Is It Time to Upgrade Your Records Center Racking?

By Jeff Andrews

   Many “start-up” archive storage companies get in the business the cheapest way possible, including often buying “used” racking systems and other low cost equipment. They keep capital cost low while testing and growing their market. This makes sense while initially building the business and determining the customer base. Soon they are developing more customers and racks get filled.
   Eventually they become a serious records management company with tens of thousands of file boxes.   It becomes apparent that a better racking strategy needs to be employed. The old used rack was a good starter system however, as more warehouse space is needed, the owner realizes the importance of space management as well the benefits of a well planned storage system.
   In many cases when the initial used racks were purchased, it was a matter of what was available. The height, depth and capacity of the racks might have been great for storing pallets but the sizes were not optimal for file box storage. In other cases old rivet style shelving, generally used for storing boxes two deep and two high were purchased. Maybe the used racks were not high enough to fully utilize the clear height in the building. Lastly, in some cases the racks may have been damaged and create a safety issue. Eventually it makes sense to take a hard look at whether a racking upgrade is necessary.

   Some of the considerations for upgrading a storage racking system include:
   ·        Storage density and revenue
   ·        Storage and retrieval efficiency
   ·        Life Safety
   ·        Disaster prevention
   ·        Depreciation expense tax savings
   ·        Company resale value
   ·        Appearance and attracting customers

   Regarding storage density and revenue, it may be worthwhile for a review of the “master plan” layout of the records facility. It’s simple enough to do and only requires a quick survey including dimensions of the walls, building columns, exit doors, dock doors and other obstructions. In addition height clearances need to be measured especially the roof slope, sprinkler heights, truss and other obstructions.
   Once the survey is completed a racking professional that understands the archive business can array the racks and quickly calculate the box capacity in the building. This can be compared to the existing capacity and a determination can be made as to whether it makes sense to re-configure the facility. Old inefficient racking can be replaced with a system that creates greater revenue or perhaps postpones the expense of finding additional space.
   In the past 20 years, archive storage systems have changed dramatically from steel shelving and rivet style” shelving with particle board to a more standard heavy duty and high density “racking” style systems. The racks are outfitted with shelves made from steel or wire decking.   Boxes are typically stored three deep and three high per shelf.
   Some companies still store boxes on pallets which is terribly inefficient including space utilization as well as time requirements for storing and retrieving boxes.   In some facilities, as much as 10-50% additional storage can be realized with a well designed high density system. If a typical file box brings in revenue of $3-4 per year, then it makes sense to find every possible box location.
   Many startup companies also use “order picker style” (OPR) racking. The racks are loaded and off-loaded by hand from a man-up forklift working in a 60” aisle. Again, the initial costs are lower than a “catwalk style system” that needs stairways, catwalks and usually more sprinklers. However, 95% of the established records companies use catwalk systems. It’s simply a mathematical equation. Generally, they will get 10-20% more boxes. The additional investment cost is paid off in about one year and from that point on the revenue stream continues. The top names in the industry have conducted various studies and generally agree that catwalk systems offer the greatest long term return on investment.
   A catwalk system uses a typical 30” service aisle versus a 60” aisle for an OPR system. In addition a catwalk style system can easily be designed to follow the contour of the sloped ceiling adding boxes at the higher points. OPR systems are limited by the reach height of the truck. Catwalk systems are able to reach heights of over 80’.
   “Safety” is another reason to upgrade the racking system. OPR systems will often sustain much more damage than the typical catwalk system that does not allow forklifts operated in the aisles. A damaged racking system can collapse in a matter of seconds. A few years ago an OPR system with a heavily damaged rack collapsed in the middle of the night, initiated by a train rolling by the building shaking the ground enough to cause a buckling followed by a domino effect across the building destroying building columns, collapsing the roof and busting through a demising wall and onto the neighbor’s expensive printing press. Needless to say both businesses were shut down for an extensive period.    A crane was brought in to lift up the roof and the racking was disassembled like “pick-up sticks”.
   Many startups have the long term goal of selling their businesses in the future. In many cases the value of the racking system is calculated into the sales price of the business. An inefficient racking system will most likely be disassembled, scrapped and replaced and the cost for this could heavily discount the value of the business.   Whereas a well designed high density racking system could increase the value of the business.
   In some records centers that have old inefficient racking systems it may be worthwhile to review tax advantages of replacing a fully depreciated racking system with a new more efficient system. This is one more incentive to look at with a qualified CPA to determine if the new efficiencies and tax savings justify a new system.
   Lastly, customers often want to take tours of the archive facilities when choosing to outsource their records. Racking appearance and safety does matter. It says something about the company. Are they neat and organized? Do they care about the safety of their employees? Do they care about the safety of my file box?   Even the paint color of the racks is important. Most large records center companies also choose specific paint colors to match their logos and boxes. It’s all tied together for a professional image.
   In summary, if your racking system is looking old and tired, it may be worth the time to investigate the options for a new more efficient, safe and attractive racking system. The return on investment may be sooner than you think.

Jeff Andrews is the President of the Archive Division at Elite Storage Solutions, a leading manufacturer and integrator of racking systems nationwide. Jeff has over 30 years experience in high-rise racking systems and 22 years specifically devoted to the archive racking industry.