Case Study: A Greenfield Layout Design for a New Distribution Center

Background and Challenges

A cannabis cultivator and distributor was growing rapidly, causing the warehousing and distribution of finished goods to be very inefficient. The existing distribution facility had limited docks and staging, insufficient space for proper material handling equipment, and limited storage space resulting in frequent consolidations and finished goods stored in many different rooms. It was decided that instead of investing in improving the existing facility, the existing facility should be prioritized for manufacturing and a new distribution facility should be opened to handle all finished goods storage and distribution, as well as some raw material storage. The client had acquired a new building and Establish was engaged design the layout for a new cannabis distribution center. The goal was to create efficient material flow and enough capacity to support the projected growth. In addition to the normal considerations for a warehouse design project, there were some unique laws and regulations pertaining to the cannabis industry.

Design Criteria

The new distribution facility would need to be able to receive finished goods in bulk from the client’s multiple manufacturing facilities and then send out finished good deliveries to different customers in the state using their own fleet of trucks. In addition, it was also required that the new distribution center be able to receive and store raw materials and deliver them to the manufacturing facilities as needed.  The client also wanted to keep some open space for the potential to add value-added service capabilities in the future.

Establish conducted site visits to the current facilities and the new building to gather all the operational inputs that would be needed to develop the design of the new distribution center. A very detailed analysis of order and inventory data was also conducted to understand the storage and staging volumes. The data analysis also provided a detailed profile of the inventory which was used to determine the ideal storage solutions. The following considerations were incorporated into the design criteria:

• The initial layout should designed to support projected volumes for the next 3-5 years.

• Lot tracking is critical and must be incorporated into the process.

• Raw material and finished good activities were to be separated but had to utilize the same dock doors.

• Products arrive at the pallet level and are distributed at a case level. Both full and partial pallets are received.

• Case dimensions and batch sizes vary for all products, resulting in varying pallet heights.

• Each inventory location should be single-SKU.

• Some raw materials are stored on pallets that are too large for regular racking.

• Certain product groups have different temperature requirements.

• Sample and partial cases should be stored separately from the rest of the finished goods.

• Outbound products require extensive quality checks and sufficient space for packing.

• Column spacing in the new facility restricts the potential aisle width configurations.

Results

Establish compared various types and configurations of storage media. In the raw material storage area, Establish explored different orientations and arrangements of standard racking and bulk floor storage, which was allocated for the pallets that wouldn’t fit in racking. For finished goods, standard rack and very narrow aisle (VNA) rack were explored for regular product batches, while vertical lift modules (VLM) and standard shelves were considered for partial cases and samples. Two ASRS options were also compared to show the effect of automation on storage capacity. The capacity, equipment costs and labor costs were used to compare the different concepts.

The raw material area was designed first and ended up with a mix of bulk floor storage and selective racking, with large enough aisles for easy maneuverability and a clear access lane to and from the docks. For finished goods, it was determined that initially, there was not enough throughput to warrant the ASRS options. The final layout chosen had standard aisles of selective rack that alternated between full pallet and half pallet positions, plus some shelving for samples, partial cases, and smaller batches in the finished goods area. The detailed data analysis was used to determine the size and quantity of the different storage types. This provided enough storage capacity for single SKU locations and left ample room for staging, QC, raw material storage, and value-added services activities. If the capacity ends up growing beyond the projections, the client has room to add more capacity within the existing space by shifting to very narrow aisle (VNA) racking and adding a vertical lift module (VLM). To ensure optimal use of the layout, Establish recommended that put away be done with a reach truck and picking to be done with an order picker. Transport from picking to QC could then be done by an operator or automated with the use of conveyors or autonomous mobile robots (AMRs). In addition to designing the new distribution facility, Establish assisted with the implementation of the client’s new WMS to ensure the system’s functionality aligned with the new layout and processes. Detailed process maps were also created to make sure the client had everything they needed to successfully operate the new distribution center.