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The Warehouse Wake-Up Call: How to Avoid Expensive Mistakes in Facility Development
NBWA Associate Member Facility Planning, in their Associate Member Viewpoint, explores how well-planned facilities, optimized space and automation readiness help distributors operate more efficiently and adapt to changing demands.
By Mike Pratt, Principal, Facility Planning
mike@facility-planning.com | www.facility-planning.com
You don’t overhaul a warehouse every year. But whether you’re building from scratch, expanding or rethinking your current layout, the decisions you make today will either deliver long-term operational efficiency or create costly constraints that haunt your team for decades.
After decades in facility development — first with Anheuser-Busch and now as an independent project manager serving distributors nationwide — I’ve seen both the best and worst of warehouse planning. With SKU sprawl, product mix complexity and labor dynamics all shifting fast, facility decisions have never been more strategic or more complicated.
For many distributors, space planning has historically been reactive. But in today’s market: If you wait until you’re out of space, you’ve already lost efficiency — and margin. Building or expanding a facility isn’t just about pouring concrete; it’s about forecasting your future operation, whether that means leasing space, retrofitting or investing in automation readiness.
Here are six areas where today’s top-performing distributors are doing things differently — and where many still fall into expensive traps.
1. Don’t Touch It Twice
Product touches are one of the most underestimated costs in warehouse operations. Whether you’re manually moving pallets between short-term leased storage and your main facility, or shuffling inventory to make room for new SKUs, every additional move consumes time, labor and fuel — and often results in breakage or mis-rotation.
Some distributors try to avoid a capital investment by leasing overflow space “for a year.” That year often turns into three or four, and the silent cost of those multiple touches adds up to far more than an expansion would have cost in the first place.
If you’re leasing off-site storage, ask yourself:
- How often are you moving inventory between facilities?
- How are you tracking the labor and fuel costs?
- Are you accounting for breakage or rotation errors?
- How many times is product being handled before it’s delivered?
In nearly every case I’ve seen, multiple-handling costs can be quantified — and they justify expansion far sooner than expected.
2. More SKUs, Not More Volume: Plan for SKU Sprawl
Most distributors are seeing SKU counts climb even as overall volume plateaus or declines. The result? A dramatic shift in storage and picking needs. Buildings that were once “big enough” are now overwhelmed — not by volume, but by variety.
Whether you’re adding NA products, snacks, RTDs or wine, these items often have slower turns and higher complexity. That’s a planning challenge — especially if you’re trying to retrofit a 30-year-old facility with ceiling heights and dock configurations built for a different era.
It’s important to design for SKU velocity, not just square footage. That means:
- Higher clear heights for denser vertical storage
- Flexible zones that can be repurposed as the mix shifts
- Pick path optimization that accounts for low-turn items
3. Build Once, Build Right: Concrete Tilt vs. Metal Panel
Many distributors ask whether they should build with insulated metal panel (IMP) or go with a concrete tilt-up design. While concrete tilt construction carries a premium, the long-term benefits — thermal efficiency, durability, and maintenance savings — often outweigh the initial cost.
Not only does a concrete structure better withstand forklift mishaps (and yes, I’ve seen tines punch through walls), it also helps control energy costs and supports long-term refrigeration upgrades.
Thermal envelope matters more than you think, especially as energy costs continue to climb and solar incentives add urgency to upgrade.
4. Solar and Refrigeration: The Clock is Ticking
Speaking of energy: If you’re considering solar, the window for federal tax credits is closing. Projects must be completed and placed in service by December 31, 2027 to qualify. That sounds far off — until you consider:
- Construction lead times of 18–24 months
- Panel and labor shortages as demand spikes
- Grid interconnection and permitting delays
The same urgency applies to refrigeration. We’re seeing significant ROI from replacing outdated systems, especially those relying on legacy refrigerants. In one project, a distributor was facing a $1.2M cost to replace their system. By acting early and retrofitting with compatible components, we cut that down to $250,000.
If you’re planning a new build, design for solar now — even if you won’t install panels for a few years. That includes reinforcing roofs, roughing in conduit, and sizing your electrical service appropriately.
5. Automation Is Coming. Are You Ready?
Warehouse automation is not one-size-fits-all. There’s a wide spectrum — from layer pickers and automated stretch wrappers to ASRS (automated storage and retrieval systems) and full-case picking robots.
The right system depends on your volume, SKU mix, labor environment and, critically, your building. Many distributors exploring automation find their facilities simply aren’t built for it: low ceilings, narrow aisles, and inefficient layouts can make automation cost-prohibitive.
Some things to explore:
- ASRS systems, which reduce required square footage by densifying pallet storage
- Case picking systems, which reduce man-hours through robotic picking and palletizing
- Hybrid options that combine automation with traditional methods
If you’re building or expanding, design for automation today — even if you won’t install it yet. That means taller ceilings, flatter floors, and flexible layouts.
6. The Most Expensive Project Is the One You Don’t Do
Many distributors hesitate to move forward with facility investments, especially in uncertain market conditions. But in nearly every case I’ve seen, waiting only increases the cost through inflation, inefficiency or missed opportunities.
Planning early gives you optionality: You can phase construction, secure better financing, and avoid being forced into suboptimal decisions under pressure.
Whether you’re expanding, retrofitting, or simply reevaluating your operational layout, the best investment is often not in steel or concrete — but in planning.
Want to Learn More?
For a deeper dive into this topic, listen to Episode 73 of the Tapped In Sales podcast: “The Warehouse Wake-Up Call: Space, Solar, and Strategic Screwups.” We cover geothermal builds, cross-docking traps, and what the future of warehouse robotics could look like in beverage distribution.