High-bay warehouse planning with manufacturers: The economic advantage of direct system integration

Minimizing interface risk: Why a “one-stop-shop” approach for high-bay warehouses is safer

The planning and implementation of an automated high-bay warehouse marks a crucial strategic turning point for any logistics company. With investment sums quickly reaching tens of millions and a target operating life of up to two decades, every wrong decision in the planning phase has serious consequences. Traditionally, decision-makers reflexively turn to external consulting firms, hoping to find the optimal system design through "neutral expertise." However, a thorough economic and technical analysis radically challenges this common approach.

The following analysis reveals a structural discrepancy: While external consultants can provide methodical process analyses, they often lack access to the in-depth empirical data and machine-specific performance limits that only the manufacturers themselves possess. It becomes clear that directly integrating the manufacturer into the planning phase not only drastically reduces interface complexity but also unlocks significant cost advantages – from saving six-figure consulting fees to a shorter amortization period through more precise technical dimensioning.

This article explores why "unified responsibility"—that is, planning and implementation from a single source—eliminates the risk of the "blame game" and why a manufacturer, who must guarantee the long-term functionality of their system, is intrinsically motivated to design more realistic and robust solutions than an external service provider. We analyze the financial realities of automated warehouse systems and advocate for a hybrid approach that returns technical planning authority to where the deepest system understanding resides: the manufacturer.

The provocative thesis: Why manufacturers are a better choice than external consulting firms

Choosing the right partner for planning and dimensioning a high-bay warehouse is one of the most strategically important investment decisions in supply chain management. While consulting firms are often seen as neutral, process-oriented partners, a closer economic analysis reveals significant structural advantages in working directly with the warehouse system manufacturer. This analysis refutes the widespread narrative of the necessity of consulting independence and demonstrates that in-depth technical specialization, integrated responsibility structures, and systemic cost efficiencies not only justify working with the manufacturer but also make it significantly more economically advantageous.

The global warehouse technology industry invests billions annually in research and development to optimize high-performance high-bay warehouses. These investments are solely focused on maximizing system performance, material flow efficiency, and operational reliability. Consulting firms cannot replicate this in-depth expertise without becoming warehouse technology manufacturers themselves. This fundamental asymmetric distribution of information results in a structural competitive advantage for the manufacturer during the planning phase.

The financial reality of automated warehouse systems

The investment costs for a fully automated, medium-sized high-bay warehouse typically range between five and twenty million euros. Unit-load systems for pallet logistics require investments of at least one million euros, while mini-load systems start with total budgets of 750,000 euros. These investment figures illustrate the critical importance of optimal system planning: a cost saving of just five percent through improved planning already equates to a direct reduction in the investment sum of 250,000 to one million euros.

The operating costs of an automated high-bay warehouse consist of annual maintenance (one to three percent of the investment), energy consumption, personnel costs, and system downtime. Modern high-bay warehouses, in well-designed systems, achieve a return on investment of two to four years. This means that efficiency gains during the planning phase directly reduce the amortization period, and cost savings over a 15- to 20-year operating period have an exponential effect.

Analyses document that warehouse automation can reduce personnel costs by up to 30 percent and lower error rates from the typical 66 percent in manual warehouses to below one percent. Space utilization efficiency increases many times over through vertical optimization, while throughput times are reduced by 20 to 40 percent. However, these effects are highly dependent on the quality of the initial procurement and sizing decisions.

Why direct manufacturer partnerships are superior in terms of information technology

High-bay warehouse manufacturers like Jungheinrich, Kardex, or SSI Schaefer have decades of operational experience with thousands of installed systems. These companies possess empirical data from practical experience: They know which storage height in which rack type delivers optimal throughput under specific product characteristics, how material flow bottlenecks arise, and where redundancy costs can be reduced without compromising system availability.

Consulting firms, including renowned strategy consultants, possess methodological knowledge of warehouse planning and can conduct ABC analyses, create material flow diagrams, and evaluate scenarios. However, this knowledge is systematically limited by their distance from the technical implementation. An external consultant does not know the mechanical performance limits of a particular storage and retrieval machine as precisely as the manufacturer, who operates that machine daily for thousands of cycles per shift.

The difference in technical expertise becomes immediately relevant during the planning phase. When a manufacturer plans a high-bay warehouse system, they implicitly or explicitly consider insights gained from thousands of installations: optimal dimensions to minimize mechanical stress, buffer sizes between storage and retrieval to reduce system bottlenecks, and energy efficiency potential through specific drive configurations. A consulting firm cannot define these parameters with the same level of evidence.

System integration and unified responsibility

A subtle but economically significant advantage of manufacturer-led planning lies in the unified responsibility structure. When the manufacturer plans, sizes, and subsequently installs, they bear full operational responsibility for the entire system. This creates a strong internal incentive for optimization as early as the planning phase. The manufacturer knows that they will later have to deal with the consequences of suboptimal decisions during the implementation phase.

Consulting firms, on the other hand, hand over the project after the planning phase. They earn money through consulting, not through successful implementation and 15 years of operation. This incentive conflict statistically leads to a higher risk of overly conservative or unbalanced planning decisions. A consulting firm can build excess capacity into the planning without fully internalizing the client's financial burden during operation.

The warranty structure reinforces this advantage. If the manufacturer plans and builds, the warranty extends to the entire system, including the planning. This means that planning deficiencies cannot be passed on to the customer. An external consultant could ultimately claim that the implementation or future operational changes have modified their planning concept, thus obscuring the lines of responsibility.

The cost structure of consulting firms

A frequently overlooked economic reality is the cost structure of external consulting. When a medium-sized logistics company engages a consulting firm for high-bay warehouse planning, fees of between €50,000 and €250,000 are incurred for comprehensive concept development, depending on the complexity and depth of the consulting services. These fees are expenses that are added to the total investment without directly influencing the system's technical parameters.

In addition, there are hidden cost components. Consulting firms work on projects with a fixed scope. If requirements change during the planning phase or additional analyses become necessary, extra fees are incurred. The distinction between basic planning services and additional services is often blurred, leading to unexpected costs during the planning process.

In contrast, a manufacturer structures its planning as an upfront investment in preparation for a later order. The manufacturer has no economic incentive to maximize revenue during the planning phase, as its profit lies in the implementation. This creates an incentive for efficient consulting and cost-optimized planning.

Material flow optimization and in-depth technical planning

Modern warehouse technologies are highly complex. An automated high-bay warehouse with a storage and retrieval machine, conveyor system, buffer system, information management system, and ERP system integration is not a collection of individual components, but a thoroughly optimized technical system. The quality of this optimization depends on how precisely material flow requirements are aligned with the technical system characteristics.

Manufacturer specialists can simulate material flow scenarios with precision because they know the exact performance characteristics of their systems. They know that a particular storage and retrieval machine processes 120 double cycles per hour under peak load, that blockages occur at a certain shelf depth, and how buffer capacity must be dimensioned to avoid these. An external consultant does not have this precision data available unless they obtain it from the manufacturer. This leads to an indirect form of manufacturer dependency.

Material flow optimization can increase productivity by 15 to 30 percent. These optimizations require a deep understanding of system dynamics. Transport distances can be reduced by 20 to 40 percent through intelligent shelf organization. A manufacturer who plans directly can integrate these optimizations into the initial plan, not as a later retrofit.

LTW Intralogistics – Engineers of Flow - Image: LTW Intralogistics GmbH

LTW offers its customers not individual components, but integrated complete solutions. Consulting, planning, mechanical and electrotechnical components, control and automation technology, as well as software and service – everything is networked and precisely coordinated.

In-house production of key components is particularly advantageous. This allows for optimal control of quality, supply chains, and interfaces.

LTW stands for reliability, transparency, and collaborative partnership. Loyalty and honesty are firmly anchored in the company's philosophy – a handshake still means something here.

Suitable for:

• LTW Solutions

Technical support and long-tail costs

A systematically underestimated cost component in consultant-led planning is the long-tail cost of technical support. After commissioning, questions arise regarding system optimization, configuration adjustments, troubleshooting system errors, and upgrades. When the manufacturer plans and builds, they have a deep understanding of the exact system configuration and can provide support more efficiently.

When a consulting firm designs the product but the manufacturer builds it, information asymmetry arises, increasing support costs. The manufacturer has to adapt to the consulting firm's design decisions. This mismatch leads to longer response times and higher daily technical support fees.

A concrete example: A high-bay warehouse experiences bottlenecks in buffer management during peak loads. A manufacturer with original planning can immediately diagnose whether this was a design flaw or whether operational processes are suboptimal. A manufacturer without original planning must first understand the design concept, then validate the implementation, before taking effective action. This additional troubleshooting phase costs time and money.

Scenarios and flexibility in planning

A frequently cited argument for external consulting is independence in scenario development. A consulting firm can objectively compare several competing system solutions and humbly present their advantages and disadvantages. A manufacturer, on the other hand, has a commercial interest in its own solution.

This argument is less compelling than it appears. Modern manufacturers often offer modular systems with various configuration options. A manufacturer can legitimately present different high-bay warehouse variants (pallet-based vs. box-level, vertical vs. horizontal mobility) and recommend the best option based on customer requirements. A good manufacturer's sales engineer won't sell the most expensive system, but rather recommend the optimal one, because this leads to customer satisfaction and a long-term business relationship.

Comparing offerings with competing systems is common practice in modern supply chains. Companies conduct formal request-for-proposal processes in which multiple manufacturers plan and calculate in parallel. This already creates a competitive mechanism that renders independent consulting at least partially redundant.

Data availability and forecast quality

A high-bay warehouse planning process requires precise data on future inventory levels, throughput volumes, and product characteristics. The quality of this forecast data is critical for sizing decisions. A consulting firm has access to the same data as the manufacturer: customer information, financial plans, and growth forecasts.

However, a manufacturer has the opportunity to validate planning data with historical benchmarks from thousands of other warehouses. A consultant might say that a planned 40 percent increase in throughput is good planning. A manufacturer, on the other hand, might say that such increases moderate to 25 percent after three years in 85 percent of cases for customers in this industry, and that therefore a more conservative design with scaling options is better.

This benchmarking capability of the manufacturer leads to more realistic, less oversized storage systems. This saves capital expenditure and operating costs.

Implementation risks and system integration

A high-bay warehouse is not an isolated entity. It is integrated into existing processes: goods receiving, order picking, shipping, ERP systems, and conveyor systems. The complexity of these integration points is often underestimated. A consulting firm creates a warehouse layout and a conceptual system design. However, it is the implementation partners and the manufacturer who are confronted with the actual integration complexities.

A manufacturer involved in the planning from the outset can anticipate integration complexities early on. They know which ERP system interfaces are robust and which have caused problems in the past. They know what buffers are necessary between automated warehousing and manual processes to ensure system availability.

A consulting firm must plan these integration points but has less access to operational experience. This leads to integration points being described in planning documents but not optimized with technical depth.

Personnel management and operational phase

The operational phase of a high-bay warehouse requires specialized personnel. Warehouse technology manufacturers offer standardized training programs for the maintenance and operation of their systems. These training courses are optimally tailored to the actual system configuration once the manufacturer has completed the planning.

A consulting firm can develop training concepts, but cannot convey the technical depth with the same precision as the manufacturer. A client's employees have less access to in-depth knowledge if the original planner was an external consultant.

This leads to higher error rates, less efficient maintenance cycles, and a greater need for external support during the operational phase. In the long term, operating costs increase.

Rate of amortization and capital allocation

A precisely dimensioned high-bay warehouse, based on manufacturer specifications, typically reaches its break-even point two to four years after commissioning. An oversized or suboptimally configured system can extend this amortization period to five to seven years.

In a €10 million system, a two-year delay equates to a net present value loss of approximately €2 million (assuming a cost of capital of ten percent). This capital allocation inefficiency is often sufficient to outweigh the investment in external consulting.

Larger companies with multiple logistics locations benefit particularly from manufacturer-led planning because learning effects and optimization patterns are transferred from one location to another. A manufacturer planning three high-bay warehouses for the same customer will build upon insights gained from earlier projects in subsequent ones. A consulting firm would have less systematic access to this learning curve.

Disadvantages and structural limitations of manufacturer planning

An honest analysis must also acknowledge the limitations of manufacturer planning. The first substantial advantage of external consulting is the relative independence it offers in system selection. A consulting firm can conduct an independent feasibility study and conclude that partial automation through lean optimization is more cost-effective than full automation. A manufacturer of full automation solutions has less incentive to reach this conclusion.

The second structural advantage of consulting is process optimization. A consulting firm can objectively evaluate a client's business processes and suggest that the warehouse processes themselves, not just the warehouse technology, need to be transformed. A manufacturer has less incentive for such fundamental process realignments if they require less technical warehouse system complexity.

A third point is flexibility. A high-bay warehouse is a long-term investment. A company's requirements can change fundamentally over 15 to 20 years. A modular, less specialized warehouse system can sometimes be adapted to new requirements more easily than a manufacturer-specific system.

These are legitimate arguments. However, they don't mean that consulting is necessary at all. A smart company uses the following hybrid approach: The manufacturer handles the technology planning. In parallel, the customer or an external process consultant conducts a business process optimization study. These two approaches are then synthesized. This reduces the risk of sub-optimization without the efficiency drawbacks of pure consulting.

Guarantee and long-term relationship structure

An often overlooked advantage of manufacturer-led planning is the warranty structure. When a manufacturer plans, installs, and commissions the system, their warranty covers the entire system. If problems arise later, the manufacturer bears full responsibility.

In contrast, lines of responsibility become fragmented after consultancy-driven planning. The consultant says they delivered a correct concept. The manufacturer says they built to specifications. The installer says they performed the installation correctly. Responsibility breaks down into individual parts, and the customer is caught in the middle when problems arise.

In the long run, this leads to higher overall costs. Legal disputes, negotiations over responsibility, and delays in troubleshooting cost more than the savings achieved through external consulting.

In terms of relationships, manufacturer-led planning leads to a longer-term, more intensive relationship between manufacturer and customer. The manufacturer is present for a longer period during planning, implementation, and operation. This can lead to better mutual understanding, faster problem-solving, and more strategic optimization discussions.

A consulting firm has less incentive for intensive, long-term relationships because its business model is based on project budgets. Once the consulting project is completed, the relationship ends for economic reasons.

Industry-specific aspects and specialist expertise

Storage technology manufacturers often have deep specializations in specific industries. A manufacturer focused on pharmaceutical storage understands temperature-controlled storage, batch tracking, and specific regulatory requirements on a different level than a generalist consultant.

These industry specialists can plan faster and more accurately because they don't start from scratch, but build on established best practices within their industry. They know which dimensions are used in comparable warehouses, which mistakes should be avoided, and which optimizations have proven successful.

A generalist consultant would first have to acquire this industry knowledge, possibly through additional research, which costs time and money.

Why the manufacturer is the better advisor for your warehouse

The economic analysis clearly supports direct collaboration with the warehouse technology manufacturer for the planning and dimensioning of a high-bay warehouse. This is counterintuitive to conventional consulting practices, but contradicts structural economic reality.

The manufacturer possesses IT expertise that an external consultant cannot replicate. The manufacturer has stronger financial incentives for optimization because they will ultimately be responsible for the system. The manufacturer can anticipate implementation and operational complexities because they have worked with thousands of similar warehouses.

Consulting firms have advantages in process realignment and independent system selection. However, these advantages should not lead to a completely consulting-driven planning model, but rather to a hybrid structure in which process optimization consulting runs in parallel with manufacturer-driven technology planning.

Companies that invest in high-bay warehouses through direct partnerships with manufacturers benefit from more precise sizing, faster amortization, reduced implementation risks, better operational support, and lower overall costs in the long run. These cost savings can amount to between five and fifteen percent of the total investment, which is strategically significant for investments in the ten-figure euro range.

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