Client:
The client is an industrial manufacturing company operating a large distribution center.
Challenge:
The existing DC included 17,000 pallet locations, 9,000 small parts bins, and outdated vertical carousels. Operations required significant labor for unloading, re-palletizing, and moving material across the warehouse due to wide aisles and drive-in racking. The company wanted to close this facility and consolidate operations into a 170,000-square-foot building with an irregularly shaped building at its headquarters campus, 30 minutes away. The challenge was to determine whether the new footprint could accommodate all products and services, support future growth, and leverage automation to improve efficiency.
Strategic Objectives:
Waypost Advisors was engaged to determine if the smaller footprint could support current and future operations, while also identifying opportunities for automation to increase storage density and order processing efficiency. Additional objectives included developing a rough-order-of-magnitude budget for the new facility and automation solutions, as well as projecting workforce changes based on automation scenarios.
Approach:
The work was divided into two phases. Phase 1 focused on feasibility, beginning with a detailed data collection effort including inventory snapshots, item master information, ERP bin settings, and sales order history. This data was modeled to create a layout design that maximized capacity using narrow aisles and shuttle systems. The design proved consolidation was possible, with over 18,000 pallet positions including floor stock.
Phase 2 explored automation options. Leveraging the inventory model, Waypost partnered with multiple automation vendors to create layout concepts using pallet shuttles, conveyors, robots, and automated storage systems. These concepts balanced cost against expected efficiency gains, storage density improvements, and headcount reductions. Input from the local DC management team was incorporated to estimate labor impacts and operational savings.
Assessment Areas:
The study revealed significant inefficiencies, including unused vertical space in service and rework areas, labor-intensive drive-in racking, and reliance on temporary labor for container unloading and palletizing. SKU analysis showed that a small number of high-runner items consumed large amounts of space, while most items required only one pallet, suggesting opportunities for dynamic automation.
Tools and Methodologies:
Waypost employed inventory modeling, SKU profiling, and facility layout simulations. External vendors were engaged to propose and validate automation concepts, including advanced pallet shuttles and tote-based systems. Comparative analysis provided the client with options across a spectrum of investment levels.
Deliverables:
The final deliverables included a validated feasibility model, four layout options with varying levels of automation, and headcount reduction projections ranging from 2% to 30%. Technologies such as AutoStore’s Pio system and Eurofork’s advanced pallet shuttles were recommended for their scalability, efficiency, and cost models.
Conclusion:
Waypost demonstrated that consolidation into the new DC footprint was achievable while creating opportunities to enhance efficiency. The baseline design met the space requirements with minimal cost but offered little labor savings. By incorporating automation solutions such as robotic palletizers, tote-based AS/RS, and advanced pallet shuttle systems, the company could significantly reduce handling costs, improve throughput, and cut labor needs by up to 30%. Importantly, the study highlighted that automation investments were less expensive than expected, and subscription-based models such as Pio lowered capital barriers, enabling the client to pursue scalable solutions that balance cost and performance.