As a warehouse rack manufacturer, we have served many customers and designed many types of warehouses, such as urban distribution centers, and this time we will talk about another type of warehouse: manufacturing warehouse.
So in the next section we’ll tell you what a manufacturing warehouse is and the basics about it, so you can get up to speed quickly!
What is a manufacturing warehouse?
A Manufacturing Warehouse is a warehouse that is closely related to the manufacturing process, and its main role is to store and manage the materials, components and finished goods required in the manufacturing process. This kind of warehouse is not just a place to store goods, it usually directly serves the production process to ensure that the manufacturing process runs smoothly.
Main functions of a manufacturing warehouse
Raw Material Storage
Stores raw materials required for manufacturing, such as steel, plastic, and wood.
Component Storage
Holds various parts and components used in the manufacturing process.
Work-in-Progress (WIP) Management
Stores semi-finished products or assembled parts that are not yet fully completed, awaiting the next production stage.
Finished Goods Storage
Stores fully manufactured products, awaiting shipment or further processing.
Inventory Management
Ensures a sufficient supply of materials to prevent production disruptions while avoiding excess inventory that leads to waste.
Logistics Support
Facilitates the movement of goods between production areas, distribution centers, and customers, ensuring efficient production operations.
Manufacturing Warehouse vs. Traditional Warehouse
| Comparison Aspect | Manufacturing Warehouse | Traditional Warehouse (e.g., Retail Warehouse) |
| Primary Purpose | Supports the manufacturing process | Stores and distributes goods |
| Storage Type | Raw materials, components, WIP, finished goods | Finished goods, merchandise |
| Relation to Production | Directly supports production | Usually independent of production |
| Inventory Movement | Frequent movement (adjusted based on production needs) | May involve long-term storage |
How big is a manufacturing warehouse?
The size of a manufacturing warehouse does not have a fixed standard. It depends on factors such as production scale, storage requirements, production line layout, and logistics flow. Generally, manufacturing warehouses range from a few thousand square meters to hundreds of thousands of square meters.
Key factors affecting manufacturing warehouse size
Industry Type
- Small-scale manufacturing (e.g., electronics, small components) โ 2,000โ10,000 mยฒ
- Medium-scale manufacturing (e.g., automotive parts, machining) โ 10,000โ50,000 mยฒ
- Large-scale manufacturing (e.g., vehicle manufacturing, steel, heavy industry) โ 50,000โ300,000 mยฒ or larger
Production Process
- Does the production line require a large storage area? (e.g., automobile factories need space for numerous parts)
- Is there a work-in-progress (WIP) storage area? (some industries require temporary storage for semi-finished products)
- Does the facility use automation? (AGVs, robots, and automated systems may require additional space)
Inventory Needs
- Large raw material storage โ Requires a bigger warehouse
- Just-in-Time (JIT) production โ Requires less warehouse space
Logistics Flow
- How many goods move in and out daily?
- Is a large loading and unloading area needed?
- Are there dedicated shipping and receiving zones?
Advantages and disadvantages of a manufacturing warehouse
Advantages of a manufacturing warehouse
1. Improved Production Efficiency
- The production floor can access required materials at any time, preventing downtime due to material shortages.
- Reduces supply chain disruptions, ensuring smooth operation of production lines.
2. Optimized Inventory Management
- Systematic management of raw materials, components, and finished products minimizes waste and excess inventory.
- Integration with automated inventory systems (WMS) allows precise tracking, preventing shortages or overstocking.
3. Lower Procurement Costs
- Bulk purchasing of raw materials can secure better pricing from suppliers.
- Storing raw materials and finished products in the same location reduces transportation costs.
4. Enhanced Logistics Efficiency
- Shortens transportation time, accelerating the flow from raw materials to finished products.
- Strategic warehouse placement near production lines minimizes handling distance, reducing labor and equipment wear.
5. Support for Flexible Production
- Adapts to different production models (e.g., Make-to-Order (MTO) or Make-to-Stock (MTS)).
- Enables quick response to market demand; if order volume suddenly increases, the warehouse can provide sufficient material support.
Disadvantages of a manufacturing warehouse
1. High Construction and Operating Costs
- Renting or building a warehouse is expensive, especially for large-scale manufacturing operations.
- Implementing automation systems (e.g., AGVs, automated storage systems) requires additional investment.
- Requires skilled personnel for management, such as warehouse managers and inventory controllers.
2. Complex Inventory Management
- Without an efficient inventory system, issues like material overstock, expiration, or shortages may arise.
- Regular stock audits are necessary to ensure data accuracy and prevent “ghost inventory” (discrepancy between recorded and actual stock).
3. Large Space Requirements
- Large manufacturing warehouses occupy significant land and must be well-planned to avoid inefficiencies in production flow.
- Factors such as storage height, racking systems, and forklift aisles must be considered to prevent congestion and safety hazards.
4. Logistics Challenges
- Supply chain disruptions (e.g., delayed raw materials) can halt production.
- If the warehouse is close to the production area but far from suppliers or customers, transportation costs may increase.
5. High Safety and Compliance Requirements
- Must comply with fire safety, environmental, and industrial regulations.
- Requires measures to prevent damage, theft, and contaminationโespecially for warehouses storing flammable, explosive, or food-related materials.
Considerations when establishing a manufacturing warehouse
Location Selection
Key Points: Proximity to the supply chain and market to reduce transportation costs
- Close to Suppliers: Locating the warehouse near raw material suppliers reduces transportation time and costs.
- Close to Production Line: The warehouse should be reasonably close to the production floor to avoid frequent long-distance transportation.
- Close to Customer Market: If products are directly shipped to customers, being near the target market shortens delivery time and enhances customer satisfaction.
- Convenient Transportation: Choose a location near highways, ports, or railway hubs to facilitate logistics transportation.
Warehouse Space and Layout
Key Points: Proper space planning to increase storage efficiency
- Area: Ensure the warehouse has enough space to store raw materials, semi-finished products, and finished goods, with room for future expansion.
- Height: High warehouses can utilize heavy-duty racks or automated storage systems to maximize space utilization.
- Aisle Design: Design forklift aisles efficiently to ensure smooth material handling and reduce congestion.
- Access Method: Choose the appropriate storage method based on production needs, such as First-In, First-Out (FIFO) or Last-In, First-Out (LIFO).
Facilities and Basic Equipment
Key Points: Ensure the warehouse is equipped with modern management and automation capabilities
- Floor Load Capacity: Check if the floor can support heavy equipment (e.g., forklifts, palletized goods).
- Lighting and Ventilation: Good lighting and ventilation systems help improve work efficiency and safety.
- Automation Equipment: Consider introducing automated storage systems (AS/RS), conveyor systems, AGVs, and other technology to improve operational efficiency.
- Fire Safety: Ensure compliance with fire safety standards, including sprinkler systems, fire extinguishers, and emergency exits.
Safety and Compliance
Key Points: Prevent accidents and ensure regulatory compliance
- Fire Prevention: As manufacturing warehouses may store flammable materials, automatic fire suppression systems should be installed and checked regularly.
- Safety Management: Establish clear safety procedures and ensure employees follow standard operating procedures (SOPs).
- Environmental Requirements: If storing chemicals or special materials, ensure compliance with environmental regulations and implement necessary safety measures.
Inventory Management and Technical Support
Key Points: Efficient inventory management reduces operational costs
- Warehouse Management System (WMS): Select a smart warehouse management system that supports real-time inventory tracking and data analysis, improving inventory accuracy.
- Barcode/RFID Systems: Improve goods identification and tracking efficiency, reducing human errors.
- Smart Monitoring: Install cameras and security systems to prevent loss or theft of goods.
Cost and Budget
Key Points: Consider costs comprehensively to maximize return on investment
- Rent/Construction Costs: If leasing the warehouse, calculate long-term rental costs; if building, consider costs for land, construction, and equipment.
- Operational Costs: Include expenses such as utilities, labor, equipment maintenance, and insurance to ensure the warehouse doesn’t create excessive operational burdens.
- Long-Term ROI: Choose a warehouse that best suits the company’s long-term needs to avoid high adjustment costs due to inadequate space or poor layout.
Flexibility and Scalability
Key Points: The warehouse should be adaptable to future changes
- Future Growth Space: Consider the company’s future expansion plans and whether the warehouse can support larger production demands.
- Storage Mode Adjustment: Ensure the warehouse supports different types of storage methods, such as rack storage, pallet storage, and automated storage.
- Leasing vs. Building: If the business is uncertain, leasing may offer more flexibility; if the business is stable, building may be more cost-effective.
Conclusion
We’ve covered the basics of manufacturing warehouses, but there are still a lot of details that you need to verify when you’re actually setting them up, so if you’re not an experienced manager, you may want to seek out a team of professionals to assist you.
If you have the time now, you may want to contact us immediately! We are not only a professional warehouse rack manufacturer, but also a professional warehouse planning and design master. More than 20 years of global service experience will surely bring you satisfactory and reliable solutions.
