What is Warehouse Design? Needs, Factors, Layout, Operations

  • Post last modified:14 June 2021
  • Reading time:24 mins read
  • Post category:Supply Chain
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What is Warehouse Design?

Warehouses a place to store inventory. Warehousing means maintaining the stock of raw materials, components, spare parts, fuels, work in process, finished goods etc. in a convenient storage location and from there, retrieving the stock as and when required. Warehousing is a part of development of facility structures. A facility structure is a part of logistical infrastructure which supports one or more logistical functions.

Definition Warehouse

warehousing is a set of activities that are involved in receiving and storing goods and preparing them for reshipmentRobert Hughes

Needs of Warehousing

These are needs of warehousing because of performs certain functions such as;

  1. Consolidation
  2. Break Bulk
  3. Cross Docking
  4. Product Mixing
  5. Reservoir
  6. Safety Valve
  7. Final Assembly


Products which are received from multiple sources but are to be delivered at a common destination are consolidated and stored in the warehouse before loading on transport vehicles.

Break Bulk

It is the opposite of consolidation. Products are received from a single source but they are to be supplied to multiple destinations in smaller quantities. In warehouse the original large shipment is broken down into small parts as per the individual orders.

Cross Docking

Sometimes no storage of products is required i.e. consignment is received from a source and it is only to be rearranged and re-packaged as per individual orders and forwarded immediately to various destinations. This operation is called Cross-docking.

Product Mixing

Sometimes the warehouse receives consignments from multiple suppliers, each supplier supplying a different product. After receiving, arrangements have to be made to supply customized deliveries to multiple dealers or retailers.

Each dealer or retailer may require a different set of all or some products. Hence, different deliveries will require different product mix.


In case of finished goods, a warehouse can act as a reservoir for excess production. The excess production can be safely stored in the warehouse till further demand in the market.

Safety Valve

In case of raw materials, a warehouse serves as a safety valve if an unexpected problem occurs on supplier’s side. Production activity can continue using safety stock stored in the warehouse.

Final Assembly

Sometimes products are stored in the warehouse in semi-finished or semi-assembled stage and the final assembly operation is done when market demand is confirmed or in case of customer orders. This can help in saving storage space or customizing the final product as per customer’s requirement.

Issues Affecting Warehousing

Since warehouses, stores and distribution centers have to operate as essential components within supply chains network, key issues, when setting up such facilities, must be addressed by the overall supply chain strategies for service and cost.

The factors that should be considered include the following:

  1. Market and Product Base Stability
  2. Type of Materials to be Handled
  3. Warehouse Facility
  4. Inventory and Inventory Location

Market and Product Base Stability

Long –term market potential for growth of the product range may influence decisions on the size and location of a warehouse facility, including space for prospective expansion. These considerations will also impact the perceived need for potential flexibility, which in turn can influence decisions on the type of warehouse and the level of technology to be used.

Type of Materials to be Handled

Materials handled can include raw materials, WIP, OEM Auto spare parts, packaging materials and finished goods in a span of material types, sizes, weights, products lives and other characteristics. The units to be handled can range from individual small items through carton boxes, special storage containers for liquids, drums, sacks, and palletized loads.

Special requirements for temperature and humidity control may also have to be met in the case of perishables and all of these will impact the type of warehouses and technology level.

Warehouse Facility

Type, size and location: The type of operation, the design capacity and size of a warehouse and its location will all be influenced, if not directly determined, by its exact role and position in the supply chain network, and the role, capacity and location of other facilities in the supply chain.

The customer base, level of inventory, the need for optimization of inventory, time compression in the supply chain and the overall customer service levels should also be considered while deciding on type, size and location. A further consideration here is whether the warehouse facility should be an own-account operation run by the company or outsourced and run by a 3PL.

Inventory and Inventory Location

Within a supply chain network there is an issue not only of what materials to stock and in what quantities, but also in what locations. Options can include distribution centers devoted to specific markets or parts of the product range distribution centers dedicated to serving specific geographic areas, or regional distribution centers that hold,

Factors Affecting Selection of Warehouse

However, transportation cost, which is a major element in logistical cost, depends on the location of the warehouse. factors affecting selection of warehouse are:

  1. Infrastructure
  2. Market
  3. Access
  4. Availability
  5. Product
  6. Regulations
  7. Local Levies


The availability of proper infrastructure such as approach roads, utilities (water, electricity, communication etc.) and labour has a great effect on the efficiency and the effectiveness of warehouse operations. The non-availability of a proper road or rail siding facilities will have a serious impact on the operations of a warehouse and as a result the transportation cost may go up considerably.

The lack of infrastructure such as wagon platform, material handling equipment may pose a problem in loading and unloading of the materials and special provisions may cost more.


The distribution warehouses are planned in close proximity to the market or consumption centers for offering better service to the customers. Frequent deliveries with small quantities as required by the customers can be organized due to limited geographical area coverage.


The location of the warehouse has the greatest effect on the primary transportation cost. The difficult in access will have an influence on the transportation cost.


The availability of warehousing space in an urban area particularly in metros at cheaper rates is a remote possibility. In such cases the site has to be shifted beyond the municipal city limits where storage space is available at a considerably cheaper rate. However, this arrangement may add to the transportation cost.


The type of product will have a profound effect on the number of warehouses and their locations. For example, perishable products need to be delivered to the customer within their expiry period and hence they should be located near consumption centers. Warehouses with a delivery limitation and geographical reach should be small and numerous.


For certain types of products (explosives, hazardous, chemicals and radioactive materials etc.) which can cause damage to human life, the storage site selection is guided by government regulations and in such a case very little options are left with the firms to choose the site from.

Local Levies

Depending on the sales tax and the octroi charges in the region the location of a warehouse is planned. Due to non-uniformity of sales tax across the Indian States, marketers invariably plan the warehouse to take benefits of the local sales tax disparities.

Warehouse Layout

The warehouse layout or design also depends on the nature of inbound and outbound traffic, volume and movement of materials inside the warehouse and material handling system to be installed in the warehouse.

Some important decisions to be made while designing a warehouse are:

  1. Horizontal Layout vs Vertical Layout
  2. Single Storey vs Multi Storey Warehouse
  3. Single Dock Warehouse vs Multi Dock Warehouse
  4. Type of Material Handling System
  5. Entry and Exit Points of Warehouse

Horizontal Layout vs Vertical Layout

Normally horizontal layout is preferred because product movement can be done easily. In case of vertical layout materials or products may have to be moved or shifted in vertical directions (i.e. from one storey to another or at a greater height on the same storey) which will require additional material handling equipments or elevators.

Single Storey vs Multi Storey Warehouse

Normally, single storey warehouses are used if enough space is available but in case of less availability of space multistorey warehouse is constructed and therefore provision of lifts or elevators is required to facilitate product movement from one storey to another.

Single Dock Warehouse vs Multi Dock Warehouse

In a single dock warehouse, inbound and outbound shipments are handled at the same dock. Shipment loading or unloading, shipment inspection, record keeping,shipment dispatch etc. are managed at the same dock. However, in case of multiple dockwarehouses there are separate docks for handling inbound and outbound shipment i.e. receiving dock and shipping dock.

Type of Material Handling System

If the volume and frequency of shipment is high it is better to install mechanized material handling system. Higher degree of automation in material handling will reduce handling time and need for manpower. It will also reduce errors and accidents.

The capital cost of installing an automated or mechanized system is very high but in the long term it will turn out to be beneficial. It is more suitable for warehouses which handle very high loads on a regular basis.

Entry and Exit Points of Warehouse

The entry and exit point of the warehouse should have direct access to a road or rail line for easy movement into and out of the warehouse campus. It will reduce traffic congestion at the entry and exit points.

Further, for planning the layout and operation of a warehouse system the following fundamental principle holds such as:

  • Making the best use of available space.
  • Using a ‘Unitized’ load system suitable for storage.
  • Minimizing the movement of goods by allotting proper storage area.
  • Providing flexibility for changing future needs.
  • Providing safe, secure and clean working conditions. Etc.

Warehouse Operations

These are some important warehouse operations:

  1. Storage Systems
  2. Fixed and Random Stock Location
  3. Palletized Storage Systems
  4. Drive-in and Drive-through Racking
  5. Push Back Racking
  6. Adjustable Pallet Racking (APR)
  7. Double Deep Racking
  8. Powered Mobile Racking
  9. Pallet Live Storage
  10. Small Item Storage Systems

Storage Systems

The type of materials passing through warehouses varies enormously, with different sizes, weights, shapes, levels of fragility and hazard characteristics. A major benefit of unit loads such as pallets is that they enable the use of standard storage systems and handling equipment, irrespective of what is handled.

Nevertheless variations in throughput and order picking patterns make it appropriate to have different types of storage system, with different operational characteristics, so that systems can be selected that most closely match the needs of the wider system within which they are to operate.

Fixed and Random Stock Location

The effective storage capacity of a given installation is influenced by whether individual product lines are held in fixed and dedicated locations, or whether any product line can be located randomly in any available storage location.

If a fixed location system is used, any specific location can be used for its designed product line, and never for any other product. Consequently the installation must be designed with enough capacity to hold the maximum stock of every product line.

With random location, when any empty location can be utilized for any product line as required, the size of installation can be reduced, since the probability of every product being in stock at maximum stock level at the same time is virtually nil.

Palletized Storage Systems

Block storage does not use any storage equipment. Loaded pallets are placed directly on the floor and built up in stacks, one pallet on top of another to a maximum stable height. The pallet loads must be capable of carrying the superimposed pallets, and the top of each load should be flat enough to provide a stable base for the next pallet.

Block stacking is suitable for that part of the product range where there are few product lines, each with high stock level, and where very strict FIFO movement of stock is not required. The advantages are good use of area, flexibility to change the layout of the blocks and quick to stock for rapid throughput.

Drive-in and Drive-through Racking

Although this is a racked storage system, it is operationally similar to block storage. There should only be one product line in each row, and the effective utilization of the pallet positions is about 70%. The racking structure supports the weight of the pallets so this system is suitable for high stock product lines.

Where strict FIFO movement is not required, but where the pallet loads are not strong enough or of regular enough shape to carry superimposed loads. This system consists of vertical support frames, tied at the top, with cantilever pallet support beams at different heights.

Push Back Racking

This type of racking is a comparatively recent development. Like-drive-in racking it gives high-density storage and can be built to any height up to the maximum lift height of the lift trucks accessing it. Pallets can be stored up to about four deep in the racking, on either side of the access aisle.

The basic operational difference between this system and block stacking or drive-in racking is the increased selectivity achieved. There should be no mix of product lines in any one lane, but there can be between the lanes in any row.

Adjustable Pallet Racking (APR)

Adjustable pallet racking is probably the most widely used type of pallet racking, and offers free access to every pallet held. It can be built to match the lift height of any forklift truck. Unit loads other than pallets can be stored using APR, and there is a range of accessories such as drum supports and channel supports for post pallets to facilitate this.

The conventional way of laying out APR is to have one row single deep at each end of the installation, with back-to-back rows in between. This gives every truck aisle access to two rows of racking, and minimizes the number of aisles required.APR is a flexible, versatile storage system, which gives excellent stock access.

Double Deep Racking

If some loss of totally free access to stock can be accepted, although not nearly as severe as in block, drive-in or push back storage, space utilization can be improved using double deep racking. This supports pallets on pairs of beams as in APR, but improves space utilization by eliminating alternate access aisles, and using a double reach fork-lift truck, which can access not just one but two pallets deep into the racking.

Powered Mobile Racking

Powered mobile racking is effectively single deep APR, with the racking, except the end or outer rows, mounted on electrically powered base frames. Operationally it has similar characteristics to APR, but it is slower in use, and the pallet position utilization is likely to be similar to APR at 90 to 95%.

This type of storage is expensive in equipment and floor costs, and it tends to be slow in operation.

Pallet Live Storage

Live storage systems are made up of inclined gravity roll conveyors, laid out side by side and at a number of vertical levels. Pallets are fed in at the higher end and removed as required at the lower. Such a system imposes FIFO. The only accessible pallets are at the out feed end, so any one lane should only hold pallets of the same product line.

Pallet live storage systems are suitable for very fast-moving product lines. They can provide effective order picking regimes, which automatically refill empty locations, and also provide physical separation between picking and replenishment operations.

Small Item Storage Systems

As with palletized storage systems, there is a range of different types system for holding small items. With small item storage it often happens that different systems are incorporated into one installation. For ex, drawer units and cabinets may be built into as helving installation.

Consequently the concept of standard equipment sizes and modularity is important for small item storage systems. The following lists are some of the storage systems used for small items such as Shelving, Tote bins, Drawer units, Dynamic systems –mobile and live storage, Mechanized systems- carousels and mini loads.

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