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Food and Beverage Industry Storage

The food and beverage industry is a segment of our economy that nearly all Americans interact with daily. This industry is comprised of “all companies involved in processing raw food materials, packaging, and distributing them, including fresh, prepared foods, as well as packaged foods, and alcoholic and non-alcoholic beverages,” per Global EDGE.

It is a unique sector in that, to truly maximize profits from their efforts, firms need to be operating in a way that maximizes the volume of throughput. Traditionally, these facilities are working on relatively thin profit margins – some even as low as 2% — so they are required to find fulfillment solutions that allow them to pack and ship their products as quickly as possible.

However, as labor unreliability grows and pick accuracy requirements increase, many of these companies are at a crossroads when it comes to optimizing their fulfillment operations. They are evaluating the question: “Is it time to introduce automation?”

Currently, they may be utilizing a less expensive storage system, choosing to instead rely on human labor for their fulfillment needs. However, they may be evaluating mini-load automated storage and retrieval systems (AS/RS) or pallet shuttle technology to help keep their costs-per-pick at a manageable level. However, automation can be expensive. Alternatively, some can look to goods-to-person fulfillment options that do not require infrastructure investment. The goal for these fulfillment centers is simple: maximize throughput and minimize labor costs to help increase their profit margins.

While the industry continues to evolve to keep up with ever-increasing expectations on faster fulfillment and order accuracy, some common storage types still emerge among the top food and beverage distribution centers across the United States.

Common Storage Solutions for the Food & Beverage Industry

Selective Rack

Selective pallet racking is by far the most common style of storage within food and beverage distribution facilities. Typically, in this industry, decisions are made quickly, and there is not much lead time on projects. Selective racking tends to be quicker to install than other racking styles, and it offers a more durable option, which is ideal in an industry that relies on forklifts to the degree that the food and beverage sector does.

While other integrators never change their specifications regarding their racking configuration, we have found a creative solution that offers some cost savings to our food and beverage partners. In storage racks that are several levels high, we often suggest that companies in the food and beverage industry use structural racking for the uprights and the bottom few beam levels – the ones used the most and most susceptible to forklift impact – and then switch to a roll-formed option for the remainder of the beam levels. Though roll-formed racking is less durable, it is also less expensive and thus can provide cost savings with little impact to functionality in this design.

Drive-In / Drive-Thru Racking

Drive-in and drive-thru racking are common in food and beverage storage environments because it adds a denser storage option than traditional selective pallet rack configurations. These racking systems allow companies to increase storage density by storing more pallets in a smaller area because they require fewer aisles from which to pick. Typically, that means up to 75% more space dedicated for pallets than a traditional selective rack. They are relatively less expensive on a per-pallet-position basis and are ideal for companies that rely on LIFO (last-in, first-out) inventory practices.

While this type of storage medium has been popular in this setting for years, we are noticing that fewer facilities utilize this style of racking as its primary storage means. As orders contain a smaller number of products-per-order, SKUs become smaller, and fulfillment times shrink because of quicker end-user expectations, facilities rely less on the drive-in and drive-thru racking as dense storage mediums.

Pushback Rack

Also designed primarily for LIFO inventory management, pushback rack is a dense storage system that allows materials to be stored within a lane, with pallets being pushed back as new inventory is added. Pallets are stored on a slight grade, so when a front pallet is picked, the design of the storage configuration allows rear pallets to gravity flow down the lane to be selected.

In food & beverage, when FIFO is managed using lot codes or date codes, pushback can be a solution to provide more density of storage while allowing for the maintenance of FIFO. Operating rules must be in place to support this approach, but it is often done successfully.

We have found that pushback rack systems are often designed for 2-deep or 3-deep storage for food and beverage storage and fulfillment centers. That makes the putting and retrieval faster and easier than in deeper 5-deep or 6-deep systems, which is critical in hastening the fulfillment process. Remember, companies within the food and beverage industry rely on throughput to maximize profits. So, as order profiles continue to get smaller with a wider variety of SKUs, this configuration supports optimizing the throughput of stored products.

Pallet Flow

Pallet flow racking offers additional storage density and labor savings when installed within a food and beverage distribution facility’s selective racking. Pallet flow consists of a back-to-back selective rack with lightly graded conveyor wheeled flow lanes installed on rails within the racking. This configuration allows back-loaded pallets to flow toward a pick face with the help of gravity to move the pallets from the loading side to the pick side.

Ideal for FIFO inventory management, this system ensures that picking aisles are always stocked, which means faster pick and load times for the facility. While other types of racking can hold between two and five pallets per racking configuration, pallet flow can facilitate between as many as twelve to fifteen pallets racks, depending on the system. Facilities can also customize the racks for optimal flow by designing the structure to the size and weights of their pallets, meaning pallet flow can be among the most efficient storage systems available for food and beverage distribution facilities.

It is also common in the food & beverage industry to see a combination of pallet flow on the ground level of the pallet rack with pushback on the upper levels. This approach allows for alternating pick aisles & replenishment aisles throughout the facility to maximize throughput from a picking perspective.

Mezzanines

Mezzanines are great additions to any warehouse or fulfillment setting because they are designed to create additional storage locations at both the floor and mezzanine levels. They can be designed to include multiple levels, adding additional pick locations with each pick level. Mezzanines are typically free-standing, rack-supported, or bin-supported, giving warehouses and fulfillment centers a durable solution to increase storage capacity without expanding their facilities’ footprint.

Platforms can be designed and installed at a fraction of the cost of expanding the facility, which is crucial to a business operating on already thin margins. They are custom-built to support the exact type of products stored within the facility and can genuinely increase fulfillment speeds when combined with a conveyor system that gives those who are not at ground level the ability to transfer their pick loads without traveling up and down stairs or an elevator.

Carton Flow

Carton flow systems have two significant benefits to food and beverage companies: improved picking speeds and increased storage capacities. Carton flow systems use gravity to push products through a pallet rack on roller tracks, meaning as an item is picked from the pick face, the entity behind it (usually the same SKU) is fed to the front, ready to be selected. These systems are often installed within standard pallet racks, with tracks installed on the beams with the assistance of hangers. They can be customized to fit multiple sizes, so different SKUs (and their respective packaging) can be accommodated, whether stored in cartons, bins, or boxes.

In the food and beverage industry, these systems are ideal for each picking, as it makes the picking process easier and quicker for pickers. Instead of searching a pallet for a particular product, carton flow can be installed on floor level with selective or pushback lanes above, giving better access to the quick-moving products while maximizing storage space & minimizing the amount of travel required to pick an order.

Pallet Shuttle Systems

In the food & beverage industry, it is common to have many pallets worth of inventory on hand in the distribution center for the fastest-moving items. It is also common to have a need for expensive temperature-controlled storage – typically cooler or freezer space. Pallet shuttle systems can be a great way to provide very dense storage while still accommodating fast fulfillment speeds. A pallet shuttle system utilizes a deep rack structure (often 25-30 pallets deep, or more) and semi-automated shuttles (or carts) to move pallets into the dense storage.

The shuttles can be easily moved from lane to lane or level to level within the storage system by forklift operators. The same shuttles are used to retrieve pallets and move them to the front position in the deep lane system to allow for efficient picking.

What Storage-Type Combination is Best for Your Food & Beverage Distribution Center?

As is typical with most distribution centers and fulfillment centers, the optimal storage configuration for your facility will be determined by your products, your order profiles, and your fulfillment strategy. If you are beginning to assess your facility layout, the best place is to evaluate your system and design your storage configuration around a dynamic fulfillment process. If you have a facility in place and are looking to optimize your capacity or improve your operations, you may need to establish your opportunities for improvement.

Either way, we’re here to help. Give us a call, and our team of storage and fulfillment experts can talk through your business goals and challenges, perhaps even touring the facilities to determine the optimal course of action. Our team has decades of combined experience in determining storage solutions that can relieve the challenges caused by labor shortages, suboptimal storage, and poor facility design.

Let’s get the conversation started today!

Misapplied Drive-In and Drive-Thru Racks

Drive-in and drive-thru racks are popular dense storage solutions for companies looking to increase storage capacity within their facilities. Typically, these solutions are best applied in environments with a high volume of pallets stored on hand with a low number of SKUs.

The two racking styles are very similar in that they store pallets on rails, which are attached to uprights that create deep aisles of storage that allow forklifts to drive in or through the system to select or drop off a pallet. However, they differ in that drive-in racking requires the forklift to back out of the aisle (making ideal for last-in, first-out (LIFO) inventory management). In contrast, drive-through racking allows the driver to enter through either end of the system (making some people think it ideal for first-in, first-out inventory management). Operationally though, using drive-through racking for FIFO inventory often creates lots of additional product touches and adds cost. Drive-through racking also requires an aisle for travel on both sides of the system, making drive-in racking a higher-density option.

In suitable environments, these styles of racking can undoubtedly be beneficial. They can help support storage density efforts with a relatively low initial cost. In fact, in an environment where steel prices are not as volatile as they are now, drive-in and drive-thru racks are typically around a third of the price-per-position as other dense storage solutions like pushback rack, pallet flow, or the use of pallet shuttles. After all, there are no moving parts and no mechanical components in drive-in and drive-through racking; it is static.

But in the wrong environment, drive-in and drive-thru racks can lead to unforeseen expenses, slower fulfillment times, and poor utilization of cubic storage space. Ironically, these negative consequences were likely all the problems the evaluator was attempting to solve in the first place.

How does that happen? To start, evaluators are looking at the wrong bottom line.

Because drive-in and drive-thru racking is the lowest-cost dense storage racking system, a decision-maker will look at and their area and determine that they can fit the same number of bays of drive-in as, say, pallet flow. However, because the cost of the former is roughly 30-40% of the latter, they will default to choosing the cheaper option.

That low initial cost looks good to the decision-makers looking at a project as an open-and-shut project but not part of an overall operational strategy. While that initial bottom-line number is appealing, they may not be considering that cost-based decision may end up with a wrong application or poorly utilized storage system. Operational costs can soar when drive-in and drive-thru racks are misapplied. Dense storage design is better managed with a long-term approach with a more strategically applied solution.

The trick with drive-in and drive-thru racks: you want to keep utilization high, so you need to keep the same product in each lane – front to back and the top. Ideally, you want more than one lane worth of product for utilization purposes – filling the entire depth and height of the storage system – for each SKU being stored. But what happens when orders change and SKU proliferation hits? Now, you may be storing fewer of a particular product, a greater variety, and those dedicated lanes start getting SKUs mixed. Now you may have to turn, rotate, move-and-return other pallets to get a pallet you need to select, adding several more touches-per-pick and increasing your operational costs in the process.

Now, consider that drive-in and drive-thru racking is a popular storage solution for the food-and-beverage industry, where temperature-controlled storage is frequent. You have to figure in lot codes, date codes, and other requirements to maintain the product’s integrity. It can be a real challenge to manage these inefficiencies while keeping utilization high, operational costs low, and discipline to those codes.

How Do I Know if I Have a Utilization Problem with My Drive-In or Drive-Thru Racking?

The challenge with knowing whether your drive-in or drive-thru racking is operating at its fullest potential – or if another strategy should be considered – lies in the fact that you need to be looking for that magic utilization number to know if it is truly working for your operations (or not). If you are not actively seeking to maximize your space, you may not notice that you are underperforming.

However, if you have a significant share of drive-in or drive-through racks and are finding yourself in need of expediting your orders, or you are looking at adding dense storage solutions, give us a call first.

Misapplications of drive-in and drive-thru racking can cause many unforeseen expenses and slow down pick processes intended initially for efficiency. Our team of experts knows how crucial operational flow is to a company’s long-term bottom line. We know the challenges associated with rising operational costs-per-pick and have the experience to design and provide solutions uniquely designed to meet your needs, now and with an eye toward future growth.

Hidden Costs of Honeycombing

When working with our clients, we like to tour their facilities to find opportunities to increase efficiency, reduce costs, and optimize their operations. One common issue we run into is honeycombing, which is essentially dead space – horizontally or vertically – in a warehouse that results in hidden operational costs.

To be more exact in learning about this recurrent situation found in warehouses and fulfillment centers, honeycombing can result in three scenarios: (per Supply Chain Visions):

  1. The practice of removing merchandise in pallet load quantities where space is not exhausted in an orderly fashion. This results in inefficiencies due to the fact that the received merchandise may not be efficiently stored in the space which is created by the honeycombing.
  2. The storing or withdrawal of supplies in a manner that results in vacant space that is not used for storage of other items.
  3. Creation of unoccupied space resulting from the withdrawal of unit loads. This is one of the significant hidden costs of warehousing.

Honeycombing is a measure of how well a fulfillment center is using its capacity utilization. As expressed as a percentage of open space within a storage system, utilization plays a crucial role in understanding how much product should be stored.

As a guide, we typically aim for an 85% utilization. Anything above 85% can become operationally inefficient from having a lack of available locations. Anything under means you probably have too much free space that can otherwise be used to store additional products.

Typically, honeycombing is most common in dense storage systems, particularly with drive-in and drive-thru racks, which have deeper lanes with fewer picking access opportunities. However, honeycombing is also found – and is potentially more costly – in pushback, pallet flow, or other deep lane storage configurations.

Honeycombing can also be incredibly costly when we look at the food and beverage industry. Temperature-controlled storage is expensive, and managers are always looking at ways to reduce costs for storage. If their storage area is not designed correctly or optimized, the company is continuously wasting money cooling a room that is not effective in storing products.

Effective design and inventory management are required to keep costs down and operations profitable. There must be a strategy to hit that magic utilization ratio – and some analysis behind the storage design. With a simple, smart, and strategic approach to looking at honeycombing within your facility, we can help guide you to your goal of optimized storage.

If honeycombing affects your operations – and it is a good bet that it does – we would love to learn more about your operation and provide solutions that can help you reduce your costs and increase your cubic storage capacity. Give us a call today!

dense storage solutions

As a natural byproduct of business cycles, warehouses need to be flexible as storage needs ebb and flow. During periods of economic growth, these warehouses need to find ways to increase capacity without increasing the facility size. Similarly, as a result of new equipment or new inventory profiles, managers are often tasked with finding ways to decrease their layout’s footprint while maintaining (or even increasing) their storage capacity.

In our experience, many small-to-medium-sized companies are unfamiliar with the benefits of introducing dense storage solutions. Often, these companies are more familiar with a traditional, selective pallet rack option. Depending on your inventory, there may be an opportunity to install dense storage racking at this stage of a business cycle. But first, before you evaluate those options, managers should make sure they design the optimal plan.

Perform a Facility Design Assessment

Whatever steps you decide to take, know that your best bet for an optimal result may begin with a complete facility design assessment. Our experts can look at your layout and provide suggestions for the optimal design for your operation. Our experts can help you take the guesswork out of the process.

Integrate Smart Slotting Data

Primarily, Smart Slotting introduces a data-centric approach to optimizing your picking process. The tool measures operational and storage costs against the volume of your picking demand to give you the optimal inventory slotting strategy. However, this approach also improves your ability to increase capacity by moving SKUs to the best possible storage media types.

Are You Ready for Dense Storage Solutions?

If you have large quantities of pallets on hand for each item you are storing, dense storage may be right for you. Let’s look at the options:

  • Pushback: These are systems in which pallets are stored on a cart system on a slight pitch so pallets can gravity flow back down to the front location as pallets are removed from the system. Pushback racking is ideal for Last-In, First-Out (LIFO) inventory systems or First-In, First-Out (FIFO) inventory for larger lot/date code SKUs. These systems often utilize nested carts, which make the placement and retrieval of products easy.
  • Pallet FlowPallet flow rack is an ideal option for warehouses that operate on a First-In, First Out (FIFO) inventory system & have large quantities of pallets on hand per SKU. This flexible racking system can be designed to your desired depth to maximize your capacity & utilization of the storage system. Pallet flow systems are customizable and uniquely designed for your products.
  • Drive-In / Drive-Thru: Drive-In and Drive-Thru racking are similar in that they increase storage density & require fewer aisles in your warehouse. The main difference between the two is Drive-In racking is accessible via forklift by one end. Drive-Thru racking is accessible from both ends. Drive-In & Drive-Thru racking work best for operations with really large quantities of pallets on hand per item. The best applications have the same SKU stored from the ground to the top & from the front to the back in each lane of the storage system. To keep utilization high, it is also ideal to have multiple lanes of Drive-In or Drive-Thru racking filled with the same item.
  • Semi-Automated Deep Lane Systems: These systems allow an operator to utilize a semi-automated cart to move packages into dense storage racking. This system can integrate perfectly with both LIFO and FIFO inventory systems. Semi-automated deep lane systems are often 25-40 pallets deep & work great for operations that have lots of pallets on hand per SKU & relatively high throughput requirements. These modern systems are fast and extremely easy to use, also utilizing green technology to operate.

Whenever you are ready to talk about your dense storage solutions, we are here for you. To get started, contact us and we can look at your inventory profile and share how our design-based solutions can increase storage space and ultimately increase your warehouse’s capacity.