Small parts distributor - Automation feasibility

Key challenges

With an upcoming lease renewal in 2026 at the clients Sydney DC and rapid expansion across Australia and New Zealand, they required a site capacity assessment and automation feasibility study. This would allow them to better understand the short and long-term options for the business and which options will support the anticipated growth.

• Over the next 5 years the client is forecasting 200% growth from baseline, equating to a growth rate of 14.8% per annum.
• An external 3PL is currently used for offsite storage of furniture items as they do not have sufficient space on-site to accommodate full breadth of range.
• Even if the project growth is reduced, constraints will still rise in the coming years if an alternative solution is not implemented.

Our approach

The current Sydney DC is at 75% capacity and expected to breach soon, where a short-term solution is being considered until a new property can be determined for 2026.

• TMX assessed the current operations across inbound and putaway, inventory and replenishment and outbound activities.
• Our team provided analysis on breach points across varying year-on-year growth rates and determined operational constraints that will be experienced in as little as 12 months (at the time the report was issued).
• Design levels analysis provided context on which areas of the business from inbound/outbound activities to inventory replenishment could benefit from automation or if a new DC design is applicable.
• Three DC layouts across single selective, very narrow aisle (VNA) and double deep were compared to understand the viability of racking extension options.
• VNA was deemed to be the only practical extension option to support densification with a slight sacrifice on productivity. However, operational disruptions were on the horizon with full DC retrofit and investment of new materials handling equipment (MHE).
• Explored areas for on-site storage area solutions and shortlisted potential automation vendors for vertical lift modules and buffers to drive throughput capacity.

The results

• Capacity assessment revealed the only viable extension option to increase storage density is the VNA layout and requires a full racking retrofit with new MHE. This extension option increases capacity to 485 pallet positions – a 26% increase on current operations.
• VNA is only a short-term solution as it will not cover the full expected 5-year growth period.