Getting the right warehouse for the new economic order

Companies who have managed to survive the past year or two will almost certainly be looking at a markedly different business environment from a year or so back. And while banks and politicians may seem to be at the eye of the public storm, the logistics sector continues to be hit hard.

For the consumer as well as the manufacturer the ability to deliver the goods starts from the factory door to the warehouse, and Laurie Sice of warehouse property specialist sbh offers some advice on how to get the right facility for the new economic order.

“As discussion rages about the structure of international finance and formerly successful business models come under stress, the logistics sector must continue to keep the retail shelves full and production moving – at the same time adapting ever changing demand and business patterns.

Add in even greater pressures to control costs and it’s easy to see why more companies in the next year or two will either be forced – or have the opportunity - to consider relocation, consolidation or extending existing premises. The decisions they make could well affect their businesses for years to come so it’s vital make sure they are the right ones.

Doing the homework
More than ever it pays to know your business – where it is going, what your clients expect, what are the drivers for success. While each business has its own needs, there’s little doubt that the big three targets will be more profit, lower costs and improved client service and response. Such factors are essential to understand the role and performance expected from the warehousing function. It’s good to remember too that there’s no such thing as the ideal warehouse. Apart from cost considerations no business forecast will be perfect so the warehouse design needs to be resilient, flexible and ready for changes as the future arrives.

The timing is right – for now
With less building work and lack of demand, 2010 promises to be a year of opportunity for companies looking to build or extend. Landlords are more ready to be flexible on rent and lease costs and to offer incentives, and building industry costs are under pressure.

Construction prices fell by around 12% in 2009 and further minor falls are expected in 2010, but likely to start to rise in 2011. Material costs have been falling but volatile in the past year although as some economies start to come out of recession, demand and prices will rise.

Getting organised
Once the plan for new or extended premises has been agreed in principle, the next big question is whether to try to run the project in house or seek outside help. It may seem sensible to handle everything in house – but few companies have the internal expertise and experience to deal with complex planning requirements, the different way to organise a build project, budgeting and cost control – and the increasingly stringent legislative demands focused on health and safety, and environmental issues.

Using the services of a consultancy such as sbh provides access to a wealth of invaluable industry experience and knowledge in warehouse planning, design and construction. The decision also frees the client’s management to concentrate on running their core business.

However it’s vital that the client in fully involved in the process, and appointing an internal project manager, authorise to represent the company and to deal directly with the consultancy team, is a key step in ensuring the final result matches everyone’s vision and expectations.

Key steps
Location and planning permission: deciding where to locate new premises will inevitably be a compromise between local land and build costs, ease of transport whether road, rail or sea, labour availability and other factors specific to the business.
Getting planning approval may require dealing with the local Planning Officer, the Environmental Agency, the Highways Authority and Health and Safety – as well as being aware of issues such as the government’s Sustainable Distribution Strategy, local green transport plans and the National Cycling Strategy.

Warehouse design and internal systems: the subject of a myriad number of books, articles and features - and with such a diverse range of equipment, systems and technologies available, one where a knowledgeable guide will be invaluable.

Procurement methods: during the past few years the construction industry has evolved a number of different ways to organise and manage a project, each with its own advocates. The traditional method, which involved the client appointing a full design team of specialists then selecting a main contractor, has gradually fallen out of favour and is not generally regarded as an efficient way to build a warehouse.

Design and Build, while still an established route, means the client only has a single contractor to deal with, but may still need an employer’s agent to manage the project effectively. Most recently Professional Construction Management, where the client appoints a Construction Manager on a fixed fee, has proved to be a faster, more flexible and more efficient route.

Environment and legislation: the project manager today needs be acutely aware of the steady flow of standards and laws being passed that affect every stage of construction. The Construction (Design and Management) Regulations 2007 and Approved Code of Practice, Regulatory Reform (Fire Safety) Order and the proposed Building Regulations Park L1A 2010 are just some of the rules that now affect any warehouse construction project.

Ultimately the right warehouse must be able to do what the client expects of it, with flexibility for the future, be delivered on time, to budget and to the agreed specification. A sound working partnership between a committed client and an experienced consultancy such as sbh is the surest way to achieve all these objectives – while allowing the client the freedom to concentrate on managing a successful business.“

February - 2010