Addressing the Warehouse Capacity challenges in Neston Operations
Introduction
Management of logistics and storage processes is a vital part of supply chain management without which the entire supply chain can be at risk. In particular, warehouse operations form a critical part of supply chain management as it involves inventory handling and management. In the recent years, reports have indicated that warehouse operations in relation to cold storage have increased tremendously. Sectors such as the pharmaceutical industry as well as the food and beverage industry have grown resulting in increasing need for the expansion of the means of storage. In the year 2016 alone, the total capacity of refrigerated warehouse grew to 600 cubic meters in the U.S alone (Phillips, 2016). This is an indicator of market development and a sign that the movement of goods is increasing across the board. This growth corresponds to the level of growth observed in individual companies such as Aldi, which deal to a large extent with cold storage.
Aldi has been experiencing growth in its market segment. As a chain of stores that handles food products, most of which are perishable, the need for cold storage is inevitable. Aldi therefore opts to use large, drive in freezers for the kind of storage necessary as this gives greater capacity for their products. Despite the efforts made by the company to maximize their space utilization, the company’s market shares have continued to grow immensely every year, putting a strain on the already available storage resources. This implies that has to find ways of increasing the cold storage capacity of their stores. For instance, the Neston plant is reported to have grown, probably stretching the already existing capacity. As such, the company plans to create an additional 35,000square feet of cold storage increased distribution centers (Frost, 2015). In the report created by Frost, the freezers for the new outlets will be designed to incorporate increased sustainability and high quality designs. The designs are also to be fine-tuned to the operation models used at Aldi and to their best principles of practice (Frost, 2015).
Although the plan outlined by Aldi does not seem wrong or misrepresented, there is a possibility for Aldi to take certain measures pertaining to the processes. Expansion may be an option for increasing the cold storage capacity yet may not offer an immediate solution to the capacity problems experienced. Based on this, it is prudent to consider it a long-term solution to the capacity problems experienced by the company. This makes it necessary for Aldi to develop other procedures that would help them hold off the capacity issues albeit for the time being before the expansion plans actualize. The subsequent section of this essay represents various options on how Aldi could address the challenge faced in terms of capacity at their Neston branch without expansion and thereafter in combination with expansion to ensure that the capacity issues are addressed satisfactorily and sustainably.
Dealing with Capacity Issues in At Aldi, Neston Operations
Blanchard (2013) reports thatcatering for capacity problems does not have to be about expansion. On the contrary, companies dealing with warehouse capacity problems could minimize them by optimizing the already available space through good use. In particular, the author mentions three of the most common causes of capacity limitation which include: having too much of the required products;having too much of the unnecessary products; and theimproper utilization of space. At Aldi, the most probable cause of capacity shortage is the presence of too much of the required products. At the same time, it could be argued that there is still a probability of optimizing space usage in the company.
As such, strategies have to be developed for reducing strategy through ways that will see more of the required products getting out of the freezers, or increased space optimization in the facilities.In a report by the Bio-banking Staff (2013), Failure to maximize the return received on storage when dealing with cold storage can result in capacity reduction, costly maintenance processes and limited revenue among other outcomes. This means therefore that while seeking expansion, it should be realized that the expansion should come with a pre-developed optimization plan for the freezer space.
Huddock explores a series of options available for Aldi in Neston before settling for expansion.The first of the available options is through warehouse redesign. Such redesign would be focused on optimizing the usage of space, increasing the material handling efficiency, increasing flexibility and a good housekeeping model. This also helps to handle space usage, labor, costs of equipments, material damage and safety during operations, more efficiently and economically (Huddock, n.d). The redesign of the warehouse may involve several factors but it begins with the evaluation of the available space. It is necessary to quantify the available space so as to be accountable for it. Without knowing the total space available, it is impossible to determine the amount remainingto plan for it. Obstacles to movement such as walls, columns, doors and clearances must be identified and described in details together with their relative positions after space quantification (Huddock, n.d). This helps to plan the layout of the warehouse completely before attempting to arrange the products in their places. Identification and description of key products should also follow suit. While describing the products, Huddock asserts that the description should provide details of the storage conditions, the throughput and replenishment needs and the unit handling loads. This can help in planning the product arrangement whereby those that are frequently accessed should be close to the point of access.
After identifying the materials and the fixed obstacles, the next step in the plan would be to predetermine the material flow paths and to establish other requirements such as the office, holding and inspection areas effectively. After ensuring that the available space is well understood, the redesign process then continues to the profiling of the viable alternative arrangements that would help to maximize the utilization of the space available. As the alternatives are developed, an iterative process of planning and evaluation will be adopted to enable the most feasible arrangement option to be adopted. The alternatives developed have to take into consideration material handling and their impacts on labor besides the space to be allocated. For products that are in bulk but are right, bulk storage is appropriate as large quantities of products can be stored in stackable areas or areas requiring low clearance (Haddock, n.d).
Haidari and others (2013) discuss the potential of addressing thecapacity challenge through transportation expansion. According to the views of these authors, increasing the capacity of higher storage levels must have an impact on the lover storage levels. Similarly, an increase at lower levels impacts the upper levels significantly. This thus follows that a process such as transport should be adopted as it addresses the needs of both levels of storage. In terms of transport use, the authors suggest that instead of focusing on the warehouse and the challenges it poses, focusing on transportation can help to address capacity issues through optimum space optimization. Haidari and others (2013) assert that transport is part of the downstream operations in the supply chain. Consequently, dynamic interactions on the downstream side can help to achieve optimum space allocation. This argument is based on the assumption that goods targeted by cold storage are perishable and highly movable products.
The redesign of the warehouse is also discussed by Newby (n.d) who asserts that managing cold storage can be optimum when the space is redesigned with longer aisles than when with shorter aisles. The shorter aisles consume greater space as they have to be more while the longer aisles consume less space. This, combined with the approach developed by Haddock proves to be a viable process. The location of internal columns should also be planned such that they do appear imposing on the available space. The objective is to utilize as much of the floor and vertical space as possible. Planning the layout of the floor is the best way in which space loss can be minimized in the stores. The plan for optimum space use begins from the inside out as evidenced herein. Better interior design and layout makes it even easier for transportation of products both into and out of the warehouse and beyond.
At the same time, transport augmentation also increases the average storage capacity without exerting the corresponding capital investment. While expanding the capacity requires input through capital, dependence on transportation may require something as easy as redesigning the transportation routes so that more deliveries are made through a single trip. This could for instance be made possible by designing the delivery loops such that a single delivery trip results in delivery to multiple locations. This way, more of the right products get delivered from the warehouses resulting in reduced pressure in the white house. As such, the available space is increased without additional costs. At some times however, there may be need to increase costs incurred in transportation through addition of fuel and/ or provision of larger trucks to ferry more products to the desired locations. The costs for expanding transportation in this case would be far less than the costs that would be incurred in expanding the storage facilities.
In addition to the aforementioned strategies, Newby gives other practices that could enhance the capacity utilization of a warehouse. The goal described by Newby is to ensure that the utilized storage space gives an impression of high density while at the same time being appropriate for the warehouse operations. The drive –in pallet packing used at Aldi is one of the recommended forms of warehouse design that is recommended for optimizing space utilization. In addition to this, Newby (n.d) asserts that companies could also have an additional mezzanine floor operating based on conveyors in order for vertical space to be used effectively. This alternative however appears costly as it may require greater input in terms of capital investments. Consequently, it is recommended only for facilities that are already built with a mezzanine floor and who have sufficient resources to invest in conveyors where they are absent.
While most of the suggested methods for capacity utilization rely on actually redesigning the warehouse or transport modification, it is also possible to optimize such space utilization through proper inventory management. Carver (2016) outlines the need to carry out frequent evaluation of space utilization and layout of the warehouse. Through the daily use, it is possible that the initial designs and material layout in the farm was destroyed. This calls not only for re-evaluating the design but also conducting inventory forecasting and reporting on the use of various tools for inventory management. Additionally, conducting traffic evaluations can also help in monitoring the throughput of the products and hence planning effectively to avoid instances of capacity shortage. The outlined methods provide excellent opportunities for making use of the available storage space optimally. However, a combination of methods that would increase the transportation rates, reduce the utilization of space and enhance inventory management should be given the first priority in cold storage warehouses such as those at Aldi.
Conclusion
Aldi may still ultimately have to invest in expansion as a result of the increasing demand for products. Although the market expansion is a cause for rejoicing in the company, it comes with additional challenges and expectations such as the need to increase the capacity of the freezers. As the company intends to do this, it should adopt the outlined strategies to ensure that not only the already present freezers are subjected to the recommended redesign improvements but also the new one. Maintaining a culture of space optimization in the cold storage warehouses could be the prerequisite for constant and sustainable capacity growth.
References
Bio-banking Staff. (2013). A forgotten key to bio-repository efficiency: Maximizing storage space.Thermofisher Scientific. Accessed from www.thermofisher.com/blog/biobanking/a-forgotten-key-to-biorepository-efficiency-maximizing-storage-space
Blanchard, D. (2013, November 1).“Supply chain and logistics: Top 5 warehouse challenges and how to overcome them.”Industry Week. Accessed from www.industryweek.com/warehousing-and-distribution/supply-chain-logistics-top-5-warehouse-challenges-and-how-overcome-them
Carver, A. (2016, August 3). Cold storage warehouse and best practices: Warehouse Layout Optimization. [Slideshare]. Accessed from www.slideshare.net/acoxdatex/cold-storage-warehouse-best-practices-warehouse-layout-optimization
Frost, R. (2015, May 20).“Aldi proposes Neston Distribution Hub expansion.” Insider News. Accessed from www.insidermedia.com/insider/northwest/139853-aldi-proposes-neston-distribution-hub-expansion
Haidari, L., Connor, D., Wateska, A., Brown, S., Mueller, L., Norman, B. and Others. (2013). Augmenting transport versus increasing cold storage to improve vaccine supply chain.Plos One Journal,8(5).
Haddock, B. (n.d).“How to maximize warehouse space when expansion is not an option.”Tompkins International. Accessed from www.tompkinsinc.com/how-maximize-warehouse-space-when-expansion-isnt-option/
Newby, A. (n.d).“Maximizing your facility chill factor.”Food & Drinks Magazine, undated. Wiley Publications,
Phillips, E. (2016, August 10).“Global refrigerated warehouse capacity grows amid emerging market gains.”Wall Street Journal.