During this time of pandemic and unpredictable consumer demand, many retailers and consumer goods companies are seeing their businesses undergo radical change. While some of the traditional ways of distribution continue to exist, they’re on the decline, and are being replaced by more online shopping. This change may require firms to put up new distribution facilities, in order to continue supporting traditional methods of order fulfillment, while also planning for an uncertain future.

When engaging in facility location planning, companies first must undertake the design of the new operation — not the building. It’s essential to know how the facility will function over the next five to seven years, before it can be correctly sized.

Deciding on the right site or building can also be a timely and costly task, especially if mistakes are made at this early stage. Whether customizing an existing facility or building a new one, companies need to be aware of the following key considerations during the planning phase:

• When selecting an existing facility, it’s important to design the operation to fit into that space, or at least understand that it can work there. The aspect ratio (length to width) of the facility is a crucial measure, along with clear height, bay spacings and number and placement of dock doors to accommodate the operation.
• The process of building a new facility is a bit more drawn out, and involves some additional decision points. First, a completed and detailed design is a must, as the document will need to be used in all subsequent steps. Material handling equipment (MHE) vendors must be selected, based on a clear understanding of lead times for acquiring the equipment. Depending on the MHE equipment that’s selected, buyers might have to execute contracts immediately, to ensure that it arrives on time.
• When selecting and planning for a new site, be sure to find a plot of land that not only accommodates the design, but also provides inbound and outbound access for trucks, and enough space for employees’ cars, based on expectations of overall growth. Companies should also use this opportunity to obtain incentives from the township, county and state, which is easier if they’re moving into a new area, but requires a bit more strategy if they’re already operating there.

Outlook

The decision to move into a new distribution facility, whether an existing building or one that’s custom-built, is a momentous one. It might only happen once or twice in the lifetime of a distribution operation, and it needs to be taken seriously. You’ll be living with that decision for years to come.

Steve Simonson is Vice President of Tompkins International.