The Economics of Engineering


Due to shoppers’ ever-increasing preference for online shopping, the demand for warehouse space for both packaging and distribution has been on the rise nationally and internationally.

This demand will further accelerate in the time of COVID-19, as shoppers are avoiding exposure to higher risk at physical stores.

Along with the increase in demand comes the need to operate more productively. We would like to share our top 14 tips for optimising your warehouse design, warehouse storage, and warehouse layout to achieve peak performance at your facility.

1. Maximise space.

  • The first thing you need to look at is the cost of a square meter and how you can maximise each square. Any square meter that is empty, is wasted opportunity.
  • Secondly, how fast can you move inventory through the building? A rule of thumb is to make policies of turning over finished goods in no more than two weeks, and not holding inventory for more than 90 days.

2. Implement the best infrastructure technology.

Selecting the equipment can make or break your production. Several factors should be considered:

  • automation possibilities
  • installation and process time
  • lean manufacturing best practices

3. Select your location.

  • Selecting a location depends on where your current business’s main income source lies. Several general requirements must be kept in mind, such as access to roads, ports and airports in relation to growth possibilities and costing, as well as rules and regulations. The key is to look at your business’s objectives and the distribution facility.
  • Also important to keep in mind is that if you are considering building a whole new warehouse in a different location, think about your core customers and how it will impact them.

4. Consider the construction.

  • When it comes to the construction of a warehouse, the following must be kept in mind: the height of the building, plot size, service requirements, structural complexity, access, and visibility.
  • The construction process needs to be efficient – this relates to the type of material, construction time and design specifications.
  • Also, keep future flexibility in mind, should you decide to sell or lease the space.

5. Keep track of racking.

Many might not think the warehouse structure and racking design go hand in hand. However, all factors of the building will affect the design of the racking system, which then impacts on operational criteria such as cross docking, picking efficiency and container handling.

6. Explore your doors.

Simple, but effective. Before selecting a door type, it would be wise to consider how much operation per day it will undergo. The following questions should be considered:

  1. Does the door require insulation?
  2. Will heavy equipment such as forklifts be transported through the door?
  3. How much will be spent on maintenance, service, and spare parts?

7. Prioritise health and safety.

Consider this at the top of your list. Safety factors focus on:

  1. Location
  2. Occupancy
  3. Processes
  4. Potential hazards
  5. Fire compartments
  6. Smoke ventilation
  7. Fire protection
  8. Maintenance
  • The above-mentioned elements add a significant cost to the warehouse and each of these need to be handled with careful consideration.

8. Consider industry systems and new innovations.

  • The only thing you can be certain of is that change will happen, therefore design your space as flexible as possible.
  • A Warehouse Management System (WMS) is a great tool to track, for example, the volume of goods entering and leaving the premises and the complexity of the business.
  • We advise a consultancy period to brainstorm and fine tune the technology required for the project.

9. The importance of automation.

  • This is something that should be thought of from the start of the project as it can influence the structure, such as different levels of flooring, column layout and height of the facility.
  • Operational issues and performance need to be analysed, such as packing, assembling and production.

10. Focus on flooring.

  • Elements of the warehouse can be affected by the quality and durability of a floor. The loading on the floor is vital with goods entering and leaving the warehouse constantly.
  • A properly designed and constructed floor is key to ensure no disruption to operations.
  • Ongoing maintenance is imperative, as machinery will damage flooring in the long run. This maintenance must be programmed into the warehouse operations at least yearly.

11. Factor in the forklift.

  • Although a warehouse would not be designed around a forklift model, bear in mind that several factors will ultimately mould the forklift selection. Minimum space between aisles and turning aisles need to be considered in design.
  • The size and type of the forklift has a significant impact on the design of the floor and the type of joints within the warehouse, which relates to the cost per square meter of the warehouse.

12. Consider temperature control.

  • The need for temperature control depends on what goods are being stored in the warehouse. Cold storage may be required for certain businesses, while others may only require a temperature control to keep temperature constant or work on specific temperature intervals.
  • Cold storage panelling will typically be supported from the main structure, which adds weight and ultimately cost to the overall structural steel.

13. Bear in mind your budget objectives.

From a financial point of view, you need to evaluate your medium and long-term objectives. When reviewing your business plan, consider the following:

  1. tax implications
  2. time value of money
  3. total operational costs
  • Prepare a financial model that considers ALL the variables, to ensure it fits into your business objectives. Be conservative, there are always unforeseen elements (min 5%, contingency).
  • Following your initial planning order of magnitude costing, refine your space planning together with your medium-term expansion plan.
  • The biggest cost elements in warehouse construction are:
  1. the weight of the structural steel roof
  2. specification of the sheeting
  3. floor specification and installation
  4. walling specification and installation
  5. the fire protection system
  6. efficient and sustainable yard area

14. Get the best team.

  • Partnering with an experienced professional team is vital to ensure the warehouse functions optimally at the lowest possible cost.
  • Experience – We at Struxit Projects have over 335 years of experience between our team members and have built a large network of professionals we work closely with, including architects, quantity surveyors, mechanical and electrical engineers, contractors, and suppliers.
  • Leadership – Between Hannes Wagner (CEO) Chris Truter (COO) and Dallin Pols (Executive), they have completed over 33 projects across 710 000m2 lettable area’s warehouse space.