The New Rules of Material Handling in the Distribution Center

The art of distribution center (DC) design continues to evolve within the changing business environment.

As business experiences the velocity of change, DC design must become more dynamic.

This paper discusses the business realities that drive DC design today. It examines how sensitivity analysis, modeling, and scenario planning can provide new design insights for the DC. In particular, it focuses on how such changes affect material handling equipment design and IT architecture within the warehouse.

DCs in the Context of the Supply Chain
Business continues to change at great speed. The financial climate is spurring more companies to cut inventories by moving to demand-driven supply chains.

At the same time, Internet commerce is increasingly disruptive to traditional business models and supply chain strategies (dubbed by Tompkins International as “The Amazon Effect”).

China continues to increase its influence on traditional supply chain thinking as it moves from being a low-cost supplier to a major international market destination. So while a DC is frequently the part of the supply chain with the highest visibility, it cannot be thought of in isolation from the other elements of the supply chain.

As an integral part of a company’s overall supply chain strategy, the DC design must take into consideration such topics as:

• Tax-effective supply chain management and network design
• Sales and operations planning, which drives inventory optimization strategies
• Demand-driven supply chain
• Transportation strategy
• Procurement and low-cost country sourcing
• Direct-to-consumer strategies (e-retailing)
• The effect of China on the supply chain, both as a source of goods and a market for goods