. The utmost creativity, innovation, and practicality should be pursued. Various operating and material handling systems, as well as storage/handling systems, should be considered.
  
  
• Step 4: Evaluate Alternative Warehouse Design Plans
  Define the investment, installation, and operating costs for each alternative plan. Perform an after-tax economic analysis of each alternative plan. Select the best Warehouse Design Plan based on the overall economic and qualitative evaluations. Qualitative factors considered should be items such as flexibility, expandability, safety, security, integration, and ease of implementation. The project team should determine these factors.
  
  
• Step 5: Specify the Plan
  The selected Warehouse Design Plan must clearly illustrate the material handling systems, storage systems, and execution systems. The result of this step should be a detailed document. The document will be extremely helpful if the team is required to present their recommendations to senior management. It will detail the four steps above and the previously described methodology.

• Step 6: Establish Bidders List
  Contact appropriate equipment and system vendors, and establish a qualified list of three to five vendors for each.
  
  
• Step 7: Develop and Release Equipment and System Functional Specifications
  An equipment and system functional specification is a document that clearly and logically defines the required functionality and bid requirements for the required equipment and systems. The document assures that all vendors provide an equal level of functionality for the price quoted. The document is prepared by the company or their representative and then sent to the appropriate vendors. The vendors will then respond with a proposal that addresses all areas of the document. Documents may vary in size depending on the complexity of the required equipment or systems.
  
  Provide functional equipment and system specifications:
  • General requirements
    • Description of Company
    • Quantity
    • Dimensions
    • System Overview
    • Features and Options
  • Operational Requirements
    • Performance
    • Capacities
    • Throughput
  • Define The Functional Areas of the Warehouse
    • Receiving
    • Putaway, Storage and Replenishment
    • Order Initiation and Picking
    • Shipping
    • Miscellaneous Functions (Returns, Cycle Counting, etc.)
  • Integration and Interface Requirements
    • Communication Protocols
    • Mainframe Interface Requirements
  • Software and Hardware Requirements
    • Reports and Inquiries
    • List of Hardware and Software
    • System Development and Implementation Requirements
    • System Performance
  • Project Guidelines
    • Training
    • Maintenance
    • General Instructions to Bidders
    • Terms and Conditions
    • Pricing format
    • Schedule requirements
      
      
• Step 8: Vendor Interaction
  The team will provide input to vendors during the bid process. The vendors should be allowed four to six weeks to complete the bid response. Items include the following:
  • Respond to questions during the bid process
  • Receive bids
    
    
• Step 9: Coordinate Site Visits
  The team will establish dates for vendor site visits and document the requirements of equipment and system demonstrations.
  
  
• Step 10: Evaluate and Select Vendors
  The team will perform an analysis of the equipment and system bids.
  
  
• Step 11: Finalize Layout
  Redesign the conceptual layout based on selected vendor's feedback. Layout the facility to maximize storage and minimize congestion. Show details and dimensions on layout for items such as staging lanes, aisles, section views of storage equipment, forklift maintenance areas and lighting requirements by area.

After the above eleven (11) steps are completed, the team is now ready to consider implementation planning and
execution.

This year, hundreds of companies will purchase a WMS. A WMS has the potential to reduce errors, increase space utilization and decrease labor costs. However, the functionality of the WMS will not be optimized until the warehouse has been optimally designed.

Jimmy Benefield is a Senior Director at enVista.

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