Attachment 4 Warehouse Consolidation Study.pdf

STUDY REPORT: PM-1023-17

VA WAREHOUSE CONSOLIDATION STUDY FOR

LAS VEGAS HEALTHCARE SYSTEM

SPEES DESIGN BUILD

4121 STATE STREET DRIVE

NEW ORLEANS, LA 70125

PHONE: (360) 223-8994

P.O.C.: RAY SPEES, PRESIDENT

ray@speesdb.com

Study Report PM-10237| Warehouse Consolidation Study Report

December 26, 2017

Mr. Brian McClung Chief Engineer Las Vegas Veterans Affairs Medical Center 6900 N. Pecos Road North Las Vegas, NV 89086

RE: Updated VA Warehouse Consolidation Study Report – Las Vegas

Dear Brian, On behalf of Spees Design Build and 1 Stop Material Handling, your Nationwide Systems Integrator, we are pleased to offer our updated study report PM-102317-R2 with detailed findings regarding the VA Warehouse Consolidation Study for Las Vegas based upon our week site visit during October 16th – 20th.

We are committed to be the highest quality systems integrator in the industry, with the ability to provide our customers efficiency, superior quality, and the widest range of products available.

If you have any questions regarding our study report, please call Ray Spees at 360-223-8994, and/or Peter Murphy at 617-669-2961. Again, thank you for the opportunity to be of service.

Sincerely, Spees Design Build 1 Stop Material Handling

Ray Spees Peter Murphy

Ray Spees Peter Murphy President CEO

Table of Contents Table of Contents

Executive Summary

Initial Kickoff

Executive Summary

New Baseline Requirements

Strategies to meet baseline requirements

Warehouse Consolidation Recommendations and Findings

Strategy 1. Build Additional Permanent Storage at the VA Campus

Strategy 2. Build Clean Room in Existing Hospital Warehouse

Strategy 3. Reduce El Campo SQFT or Relocate to a Smaller Warehouse

Strategy 4. Optimize Current Racking, Shelving and Work Stations

Strategy 5. Construct Mezzanine inside the Hospital Warehouse

Strategy 6. Lease Build-to-Suit Modular Warehouse

Strategy Summary:

Other Recommendations and Findings

Damaged Racks

Excess Inventory and Staging Materials

Inefficient Architectural Design for the Hospital Warehouse

More Efficient Racking and Stock Pick Solutions

Warehouse Management System (WMS) is a User Developed Application (UDA)

Damaged Racks

Room Specific Recommendations

El Campo Warehouse

Hospital Warehouse

Proposed Pallet Racking Systems

Data Analysis

El Campo Warehouse

Hospital Warehouse

Appendix

Appendix A –Warehouse Mezzanine Preliminary Design and Cost Estimate

Appendix B – Racking System Pricing

Appendix C – Cost Estimate for Clean Room in Existing Hospital Warehouse

Appendix D – Cost Estimate Lease Build-to-Suit Modular

Executive Summary

VA WAREHOUSE CONSOLIDATION STUDY FOR LAS VEGAS

Consolidation Study Findings

Initial Kickoff Our team attended an initial kickoff meeting on Monday, October 16th with Brian McClung, Chief Engineer;

Jonathan Sanchez, General Engineer Projects; Joseph Lloren, Supervisory General Engineer; Joanna Belcher, Logistics Manager; and Joseph Marshall, Assistant Logistics Manager. While there we went over the details of the facility; reviewed drawings of existing warehouse and storage rooms at the hospital;

reviewed drawings of off-site El Campo Warehouse; and discussed the overall current challenges and storage restraints. During this meeting, we were informed that the existing El Campo Warehouse lease is set to expire on July 31, 2019, and it was in the VA’s interests to analyze options to reduce storage costs and optimize warehouse operations.

Our team walked through the Hospital Warehouse and El Campo Warehouses, clean rooms, and other miscellaneous storage areas, to begin thorough operation observations. Upon completion of our initial meetings and inspections, our team initiated multiple discussions with the VA staff and outside vendors to determine effective strategies to eliminate requirements and associated costs. Based on these observations and discussions we have developed the following recommendations detailed in the Executive Summary. Further explanation can be found throughout the report for in-depth understanding of the summary:

Executive Summary From review the warehouse storage areas can be divided into 4 main components: pallet storage, clean room storage, working/staging areas, and personnel workstations. There are other resources to note, such as the office supply/pick stock systems, but the requirements for these are small compared to the 4 main components listed above. Below is a summary of the warehouse data based on these 4 components:

LOCATION

Total Area

(SQFT)

Clean Room

Storage (SQFT) Total Pallet

Positions Pallets Stored

(as of 10/16/2017) Vacant Pallet

Positions Pallet

Utilization

Hospital Warehouse

14,204 2134 502 302 200 60.2%

El Campo Warehouse

60,610 2300 2224 1437 787 64.6%

LOCATION Workstations Offices

Hospital Warehouse ~5 1

El Campo Warehouse ~30 5

VA Capital Asset Inventory (CAI)

LOCATION Hospital El Campo

Gross Square Feet (GSF) 15,305 50,297

Ideal GSF as per CAI 44,671 0

Net Need 29,366 N/A

% of Ideal GSF Available 34% N/A

Based on the current numbers in the Capital Asset Management Inventory, if the VA were to remove El Campo the VA Southern Nevada Healthcare System would only have 34% of the programmed storage space. A deficiency this significant could negatively impact the ability for the VA to store required supplies and support the medical centers appropriately. The El Campo warehouse currently supplements the requirements of the hospital warehouse, but the external warehouse appears to be oversized as a significant number of pallet positions, workstations and clean room storage are not utilized. Based on observations from this study, multiple strategies have been outlined in this report that can assist the Department of Veteran Affairs in reducing the current logistic asset requirements.

New Baseline Requirements After discussions with the VA logistics department, new baseline goals have been established to reduce the total palletized inventory from 1,739 (1,437 at El Campo + 302 at Hospital) stored pallets to 755 total pallet positions (56% reduction). Since the Hospital Warehouse can currently store 502 pallet positions there is currently a shortage to facilitate 253 more pallet positions in the Hospital Warehouse or external location. There is also a requirement to have approximately 75 floor positions (approximately 1,100

SQFT).

These estimates are based on the following estimated operational requirements (numbers include a 10% contingency):

New Baseline Palletized Rack Requirements

Pallet Positions Supporting Requirement 500 for Daily Operations

85 for IT (Caged Area)

45 for Replacement/Unused furniture

75 for Long Term Storage

50 for Medium Term Storage

755 Total Pallet Racking Position Requirement

New Baseline Palletized Floor/Staging Requirements

Pallet Positions Supporting Requirement 40 Pallet Positions for Transitional Items

35 Pallet Positions for Flat Holding / Staging Area

75 Total Transitional Floor / Staging Positions

Strategies to meet baseline requirements From review, we have identified multiple strategies that can be implemented to assist the Department of Veteran Affairs in reducing its current storage requirements. All recommended strategies target one of the following focus areas: reduce inventory, optimize storage/space solutions, and build or lease storage to fulfill the remaining space requirements.

The following strategies have been identified as most effective in reducing costs and resource requirements for the VA. Additional details concerning these strategies are available in report section “Warehouse Consolidation Recommendations and Findings.” A sumary of the recommended strategies is as follows:

DESCRIPTION

Estimated

Fixed Cost*

Estimated Annual Cost* ±

PRO CON

El Campo Warehouse (Current Conditions)

$761,094 $693,221 Operations stay the same.

Simple solution.

Most expensive long-term.

1. Construct an Addition to the Existing Hospital Warehouse or Construct a permanent warehouse storage facility on the VA Campus

$3,000,000 to

$6,000,000 $0

Most efficient for operations and future expansion. Best return on investment from costs and operational efficiency.

(Freezing footprint does not apply)

Expensive upfront costs, but best ROI long term.

Warehouse SqFt is low priority in SCIP for minor construction

2. Build Clean Room in Existing Hospital Warehouse

$2,700,000 $0

Consolidates Clean Room in Medical Center; No new SF addition/construction. Existing NRM SCIP project can be used to convert existing space. Existing Clean Room can be utilized for supply/personnel space. Most economical solution in the short and long term. Consolidation can be finalized prior to July 2019.

Removes pallet storage space. Other strategies would need to be considered in conjunction with this option to address pallet limitations.

3. Reduce El Campo Leased SQFT or Relocate to Smaller Warehouse

$200,000 to

$400,000

$125,000 to

$150,000

Rough pricing is based on 10,000 SQFT. Significant cost savings to current warehouse.

Long term costs are still significant.

4. Optimize Current Racking

$300,000 to

$500,000 $0

Most cost effective to add pallet positions, but limited on current space.

Tighter tolerances require changes to current operations, workflow process and safety plan.

5. Construct Mezzanine inside Hospital Warehouse

$6,000,000 to

$7,776,627 $0

Significantly optimizes hospital resupply operations for patient care. Corrects clean room sterility concerns. (Freezing footprint does not apply)

Minimally addresses pallet storage requirements.

Warehouse SqFt is low priority in SCIP for minor construction

6. Lease Build-to-Suit Modular Warehouse (10Yr)

$485,000 $400,000 to $500,000

Shorter distances between facilities create saving in travel.

(Freezing footprint does not apply)

Significant Lease Term and Upfront Cost Required

*Costs can vary significantly depending on the setup and requirements.

± Annual costs are based on no additional maintenance requirements.

Full details for strategies and pictures available below.

Warehouse Consolidation Recommendations and Findings

Recommended Strategies

After further analysis from our observations and discussions with the staff, we recommend the following strategies to reduce and potentially eliminate the external warehouse requirements for the Department of Veteran Affairs in Las Vegas, NV. The following strategies are recommended to be used together to meet the goals of the VA. A brief description of these strategies was provided in the Executive Summary, but additional details are available below.

Please note that any mentioned square footage requirements are only an “estimated/approximate” space, as the actual requirements can vary greatly depending upon details of the actual facility and what the final design of the racking system can be in order to meet the necessary design criteria for current codes and final pallet position counts

Strategy 1. Build Additional Permanent Storage at the VA Campus

- Construct an Addition to the Existing Hospital Warehouse or

- Construct a Permanent Warehouse Storage Facility on the VA Campus.

(Long Term Solution)

This strategy is optimal as it would consolidate all warehouse operations at the VA campus. It is a permanent solution and the most cost effective in the long-term versus leasing a storage facility. Priority will be to add an extension to the warehouse if feasible as it will eliminate waste caused by separating logistical operations.

A new Addition to the Hospital Warehouse can be completed by integrating the current warehouse and constructing an addition beyond the current Dock Doors, Bays 1 – 5. This would ultimately consolidate all of your warehouse operations under one roof at the hospital campus. This is the most efficient option available as all operations can be consolidated in one location. Compared to most options this strategy requires a higher initial capital expense, but the return on investment is the best. Based on current expenses, this option would pay itself off in less than 7 years. Additional cost savings would be realized through operational efficiencies.

Photo showing the above proposed Warehouse Expansion Area

This warehouse extension could provide storage for the additional 253 pallets positions and 75 staging positions. Other options could also be included for potential work stations or clean room space.

This strategy also provides options to re-design different racking systems, such as push back, selective, and carton flow-rack (FIFO storage). We recommend also incorporating a warehouse management system (WMS) with automation, scanning, and possibly voice picking to help streamline operations and enhance real time storage data with location tracking. This would enhance ease of management reporting and operational facilitations. The new warehouse extension area is the ideal location to store slow movers and overstock storage, all while helping to eliminate the logistical challenges in moving both product and personnel back and forth between two locations.

Concept drawings for this option could include the following options:

Concept 1 (CLEAN ROOM in the existing warehouse footprint; Additional OFFICES and additional racks in new footprint)

Concept 2 (CLEAN ROOM and additional racks in the new footprint; Additional OFFICES and additional racks in the existing hospital warehouse):

Concept 3 (CLEAN ROOM and additional OFFICES in the new footprint; Additional racks in the existing hospital warehouse):

A Permanent Warehouse Storage Facility on the VA Campus This is similar to the extension of the existing Hospital Warehouse, but on a different location. It is also a more permanent solution over leasing a Build-to-Suit Modular storage facility. This is only recommended if the extension is not feasible as it is less efficient to separate operations.

Potential Warehouse Expansion Sites

Other potential options for Warehouse

Expansion (Close to Existing)

Primary/Optimal Warehouse

Expansion Site

Strategy 2. Build Clean Room in Existing Hospital Warehouse (Short, Intermediate & Long-Term Solution) This strategy would consolidate the clean room space to the medical center. Existing clean room space (2,134 SF) in the medical center can be used for storage clean room supply or converted into personnel space. No new square footage will be added with this strategy, so the existing Non-Recurring project can be used to convert storage space into a clean room. A feasibility study of logistical operations should also be conducted to ensure areas are suitable for conversion. We recommend that this strategy is paired with the Reduce El Campo SQFT strategy or Construct an Addition to the Existing Hospital Warehouse strategy to provide additional space for palletized inventory.

In these concept drawings we have converted 5,500 SqFt of the Hospital Warehouse into a consolidated clean room storage area. This allocated space would provide enough space for the clean Break-Out Room, Clean Supply Room and a Clean Prep Room. Consolidating all the clean rooms into one area would reduce potential infectious control concerns as well as create a more efficient flow/distribution system.

Concept 1: Clean room (Red Roof) near front of the Hospital Warehouse. Maximizes available racking space. Eliminates staging/breakout area

Concept 2: Clean room (Red Roof) along wall of the Hospital Warehouse. Eliminates most of the available racking space. Only eliminates part of the staging/breakout area

Strategy 3. Reduce El Campo SQFT or Relocate to a Smaller Warehouse (Intermediate Solution) There are currently 787 empty pallet positions in the El Campo Warehouse and 200 empty pallet positions at the Hospital Warehouse. This underutilized space can immediately be eliminated by reducing the current El Campo Warehouse space or relocating to a smaller warehouse. This would immediately produce a cost savings to the VA.

The new baseline requirements specify a need for 755 total racking pallet positions. Of these 755 racked pallet positions, 502 of the pallet positions can currently be stored at the Hospital Warehouse. This leaves only 253 remaining pallet positions to be stored at El Campo or a smaller warehouse. The current lease for the El Campo Warehouse is for 60,610 SQFT which is arranged to store 2224 racked pallet positions.

By reducing the external requirements to only 253 racked pallet positions the warehouse could be reduced to as little as 10,000 SQFT. This reduced SQFT would be enough to store the 253 external pallet positions and 75 floor/staging pallets. Additional design and further baseline assessments would still be required as multiple variables include workstations, clean room requirements, warehouse configuration, and types of racking and operational workflow requirements will affect the final space requirements.

The current lease at the El Campo Warehouse is $591,221 per year, equating to $9.75 per SQFT. Adding a 30-50% increase for a smaller footprint, and increasing pricing we estimate that a new annual lease for 10,000 SQFT would be between $125,000-$150,000 per year. Tennant improvements would also be required, and can change drastically depending on the demands and warehouse layout. We estimate between $200,000-$400,000 for initial tenant improvements depending on requirements. A full review of the warehouse configuration, number of workstations, clean room, and types of racking and operational workflow requirements should all be established first to ensure the correct type and amount of space is acquired. We also recommend a more detailed cost estimate be conducted once the requirements have been established.

An example of a more compact warehouse is provided below. This space is estimated to be approximately 12,100 SQFT and hosts 2-deep racking setups to optimize the layout configuration for long-term storage. If effectively designed, this layout could provide for the 755 total racking pallet positions required for the baseline with additional floor space for staging. This example does not consider warehouse support beams, which can significantly reduce the efficiency as seen at the Hospital Warehouse.

The above strategy would reduce the overall costs to the VA, but a smaller offsite warehouse will still have the same logistical inefficiencies that currently exist with the El Campo Warehouse. Offsite warehouses require additional resources for personnel, transportation, and management oversight.

Storage solutions that reside on the VA Campus are preferred for efficiency purposes.

Strategy 4. Optimize Current Racking, Shelving and Work Stations (No Cost / Low Cost Solution) It is recommended that the VA install new storage solutions that can optimize storage/working configurations and reduce space requirements. Areas of focus include efficient racking systems, efficient clean room storage solutions and shared workstations for personnel requirements. Potential solutions that can positively impact these focus areas include the following:

Optimize Pallet Positions: Additional pallet positions can be added to the Hospital Warehouse, but a redesign of the current racking system would be required. If utilizing a selective racking and adding 2/3 Deep Push Back Racking, approximately 124 (~25%) more pallet positions could potentially be added.

Additional design would be required to determine the feasibility of this option and an investment in new pallet racks and new forklifts would likely be required. Warehouse operations would also have to be modified to implement this new system. Narrow isles racking has also been discussed, but has been discouraged due to the safety concerns and lack of experience required to appropriately operate in a narrow isles environment.

An example of a remodified racking system for the Hospital Warehouse can be reviewed in the diagram below. This diagram presents an option for 3 deep racking systems in certain sections of the Hospital Warehouse which can be used for long term storage. This type of racking system would potentially add about 50 pallet positions or 10% to the existing setup. Making this 4 deep in certain columns could add another 50 pallet positions increasing storage by a total of 20%. Multiple configurations are available, but additional design would need to be completed to determine the best approach and exact numbers.

Clean rooms can be optimized with new shelving systems and stock pick bins. Suggestions are provided later in this report for potential shelving and bin systems. If implemented effectively, optimizing the clean room storage should make a significant impact in reducing clean room storage space requirements.

Workflow processes and requirements should also be reviewed to determine the best course of action for this strategy.

Shared work stations are recommended for floating staff. As some staff only require onsite workstations during short periods of time, it is recommended that shared open work stations be created for such personnel. A review of the current floating staff is recommended to determine the best opportunities for shared work stations.

Strategy 5. Construct Mezzanine inside the Hospital Warehouse (Long Term Solution) Constructing a mezzanine inside the existing Hospital Warehouse could provide additional space for logistical personnel and clean room storage. This would not assist in pallet storage, but would consolidate other requirements in one location. It could also create efficiencies in resupply operations by connecting into the main floor of the hospital. Additional details and cost estimates can be reviewed in “Appendix A –Warehouse Mezzanine Preliminary Design and Cost Estimate”. A preliminary design for this space is provided as follows:

This option proposes building a mezzanine over the current warehouse receiving and staging area, building a clean room on the mezzanine, and constructing an access point to the first-floor hallway to optimize the flow of logistical supplies. Depending on the space and layout this could provide room for approx. 20+ cubicles, offices for senior managers, and a small board room or breakroom area.

A clean room could be constructed above or below the mezzanine area depending on the design requirements. This is an optimal space to house the clean room supplies, and helps shorten distances between transport areas. This clean room would also be designed appropriately to mitigate concerns about current clean room HVAC and potential sterility concerns.

The mezzanine structure would be protected from damage by fork trucks since the clean room is accessed with smaller non-powered equipment such as picking carts or pallet jacks. Safety barrier railings would also be recommended to further protect the mezzanine columns.

Strategy 6. Lease Build-to-Suit Modular Warehouse (Intermediate Solution) Leasing a Build-to-Suit Modular warehouse that can be constructed on the VA campus is a temporary solution that can be utilized until inventory levels are further reduced or additional permanent long-term storage is provided. Since the VA campus currently has undeveloped land that can be allocated for a leased Build-to-Suit Modular warehouse, the costs for this type of warehouse can be less than leasing space externally, although prices can vary significantly based on the requirements. Expanding storage at the VA campus would reduce inefficiencies caused by moving people and inventory between two locations which provides a cost savings. Examples of Build-to-Suit Modular buildings include the following examples:

Based on the new baseline requirements, external SQFT requirements for 253 pallet positions and 75 positions for temporary/transitional staging, we estimate approximately 10,000 SQFT is required.

Estimated pricing for this option can vary significantly based on requirements, but we estimate costs between $400,000-$500,000 per year for a 10-year lease with a 20% down payment. If this option is determined to be a focus area, then a more detailed cost estimate is recommended to refine costs. This option is relatively close in cost as the current set costs in the lease. If the lease price was to increase then this strategy would start to seem more reasonable. Having the building on the VA campus is a significant advantage to this solution.

Strategy Summary:

All these strategies have certain advantages and costs. It is recommended that aspects of all these strategies are reviewed for potential integration into the short, intermediate, and long-term solutions.

Once strategies and requirements have been established the VA can then pursue design concepts that meet the requirements. This research will then lead to the appropriate selection process for racking solutions, picking requirements, slotting protocols and a WMS to best implement logistical operations.

Based upon our review we believe it is possible to implement many short, intermediate, and long-term solutions before the existing El Campo Warehouse lease expires in July 2019. Discussions and decisions need to be expedited and the appropriate team selected to assist with the design and construction. This would become a fast-moving project to ultimately eliminate the need for offsite warehouse storage, extend VA resources, maximize return on investment (ROI), and improve hospital operational efficiencies.

Other Recommendations and Findings

Noteworthy findings concerning our review include the following:

Damaged Racks Observations: Some of the pallet racking systems have been damaged at both warehouses. This damage is likely due to forklifts bumping the frames. Damaged racks compromise the structural integrity of the system and reduce the designed load. Some load beams have also been displaced from their tracks, which pose a significant risk of falling and potentially injuring or fatally wounding personnel.

Solutions such as column protectors could reduce damage to the racking system. Bolts or other type of locking mechanisms can assist in mitigating the risk of load beams being displaced. Additional training and awareness will also mitigate these risks.

Excess Inventory and Staging Materials Observations: There appears to be excess inventory in the warehouses. This appears to be partially due to a lack of identified storage plans or storage limits for owners/departments. It is noted that some excess inventory has been staged for transfer to other government entities. Some inventory appears to be permanently stored as it is designated for projects that have been delayed indefinitely. Other excess inventory appears to be accruing in the warehouse and not being consumed as quickly as it is being resupplied. Although actual requirements cannot be fully determined as data is limited, this appears to be an important area to review.

There are approximately 302 pallets stored at the Hospital Warehouse and approximately 1,437 pallets being stored at the El Campo Warehouse. The Hospital Warehouse can currently store approximately 502 pallets. With the current conditions the VA would need to eliminate 71% of its current inventory to fit remaining pallets in the Hospital Warehouse. It is recommended that an inventory review be conducted to determine items that can be repurposed, donated, or removed. The “Data Analysis” section of this report provides a summary of owners, storage usage and associate costs to store inventory*. We recommend all owners conduct inventory reviews and determine their minimum requirements. Value of stored items should also be compared to storage costs to determine if inventory is worth retaining. A baseline can be established from this review to determine the amount of storage space required.

Potential Solutions: Reduce Inventory (No Cost / Low Cost Solution): It is recommended that the VA conducts inventory reviews and reduce unnecessary and redundant items. The “Data Analysis” section of this report provides a summary of owners, storage usage, and associate costs to store inventory. We suggest all owners conduct inventory reviews and determine their requirements. The value of stored items should be compared to storage costs to determine if inventory is worth retaining.

Excess inventory should be donated or removed to reduce space requirements.

During this study, the logistics department conducted such a review and determined that the number of pallet positions can be reduced to 755 racking pallet positions and 75 floor staging and receiving pallet positions. This plan will reduce the total number of palletized inventory from 1,806 to 755 pallet positions (58% reduction) and 75 pallet positions for staging and receiving. This plan will eliminate a significant amount of the external resource requirements and bring the VA significantly closer to its warehouse consolidation goals. This baseline has been used to determine other numbers and requirements for this report.

*Please note the numbers from data analysis vary from manual counts previously provided.

Discrepancies have been identified as timing/date difference as well as types of pallet positions. Both data sets are for reference only to show trends and focus areas. Further analysis would need to be conducted for further design as the data is dynamic and constantly changing.

Inefficient Architectural Design for the Hospital Warehouse Observations: The architectural layout of the Hospital Warehouse is not efficiently designed to optimize the space allocated for racking systems and storage. The arrangement of the concrete support columns and the low ceiling utility lines impede the ability to optimize storage configurations. The building support columns are in square configurations approximately 20ft center to center. Due to these relatively close configurations it creates challenges in maximizing the space allocated for the warehouse. The VA Design Guide Space Planning Criteria authorizes approximately 8,586 SQFT. The existing space allocated is 14,204 SQFT, but due to the inefficiencies of the architectural design the true availability for storage is much less than 14,204 SQFT.

Potential Solutions: Alternative racking systems could increase pallet storage positions, but additional design and construction would be required to optimize the space. Current operations would also need to be modified to adapt to alternative racking options.

More Efficient Racking and Stock Pick Solutions Observations: The current racking system is sufficient to meet requirements, but more effective methods are suggested to increase storage capacity and operations. Alternative racking options can also assist with workflow processes and optimize “First In, First Out” (FIFO) procedures to decrease potential waste.

Potential Solutions: Alternative racking solutions recommended in this report would assist in maximizing storage capacity in the existing Hospital Warehouse and clean rooms. Alternative methods could also provide options to minimize material handling, creating a more efficient workflow process.

Warehouse Management System (WMS) is a User Developed Application (UDA) Observations: The Warehouse Management System (WMS) used to track long-term storage is a user developed application (UDA) created from Microsoft Access. The system appears to be effective, but a UDA dependent on manual inputs does not include the risk management controls and features that are standard for commercial WMS applications. Common risks associated with UDAs include insufficient application lifecycle management (ALM) processes to include versioning controls, lack of change and approval controls and dependency on the application developer. Manual systems are also more prone to user input errors and missing data reports. There are also minimal features and tools available on the current WMS. Updating this system could significantly assist with the overall supply chain management process.

Potential Solutions: Acquiring and implementing an enterprise WMS could assist in daily planning, organizing, staffing, directing, and controlling the utilization of available resources. This can assist with moving and storing materials into, within, and out of the warehouse, while supporting staff in the performance of material movement and storage in and around a warehouse. Other advantages include better data for managing Just-In-Time (JIT) inventory and property book reconciliation. An enterprise WMS should also be implementing proper Application Lifecycle Management (ALM) processes which eliminates many risks associated with a UDA. An Enterprise WMS will also have external audit reviews to ensure compliance with industry standard security controls. In summary an appropriate enterprise WMS implemented with a proper workflow process should improve overall logistical operations while minimizing significant risks.

Damaged Racks Observations: Upon observation, some of the pallet racking systems had been damaged at both warehouses. Damaged racks are a concern, as they will compromise the structural integrity of the system and reduce the deigned load. Load beams had also been displaced from their tracks posing a significant safety risk. If a load is placed on a displaced load beam, the load could fall and potentially injure or fatally wound personnel. All identified displaced load beams were immediately escalated and corrected by VA personnel. Damaged and displaced racks were likely caused by forklifts inappropriately contacting the frames.

Potential Solutions: Providing column protectors around the base of the upright frames will reduce damages to the racking system. Adding bolts or other type of locking mechanisms to secure the load beams will assist in mitigating the risk of them being displaced. Additional training in awareness and identifying these hazards will also assist in mitigating the risk.

Room Specific Recommendations BD308 – Clean Room – (Area is approx. 79’-2” x 21’-0” – 1,660 Sq. Ft.)

- This area currently has a combination of steel- and wire-shelving mobile carts, and is approx. 65% - 70% full. However, we feel that this space could be better utilized with different types of shelving units, and be more efficiently reconfigured to provide additional storage spaces.

2D426 – IMD Clean Room – (Area is approx. 13’-7” x 14’-6” – 200 Sq. Ft.)

- This area currently has wire shelving mobile carts, which is approx. 70% - 80% full. Again, this space could be reevaluated to use different types of shelving and carts, potentially helping to increase both storage and picking functions, and better assisting in moving supplies faster to hospital care areas.

2D432 – Implants Clean Room – (Area is approx. 18’-8” x 14’-6” – 275 Sq. Ft.)

- This area currently has wire shelving mobile carts, with inventory approx. 70% - 80% full. This space could also be reevaluated to use different types of shelving and carts, potentially helping increase both storage and picking functions, and better assisting moving supplies faster to hospital care areas.

Engineering Maintenance Shop – BD405 – (Area is approx. 34’-6” x 54’-4”) & Engineering Maintenance Shop Storage – BD409 – (Area is approx. 17’-6” x 23’-10”)

- These Maintenance Rooms BD405 and BD409 have potential to be converted into possible Clean Room Storage areas; however, this could not be feasible to accomplish without relocating the engineering maintenance shop group to another area in the hospital, or possibly to a new building or structure on the hospital grounds.

Tunnel Area access way to Boiler Plant –

- This area was looked at for potential storage; however, it is unusable as there are already several fenced in areas with misc. equipment, products, and pallets spread throughout the tunnels. These tunnels would also not be considered optimal storage areas for active warehouse products due to distance from loading docks and areas where products would need to be dispersed.

CB-6 Corridor (where Robots are currently being powered)

- Area is approx. 15’-4” x 51’-4”. This corridor area has potential to be converted into a Clean Room Storage area; however, this would not be feasible to accomplish without relocating the power to the Robots, and new construction to build out such a clean room or storage area.

El Campo Warehouse

El Campo Warehouse Layout

➢ Pallet Racking (existing)

This selective racking system houses pallets and or loose product with various medical supplies, cleaning supplies, medical devices, IT computer equipment, and furniture.

There is a total of 12 Rows of Pallet Racking with 278 Bays - each with dimensions 240” High x 48” Deep x 96” Long – with 4-beam levels in each bay. All Bays have Heavy Duty Wire Decks with complete Wire Grids able to store multiple pallet sizes or any loose items.

*See breakdown of each Pallet Rack Row and Bay with current storage capacities below, based on visual observations during week of October 16th, 2017 (spreadsheet with more details also available/attached):

Row 2 – (104) Total Available Pallet Positions, and there are (61) OPEN Pallet Positions.

Row 4 – (120) Total Available Pallet Positions, and there are (30) OPEN Pallet Positions.

Row 6 – (200) Total Available Pallet Positions, and there are (96) OPEN Pallet Positions.

Row 8 – (200) Total Available Pallet Positions, and there are (113) OPEN Pallet Positions.

Row 10 – (200) Total Available Pallet Positions, and there are (120) OPEN Pallet Positions.

Row 12 – (200) Total Available Pallet Positions, and there are (39) OPEN Pallet Positions.

Row 14 – (200) Total Available Pallet Positions, and there are (46) OPEN Pallet Positions.

Row 16 – (200) Total Available Pallet Positions, and there are (105) OPEN Pallet Positions.

Row 18 – (200) Total Available Pallet Positions, and there are (38) OPEN Pallet Positions.

Row 20 – (200) Total Available Pallet Positions, and there are (37) OPEN Pallet Positions.

Row 22 – (200) Total Available Pallet Positions, and there are (11) OPEN Pallet Positions.

Row 24 – (200) Total Available Pallet Positions, and there are (91) OPEN Pallet Positions.

• 2,224 Overall Available Pallet Positions for ALL Bays.

• 787 OPEN Pallet Positions *(as of 10/17/17) in this system, which is 35.39% open / available**.

• Approx. 457 Pallets being Stored***, Outside of the Furniture or IT Equipment, which is approx.

20.55%.

• Approx. 44.06% of Furniture or IT Equipment currently being stored.

** Note: On top of the 35.39% Open Positions, there are several Bays in Rows 2, 4, 6, 8 and 10 which could have additional beam levels added for storing smaller pallets and/or small boxes or cartons for picking operations.

***Note: The (457) Pallets to be Stored Does Not account for any additional growth.

****Note: The “Visual Observations” inventory and “Data Analysis” inventory do not match. Reasons for this are due to the different times the inventories were conducted and the classification system used by the warehouse inventory system. This information if for reference only so exact counts are not required.

➢ Mobile Shelving (existing) in Warehouse Area

This mobile shelving system houses all types of office supplies, such as paper, folders, pens, pencils, ink, etc.

There is 1 section of Mobile Shelving, by Space Saver, which is 222” Deep (front to back) x 106” High x 952” Wide (left to right). This shelving is broken up into 2 sections. The first section has Rows 1–33, which are Wire Shelving Style with Open Backs and each row has 5 bays that are 36”, 48”, 48”, 48” and 36” with 4-shelf levels on 30” centers for storage. The second section has Rows 35-67 which are Steel Shelving Style with Closed Backs, and each row has 5 bays that are 36”, 48”, 48”, 48” and 36” with 6-shelf levels on 14” centers for storage.

• Approx. 750 Overall Total Slots available in this Mobile Shelving, which is currently approx. 60% full/utilized.

• This Mobile Shelving System takes up approx. 1,480 Square Feet of space.

*Note: we observed that most of the emergency Foot Stops are not working on this mobile shelving. This is a possible safety concern. For example, when one worker is in a given aisle, a foot stop helps prevent a second person from closing a section onto the first worker and trapping him/her in that aisle. Because so many of these foot stops were not working properly, we highly recommend that they be reviewed and repaired to ensure that an operator can prevent such an accident from occurring.

**Spreadsheet with more details of each Mobile Shelving Row and Bay also available/attached.

➢ Clean Room # 102 - Mobile Shelving Carts (existing)

There is 36 Chrome Wire Shelving Mobile Units existing in clean room # 102, in which each unit is approx.

60” Wide x 24” Deep x 69” High with 4 shelves in each unit.

This clean room # 102 is approx. 1,600 square feet total, and is currently approx. 60%-70% full / utilized.

➢ Clean Room / Receiving # 101 - Mobile Shelving and Freezer Unit

This clean room # 101 is an active receiving area which houses some shelving units and mobile carts for breaking down products. There is also Freezer Units along the back wall.

This clean room # 101 is approx. 350 square feet total, and is currently approx. 60%-70% full / utilized.

➢ Clean Room / Packing Room # 103 - Mobile Shelving

This clean room # 103 is an active packing area which houses some shelving units and mobile carts for packing products ready to be shipped out.

This clean room # 103 is approx. 350 square feet total, and is currently approx. 60% full / utilized.

Overall Approx. Total of Clean Room Space at El Campo Facility = 2,300 Sq. Ft.

Hospital Warehouse

Hospital Warehouse & Storage

Hospital Warehouse Layout

➢ Pallet Racking (existing)

This selective racking system houses pallets with various medical and emergency supplies, devices, etc.

- mostly for primary storage. This Hospital Warehouse is different compared to the El Campo Warehouse, as this warehouse operates with significantly more broken pallets for picking operations.

There is a total of 9 Rows of Pallet Racking with 65 Bays, most of which have the dimensions of 192” High x 42” Deep x 96” Long. They vary between 2 to 4-beam levels in each bay, due to obstructions in the ceiling.

*See breakdown of each Pallet Rack Row and Bay with current storage capacities below, based on visual observations during week of October 16th, 2017 (spreadsheet with more details also available/attached):

Row 3 – (54) Total Available Pallet Positions, and there are (30) OPEN Pallet Positions.

Row 4 – (12) Total Available Pallet Positions, and there are (5) OPEN Pallet Positions.

Row 6 – (46) Total Available Pallet Positions, and there are (25) OPEN Pallet Positions.

Row 8 – (62) Total Available Pallet Positions, and there are (8) OPEN Pallet Positions.

Row 10 – (62) Total Available Pallet Positions, and there are (10) OPEN Pallet Positions.

Row 12 – (62) Total Available Pallet Positions, and there are (45) OPEN Pallet Positions.

Row 14 – (62) Total Available Pallet Positions, and there are (26) OPEN Pallet Positions.

Row 16 – (62) Total Available Pallet Positions, and there are (25) OPEN Pallet Positions.

Row 18 – (80) Total Available Pallet Positions, and there are (26) OPEN Pallet Positions.

• 502 Overall Available Pallet Positions for ALL Bays.

• 200 OPEN Pallet Positions *(as of 10/17/17) in this system, which is 39.84% open / available.

**Note: The “Visual Observations” inventory and “Data Analysis” inventory do not match. Reasons for this are due to the different times the inventories were conducted and the classification system used by the warehouse inventory system. This information if for reference only so exact counts are not required.

➢ Pallet Racking – Smaller for Bins Rows (existing)

Bin Row 1 has a total of 8 Bays. 6 Bays have 4-Beam Levels, and 2 Bays have 2-Beam Levels for Bin Picking Storage of smaller boxes. These Bays are approx. 96” High x 36” Deep x 96” Long.

In Rows 2 and 4 there are 6 Bays which have 4-Beam Levels for Bin Picking Storage.

• The 8 Bays in Bin Row 1 have an overall total of 32 Pick Slot positions.

• The 6 Bays in Rows 2 & 4 have an overall total of 12 Pick Slot positions.

Hospital Warehouse Layout

Hospital Clean Rooms

➢ BD308 – Clean Room – (Area is approx. 79’-2” x 21’-0” – 1,659 Sq. Ft.)

The current hospital clean room is not filtered and has no active/passive air. This area has a combination of steel shelving and wire shelving mobile carts, which is approx. 65% - 70% full / utilized.

➢ 2D426 – IMD Clean Room – (Area is approx. 13’-7” x 14’-6” – 200 Sq. Ft.)

This area currently has wire shelving mobile carts, which is approx. 70% - 80% full / utilized.

➢ 2D432 – Implants Clean Room – (Area is approx. 18’-8” x 14’-6” – 275 Sq. Ft.)

This area currently has wire shelving mobile carts, which is approx. 70% - 80% full / utilized.

The Overall Clean Room Space at the Hospital = approx. 2,134 Sq. Ft.

Warehouse Enhancements:

Hospital Warehouse:

• The Hospital Warehouse currently has all selective racking. This warehouse area could be enhanced by reconfiguring existing selective racking and adding in new Push Back Racking.

• Currently there are approx. 502 Pallet Positions in the Hospital Warehouse. Additional pallet positions can be added utilizing selective racking and adding 2/3 Deep Push Back Racking, but without doing an actual concept design analysis (which should be part of phase 2) we are not able to provide the exact additional pallets that could be stored in the Hospital Warehouse.

• Please keep in mind that Push Back Racking is very different storage compared to the current selective storage. An in-depth analysis of how SKU’s are being stored would need to be determined to ensure the optimal layout and functionality of these racking systems. New operations and procedures would also have to be implemented to optimize this process.

• The current Hospital Warehouse area (approx. 14,204 SQFT overall) is somewhat limited and more challenging when it comes to reconfiguring this space for storage due to the original building column layout in this warehouse area, as these building columns are approx. 19” square columns on 20’ centers which does not bode well for the most efficient design.

• The Hospital Warehouse operation requires much more picking operations and space for smaller boxes or smaller broken pallets, so it is also recommended to incorporate some Case Flow Tracks and additional Beam Levels into the existing selective racking. This could also be designed in conjunction with new Push Back Racking, and could have these case flow tracks and or selective pick levels below push back tracks.

• Look into incorporating a WMS (warehouse management system), which needs much more analysis by all parties concerned as there are so many different factors to be discussed before moving forward with WMS.

These photos below show the existing racking in the Hospital Warehouse:

In the left photo, you can see there is a significant amount of unutilized space on the first 3 levels. A properly designed warehouse racking system would better maximize storage efficiency. For example, the pallets on the top level are emergency supplies, which are dense storage pallets and should be housed in a Push Back application, while all smaller boxes on the levels below should be housed in either carton flow tracks or selective pick levels.

In the right photo, again there is a significant proportion of inefficient storage space for broken pick pallets.

This space should be better utilized with a different type of rack configuration.

Photos below showing the recommended Case/Carton Flow and Push Back Applications:

Case Flow Levels with Selective Storage above Case Flow Levels with 2/3 Deep Push Back above

Clean Room Areas:

• In the clean room areas at both facilities, there appears to be underutilized space which could be maximized by incorporating Chrome Wire Mobile Storage Shelving Systems. These would help eliminate unnecessary aisles, while providing flexibility and mobility. They also allow for easy cleaning, and can be covered for protection.

Photo showing current clean room with Photo of proposed mobile shelving, which would underutilized space. allow for additional storage.

• One recommendation is adding Chrome Wire “Nestable” Mesh Bins, which come in 9 sizes ranging from 4-3/4” x 4” x 2-7/8” up to 18” x 16-5/8” x 11”. These could be an ideal solution to current bins usage we observed in clean room BD308. They current bins don’t seem to stack very well, and appear to inhibit ease of access as well as storage efficiency. Better stacking can also equal additional storage.

• Photo to left side photo below shows these “nestable” bins, and photo to right side shows current bins.

• There appears to be redundant clean room supplies in both facilities, so a recommendation is that the VA do an inventory review of all the clean room supplies in order to determine better consolidation.

• Once the VA completes this inventory review it would be easier to determine a better design concept for more efficiencies. This would also require slotting to make these small SKU’s more accessible.

Proposed Pallet Racking Systems

Applicable References below are of “New” proposed different types of Pallet Racking Storage Systems. These are the types of recommended systems for use during the warehouse consolidation project to help increase storage capacities, operational efficiencies, and address ergonomics for personal safety.

➢ Push Back Racking - Push Back Racking systems allow you to eliminate aisles and gain pallet storage in your warehouse. Push Back Rack systems utilize gravity-fed telescoping carts to provide the densest storage. In most cases, Push Back Racks can double your storage capacity and allow for more picking faces. Push Back lanes can be designed to accommodate all unique pallet sizes. Pallets are fed and retrieved from one aisle, which makes Push Back Racking easy to operate. You simply load the first pallet onto the top cart, and then as you load the second pallet it pushes the first pallet back, which can be continued from 2 to 6 pallets deep. To remove pallets, simply lift the pallet and back out slowly until the next pallet is in the front position.

❖ Please view video link below to see animated operation of a Push Back System:

https://vimeo.com/83532948 https://www.youtube.com/watch?v=n-5Rph1jZMw

❖ Push Back Rack Photos:

https://vimeo.com/83532948 https://www.youtube.com/watch?v=n-5Rph1jZMw

❖ Structural Racking for…