Keeping all parts of the business informed about what will
occur during the implementation of each phase, what the
risks are, and the expected outcome can help build support
throughout the organization, he says.
External clients should also be kept in the loop, so they
are not surprised by any changes in business processes that
result from the retrofit. Taylor notes that project updates
can be parlayed into a marketing tool. “It’s another touch
for the customer, letting them know you are improving the
business,” he says.
▪ Plan, then plan some more. A retrofit requires detailed
step-by-step planning in order to succeed. That includes
figuring out in great detail what mechanized systems will be
used, the number of pick faces needed, how many SKUs the
system will manage, the order picking process, and more,
says Bob Babel, vice president, systems engineering for
Forte, another consulting and systems integration special-
ist. He adds that it’s crucial to examine not only how the
business has changed since the existing facility began oper-
ations—is the DC shipping smaller and more frequent
orders, for example—but also what changes can be expect-
ed over the life of the retrofit. That’s particularly important
for businesses that are moving into e-commerce. “That’s a
different scenario than expanding capacity to continue
what you’ve been doing for years,” he says.
▪ Draft your plan with an eye toward minimizing operational disruption. It’s rare that a DC has the luxury of a
Expansion by design
In less than three decades’ time, Ikea has grown into one of
the largest mass-market home furnishings retailers in North
America. The company opened its first store in the United
States in 1985 and now operates 37 stores here and 11 more
in Canada.
Much of Ikea’s success is based on offering goods at a relatively low cost, which means the retailer must do everything
it can to keep its own costs in check. For instance, when it set
up its distribution network, it built a system that matched its
current needs but that could also grow with the company.
That foresight paid off a few years back when the retailer
went to expand its DCs in Perryville, Md., and Bakersfield,
Calif. When originally built, the two facilities, the biggest in
Ikea’s six-DC U.S. network, each occupied 850,000 square feet
of space and featured 24 high-bay aisles with 60 feet of clearance. But as volume grew, Ikea embarked on a project to
build out the two DCs to roughly double their original size. As
part of that project, it added another 24 high-bay aisles at
each site, providing a total of 120,000 pallet locations in each
DC to handle the roughly 9,500 products Ikea carries.
As for the material handling equipment that would serve the
additional aisles, that was a foregone conclusion. Back when it
opened the DCs, Ikea selected aisle-changing automated stor-
age and retrieval cranes, rather than installing dedicated cranes
in each aisle. That offered a number of advantages, explains Jim
Leddy, Ikea’s warehouse logistics coordinator. For one thing,
employing cranes that can service multiple aisles allowed the
company to match cranes to throughput, not the number of
aisles, producing what he describes as significant savings at the
outset. For another, use of the cranes would allow for scalable
expansion to accommodate future growth. .
