The Biggest Box You’ll Ever Recycle

April 1, 2011
An abandoned manufacturing facility may have what it takes to become your next distribution center.

It’s time to move. You have put off the decision long enough. You can’t squeeze any more inventory into your current distribution center and the congestion is impacting operating costs and customer satisfaction. Expansion is not an option. The question becomes, “How much building do I need and what should it look like?”

The prevailing thought in distribution is that you need a big square box for an efficient DC. In general, that’s a good statement, but don’t close the door on lower cost alternatives. If you can find a building that meets your short and long term needs and it can be leased at a low cost compared to new construction, it makes sense to give it a hard look. After all, the goal is to increase the bottom line, and reducing your lease cost is a good first step to meeting that goal. Think of it as both a financially and environmentally sustainable option. After all, by moving into an existing building you are recycling.

Consider what’s available in the manufacturing sector. There are plenty of recyclable plants available. This often overlooked option can be very cost effective.

Because of the change in the manufacturing profile in the United States, older manufacturing buildings are being surplused.

Many of them still have a viable infrastructure and many years of life left in them.

One of the reasons older manufacturing buildings are overlooked for distribution use is that they don’t fit our ideal picture of the Big Box DC, let alone any type of DC. These buildings were designed to support unique manufacturing processes which resulted in buildings with few characteristics of the modern DC.

The Negatives May Include:

• Low ceilings;

• Large heavy columns to support crane rails;

• Floors with drains or conduit troughs;

• Disjointed layout;

• “Rooms” to separate manufacturing processes;

• Limited number of dock doors with docks at opposite ends of the building;

• Environmental concerns.

It is easy to understand why these buildings are overlooked. While some of these may be show stoppers, with a little vision and compromise you may be able to overcome some of these negatives. It all depends on your business, your operational needs, and an unbiased look at the alternatives. To determine what constitutes a show stopper when it comes to building characteristics, you need a good understanding of your business operations. Only then can you evaluate any given building and judge the necessary compromises.

Consider a building with low ceiling height, say, 12 ft where a current spec building is at 28 ft+. If there are some taller areas in the building for pallet rack and bulk storage, then the building may be acceptable. Low ceilings are not a detriment to receiving, small parts picking, order packing, consolidation or shipping. Typically the space above these areas is not used. A building with a disjointed or chopped up configuration may be alright depending on how you use it. Its “rooms” can be designated as single-use areas: one “room” for picking, one for overstock storage, one for value-add operations, for example. Rooms used for small parts picking can be linked by conveyors that would transport picks between the rooms or zones. Even if the rooms are far away from the dock, by using a conveyor to transport the picks, labor is reduced and productivity is not affected.

From an operations standpoint, the pick area is adjacent to the dock. You could even go as far as specifying different areas based on pick activity (fast, medium and slow movers). Don’t look at the layout as an obstacle, look at how it might be used to your advantage. Dock doors should only be a show stopper if you cannot get enough added in the right place to meet your needs. If you can’t get the number you need, walk away. The number of dock doors is critical to the productivity of a building and you don’t want to move into a building where you are already behind the eight ball.

Multi-level facilities can be used very successfully as DCs. Conveyors, elevators and lifts can be used to move product between floors. Depending on the distance between floors, what is the difference between the second story of a building and a mezzanine? You do need to know the floor loading of the upper levels to determine if they will handle your inventory and equipment. Most manufacturing facilities should have adequate capacity.

As far as some of the other concerns, floors can be leveled, pits can be filled, areas can be cleaned, offices can be updated or installed, etc. Most buildings can be made to work given a little vision and a clear understanding of needs.

Recycled buildings aren’t all about concessions and negatives.

The Positives May Include:

• Location – Many of these facilities are in urban settings, convenient to public transportation for your staff.

• Tax abatements, state and local grants may be available to try to bring work back into the cities.

• Low cost – The building is generally paid for and you avoid the costs of new construction. Modifications will be necessary to make the building meet your needs, but they cost less than new construction and there may be government funds to assist with the redeployment of the building.

• Ready availability – These plants are just about everywhere and landlords are eager to have them occupied. Realty companies in your area may specialize in “re-tasking” old manufacturing plants as viable distribution centers. Many times they will divide an old plant into several smaller facilities. This amortizes the rework costs among the tenants and can help reduce the overall cost.

In a world that is thinking greener it makes sense to look at all of your options before building a new facility. As we find more and more items to recycle, it seems only logical that we start to include our old manufacturing plants. Do something green and recycle a big box.