Site optimization unlocks sublease value while preserving operational capability

After splitting from its parent company, a leading global food manufacturer significantly reduced inventory in a 1M sq ft distribution center. This created an opportunity to sublease a portion of the site to generate financial returns. However, they first needed to determine how much of the facility could be repurposed without compromising existing operations.

To do this, our client needed to establish a new operational baseline that reflected the now segmented business. Inventory levels, storage utilization, and facility layout all needed to be realigned with the newly reduced operations.

Miebach was brought in to help the client find a balance between running an efficient warehouse and unlocking new financial opportunities. Using historical operational data from the downsized business, we modeled how inventory sensitivities would impact flow, storage, and capacity.

Our key recommendations included:

• Right-sizing case picking – reduce the footprint in this area by limiting inventory in this area to 1-2 DOH based on actual case-pick demand
• Reclaiming vertical space - reassign lower racking levels to case pick and use the above levels for slow-moving inventory. The freed-up space 70k sq ft of can now be used for additional bulk storage
• Simplifying bulk storage - reduce the number of lane depths from 9 to 3, improving storage flexibility.

To minimize capital expenditure, we value-engineered the resulting layout to align with existing striping wherever possible, resulting in a more efficient implementation plan. Finally, we delivered a sequenced rollout strategy that allowed changes to be executed with minimal disruption to day-to-day operations.

Our approach and step-by-step plan gave the client the confidence move forward with subleasing without sacrificing the performance of their own operation. The strategy combined flexibility and scalability with an implementation plan that ensured that operations could continue without disruption during execution.