Warehousing and Distribution

There's a question that sits at the heart of every supply chain, and most organisations don't ask it often enough: is our distribution network actually set up to deliver what we're promising to customers, at a cost we can sustain?

It sounds simple. It's anything but. Network design and warehouse strategy are among the most consequential decisions a business makes — and they're also among the stickiest. Once you've signed a lease, built out a facility, and configured your operations around a particular footprint, you're locked in for years. Get it right and you create a platform for lower costs, faster service, and the flexibility to adapt as conditions change. Get it wrong and you bake inefficiency into the business in ways that are expensive and painful to undo.

In Australia right now, these decisions carry even more weight than usual. The industrial property market is shifting, customer expectations keep ratcheting up, construction costs remain elevated, and the economics of distribution are being reshaped by everything from e-commerce growth to interest rate movements. Organisations that approach network design and warehouse strategy with rigour — grounded in data, not gut feel — will outperform those that don't.

This article lays out how to think about these decisions in the current Australian context, where the common pitfalls are, and how to avoid them.

Why Network Design Matters More Than Most Executives Realise

When people hear "supply chain strategy," they tend to think about procurement contracts, transport rates, or warehouse management systems. Those things matter, but they're all downstream of a more fundamental question: what does the physical network look like?

Network design determines how many distribution centres, warehouses, cross-docks, or fulfilment centres you operate, where they're located, which customers and channels each facility serves, and how inventory is positioned across the network. It shapes your transport costs, your service levels, your working capital, and your ability to respond when things go wrong — whether that's a supplier delay, a demand spike, or a natural disaster.

In Australia and New Zealand, geography amplifies every network decision. The distances between population centres are vast. Freight costs are a significant share of total cost-to-serve. Labour markets vary enormously from one corridor to the next. And port dependencies — particularly for import-heavy businesses — add another layer of complexity that has to be factored into any serious network analysis.

A centralised network with one or two large distribution centres might offer economies of scale in warehousing but push transport costs higher and extend delivery times to regional areas. A decentralised network with multiple smaller facilities brings you closer to customers but increases inventory, complexity, and overhead. The right answer depends entirely on the specifics of your business — your product characteristics, order profiles, service commitments, and growth trajectory.

This is where strategy and network design capability becomes essential. It's not about having a strong opinion on centralised versus decentralised. It's about having the analytical tools and the industry experience to model both options (and everything in between), stress-test them against realistic demand scenarios, and quantify the trade-offs so leadership can make an informed decision.

The Current State of Australia's Industrial Market

Anyone making network decisions in 2026 needs to understand what's happening in the industrial property market, because the window of opportunity is shifting.

Through 2024 and into early 2025, Australia's industrial vacancy rates edged upward as a wave of new supply entered the market. National vacancy averaged around 2.8% through the first half of 2025 and rose to approximately 3.7% by the third quarter — still below the pre-2020 equilibrium of 5%, but enough to give tenants more negotiating leverage than they'd had in years.

That breathing room won't last. Speculative supply is forecast to fall by around 46% over the 2026–2027 period compared to the prior two years. Construction feasibility constraints — driven by elevated build costs and higher required economic rents — are causing developers to delay or shelve projects. At the same time, consumer spending is recovering, leasing activity is strengthening, and gross take-up is projected to reach 3.3 million square metres in 2026 and climb to 3.8 million in 2027.

The result is a market that's heading back towards tighter conditions. National vacancy is expected to peak at just under 4% by mid-2026 before declining to around 2.5% by late 2027. Prime net face rents are forecast to grow at roughly 3.9% per annum through 2026 and 2027, with effective rental growth accelerating as incentives pull back.

For occupiers, the implication is clear: the time to be making network decisions is now, while there's still some choice in the market. Waiting 18 months and hoping conditions will be the same is a gamble that the data doesn't support.

But — and this is the critical point — making a property decision is not the same as making a network decision. Signing a lease because a good deal is available in a particular submarket is not a strategy. It's a reaction. The property decision should follow the network decision, not the other way around. You need to know what network configuration best serves your business before you go looking for buildings.

Where Businesses Get Network Design Wrong

Having worked with organisations across retail, FMCG, government, manufacturing, and services, there are a handful of patterns that come up again and again when network design goes off the rails.

Starting with the building, not the question. This is the most common mistake. A lease comes up for renewal, a property agent presents an opportunity, or the board decides "we need a new DC." The response is to go find a building. But without first understanding the flows, the demand patterns, the cost-to-serve, and the service requirements, you end up with a facility decision disconnected from the network it sits in. The right sequence is always: strategy first, then network modelling, then facility requirements, then property search.

Ignoring the total cost picture. Transport and warehousing costs behave inversely — push one down and the other tends to go up. Organisations that optimise for warehouse cost alone (usually by consolidating into fewer, larger facilities) often find their freight bill blows out. The reverse is also true. A proper network model captures warehousing costs, inbound and outbound transport, inventory carrying costs, and fixed overheads to give a genuine total cost-to-serve view. Without this, you're optimising one line item at the expense of the whole.

Designing for today, not for where you're heading. Networks have long asset lives. Leases are typically 5–10 years, and the capital invested in fit-out, racking, and automation can take even longer to pay back. A network designed purely for today's volumes and channels may be undersized — or oversized — within a few years. Good network design incorporates demand scenarios that account for growth, channel shifts, seasonal variation, and potential disruption. This is where planning and operations capability intersects with network strategy.

Underestimating the labour dimension. Two sites that look identical on a spreadsheet can perform very differently depending on the local labour market. Wage rates, turnover, skills availability, commute patterns, and proximity to competing employers all affect your ability to staff a facility reliably. In Australia, where workforce planning and scheduling is already a challenge for most sectors, this should be a first-order consideration in any location analysis — not an afterthought.

Treating the warehouse as a black box. Network models tend to treat warehouses as cost-per-pallet or cost-per-order nodes. That's fine at a strategic level, but it's not enough when you're making real investment decisions. The internal design of the warehouse — layout, storage media, pick methodology, dock configuration, automation level — directly determines throughput capacity, cost, accuracy, and scalability. Network design and warehouse design need to be done in parallel, not sequentially, because they influence each other in ways that matter.

Warehouse Strategy: More Than Layout and Racking

A warehouse strategy defines what your facilities need to do, how they should be configured to do it, and what investments are required to achieve the desired performance. It sits between your network strategy (which tells you how many facilities, where, and what they serve) and your operational execution (which is the day-to-day running of the site).

For Australian businesses, getting warehouse strategy right is particularly important because of several converging pressures.

E-commerce continues to grow. Online fulfilment demands a fundamentally different warehouse operation than store replenishment. Picking individual items rather than full cases or pallets, managing returns at scale, and meeting next-day or same-day delivery windows all require specific design considerations — from pick-face layout to packing stations to outbound sortation. Many businesses that bolted on e-commerce capability during the pandemic are now discovering that their warehouse operations aren't scaled or designed for the volumes that online represents as a permanent channel. Designing warehouses that can serve both store and online channels efficiently is one of the core challenges for in-store and online retail supply chains.

Labour is scarce and expensive. Australia's warehouse workforce has been under pressure for several years, and the outlook doesn't suggest that's about to change. This makes the case for automation more compelling — but automation is a significant capital investment that needs to be justified against realistic volume projections and operational requirements. The question isn't whether to automate; it's what to automate, when, and to what extent. A phased approach — sometimes called "automation-when-ready" — designs the facility to accommodate future automation while being operationally effective with manual or semi-automated processes in the near term.

Sustainability expectations are rising. Warehouses consume significant energy, particularly when refrigeration is involved. The design of a facility — its orientation, insulation, lighting, HVAC, and solar potential — affects both operating costs and emissions. For organisations with supply chain sustainability commitments, warehouse strategy needs to integrate environmental performance from the outset, not treat it as a retrofit.

Construction costs remain elevated. Building a new warehouse, or fitting out an existing shell, is substantially more expensive than it was three years ago. Material costs, labour shortages in the construction industry, and longer approval timelines all contribute. This means every design decision carries more financial weight, and the cost of getting it wrong — overbuilding, underspecifying, or choosing the wrong location — is higher than it's been in a long time.

Connecting Network and Warehouse Decisions

One of the most common structural problems we see is a disconnect between network-level decisions and facility-level decisions. The network team models the optimal number and location of DCs. The property team goes and finds buildings. The operations team then has to make whatever they've been given actually work. Each group is doing sensible things in isolation, but the lack of integration means the result is suboptimal.

A centralised network with one or two large facilities might call for a high-throughput, automated warehouse with significant investment in materials handling equipment. A decentralised network with several regional facilities might favour smaller, more flexible operations with lower automation and greater reliance on labour. If the network configuration and the warehouse design aren't aligned, you end up with facilities that are either over-engineered for the flows they handle or under-equipped for the volumes they need to process.

At Trace Consultants, we deliberately run network and warehouse design modelling in parallel. The network model tells us the optimal flows, and the warehouse design work tells us what it takes to process those flows operationally. The two inform each other iteratively until we arrive at a solution that works on paper and will work in practice.

This integrated approach also extends to transport. Dock door numbers, yard layout, staging space, and dispatch scheduling all depend on the outbound transport plan — which in turn depends on the network configuration. Similarly, inbound logistics — container receival, cross-dock operations, putaway sequencing — need to be designed around the reality of how product arrives, not an idealised assumption.

The Role of Data — and Its Limits

Network design and warehouse strategy both depend heavily on data: demand data, order profile data, SKU data, transport data, cost data, and facility performance data. Good data enables good modelling. Poor data produces models that look precise but are actually misleading.

The first step in any network or warehouse project should be a thorough data review — cleaning, validating, and enriching the data to ensure it's fit for modelling. This includes understanding what the data does and doesn't capture. Most ERP and WMS systems will give you transactional data, but they rarely capture the nuances that affect warehouse design — things like handling complexity, product fragility, storage requirements, or the real-world constraints that operators deal with every day.

This is why the best network and warehouse design work combines quantitative modelling with qualitative insight. The model gives you the numbers, but experienced operators and site managers give you the context that turns a theoretical optimum into a practical solution. It's also why technology selection — from network modelling tools to WMS platforms — should be guided by what your organisation actually needs, not by what's newest or most feature-rich.

What About 3PL Versus In-House?

For many Australian businesses, the network design question is inseparable from the operating model question: should we run our own warehouses and transport, or outsource to a third-party logistics provider?

There's no universally right answer. In-house operations offer control, visibility, and the ability to invest in capability over time. 3PL arrangements offer flexibility, variable cost structures, and access to scale without capital commitment. Most organisations end up with some hybrid — perhaps owning their primary DC and using 3PLs for overflow, regional distribution, or specialised services.

What matters is that the operating model decision is made in the context of the network strategy, not independently of it. A poorly structured 3PL arrangement can erode the benefits of an optimised network, while a well-designed outsourcing model can extend the network's reach without proportional cost increases. Trace Consultants helps organisations evaluate insource versus outsource options as part of the broader network design process, ensuring the operating model supports the strategy rather than constraining it.

Resilience: The Dimension That's Easy to Forget

Most network design exercises focus on cost and service — and rightly so, since these are the primary performance dimensions. But the events of the past five years have taught us that resilience deserves equal attention.

A network that's optimised purely for efficiency can be dangerously fragile. A single DC serving the entire east coast is efficient right up until it's affected by flooding, fire, industrial action, or a pandemic-related shutdown. At that point, the cost of disruption far exceeds whatever savings the centralised model delivered.

Building resilience into network design means designing for redundancy where it matters — whether that's maintaining safety stock in a secondary location, designing facilities that can flex capacity, or structuring supplier and transport contracts to enable rapid redirection. Trace Consultants' resilience and risk management practice helps organisations stress-test their networks against realistic disruption scenarios and build contingency into their supply chain architecture.

How Trace Consultants Can Help

At Trace Consultants, we see network design and warehouse strategy as two halves of the same strategic coin. Our approach brings them together into an integrated process that delivers clear, quantified recommendations aligned with your commercial objectives.

Here's what that looks like in practice:

Rapid diagnostic and cost-to-serve analysis. We start with a sharp review of your demand flows, service promises, and current cost structure to identify the two or three levers that will have the greatest impact. This work gives leadership a clear picture of where the opportunities are before committing to a full design programme.

Scenario-based network modelling. We model multiple network configurations — varying facility count, locations, and inventory posture — and quantify the transport, warehousing, and inventory implications of each. We include emissions estimates and risk stress-tests so decisions are robust, not just efficient. Our strategy and network design team brings deep experience across retail, FMCG and manufacturing, government and defence, and health and aged care sectors.

Warehouse strategy and design. We develop layout options, storage media recommendations, process designs, and automation roadmaps tailored to your operational reality. Workforce requirements and safety are embedded from the start, not bolted on at the end. Our warehousing and distribution practice has helped organisations achieve significant reductions in warehouse operating costs and meaningful improvements in throughput and fulfilment accuracy.

Implementation support. Strategy without execution is just a slideshow. We stay involved through property fit-out, process change, systems implementation, and project and change management to ensure that what's designed on paper translates into real-world performance.

Independent, solution-agnostic advice. We don't sell property, equipment, or software. Our recommendations are shaped entirely by your operational requirements and strategic objectives. That independence is what allows us to give advice that genuinely serves our clients' interests.

The Stakes Are Higher Than They Look

Network design and warehouse strategy decisions lock in a significant portion of your cost base and service capability for years. In an environment where industrial property is tightening, construction costs remain high, customer expectations continue to rise, and the competitive landscape shifts fast, these decisions deserve more rigour than they typically receive.

The organisations that approach this work systematically — starting with strategy, grounding decisions in data, modelling scenarios, integrating network and facility design, and planning for resilience — will build supply chains that perform today and adapt tomorrow. Those that make property decisions opportunistically, design warehouses in isolation from the network, or skip the analytical work will find themselves locked into suboptimal configurations that are expensive to unwind.

If your network was designed for a different era — fewer channels, different volumes, a different cost environment — it's probably costing you more than you realise. And with the Australian industrial market heading into a tightening cycle, the window to act on better information is closing.

Trace Consultants can help you see clearly, decide confidently, and move quickly. We keep it practical, transparent, and focused on outcomes your board, your operations team, and your customers will recognise.

Trace Consultants is an Australian supply chain and procurement consultancy with offices in Sydney, Melbourne, Brisbane, and Canberra. To discuss your network design or warehouse strategy, speak to one of our team.

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Warehouse Design in Australia: From Layout to Launch

It’s 5:45am and the warehouse is already awake.

A few forklifts are warming up near receivals. Someone’s chasing a missing pallet that “definitely arrived yesterday”. The pick team is doing that half-jog you only see when cut-off times are looming. And out in the yard, a driver is waiting for a dock door that’s been blocked by… a row of staging cages no one planned for.

This is the bit people forget when they talk about warehouse design.

On paper, most layouts look neat. Straight aisles. Clean zones. Logical flow arrows. In the real world, a warehouse is a living system—full of trade-offs, exceptions, and the daily battle between “what we planned” and “what actually showed up”.

Done well, warehouse design makes the work feel easier. Travel drops. Congestion fades. Inventory becomes findable. Productivity lifts without heroics. Safety improves because the site isn’t constantly improvising.

Done poorly, the warehouse becomes a permanent work-around. You pay for it twice: once in capital and rent, then again every day in labour, rework, damage and service misses.

This article is a practical guide to designing warehouses for Australian conditions—big distances, tight labour markets, variable demand, and industrial property constraints. It’s written for operators, supply chain leaders, CFOs and project teams who want a facility that runs like the picture.

If you’re looking for support with warehouse strategy, layout design, automation business cases, or delivery, start here: Warehousing & Distribution

What “warehouse design” really means (and why it’s not just CAD)

Warehouse design is the deliberate alignment of five things:

1. Service promise (what you’re committing to customers, stores, patients, or projects)
2. Flow (how goods, people, and equipment move through the site)
3. Space (storage, staging, work areas, amenities, growth capacity)
4. Operating model (roles, shifts, productivity drivers, governance, KPIs)
5. Technology & equipment (WMS, scanning, MHE, conveyors, automation)

A layout is only one output. The real outcome is a warehouse that hits service levels at the lowest sustainable cost-to-serve, with safety and resilience built in.

This is also why warehouse design can’t be separated from bigger footprint decisions. If you’re still deciding how many sites you need, how big they should be, or where they should sit, read this next: Strategy & Network Design and this related insight: Network Optimisation for DCs and Warehousing

The starting point: get brutally clear on your “service promise”

Before anyone draws a line, answer these questions in plain English:

• Who are we serving (stores, eCommerce customers, trades, hospitals, branches, projects)?
• What does “good service” mean (next day, same day, 2–5 days, fixed delivery windows)?
• What are the hard cut-offs (order cut-off, dispatch windows, carrier collections)?
• How spiky is demand (weekly peaks, seasonal peaks, promotions, campaign events)?
• What’s the tolerance for backorders, substitutions, partials, split shipments?

A warehouse designed for “ship everything by 3pm” looks very different to one designed for “dispatch twice a day” or “replenish stores overnight”.

If the service promise isn’t explicit, design teams tend to optimise for the wrong thing—usually density—then wonder why the operation feels like it’s running uphill.

The second truth: your SKU profile will humble you (let it)

Most warehouses don’t struggle because they lack space. They struggle because the space doesn’t match the SKU reality.

At minimum, you need a clean view of:

• SKU count and active range (what actually moves vs what exists in the master file)
• Velocity (lines/day, picks/day, cartons/day by SKU)
• Cube and weight (carton cube, pallet cube, awkward shapes, heavy items)
• Handling unit (pallet, carton, inner, each)
• Storage needs (ambient, chilled, frozen, dangerous goods, quarantine, secure)
• Order profile (average lines/order, units/line, single-line vs multi-line, burstiness)
• Inbound profile (containers, full pallets, mixed pallets, supplier compliance levels)
• Exceptions (returns, rework, relabelling, kitting, value-add)

This is where a lot of design programs go sideways: they use high-level volume assumptions, then lock in a building and racking approach that fights the real pick profile.

If you want to lift the quality of your demand and inventory inputs before you lock a design, it’s worth exploring: Planning & Operations

Flow first: design the “physics” of your warehouse

A simple rule: every unnecessary touch becomes labour, time, and risk.

Start by mapping end-to-end flows:

Inbound flow

• Gate entry and yard control
• Unloading and receivals
• Check-in, QA, quarantine, temperature control (if needed)
• Putaway and replenishment

Storage flow

• Reserve storage (bulk)
• Forward pick faces (high access)
• Slow movers (high density, lower access)
• Special zones (returns, hold, DG, secure, oversized)

Outbound flow

• Picking and consolidation
• Packing and labelling
• Staging and marshalling
• Dispatch and carrier handover

Exceptions flow (the silent killer)

• Returns processing
• Damaged stock
• Rework / relabel
• Short picks / investigations
• Stocktakes / cycle counts

A warehouse that handles exceptions “wherever there’s room” will always feel messy and slow. Exceptions need designed space, not borrowed space.

Capacity planning that doesn’t lie

Most capacity plans get one thing wrong: they treat warehousing like a static storage problem.

In reality, you’re designing for two types of space:

1) Storage space

• pallets, cartons, eaches
• peak inventory (not average)
• slotting rules, safety stock policy, seasonal build

2) Operational space

• dock staging and marshalling
• pick/pack benches and accumulation
• value-add zones
• returns and quarantine
• MHE parking, charging, battery swap
• amenities and safety clearances

Operational space is where productivity is won or lost—and it’s the first thing that gets squeezed when designs chase density.

If you’re dealing with growth or property constraints, site selection and expansion options matter as much as layout. This is a useful companion read: Warehouse Site Selection Criteria

Docks and yards: where good warehouses quietly win

Ask any operator where congestion starts, and you’ll usually end up at the loading dock.

Dock design isn’t glamorous, but it drives:

• receivals cycle time
• dispatch cut-off discipline
• carrier performance
• safety risk (pedestrian/forklift/vehicle interaction)
• damage and rework

Key considerations:

• Do you need cross-dock capability (in-to-out within hours)?
• What’s the mix of vehicles (rigids, semis, B-doubles, vans)?
• Do you need separate inbound and outbound doors to avoid conflict?
• How are pallets/roll cages staged so they don’t choke the dock face?
• Is the yard designed for real turning circles, not theoretical ones?
• Where do drivers wait, check in, and safely move?

If docks and cross-dock design are central to your project, this deeper dive is worth bookmarking: Warehouse, Cross Dock and Loading Dock Design in Australia

Storage and racking: density is not the goal—the right density is

Racking decisions should follow flow and order profile, not the other way around.

Common storage approaches include:

• Selective pallet racking (flexible, high access)
• Double-deep (higher density, less access)
• Very Narrow Aisle (VNA) (high density, specialist MHE, discipline required)
• Drive-in/drive-through (high density for uniform SKUs, FIFO challenges)
• Pallet live / carton live (flow lanes, great for velocity, needs good replenishment)
• Mezzanines and shelving (each pick, slower movers, ergonomics matter)
• High-bay / AS/RS-ready (capex heavy, strong business case required)

The trap: choosing a high-density solution that creates longer travel, more replenishment churn, and more congestion—then wondering why labour blew out.

A practical design principle: protect your high-velocity work. Put fast movers where access is easiest and travel is shortest, even if that means “wasting” some prime cubic metres.

Pick-face design: the lever that often beats automation

If you want the biggest ROI in most warehouses, it’s usually here.

Good pick-face design aligns:

• SKU velocity
• order profile
• replenishment discipline
• ergonomics and safety
• pack-out flow

A few proven moves:

• Build pick faces around velocity (ABC), not product category.
• Reduce “replenishment panic” by designing buffer capacity for fast movers.
• Keep replenishment paths separate from pick paths where possible.
• Standardise pack stations so the site isn’t reinventing the process each shift.
• Design for the unit of work (each/carton/pallet), not just the SKU.

Automation can be powerful—but a messy pick face will just automate mess faster.

Technology and automation: start with the bottleneck, not the brochure

Warehouse automation is no longer rare in Australia—but it’s also not a guaranteed win.

Before you commit, pressure test:

• Is the volume stable enough for automation to stay utilised?
• Is the SKU profile compatible (size, weight, variability)?
• Are you solving a real constraint (labour availability, throughput, accuracy)?
• Do you have the right master data and disciplines to support it?
• Can the building and sprinkler design support the chosen equipment?

For many organisations, the best “first automation” is actually:

• stronger WMS configuration
• better RF scanning discipline
• slotting and replenishment rules
• labour planning and engineered standards
• dock scheduling and yard control

If WMS selection or uplift is part of your journey, this related insight is a handy overview: Warehousing with Top-Tier Warehouse Management Systems

And if you want broader support on the tech side (requirements, vendor selection, implementation governance), see: Technology

Safety by design: don’t retrofit it later

Safety isn’t a signage project. It’s a layout decision.

High-impact safety design elements include:

• separated pedestrian and MHE routes (barriers, crossings, visibility)
• controlled entry points and safe driver amenities
• line-of-sight at intersections (no blind corners)
• speed management through layout (not just policies)
• safe charging areas and battery handling controls
• ergonomic pick heights and workstation design

When safety is bolted on after the layout is “final”, it usually means:

• lost capacity
• awkward detours
• frustrated operators
• and risk that never really goes away

Sustainability: warehouse design decisions that cut cost and carbon

Sustainability in warehouses isn’t just solar panels (though they help). It’s also:

• smarter travel paths (less energy, less wear, fewer touches)
• LED and daylighting design that supports visibility and safety
• insulation and HVAC decisions that improve comfort and retention
• waste and packaging flows that don’t clog operational space
• electrification readiness (EV fleets, MHE charging capacity, load management)

If sustainability outcomes need to be built into your warehouse or network program, see: Supply Chain Sustainability

Future-proofing: design for change, not just for Day 1

Australian warehouses rarely stay “as designed” for long. Growth, channel shifts, and range complexity arrive quickly.

Practical future-proofing looks like:

• expansion options (land, approvals, dock knock-outs, services capacity)
• modular racking zones that can be reconfigured
• allowance for mezzanine or additional pick modules
• IT and power designed for future automation (even if you don’t automate now)
• operational flexibility to handle new channels (B2B + D2C, store + parcel)

A warehouse that can’t adapt becomes expensive fast—because the only way to cope is labour.

The warehouse design process that actually works

A high-performing approach typically moves through clear stages:

1) Diagnose and define requirements

• current-state performance and constraints
• SKU and order profile analysis
• service promise definition
• capacity and growth modelling
• operating model and process design
• site options and constraints

2) Concept design (options, not answers)

• multiple layout concepts with clear trade-offs
• flow simulations and stress tests
• equipment and technology fit assessment
• capex/opex implications and risk

3) Detailed design and procurement support

• functional design brief and operational requirements
• racking, MHE, automation specs (if relevant)
• technology requirements (WMS/WES/WCS)
• tender evaluation support and vendor alignment

4) Implementation, commissioning, stabilisation

• project governance and PMO
• cutover planning and training
• SOPs, standard work, and KPI rhythm
• go-live hypercare and continuous improvement

The biggest predictor of success: operators are involved early, and the design is tested against real volumes and real work.

If your project needs strong delivery discipline (timeline, stakeholders, risks, vendors), this may be relevant: Why Us

Common traps (we see these a lot)

1. Designing for average volume, then being shocked by peak.
2. Letting the building dictate the operation instead of aligning the building to the service promise.
3. Ignoring the yard until the end (then discovering you can’t marshal safely).
4. Over-investing in automation before fixing master data and process discipline.
5. Under-sizing returns and exceptions, then letting them colonise the warehouse.
6. Chasing density at the expense of flow, making labour the permanent cost of “saving space”.
7. Treating WMS as an IT project, not an operational capability change.

Avoiding these isn’t about perfection—it’s about asking the right questions early.

How Trace Consultants can help with warehouse design

Warehouse design sits right at the intersection of strategy and execution—where decisions become expensive quickly, and where “good enough” layouts can quietly drain millions over time.

Trace Consultants supports Australian organisations across the full warehouse design journey, including:

Warehouse strategy and requirements definition

We help you define the service promise, volume drivers, and functional requirements that shape everything that follows—so the design is grounded in how your operation needs to run, not just how it could look.

Explore: Warehousing & Distribution

Data-led layout design and option evaluation

We build and test layout options against real order profiles, SKU velocity, and growth scenarios. The goal is a decision-ready recommendation with clear trade-offs—not a single “perfect” drawing.

Capacity, space planning and productivity uplift

We quantify what space is needed (storage + operational), identify pinch points, and design for flow so you’re not paying for congestion every day.

Automation and technology fit (with a business case that stands up)

Where automation makes sense, we help define the right scope, pressure test assumptions, and evaluate options. Where it doesn’t, we’ll tell you that too—and focus on the highest-return levers first.

Explore: Technology and Solutions

WMS requirements, selection and implementation governance

If WMS uplift is part of the program, we support requirements definition, vendor comparison, implementation planning, and operating model alignment—so the system actually lands in the business.

Project delivery support (PMO), commissioning and stabilisation

We can provide hands-on support to keep complex warehouse programs moving—from vendor coordination and risk management through to go-live readiness and stabilisation.

If you’d like to talk through your warehouse design project—whether it’s a redesign, a new build, a relocation, or an automation decision—reach out here: Contact Trace

A practical checklist for your next warehouse design workshop

Bring these to the table and you’ll save weeks:

• Current SKU file (cleaned, with dimensions/weights if possible)
• 12–24 months of orders (lines, units, profiles, cut-offs)
• Inbound receipts and supplier profiles (pallet quality, compliance)
• Peak inventory history and forward demand assumptions
• Current layout, racking schedule, dock door count, yard constraints
• Current pain points (and where the workarounds live)
• Service KPIs and customer commitments
• Safety incidents and high-risk zones
• Growth scenarios (range growth, channel shifts, new regions)

FAQs: warehouse design in Australia

What is warehouse design?

Warehouse design is the end-to-end planning of layout, storage systems, flows, operating model, safety controls, and technology to meet service targets at the lowest sustainable cost.

How do I know if my warehouse needs redesigning?

Common signs include persistent congestion, rising labour hours per unit, poor pick accuracy, staging overflow, unsafe interactions between people and equipment, and a constant reliance on “temporary” solutions.

What’s the difference between warehouse layout and warehouse design?

Layout is the physical arrangement. Design includes layout plus process, staffing model, technology, equipment, safety, and the end-to-end flows that drive daily performance.

Should we automate our warehouse?

Automation can be valuable when it solves a real constraint (throughput, labour availability, accuracy) and fits your SKU and volume profile. It works best when process discipline and master data are already strong—or are being fixed as part of the program.

How do you future-proof a warehouse?

Design for flexibility: modular zones, expansion pathways, scalable dock and power capacity, and layouts that can evolve as order profiles and channels change.

Closing thought

Warehouse design is one of those decisions that looks operational—but behaves strategic. It shapes service, labour, safety, scalability, and the daily reality for your team for years.

If your warehouse is due for a rethink, the best time to act is before the “temporary overflow” becomes permanent—again.

When you picture your warehouse twelve months from now, do you see a site that’s calmer and more predictable… or one that’s still relying on heroics to hit cut-off?

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Walk into a manufacturing warehouse on a Monday morning and you can usually tell — within minutes — whether the site is set up to win.

You’ll see raw materials arriving early, production planners chasing a late component, a forklift trying to squeeze past a pallet left “temporarily” in a travel aisle, and finished goods staging creeping into any spare corner because dispatch is under pressure. Someone will be doing something manual that they shouldn’t be doing (because “it’s faster”), and someone else will be waiting (because the process design didn’t anticipate the real constraint).

Most manufacturing leaders don’t set out to design warehouses like this. It happens gradually — one growth spurt, one customer requirement, one new product line, one more pallet position, one more “quick fix” at a time.

But here’s the uncomfortable truth: in manufacturing supply chains, warehouse design is not a facilities decision. It’s an operating model decision. It shapes how reliably you feed the line, how truthfully you hold inventory, how safely your team works, how quickly you ship, and how much cash you tie up while doing it.

This article is a practical, Australian-focused playbook for designing manufacturing warehouses that perform in the real world — where labour is tight, distances are big, land is expensive, and variability is the norm.

What “warehouse design” really means in manufacturing

When people say “warehouse design”, they often picture racking layouts and floor markings. That’s part of it — but it’s the last part you should lock in.

In manufacturing, warehouse design is the deliberate alignment of:

• Flow (how materials and finished goods move)
• Space (where inventory is held, staged, quarantined, kitted, packed)
• Operating model (roles, supervision, KPIs, shift profiles, standard work)
• Technology (WMS, scanning, labels, master data, integrations, reporting)
• Material handling equipment (forklifts, conveyors, tuggers, pallet jacks)
• Automation (AS/RS, shuttles, conveyors, AMRs — where it makes sense)
• Safety and compliance controls (segregation, dangerous goods, quality holds, traceability)
• Industrial building constraints (dock doors, column grid, eaves height, sprinklers, slab, yard, traffic)

Get these elements working together and you reduce touches, travel, waiting, and errors. Get them out of sync and you create a warehouse that technically “fits” but operationally bleeds money.

Why manufacturing warehouses are different

Manufacturing sites are not just receiving and dispatch points. They are buffers, control towers, and risk mitigations for the factory itself.

You’re serving two customers at once

A manufacturing warehouse typically has two “service promises” running in parallel:

• Inbound-to-production flow: raw materials, components, packaging, consumables
• Finished goods flow: orders to distributors, retailers, projects, or direct customers

When warehouse design prioritises one flow and ignores the other, the site pays twice: production disruption and poor outbound performance.

Quality and compliance are physical realities

Manufacturing warehouses often need real, physical control points:

• Quarantine and QA holds
• Batch and lot traceability
• Temperature control (if required)
• Segregation (chemicals, allergens, incompatible goods)
• Rework and scrap streams

These are not “nice to haves”. They influence where inventory can sit, how it’s identified, and how quickly it can move.

Line-feeding, kitting, and WIP change the rules

Many manufacturing warehouses do more than store inventory. They:

• Kit components for work orders
• Sequence parts to match production runs
• Run scheduled line-feeding (“milk runs”)
• Manage WIP buffers and point-of-use replenishment

That introduces new design decisions: where kits are built, how they’re staged, how they’re scanned, and how replenishment is triggered.

Item characteristics matter more than pallet positions

Manufacturing sites carry awkward items: lengths, reels, drums, bags, fragile parts, and heavy goods. Designing around “pallet positions” alone misses the true constraints — handling methods, touch points, and safety risks.

The three outcomes good warehouse design must deliver

If you want a simple test of whether a warehouse design is worth backing, it should deliver three outcomes:

1. Production continuity
   The warehouse must reliably supply what production needs, when it needs it — without heroics.
2. Shipment performance
   Orders must leave on time, complete, correctly labelled, and in the right sequence.
3. Cost-to-serve control
   The operation should reduce touches, travel, and rework, and avoid embedding fixed cost into the wrong places.

Everything else — racking, forklifts, scanners, mezzanines, automation — is a means to those ends.

Start with operating truth: demand and production profiles

Warehouse projects fail when they start with drawings instead of data.

Before you sketch a layout, get clear on the profiles that drive design:

• Inbound profiles: pallets/cartons per day, supplier variability, non-compliance rates, container de-stuffing needs
• Production profiles: takt time, batch sizes, changeover frequency, critical components, line-side space constraints
• Outbound profiles: order shapes (lines per order, units per line), pallet vs carton vs each-pick, customer labelling requirements, peak windows
• Growth scenarios: base case, stretch case, and “we were wrong” case
• Constraints: yard capacity, dock limits, labour availability, building limitations, safety issues

The key is not just averages. You design for variability and peaks, because peaks create the conditions where errors, congestion, and safety incidents spike.

The core flows (and what “good” looks like)

A practical way to design is to map the left-to-right flows across the site and make each one predictable.

1) Receiving and QA

Good looks like:

• Receiving capacity sized for variability, not averages
• Clear segregation between receivals, QA hold, and putaway-ready stock
• Identification and scanning as early as possible
• Space for exceptions: damages, shortages, relabelling, rework triggers

Common failure pattern: inbound and outbound competing for the same space, creating congestion and forcing double handling.

2) Raw materials and components storage

Good looks like:

• Storage methods matched to handling needs (pallet racking, shelving, bins, cantilever, drum stores)
• Fast movers close to kitting and line-feed zones
• Slow movers in space-efficient zones (but still safely accessible)
• Replenishment treated as a core process, not an afterthought

3) Kitting and line-feeding

Good looks like:

• A clearly defined kitting zone with standard work and quality checks
• Simple visual management: what’s due, what’s late, what’s blocked
• Scan discipline that maintains inventory truth (work order consumption)
• Replenishment signals that don’t rely on “someone noticing”

4) WIP and rework flows

Good looks like:

• Defined WIP buffers with limits to prevent hidden build-ups
• Traceable status: good, hold, rework, scrap
• Minimal backtracking across the floor

5) Finished goods and dispatch

Good looks like:

• Staging lanes designed for how loads are built (route, customer, sequence)
• Packing and labelling positioned to protect flow (not stuck where it causes backtracking)
• Dispatch buffers sized to carrier behaviour and cut-offs
• Clear separation between packed-ready, QA hold, and returns

Layout principles that matter more than “maximum pallet density”

Design for flow before density

A building can be full of racking and still perform badly. Density without flow increases travel, congestion, and touches.

Good design prioritises:

• Straight-through travel paths
• Minimal cross-traffic
• Clear inbound/outbound boundaries
• Reduced “touches” (each time a pallet is moved, you pay)

Slotting is a discipline, not a one-off project

Slotting drifts unless it’s governed. Good slotting includes:

• Classification rules (fast/medium/slow plus handling types)
• Pick face sizing rules
• A replenishment cadence and ownership
• New product introduction rules (where new SKUs go and how they’re reviewed)

Replenishment design drives throughput

If pick faces aren’t replenished predictably, pickers stop picking and start hunting.

Good replenishment includes:

• Forward pick areas sized for the task
• Simple triggers (min/max, kanban, WMS tasks)
• Time windows that avoid collisions with peak picking

Separate exceptions from the main artery

Returns, QA holds, damages, short picks, relabelling and rework should not sit in prime flow paths.

Every exception needs:

• A defined location
• A defined owner
• A defined process to resolve

Safety is designed in, not trained in

If the layout forces forklifts and pedestrians into conflict, no amount of training will fully solve it.

Design safety through:

• Segregated walkways and controlled crossings
• Line-of-sight improvements at corners and docks
• Staging lanes that don’t block aisles
• Storage systems matched to the right equipment

Building choices that can make or break the operation

In Australia, warehouse projects often stumble because building selection is treated as separate to the operating model.

Key building factors that drive outcomes:

• Dock configuration: number of doors, levellers, staging depth, cross-dock potential
• Yard design: turning circles, trailer parking, queue space, safe pedestrian separation
• Eaves height and sprinklers: impacts storage height and racking options
• Column grid: affects travel paths and racking efficiency
• Slab rating and flatness: critical for narrow aisle and certain automation
• Amenities and supervision points: visibility matters, especially in mixed-flow sites

A good warehouse design approach treats “building + operating model + technology” as one integrated decision.

Technology: when a WMS becomes non-negotiable

Manufacturing warehouses can survive on spreadsheets longer than they should — until they can’t.

Once you have a mix of:

• Batch and lot traceability
• Kitting and work order consumption
• Multiple storage types
• Customer labelling rules
• Production feeding plus outbound fulfilment
• Multiple sites or external logistics partners

…you need a warehouse management system (or a serious uplift in how you maintain inventory truth).

The smart sequence is:

1. Define the warehouse operating model and processes
2. Translate into system requirements and integrations
3. Choose technology that supports the design, not the other way around

Automation: where it pays in manufacturing (and where it doesn’t)

Automation is not a badge of maturity. It’s a response to specific constraints.

In Australian manufacturing, it’s often triggered by:

• Labour scarcity and rising cost
• Safety risk reduction
• Space constraints
• Throughput demands at peak
• Quality and traceability requirements

Where automation commonly pays:

• Dense pallet storage solutions (e.g., shuttles) when space is tight
• Conveyor for repetitive carton movement
• Goods-to-person for parts or component picking
• Automated labelling and verification
• Controlled internal moves where travel is predictable

Where it often fails:

• When data is poor (master data, location control, item dimensions)
• When exceptions are unmanaged
• When replenishment is inconsistent
• When the operation hasn’t stabilised its basic disciplines

Automation should amplify a good operating model — not compensate for a broken one.

A practical example: removing manual handling through design and system uplift

One of the clearest benefits cases in warehousing is when the layout, process design, and technology uplift combine to remove unnecessary touches. In one environment, a warehouse system and process uplift delivered a 90% reduction in manual handling and improved load optimisation through better planning and control.

The headline lesson: when you design the operating model, processes, and technology together, you can remove huge waste without relying on ongoing heroics.

The “growth trap”: when expansion exposes weak design

A familiar pattern across manufacturing is rapid growth outpacing warehouse capacity and ways of working. The operation starts to see:

• congestion and unsafe movements
• growing inventory in “overflow” locations
• rising picking errors
• production disruptions from late supply
• dispatch performance slipping during peaks

Growth doesn’t break warehouses — weak design does. Growth simply makes the problem visible.

The fix is rarely “more racking” alone. It’s a structured review across layout, process, systems, and a phased roadmap that stabilises performance first, then scales.

A method that works: how to approach warehouse design (or redesign)

If you want an approach you can defend to executives and operators alike, use a phased method.

Phase 1: Current state diagnostic (build a fact base)

• Map end-to-end flows from receiving to production supply to dispatch
• Analyse 6–12 months of operational data and profile constraints
• Assess layout, storage utilisation, travel paths, and touch points
• Identify root causes, not just symptoms

Phase 2: Future operating model (define how you will run)

• Design processes, roles, supervision, SLAs and KPIs
• Define zoning: receiving, QA, storage, kitting, WIP, finished goods, dispatch
• Define technology requirements, scanning standards, and integrations
• Confirm equipment strategy and automation pathways

Phase 3: Roadmap and investment logic

• Identify quick wins across process, layout, technology, and data
• Build a phased roadmap with decision gates (so you don’t overcommit early)
• Link initiatives to service outcomes, safety, accuracy, working capital, and cost-to-serve

This avoids the classic mistakes:

• jumping straight to CapEx before stabilising basics
• doing “process improvement” without changing physical and system constraints

KPIs that matter in manufacturing warehousing

If you want to know whether design decisions are working, track the KPIs that reveal operating truth:

• Inventory accuracy (by location and criticality)
• Dock-to-stock time and receiving compliance
• Pick/kit accuracy (errors by root cause)
• OTIF / DIFOT outbound performance
• Production line disruptions linked to warehouse supply (stockouts, late kits)
• Touches per unit (a proxy for waste)
• Labour productivity (measured consistently and fairly)
• Safety leading indicators (near misses, congestion hot spots)

A good design reduces the conditions that create KPI drift — it makes the right behaviour the easiest behaviour.

How Trace Consultants can help

Trace Consultants supports Australian manufacturers to design warehouses that are safer, faster, and more scalable — by aligning the operating model, physical design, and technology so the site can actually perform under real-world variability.

Our support typically includes:

• Warehouse diagnostics and performance improvement
• Warehouse layout and zoning design
• Operating model design (roles, processes, supervision, KPIs)
• Equipment and automation strategy (business case, fit-for-purpose design)
• WMS requirements, selection support, and implementation planning
• Network strategy (when the right answer isn’t just “bigger”)

Most importantly, we help clients avoid costly overbuild by focusing first on the constraints that actually drive performance — flow, touches, replenishment discipline, data integrity, and exception control — then investing in infrastructure and automation where it makes sense.

The bottom line: warehouses decide whether manufacturing strategies land

In manufacturing, warehouses are where strategy becomes physical reality.

When warehouse design supports reliable line-feeding, truthful inventory, safe operations, and disciplined dispatch, you get:

• fewer production disruptions
• better service performance
• lower cost-to-serve
• less working capital tied up in “just in case” buffers

When it doesn’t, the site compensates with overtime, expediting, and constant workarounds — until it hits a wall.

If you’re planning a new facility, expanding an existing site, or simply sick of fighting the same constraints every peak, warehouse design is one of the highest-leverage investments you can make — provided it’s approached as an operating model decision, not a floorplan exercise.

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