filter solution warehousing

Third-party logistics providers are now leasing more warehousing space than any other sector amid growing demand for 3PL services. CBRE's 2023 North America Industrial Big Box report found that 3PLs accounted for 41% of all lease transactions at traditional warehouses and distribution centers, with at least 200,000 square feet in 2022, surpassing retailers and wholesalers for the first time on record.

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The Food Safety Modernization Act (FSMA) is transforming the nation’s food safety system by implementing best practices and requirements designed to prevent foodborne illnesses in consumers. Many of the FSMA provisions relate directly to the supply chain and keeping food and beverage products safe, fresh and enjoyable.

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The Food and Drug Administration (FDA) has issued new requirements for additional traceability records for certain foods, ranging from nut butters to cut veggies to shrimp, under the Food Safety Modernization Act (FSMA). The requirements, which take effect on Jan. 20, 2026, create new traceability record keeping requirements beyond those in existing regulations for certain foods. All entities in the supply chain will be subject to the Food Traceability Rule.

The FDA said the changes, which require entities to share information with others in the supply chain, will allow for faster identification and rapid removal of potentially contaminated food from the market, resulting in fewer foodborne illnesses and/or deaths.

The list of foods includes some cheeses, eggs, certain vegetables, including cucumbers and leafy greens, some fruits, including melons and tropical tree fruits, fresh-cut fruit and veggies, some fish, nut butters, and ready-to-eat deli salads, such as egg salad, potato salad, pasta salad and seafood salads.

In preparation for the new requirements, which are less than three years away, it’s essential to start evaluating current warehouse management system (WMS) capabilities now to be best prepared for the near future. Since traceability in our food supply chain is essential to providing better service to our customers and end consumers, and a detailed record-keeping system is important for all the foods we handle in our food chain, making updates now will lead to a seamless transition when the new requirements become mandatory.

Key Data Elements and Critical Tracking Events

As part of the rule, those who manufacture, process, pack or hold foods on the Food Traceability List (FTL), must maintain and provide to their supply chain partners specific information — called Key Data Elements (KDEs) — for certain Critical Tracking Events (CTEs), in the food’s supply chain.

For example, if a distribution center (DC) receives the repacked fresh cucumbers from a produce processor, it must keep records on the receiving KDEs of the fresh cucumbers. Since the DC will be shipping the cucumbers to a retail store, it must maintain KDEs related to the shipping of the cucumbers to the next point in the supply chain, the retailer. The DC must also send the KDEs to the retailer.

Records must be kept regarding where the shipping event began and where it ended, meaning where the food was received. Still, the FDA said it is unnecessary to have records of the food's route, including any instances where it may have been moved from one carrier to another. Also, for cross-docking situations where food is arranged for transport from point A to point B but is briefly placed on a loading dock at point X at the DC to be transferred from one truck to another, records don’t need to be kept for point X.

Key Data Elements for those receiving food include:

  • Traceability lot code for the food
  • Quantity and unit of measure of the food
  • Product description for the food
  • Location description for the immediate previous source (other than a transporter) for the food
  • Location description for where the food was received
  • Date the food was received
  • Location description for the traceability lot code source or the traceability lot code source reference
  • Reference document type and reference document number

Key Data Elements (to maintain and provide) for those shipping food include:
  • Traceability lot code for the food
  • Quantity and unit of measure of the food
  • Product description for the food
  • Location description for the immediate subsequent recipient (other than a transporter) for the food
  • Location description for the location from which the food was shipped
  • Date the food was shipped
  • Location description for the traceability lot code source or the traceability lot code source reference
  • Reference document type and reference document number (maintain only)

Traceability Plan

All parties covered by the rule must create a traceability plan, and several are specific to those holding the food, such as a DC. The plan must include a description of the procedures used to maintain the required records, including the format and location of the records. It also needs to have a description of the procedures used to identify foods on the FTL and a statement identifying a point of contact for questions regarding the traceability plan and records. Traceability plans must be updated as needed to ensure the information reflects current practices and previous traceability plans must be maintained for two years after an update.

The Importance of Equipment, Technology and Training

There are several layers to the FSMA, which was signed into law in early 2011, and several requirements apply to the transportation and storing of food. All parties in the supply chain need to ensure they’re complying with current requirements and prepared to meet upcoming compliance dates.

FSMA includes requirements surrounding vehicles and transportation equipment, which must be “adequately cleanable” to allow the sanitary transport of food and “must be stored in a manner that prevents harborage of pests or becoming contaminated in any other manner that could result in food becoming adulterated.”

The ability to track and trace products is at the heart of several requirements, making the right WMS a vital resource. Tier 1 systems provide information on where products are stored and have embedded algorithms that can find ways to maximize productivity and the movement of product in and out of the warehouse.

It is also important for those transporting and storing food to be current on the latest requirements and best practices. Penske Logistics has earned Cold Carrier Certification, adding to its strategic approach to safety. The certification, which is the first of its kind, recognizes cold trucking carrier companies that comply with the Refrigerated Transportation Best Practices Guide from the Global Cold Chain Alliance, a trade association representing all major industries engaged in temperature-controlled logistics. Additionally, Penske associates undergo regular training to ensure food safety.

Foods on the Traceability List

Foods that will be subject to greater requirements in 2026 include:

  • Cheeses, other than hard cheeses
  • Shell eggs
  • Nut butters
  • Cucumbers
  • Herbs (fresh)
  • Leafy greens (fresh and fresh cut)
  • Melons
  • Peppers
  • Sprouts
  • Tomatoes
  • Tropical tree fruits
  • Fruits (fresh cut)
  • Vegetables (fresh cut)
  • Finfish
  • Smoked finfish
  • Crustaceans
  • Molluscan shellfish, bivalves
  • Ready-to-eat salads

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When it comes to creating your perfect warehouse strategy, there are a wide range of challenges to consider. From demand variability and shipping windows to managing costs and meeting customer expectations to simply figuring out the best way to organize your inventory, many elements must be factored in for not only what you’ll need today, but also what you’ll require tomorrow.

Penske has put together a guide to help users think about and plan for the optimal warehouse to meet their distinctive business needs. We examine all facets of the warehousing process, including:

  • Warehousing options
  • Whether to lease, buy or build
  • Site considerations
  • Making the most of your warehouse space
  • Inventory management best practices
  • Warehouse management technologies
  • Smart warehouse technologies
  • Labor management

As a renowned leader in the warehouse and supply chain industry, Penske works with businesses all over the world to make the most of their square footage and minimize the risks that can hinder warehouse operations. Our strategic warehouse designs influence efficiency in all your processes, from inventory control to production tactics and labor management.

With warehouse design playing such a critical role in an efficient supply chain, you’ll enjoy this in-depth guide that helps direct you through important factors to consider when planning your warehouse operations.

For this global industrial manufacturer of vehicles and engines, production depends on exceptional and reliable service throughout the supply chain. When the manufacturer was looking for a partner to manage its distribution centers, it sought a company familiar with the challenges of automobile supply chain management and decided on Penske Logistics. Penske has managed inventory in two of the manufacturer's facilities in Mexico since 2002.

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An energy-efficient warehouse can cut operational costs while improving sustainability, making green warehousing initiatives a win-win solution within the supply chain industry. A range of eco-friendly solutions can be applied to new construction or existing facilities.

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As real estate prices increase, the area within the four walls of the warehouse is at an ever-greater premium. Effective and efficient warehouses can help maximize space, increase productivity and improve performance, making the most of your existing warehouse space. Optimized warehouses also make the most of available labor and ensure timely service. From improving slotting patterns to embracing technology, there are several ways to streamline the movement of goods within your warehouse.

Explore these strategies from the experts at Penske Logistics to optimize your warehosue:

​Improve Slotting Patterns

Optimal slotting patterns place high-velocity pick items as close to the door and as tightly together as possible to drive efficiency. Optimal slotting designs are based on historical sales data, including volumes and A, B, C and D movers, along with forecasted demand and seasonality. That data will provide insight into what to stock and where to position it to get the top movers out of the door faster. It isn’t hard to move slotting patterns as demands change, and adjustments should be completed at least once a year to ensure efficiency. Some industries, such as food and beverage, change slotting patterns seasonally.

​Separate Fulfillment Channels

The growth in e-commerce means more and more warehouses have three fulfillment channels: shipping to their own locations, outside retail locations and business-to-consumer. Depending on the volume or the way warehouses receive orders, there can be a pallet area, case-pick area, and an each-pick area to maximize each category’s efficiency.

​Find the Ideal Racking Solutions

The right storage solutions are often based on the cost of specific geographic locations, which varies. Space is much more expensive in California than in the Midwest, so in California warehouses, it might make sense to invest in vertical racking. Sites can utilize single-deep racking, double-deep racking, push-van racking or other types to get additional spots on the rack.

​Examine Labor Standards

Labor is central to warehouse operations and software can help manage the movement of people and track productivity. That data can be compared to warehouses’ labor management time standards and results should be evaluated every day after every shift to ensure employees are meeting their productivity standards.

​Utilize a Robust Warehouse Management System

A warehouse management system provides inventory visibility and tracking and ensures products don’t get mixed up or misplaced. Improving your warehouse management software can provide several benefits, including the traceability of products, which will become even more important for certain industries, such as food and beverage, that have increased safety standards.

​Invest in Technology

Various technologies can help improve operations within the warehouse. Some warehouses use a voice-pick system to help pick items more efficiently and employees can close out orders as they pick them, using their voice and an index finger scanner. Radio frequency scanners, including forklift mounts, handhelds and wearables, direct employees to the correct picking location. Once employees pick the products, the system automatically updates the picked items in the warehouse management system.

​Augment Labor

Drones and visual guided vehicles can help free up human talent to focus on more important tasks within an operation and improve overall safety. Drones can fly through a distribution center’s aisles and provide updates on inventory or alerts if products are not in their assigned slot. Visual guided vehicles can be used to move pallets or other inventory throughout the warehouse and are trained to run the same pattern.

​Create a Contingency Plan

Supply chain disruptions have highlighted the need for contingency planning, which can range from preplanning for a natural disaster to knowing how to ramp up operations if there is a spike in business. Thinking through and predefining potential scenarios can ensure an efficient shift when necessary.

​Utilize a Multi-Client Warehouse

Companies looking to expand their footprint and move inventory closer to end consumers are turning to multi-client warehouses, which enable them to take advantage of smaller space within a facility. Multi-client solutions make sense for customers needing 75,000 square feet of space or less.

Realize the Benefits of Warehouse Optimization

From efficiency improvements, lowered operating expenses, enhanced worker productivity and reduced turnover to greater inventory management and better customer service, the benefits of a solid warehouse optimization plan are significant. Ensuring you have the right processes and platforms in place can help your business run more efficiently than ever before.

There are many elements to choosing the right logistics partner. Penske places a premium on taking the necessary time to clearly understand how our logistics solutions may impact the entire company. Our goal is to ensure the efficiencies provided by Penske are realized at virtually every level.

For more information on what Penske Logistics can do for your organization, please contact us at 800-529-6531.

Companies looking to expand their footprint and move inventory closer to end consumers are choosing multi-client warehouses, which enable them to take advantage of a smaller space within a facility.

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Maximizing space within a warehouse and positioning items to improve efficiency can add up to significant financial and time savings. The layout and design of a warehouse and a distribution network should be an ongoing process. Shippers can improve their food warehousing and distribution with these six strategies:

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Warehousing space is at a premium and represents a significant portion of total supply chain costs. Consequently, shippers need to carefully evaluate the case for investing in more storage capacity.

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As companies respond to increasing demand for sustainable products and services, the role of supply chain network design in supporting and furthering their green goals is gaining in importance.

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Cross-docking – unloading product from an inbound truck and loading it directly onto an outbound truck – is a well-established logistics practice that is growing in importance as a way to manage risk in the supply chain.

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To help improve efficiency within the warehouse, Penske Logistics emphasizes continuous improvement and lean processes and principles, which focus on eliminating waste and reducing activities that don't add value.

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Space within the four walls of the warehouse is at a premium, so it is critical to maximize all available warehouse space while ensuring orders can be fulfilled quickly. Identifying the most effective slotting patterns and the best storage solutions optimizes warehouse space and makes it easier to get products out the door faster.

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When a leading U.S. distributor of wines, spirits and other beverages had to quickly transform and expand its operations to counter an emerging competitor, they turned to Penske Logistics to engineer and rapidly deploy a fully customized solution.

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In an increasingly uncertain world, network design is quickly becoming the new imperative. It is not only the pace of change driving network design's value, it is also the scale of the changes that companies now face. The importance of strong network design strategy, planning and resiliency continues to be strongly felt across the globe as supply chains are disrupted and shortages are felt by consumers.

Executives can leverage advanced 3PL's logistics engineering and network design expertise to help scenario plan, validate strategic decisions, uncover cost savings, improve service levels, or integrate disparate networks following a merger or acquisition. Network design analysis can help inform critical decisions such as:

    • The optimal number and location of plants and warehouses.
    • The best mix of transportation modes and routes.
    • Which customer fulfillment strategy to adopt when preparing for e-commerce.
    • Evaluating supply chain strategies such as localization, offshoring or nearshoring.

    Quality, on-time metrics, and cost are all critical components within the warehouse, and advanced technology is making the movement and storage of goods more efficient.

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    The interest among foreign shippers to start selling their products on the European market is high and rapidly increasing. Annual figures from NDL/HIDC, responsible for representing and promoting the Dutch logistics industry, show stable double-digit growth figures for foreign logistics investment projects.

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    As rising warehouse labor costs eat into their logistics budgets, many manufacturers seek ways to improve warehouse productivity and reduce facility headcount. But meeting these goals is not easy, given the sheer number of technological tools and strategies available to managers.

    A useful starting point is to ascertain your current level of technological sophistication. Are your warehouse operations still grounded in manual processes or run by high-tech systems that maintain downward pressure on labor costs?

    To help manufacturers make this call, Penske Logistics has created a four-stage guide to warehouse automation. Manufacturers can use the guide to help them develop a strategy for automating warehouses that is in line with their budgetary and business goals.

    Personnel Premium

    The cost of labor can account for up to 65% of total warehouse fulfillment costs (excluding trucking), depending on how a facility is owned and managed. It represents the most significant slice of a manufacturer’s warehousing budget.

    And that slice has increased in size over recent years. Worker-related costs have soared in response to increased economic activity and a tight labor market. The growth in e-commerce volumes, as well as the number of SKUs, has driven up demand for storage space — hence, demand for people needed to run facilities.

    But hiring enough workers is not the only problem; retaining them can also be a headache. In the 2018 Warehouse and Distribution Center (DC) Operations Survey published by Logistics Management magazine, the “labor crunch” is described as the number one issue. Fifty-five percent of respondents — up six percent compared to the previous year — cited an inability to attract and retain a qualified hourly workforce as the leading industry issue.

    “Labor shortages and high turnover make it harder for warehouse managers hoping to control costs and boost productivity by improving workforce capabilities through training programs. As a result, more companies are seeking technological solutions to cost and productivity challenges,” says the 2018 State of Logistics Report, co-sponsored by Penske Logistics.

    Making the Leap

    While technology is key, choosing the most effective mix of solutions can be a daunting challenge, especially for manufacturers that lack relevant expertise.

    Penske’s four-stage guide to warehouse automation can get you started.

    Crawl, Walk, Run and Sprint chart

    Penske’s four-stage guide to warehouse automation comprises four evolutionary stages: Crawl, Walk, Run and Sprint.

    As can be seen in Figure 1, the guide comprises four evolutionary stages: Crawl, Walk, Run and Sprint. Crawl, the most basic level, denotes largely manual, paper-based warehouse management practices and systems that most manufacturers have left behind. At the opposite end of the scale are members of the Sprint group: companies that have invested heavily in high-end solutions such as advanced picking robots, automated guided vehicles and extremely sophisticated storage systems.

    For many industrial manufacturers, the middle two evolutionary steps are of the most interest. Companies in the Walk phase have introduced some automation using their existing IT resources, typically an Enterprise Resource Management system (ERP). The problem is that ERPs are not designed to handle the complex processes that drive modern warehouses.

    Importantly, while Walk is a step up from Crawl, it does not harness the power of the advanced warehouse management systems (WMS) that characterize the Run phase. As a result, a critically important task when migrating from Walk to Run is mapping standard ERP-based interfaces such as one that confirms orders have been received to a WMS (see the 10 Walk interfaces depicted in Figure 1). The migration can take months and requires extensive knowledge of warehouse solutions — which is why manufacturers often turn to third-party logistics providers to help them make the jump.

    “You can then optimize warehousing operations, for example, by implementing systems that put inventory in bulk locations or active locations to pick orders at ground level to increase pick speed,” says Don Klug, vice president of distribution center management, Penske Logistics. Introducing wearable scanners is another way to drive up pick speed. Goods flows can be accelerated by configuring operations to handle inventory items that are slow, intermediate or fast movers.

    The possibilities for improving warehouse productivity and reducing head count are limited only by the scope of the WMS and the skills of the logistics management team using it.

    Having identified potential solutions, warehousing professionals can apply technology to select the best options. “For example, Penske has engineering tools that can show customers the ROI of different solutions; if you spend “X” amount of capital, you will capture “Y” amount of productivity,” says Klug.

    Increased Use of 3PLs

    In a volatile economic climate, it is difficult to project with certainty how warehouse labor cost pressures will trend over the next few years. But even if there is some retrenchment, technology will be at the heart of strategies for raising the efficiency of warehousing.

    3PLs will continue to play a central role. In the 2020 Third-Party Logistics Study, co-sponsored by Penske Logistics, 73 percent of the shippers surveyed outsourced warehousing to third-party logistics providers, a four percent increase over the previous year.

    The research “highlights once again how important it is for 3PLs to provide a range of IT-based services to help create value for their shipper customers,” the study says. And warehouse/distribution center management is one of the most frequently cited technologies in the study. In the 2020 study, 63% of shippers said they need warehouse/distribution center management IT capabilities from their 3PL providers.

    Additionally, the study noted that optimization is occurring within the warehouse, which plays a crucial role in speeding deliveries, managing inventories and cutting costs. “Logistics providers can track the flow of inventory through and around the warehouse, monitor product velocity, and provide advanced notice of arrivals, which drive reduced dwell time and engine idling and increased efficiency,” the study says. “Data on incoming and outbound loads can be transmitted electronically between supply chain partners to reduce downtime.”

    The COVID-19 pandemic has exposed supply chain vulnerabilities, forcing many companies to evaluate their network design to de-risk the supply chain and identify improvement opportunities within their current operations. Business continuity is critical, and effective network design can ensure that companies operate efficiently not only when a natural disaster strikes, but also during more typical scenarios, such as an acquisition, business growth, or a change in products or market conditions.

    “There are ‘trigger events’ that lead companies to evaluate their network,” said Andy Moses, senior vice president of sales and solutions for Penske Logistics. “We’re in that type of moment right now.”

    Using ‘What-If’ Scenarios to Improve Operations

    Penske starts by gathering data on its customers’ supply chains and draws on the data to create models using a mix of proprietary and off-the-shelf technology. Penske’s team of engineers can run “what-if” scenarios using different ports, warehouses or plant locations and alternate suppliers as well as varying levels of inventories and modes of transportation.

    “As we look at the effect the novel coronavirus has had on the supply chain, companies likely will be moving towards multiple source lines, including more local, North American suppliers, in addition to suppliers in China,” Moses said.

    Companies may also want to look at the impact of increasing inventory on their network. “We’ve seen disruption, plus the cost of capital is low, so it may be worthwhile to look at inventories,” Moses said, adding that e-commerce has continued to explode. “Network design can help companies identify segmentation within the supply chain and position their network to serve different channels, both for today and into the future.”

    Identifying Improvements and Gaining Flexibility

    Network modeling can help Penske customers identify which channels should be served by which locations, as well as their ideal supplier base locations, the best ports of entry and the optimal positioning for brick-and-mortar warehouses. Penske can also identify quick opportunities that companies can leverage for immediate improvements. “Sometimes that is just done by analyzing their shipment or demand data,” Moses said.

    Given the supply chain disruptions many have experienced during the COVID-19 pandemic, Moses said he expects to see fewer single-source type of arrangements. “There are considerations beyond price, and predictability of supply and flexible supply capability might influence buying decisions,” he said.

    Through modeling, Penske could simulate the flow of materials through the supply chain from a supplier in one region versus a supplier in another region, which could help customers determine the right mix.

    Moses said cost is always a concern, which is why modeling can be so useful. “You must model key constraints, such as manufacturing limitations, delivery time frames and costs,” he said. “Many of these things compete against each other, but models can help customers find the right network design.”

    Once the model is established, Penske can run alternate scenarios regularly to help its customers optimize their network based on their supply chain goals, which could include improving service, reducing cost or eliminating supplier redundancy.

    Establishing Routine Network Design Reviews

    While trigger events can inspire some companies to update their network design, others do it regularly. “Companies tend to look at network design annually, but a best-in-class operation might look at it quarterly if they feel like there is enough variability in the business to warrant it,” Moses said. “Penske can keep a model alive on a sophisticated platform so we can update a technical model as needed.”