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Expanding Your Fulfillment Center

June 15, 2021
Moving to a new location can seem daunting, but follow these steps to minimize disruption.

Expanding your fulfillment center to a new location is a stressful but exciting endeavor. It signifies significant growth in your operations, even if you’re just breaking ground for a new site on the lot next door. These expansions, whether large or small, near or far, require significant planning to reign in all the moving parts and expanding costs.

Leadership, transition teams and change management professionals can minimize the disruption of a move through realistic planning and an overabundance of caution. Here are a few places to help bring your stakeholders together and create a strategy for the fulfillment center expansion.

Plan Your Steps

Every significant expansion comes with a plan that focuses on being as realistic as possible. Set firm requirements for each department and function, identify tasks and build consensus about who is responsible for what. Most warehouse processes are iterative and build on each other, so you want a transparent workflow to ensure proper foundations are built.

The project plan needs to set expectations and budgets for equipment, labor and facility costs. For those one-time events, like moving any excess inventory after the new center is operational, outline the budget and timeframe. Be realistic and overestimate. You can end up moving dozens if not hundreds of loads of freight from the old to the new facility, which has a high cost and can take days.

Many companies also use a fulfillment center transition to invest in new equipment, especially any installed infrastructure. Focus your project team on being realistic about what can and can’t be moved over to the new facility and what stopgaps—like temporary hires and equipment rentals—might be necessary to support your transition.

One recurring theme in every piece discussed below is to include extra time for new activities or changes. Give teams a chance to become familiar with the new location. It’ll reduce the stress that comes with any move and help you maintain more consistent service levels. Allotting time to test, train and breathe makes a transition as smooth as possible.

Double-Check State and Local Requirements

Your transition to a new location must meet local regulations and requirements. If you’re breaking new ground, that means discussions with local and state officials. The elements to verify change are based on your locations, but it’s smart to check that trailers and semis have easy access to your site via approved roads.

While OSHA rules govern many parts of warehouse safety, states may impose additional requirements around licensing, insurance coverage, reporting and more. A typical example is a food storage warehouse or fulfillment center. Most states have licensing requirements that ask you to verify compliance with local food safety acts and the FDA’s requirements, and go through a series of inspections before the facility is open.

You’ve likely done much of this work during the site selection, but it’s always wise to review requirements and ensure the paperwork is in, accepted and approved.

Overlap Inventory and Efforts

Inventory needs a precise plan for your transition to a new location. In many cases, it’s more cost-effective to wind down inventory at your first site instead of having to lead and move freight to the new location. Reduce levels as much as you can. Try to plan product deliveries to the new location to serve as safety stock. Slowly use deliveries to build up the inventory level as you transition.

Building in a buffer or overlap time for the new facility gives your team the time needed to count new inventory. Even when using warehouse or inventory management tools, getting accurate counts the first time can be challenging.

Inventory checks and cycle counts by pickers also help them learn the layout of your new location. This can speed up initial picking when the site is live because they have some familiarity with SKU locations. Use expansion as a time to retrain your team, especially if it coincides with process changes, like how many businesses are expanding to offer direct-to-consumer fulfillment.

Review Server and Tech Needs

Physical space and inventory dominate discussions for expanding a fulfillment center. However, there’s also a lot of technical considerations for any company adding or changing locations. Your transition team should include IT members to have specific discussions on how every warehouse system makes the transition.

Internal servers and systems can be somewhat more straightforward, but plan with IT to create a game plan. If it’s possible to install new servers in your next location, ask if they can be used to back up data now and then transition to full use during the move. Any custom software or tools you’ve developed also need to be checked. Thankfully, more and more solutions are cloud-based, so such transitions and adding locations have become simpler.

Get a specific plan from each vendor. Ask how they handle these shifts and if you need an added license or must pay for a temporary service increase to expand to multiple locations. Review the limitations of your order fulfillment tools as well. Look at the maximum support for current account tiers and see if you’ll need to expand user counts, supported devices or other factors.

Some more limited warehouse and inventory solutions may be designed for only a single fulfillment center. Sometimes there are temporary workarounds for these concerns. In other instances, you may need to change platforms. Minimize the number of changes when possible. Your teams will have enough change management on their plate already with the new location.

Account for Productivity Declines

It’s going to take time for people and processes to catch up with your move. This means you’re almost assured of a productivity loss during the early days of the transition. That can happen from pickers learning new routes in a warehouse to phone calls going to old numbers, or someone not being able to find a notebook after a move. Your team will be dealing with new traffic patterns to the site, and it takes time for people to find the place they prefer to park.

Plan accordingly and be ready for that productivity issue. You may need to increase warehouse staff during a shift to help meet goals. It can be smart to complete major marketing and sales initiatives ahead of the new location opening. And don’t forget about increasing customer service teams and hours, as clients and partners typically have increased communication and support demands during a move.

Business development leaders need to understand these declines are common and plan budgets and projects accordingly. Team leads should prioritize supporting their staff and looking for ways to reduce workload temporarily as people get used to the new operations. It can take months, but creating a positive force behind this change will help your team push through issues and stay happier with their work.

Communicate Regularly with All Partners

Fulfillment centers are a confluence of all parts of a supply chain. You can easily have dozens of partners involved with your location, even if you’re only selling and shipping your own products. Keeping everything running smoothly requires consistent, clear communication about both the old and new facilities.

Work with suppliers to help them understand when to change the destination of freight. Remember to provide adequate lead times here so that you can achieve your overlap. Speak with carriers about dates where you’re transitioning to the new location and potential needs at both facilities. Discuss that overlap need with utilities, vendors, tech partners and more.

Every company that works with you should know about your planned transition period. Keep this contact information handy. If there’s a delay or things move more quickly than expected, tell your partners.

And don’t forget customers! They’re going to need the correct contact information for your sales and support teams. Ensure your website is updated appropriately. As soon as the new facility is partially operational, give its address to customers trying to return goods. You don’t want extended delays or to have things lost in the mail.

It’s an exciting but complicated time when you’re expanding and moving fulfillment locations. Enjoy what the new space could mean for the growth of your business. Create a robust plan and bring all your partners and customers along for the ride.

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About the Author

Jake Rheude

Jake Rheude is the Vice President of Marketing for Red Stag Fulfillment, an order fulfillment company for online retailers and ecommerce businesses specializing in heavy and large products. He brings a highly motivate approach to learning and sharing all aspects of order fulfillment and business management, alongside traditional marketing, SEO, and brand positioning. Marketing plays a pivotal role in the ability to attract and audience and build loyalty, and Jake’s goal is to show companies how shipping is essential to that relationship by creating a promise you must meet with every purchase.