Making the Case for Warehouse Consolidation Post-COVID-19

It’s quite common for an organization to have multiple warehouses:

  • Each location manufactures and inventories different or specialty parts
  • A competitor was purchased - and the warehouse location was kept operational
  • The original warehouse was out of space and a secondary location was secured to hold safety stock
  • Satellite warehouse locations were established in key markets to provide faster delivery times

Depending on your business objectives, multiple warehouses might make sense. But managing multiple warehouses is labor intensive and costly. It requires a significant amount of time, money and resources, all of which are hard to come by these days. Given the current economic environment, it might be more efficient to bring everything under one roof. Your operations might benefit from reconsidering warehouse consolidation.

COVID brought with it supply chain disruptions, inventory shortages and shipping and logistics headaches at every turn. With all the uncertainty, many warehouse and distribution centers are weighing the benefits of warehouse consolidation with the needs of their customers. In some cases, managing multiple warehouses spreads warehousing operations too thin.
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Consolidating warehouses into one facility centralizes operations and streamlines processes. But with demand on the rise, how can you manage operations in fewer facilities? Automated storage and retrieval systems (ASRS) are highly dense solutions which consolidate inventory into a smaller, compact footprint. Operating on the “goods to person” principle, systems such as the Vertical Lift Module (VLM), Vertical Buffer Module (VBM), Vertical Carousel or Horizontal Carousel, can bring inventory directly to an operator at an ergonomic access opening. ASRS can support consolidating warehouses by increasing capacity, reducing costs and improving inventory control.

Increasing Capacity in Less Space

When the management team decides to consolidate multiple warehouses, your initial thought might be “How am I going to move all of my inventory into one facility?” Don’t worry, there are several options on the market to support your warehouse consolidation project. With automation, you can find more space in your existing warehouse to increase capacity. ASRS can eliminate the need for a building expansion by utilizing the vertical height of your existing space. By integrating automation, inventory can be densely stored within the unit, recovering up to 85% of previously wasted space.

With easy access to all your inventory under one roof, you reduce the risk of future COVID disruptions having a major impact on your business. It also allows you to add inventory or increase quantity on hand during peak demand.
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Reducing Costs with Automation

There are several costs associated with running multiple warehouses:

  • Staff travel costs to and from each facility
  • Shipping costs to move inventory between facilities
  • Mortgage/Rent and utilities for multiple facilities
  • Labor requirements to staff each facility

These costs add up and affect your bottom-line year after year. While purchasing an ASRS comes with an initial investment cost, the return on investment can happen in 18 months or less. Once you do the math, sometimes it makes financial sense to consolidate. Building space plus labor plus utilities, it all adds up. Can you really do the work of two buildings in one? With automation, it could be possible.

With everything under one roof, you can save time and money picking inventory and sending it out the door quickly. No need for staff to travel to multiple sites or product to be moved between facilities. Further, ASRS eliminates walk and search time as inventory is brought directly to an operator with the push of a button. This increases productivity and reduces the amount of labor required, another cost savings.

Inventory Control and Visibility

When inventory is stored in multiple warehouses, it can be difficult to manage stock levels across locations. In order to keep lean or just-in-time (JIT) inventory quantities, operations managers need to access to data from all their facilities combined. In a post-COVID world, warehouses need to tighten up inventory data to ensure shortages don’t affect customer satisfaction.
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Consolidating inventory from multiple facilities into one, using automation, can provide increased inventory control and visibility. Integrating ASRS with inventory management software gives accurate data reporting 24/7. Centralizing inventory storage provides greater control over your inventory and reduces redundancy across multiple facilities – which can result in a big cost savings to your bottom-line.

Automating to Sustain Growth Post-COVID

Warehouse consolidation can be an opportunity to save a significant amount of money, streamline your operations and improve your processes for the long term. The Post-COVID warehouse looks different than even a year ago; automation to support the human workforce, more supplies in less space to reduce the risk of shortages and more orders out the door to meet increased demand. Consolidating inventory from multiple facilities into one with the help of automation can lead to higher efficiencies by increasing storage capacity under one roof, reducing recurring costs and increasing inventory control.