The benefits of inside-out warehouse design

02 October 2022 4 min. read

With the rapid pace of innovation, scarcity of available land and the proliferation of agile automation, the traditional way of planning and developing a warehouse site is no longer fit for purpose, writes Peter Jones, Managing Director at supply chain and logistics consulting firm Prological.

Australia’s industrial property landscape is reaching record heights when it comes to rent costs (high), vacancy rates (low) and land availability (scarce). Until now, the most common process for site development begins with estimating the footprint of the facility, choosing an adequate size property site, with consideration of the internal workflows and fit-out last.

But this approach is no longer optimal. Indeed, it has always been flawed (costing organisations millions of dollars), but now the consequences of this flawed approach are more profound. As a result, the way facilities are planned, built and operated needs change.

Traditional Method

The inside-out approach

At Prological, we have turned the traditional process upside down, by designing the inside first, then the building to overlay the operation – which in turn dictates the size of the land required.

As facilities become more automated, the traditional warehouse layout is no longer fit for purpose. This is driving a need to design in a new way. This new way is achieved by engaging architecture, engineering, warehouse designers, materials handling expertise and logisticians at the beginning of the process in an iterative, integrated design process.

By committing to the idea of inside-out warehouse design, warehousing can become more innovative, efficient and effective – and the ongoing efficiencies of the facility will deliver benefits for years to come.

Prological Method

Five benefits of inside out warehouse design:

1. Increased sustainability
Sustainability is a major priority for some of the nation’s largest organisations. More than a third of Australia’s 200 largest listed entities have signed up to net zero carbon emissions targets by 2050. Simple changes to the intrinsic warehouse design can help these businesses achieve this target.

Initiatives such as increasing green space to reduce heat footprint, positioning the warehouse and offices to use natural light and improving the thermal integrity of the building can all have a significant impact in ensuring your warehouse goes green.

2. Improving customer experience with faster, more accurate delivery times
Designing the most optimised facility for the smallest land footprint may open land options otherwise not commercially accessible. For some business sectors, this presents the opportunity of being closer to the consumer.

This in turn, enables businesses to add further efficiency to the operation, reducing costs for the last mile and enabling later order cut-off times and/or earlier other city/state deliveries.

With the ambition to get e-commerce ‘right’ in Australia, along with increasing service demands in other sectors becoming more competitive every day, the benefits of being closer to the customer could be a major opportunity to increase market share.

3. Reduced travel time by optimising production and work zones from the outset
Reducing travel activity is often the single biggest area of efficiency gains in warehousing.

One of the major hidden costs of operating a warehouse is inefficient operator routes, put away distances, pick paths and distances to packing and dispatch areas.

Travel makes up some 60% of the operating cost of a traditional warehouse. When you engineer a facility to be as operationally efficient as possible you will conclude that the most cost-effective way is to design volumetrically and develop vertically rather than horizontally, in order to significantly reduce travel distances.

4. Putting people at the centre of design
With highly competitive labour markets, it is important for organisations to create an environment where people want to work. An integrated design process enables the requirements of staff to be at the centre of design.

Many forward-thinking companies realise that the dusty, grey, concrete facilities of the past are no longer acceptable to today’s workforces. There is a desire now for businesses to attract, retain, and optimise staff through human centric design.

5. Showcasing a commitment to innovation
Demonstrating a commitment to innovation and future-proofing an organisation against rising rent, fuel and labour costs, shows that your business not only works out of a more efficient facility, but also demonstrates that you are at the leading edge of innovation.

By taking an innovative-first position, you are setting your business up for the future. In 10 years from now, all warehouses will be designed in an innovative and integrated way. Those who do it now will have a decade head start on those who wait and the ownership of their market to show for their early adoption.

More information? For Download Prological’s ‘Rethinking Warehouse Design’ white paper.