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Warehouse Expansion

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When Toyota commenced sales in New Zealand back in the 1960s, its service parts warehouse was located in Wellington.

Demand for space as Toyota sales grew soon saw it looking for a new location, and in the late 1970s a decision was made to acquire a 10-hectare site that was currently under development in Palmerston North. Opening in 1977, it proved to be a great decision because there was room available to grow. Sure enough, 15 years later the size and role of the facility were extended to form the core of Toyota’s customer operations.

Toyota became the nation’s top selling automotive brand in 1987, and the ever-increasing parts demand from expanding sales required a 5,000-square-metre warehouse extension in the early 2000s, shortly after Toyota’s head office was moved to the same location. “Palmerston North turned out to be a great place to distribute parts from and to hire great people,” says Toyota CEO Alistair Davis.

“There are good schools to choose from and we have a university on our doorstep, a well serviced airport, and affordable housing for our employees.”

Business continued to boom and in 2010 a further 10,000m² were added.

As the number of Toyota, Lexus and Daihatsu vehicles on New Zealand roads approached a million units, warehouse space once again began to come under pressure, which is why Toyota is about to commission another 11,000m² of storage space. With a budget of nearly NZ$20 million, this project is Toyota’s biggest single investment in New Zealand, far outweighing any previous capital expenditure.

“It’s worth it,” says Spencer Morris, General Manager of Finance, Business Planning, and After Sales. “A lot of New Zealanders rely on us to keep their cars on the road.

We carry around $28 million of inventory, which is quite space hungry when you think about the huge variety of large items, such as bumpers, headlights and sheet metal, that we are required to stock. However, it does allow us to supply more than 95 per cent of daily orders off the shelf. We ship these overnight to our network of 66 dealers around the country. Without the space we have here we simply couldn’t meet this commitment to our customers.”

The construction of the latest extension (by local company Colspec Construction) commenced in early 2018 and was completed in October.

Toyota is also taking the opportunity to update the layout of both the storage and inbound/outbound areas, based on the latest Toyota thinking for safer and more efficient warehouse operations.

On the safety front, the new layout features a better separation of people and machines, assisted lifting for heavier items, and narrower single-direction aisles. On the efficiency front, the narrower aisles and design of the new operational areas will improve flow and productivity significantly, which will help us get parts out to customers faster.

“Our warehouse team have been heavily involved in the planning of the new layout, and are really looking forward to working in a brand-new environment to better serve our customers,” says Mark McDowell, who manages the warehouse operation.

But the work doesn’t end with the warehouse expansion. The extra space will also allow a significant amount of seismic strengthening, mostly of the original structure, which is now more than 40 years old. New racking and low-energy lighting will complete the renewal process, which is expected to take at least 18 months to complete due to the scale of the operation. The new extension will take the total space for parts storage to just under 35,000m², the size of about four rugby fields.

“Our planning for the extension assumed a 10-year life based on five per cent growth per year; however, growth has far exceeded that, so we may be back to the drawing board sooner than we thought,” says Dave Rhodes-Robinson, Manager of Parts Operations and Logistics. “It’s a good problem to have, and we’ll have to work hard to squeeze as much efficiency as we can out of the operation to extend its life.”