Warehouse Cleanout

Successful relocation of a warehouse starts with planning the warehouse cleanout, specifically: making informed decisions about which assets should be moved to the new location and which assets should be left behind to be liquidated. You can’t just assume that what you have in your existing location is an automatic asset in the new location. It may cost more to dismantle an asset and ship it than it cost to just replace it.

When it is time to plan your warehouse cleanout, here are the factors to consider when deciding what stays to be liquidated and what should be relocated:

1. Warehouse Cleanout Step 1: Assess the Warehouse Needs of the New Location

Based on the layout of your new warehouse, you will clearly map out the operational needs from inbound product flow, through storage, processing, packing, and on to shipping. The warehouse assets that go into establishing that operational workflow is specific and unique to every location. Factors like ceiling height, compliance requirements, and available square footage are going to change your asset requirements from one location to another.

Example:

• Location 1 has 8-foot-high shelves because the building has a 16-foot ceiling in a 10,000-square-foot storage area.

• Location 2 has 20-foot ceilings and an 8,000-square-foot storage area. To make the storage space adequate, 12-foot shelves are required.

Another aspect of a new location to consider is the availability and implementation of new inventory flow systems that include multiple zones of automation with subsystems like automated storage and retrieval (AS/RS) solutions, or robotic goods-to-person (GTP) systems. As the complexity of inventory flows increase, so do the need for technology that can keep up with that complexity. 

2. Warehouse Cleanout Step 2: Assess How to Operate in the Warehouse Relocation Transition

The biggest factor in what assets to take and which to liquidate is how you plan to operate during the transition. The two main scenarios are:

1. Pausing operations while the old warehouse is cleaned out and the equipment is relocated to the new location. Operation resumes when the new location is brought online once assets are moved.

2. Operations continue at the old facility while the new warehouse is set up.

The challenge with scenario 1 is that it complicates the move and requires extensive planning and perfect execution. Scenario 1 also takes longer, and any loss of operation time equals a loss in revenue. Scenario 2 is made more feasible by the availability of material handling equipment like forklifts and other machinery that can be rented while other assets are relocated.

3. Warehouse Cleanout Step 3 Establish the cost of operating the new warehouse  

To help decide the operational flow of the move, start with getting pricing to completely outfit the new facility with new or used warehouse equipment installed directly. Pricing should include installation, transportation, and all other associated costs. Basically, price out the entire space as if you were going to start using it immediately.

4. Warehouse Relation Step 4: Establish the value of your current warehouse equipment

Knowing the true value of the warehouse equipment you are currently using is based on the resale value of the assets, the cost of dismantling it, shipping it, and installing it at the new location.

• Dismantling and Installing

Dismantling the used equipment and preparing it for shipping must be done carefully to ensure that the assets are not damaged during shipment and can be properly reassembled and installed at the new facility.

• Shipping

Miles driven are important of course, but you need to account for the specific trucks that can be equipped to handle large warehouse equipment.  They can be hard to find and expensive to operate.

• Value of the used warehouse equipment

Used warehouse equipment and material handling equipment both can be sold locally and partially offset the cost of a warehouse relocation.

Bringing all these aspects of your warehouse relocation, your current assets, and their true values is the only way to truly make an informed decision about your warehouse move.

Example:

• New Shelving is $10,000.
• Your existing shelving will cost $2,000 to dismantle, $6,000 to ship, and $3,000 to install.
• The liquidated value of the old shelving is a rebate of $2,000.

In this example, you can save $1000 by dismantling and moving the equipment, but you would need to account for the time and resources to manage the work, as well as the loss of revenue from not being able to fulfill orders while relocating your warehouse operations.

1GNITE has the experience and expertise to help you navigate a warehouse relocation, the liquidation of warehouse assets, and a warehouse cleanout.  Contact us today and let’s talk about your relocation project.