How to Build a Lean-Green Warehouse Network

For years, Chicago Consulting has published its annual list of the 10 Best Warehouse Networks, which is based on an analysis of the lowest possible transit lead-times to customers represented by the U.S. population. Apparently even distribution channels can be "green" because this year the consulting firm has renamed its list as the 10 Best Lean-Green Warehouse Networks. Curiously, the criteria for choosing these networks remains identical to previous years.

At any rate, the goal is to help manufacturers and distributors identify the shortest distance between a warehouse and customers, so that the fewest number of truck miles have to be driven, and customers will receive shipments in the shortest amount of time.

As in previous years, the single-best city to locate a warehouse is Bloomington, Ind., because, according to managing partner Terry Harris, "it provides the shortest distance to the U.S. population and, therefore, the lowest outbound distance, and takes the least amount of time. Some shipments from Bloomington would travel 100 miles, some 200 miles and still others over 1,000 miles, but the average from Bloomington is the least possible." By the same token, the best network placement of two warehouses would locate them in Ashland, Ky., and Palmdale, Calif.

Chicago Consulting's calculations are based on the population disbursement throughout the country, and assume a generic company's customer pattern. "While many companies do not sell products directly to individuals, population is a good representation of many companies' customer patterns," Harris explains.

"Cost and service are the most important criteria when designing warehouse networks," he adds. Other relevant issues include highway infrastructure, real estate issues, labor climate, and nowadays, carbon footprint concerns.

According to Harris, the unpredictable fluctuations in fuel prices have greatly added to manufacturer's transportation expenses, leading some to rethink their warehouse networks. "Companies are expending extraordinary efforts to rein in costs," said Harris, "and re-engineering their warehouse networks is a high leverage area to start." Some companies, he points out, are adding locations, some are decreasing them and others are moving existing warehouses to new locations.

# of Warehouses	Avg. Lead Time to Customers (Days)	Best Warehouse Locations
One	2.28	Bloomington, Ind.
Two	1.48	Ashland, Ky.; Palmdale, Calif.
Three	1.29	Allentown, Pa.; Palmdale, Calif.; McKenzie, Tenn.
Four	1.20	Lancaster, Pa.; Palmdale, Calif.; Chicago, Ill.; Meridian, Miss.
Five	1.13	Summit, N.J.; Palmdale, Calif.; Chicago, Ill.; Dallas, Texas; Macon, Ga.
Six	1.08	Summit, N.J.; Pasadena, Calif.; Chicago, Ill.; Dallas, Texas; Macon, Ga.; Tacoma, Wash.
Seven	1.07	Summit, N.J.; Pasadena, Calif.; Chicago, Ill.; Dallas, Texas; Gainesvillle, Ga.; Tacoma, Wash.; Lakeland, Fla.
Eight	1.05	Summit, N.J.; Pasadena, Calif.; Chicago, Ill.; Dallas, Texas; Gainesvillle, Ga.; Tacoma, Wash.; Lakeland, Fla.; Denver, Col.
Nine	1.04	Summit, N.J.; Alhambra, Calif.; Chicago, Ill.; Dallas, Texas; Gainesvillle, Ga.; Tacoma, Wash.; Lakeland, Fla.; Denver, Col.; Oakland, Calif.
Ten	1.04	Summit, N.J.; Alhambra, Calif.; Chicago, Ill.; Dallas, Texas; Gainesvillle, Ga.; Tacoma, Wash.; Lakeland, Fla.; Denver, Col.; Oakland, Calif.; Mansfield, Ohio