By Paul R Salmon FCILT, FSCM
Here’s a structured overview:
1. Core Objectives
Determine maximum storage capacity (by SKU, pallet, carton, or unit) Assess throughput capability (receiving, put-away, picking, dispatch rates) Identify constraints (bottlenecks in space, labour, equipment) Model future demand scenarios (seasonality, SKU growth, service level changes) Support investment decisions (racking changes, automation, expansion)
2. Key Inputs for Modelling
Physical Space Warehouse dimensions (length, width, height) Usable height (allowing for sprinkler clearance, lighting, safety regulations) Aisle widths and dock areas Storage Media Racking type (selective pallet racking, VNA, drive-in, push-back, automated systems) Floor stacking configurations Bin shelving or mezzanine levels Inventory Profile Number of SKUs Units per SKU Pallet size/weight and stacking limits Stock turnover rates and ABC velocity profile Operational Data Receiving rates (in pallets, cases, or units per hour) Put-away and picking rates Number of shifts and working hours Equipment type and capacity (forklifts, conveyors, AS/RS) Growth & Forecasts Anticipated SKU growth Peak season volumes Service level changes
3. Modelling Approaches
a. Static Capacity Calculation
Calculate maximum theoretical storage: \text{Total usable floor area} \times \text{usable height} \div \text{volume per pallet} Adjust for: Aisles, columns, and safety clearances Equipment maneuverability space Non-storage areas (offices, staging, returns processing)
b. Dynamic Simulation
Use warehouse simulation software (e.g., AnyLogic, FlexSim, Simio) to model: Flow of goods from receipt to dispatch Resource utilisation (labour, equipment) Bottlenecks under peak load Effects of automation or layout changes
c. Scenario Modelling
What-if analysis for: Adding extra shifts Changing racking systems Increasing SKU variety Implementing automation (shuttle systems, AS/RS) Outsourcing overflow to 3PLs
4. Key Metrics
Storage Capacity: Total pallet positions / bin locations Utilisation Rate: % of positions occupied Throughput Capacity: Pallets in/out per day Turnover Ratio: Annual throughput ÷ average stockholding Pick Density: Picks per hour per picker Dock-to-Stock Time: Receiving to put-away completion
5. Common Pitfalls
Overestimating usable height (ignoring clearance and safety) Ignoring growth in SKU count (even if total volume stays constant) Focusing only on storage, not throughput Underestimating peak season surges Not modelling reverse logistics (returns, repairs, repack)
6. Tools & Techniques
Excel-based calculators for quick assessments CAD layouts for space planning Discrete event simulation for operational modelling Digital twins for continuous monitoring and scenario testing
