Chapter 12 dp&c 12-1 “Education in Pursuit of Supply Chain Leadership” Chapter 12 dp&c Warehouse Management.

Chapter 12dp&c12-1

“Education in Pursuit of Supply Chain Leadership”

Chapter 12

Chapter 12dp&c

Warehouse Management

Chapter 12dp&c12-2

Learning Objectives (cont.)

• Defining demand management

• Detailing the components of demand management

• Formulating demand management strategies

• Determining the process of demand planning

• Performing demand planning

• Performing sales planning

• Developing the demand forecast

Chapter 12dp&c12-3

Learning Objectives

• Performing production and resource planning

• Performing inventory and distribution planning

• Balancing the demand and supply plans

• Detailing the foundations of S*OP

• Working with S&OP planning grids

• Performing the monthly S&OP process

Chapter 12dp&c12-4

Inventory Management Basics

Chapter 12


Defining Warehouse

Management

Chapter 12dp&c12-5

Defining Warehousing

The segment of an enterprise’s logistics

functions responsible for the receiving,

storage, handling, and shipment of inventories

beginning with supplier receipt and ending at

the point of customer consumption

Chapter 12dp&c12-6

Magnitude of Warehousing

The cost of all warehousing in 2012 was US$130 billion

The warehouse space was used to stock US$2.27 trillion of inventory

Accompanying carrying costs to house and administer this inventory was US$434 billion

CSCMP Annual State of Logistics (2014)

Chapter 12dp&c12-7

Warehouse Functions

Order Management

Information Transfer

WarehouseFunctions

Product Storage

Materials Handling

Chapter 12dp&c12-8

Material Handling Functions

Materials Handling

Loading and Unloading

Movement to and from Storage

Sorting

Postponement

Cross-Docking

Reverse Logistics

Chapter 12dp&c12-9

Inventory Storage

Product Storage

Storage/Put-Away

Stockpiling

Product Rotation

Consolidation

Bulk Breaking

Product Mixing

Spot Stocking

Production Support

Chapter 12dp&c12-10

Order Management

Order Managemen

t

Customer Order Picking

Production Order Picking

Traffic Management

Shipping

Chapter 12dp&c12-11



Transaction Management

Inventory Balance Accuracy

Warehouse Capacities

Chapter 12dp&c12-12


Chapter 12


Types of Warehouse

Chapter 12dp&c12-13

Types of Warehouse

Private

Public

Contract

Storage in transit

The property, facility, and accompanying storage and material handling equipment are normally owned and operated by the firm

Similar to a public warehouse except that the third party and the renter seek to engage in a long-term contractual relationship

This is a special form of warehousing where goods are held in a transportation mode, such as truck or railcar until needed

The property, facility, and storage and material handling equipment are owned and operated by a third party who rents out its services for a fee on a short-term basis

Chapter 12dp&c12-14

Specialized Warehouse Services

Cold storage warehouse. Often products must be kept at certain low temperatures to preserve freshness or prevent spoilage. This is particularly true of foodstuffs that must be refrigerated or kept frozenTemperature-controlled warehouse. There are some products, such as fresh vegetables, fruit, liquids, and chemicals, that must be stored in warehouses whose temperature is somewhere in between cold storage and "dry" or ambient outside temperature

Bonded warehouse. Companies engaging in international trade will often use a special type of warehouse that will enable them to produce, transfer, and/or store products without having to pay excise taxes and duties

Records warehouse. Practice of utilizing excess or dedicated warehouse space and personnel for the pickup, filing, storing, retrieving, and delivery of company records

Chapter 12dp&c12-15

Specialized Warehouse Services (cont.)

General merchandise warehouse. This type of warehouse accounts for, by far, the largest percentage of all warehousing activities. It can be defined as the storage of all goods except specialized or commodity products. This type of warehouse can be private or public, bonded or unbonded, and may or may not have customs and free-trade-zone privileges

Commodity warehouse. This type of storage specializes in commodity, bulk, or large products such as wood, agricultural goods, cloth, building materials, cotton, large appliances, and so on. Commodity warehouses can be either public or private

Foreign free-trade-zone warehouse. This type of warehouse is used by enterprises engaged in international trade. In the U.S., these storage facilities legally reside outside of U.S. customs territory where they are exempt or have reduced customs duty liability. If the goods are re-exported, no customs duties are owed

Chapter 12dp&c12-16

Specialized Warehouse Services (cont.)

Mini-warehouse. This type of warehouse is usually characterized by limitations in total space and the complete absence of warehousing services. They are simply intended as extra storage space, ranging from 20 to 200 square feet. They are normally administered by an on-site caretaker, and often have a limited assortment of material handling equipment for rent

Chapter 12dp&c12-17


Chapter 12


Developing Warehouse Strategies

Chapter 12dp&c12-18

Strategic Decision Components

Warehouse Strategy

Location Optimization

Transportation Cost

Inventory Carrying Cost

Warehousing and Handling Costs

Network Service Capability

Operational Flexibility

Industry Synergies

Technology Applications

Total System Cost

Chapter 12dp&c12-19

Total System Costs

Cost

Total Cost

WarehouseCost

InventoryCost

TransportationCost

Number of Warehouses

Cost of Sales

Chapter 12dp&c12-20

Warehouse Strategy Steps

Document existing warehouse operations. This step consists of two separate elements. The first is concerned with documenting existing warehouse facilities, cataloging warehouse equipment and capacities, and establishing labor resources by department. The second element involves performing an operations diagnostic, first on each resource and then on the general information and material flows in the entire warehouse

Identify and document deficiencies in existing warehouse operations. One of the outputs from the operations diagnostics described in Step 1 is documentation of areas of waste and redundancy that inhibit productivity

Determine and document the warehouse storage and throughput requirements over the specified planning horizon. This step requires forecasting which products and in what volumes are anticipated to be stocked in the warehouse over the planning horizon

Chapter 12dp&c12-21

Warehouse Strategy Steps (cont.)

Identify and document alternative warehouse plans. Once warehouse deficiencies have been identified, management must develop a plan that satisfies requirements by determining possible alternatives including acquiring additional resources, using rented equipment, temporary help, or public storage facilities

Select the recommended solution. Solutions will consist of detailed descriptions of proposed warehouse storage, equipment, personnel, and operating standards objectives for the forthcoming planning horizon

Evaluate alternative warehouse plans. Once alternative warehouse plans have been formulated, each must undergo rigorous financial analysis including capitalization, cost/benefit justification, after-tax current asset evaluation, and return on investment

Chapter 12dp&c12-22

Warehouse Strategy Steps (cont.)

Update the warehouse strategic plan. The warehouse strategy will always require updating as more accurate information about products, customers, and competitors is revealed

Chapter 12dp&c12-23

Use of LSPs

LogisticsFinancial settlement, global trade, consulting, logistics management, warehouse location, and supplier management

WarehousingStorage, warehouse management, pick/pack and assembly, cross-docking, fulfillment, vendor-managed inventories

TransportationSmall package delivery, freight, air cargo, intermodal, ocean, rail, bulk product, fleet acquisition assistance, and leasing

Special ServicesSpecial material handling, special delivery, import/export/customs, reverse logistics, and marketing and customer management

Networking Technologies

Leased services and equipment for EDI, Web-enablement, and warehouse (WMS) and transportation (TMS) management systems

Chapter 12dp&c12-24

Types of LSP

Basic services

3PL model

4PL model

Traditional logistics model

Internal company functions seek to totally control all logistics decisions and resources

The need for logistics services beyond the company’s competency will require the use of outside LSP partners beyond just intermittent spot buying

While the logistics team acts as a logistics integrator and retains control of channel design, 3PLs are given responsibility for managing entire portions of the supply chain

LSP assumes full responsibility for the total logistics solution. The LLP assumes ownership of channel design, spot logistics contracting, 3PL selection, and detail operations execution

Chapter 12dp&c12-25

LSP Sources of Logistics Value

The goal of this value is to find a competent LSP partner that can relieve the company from the task of managing the supply channel

The objective of this value is to leverage the technology capabilities of LSPs to provide logistics information accuracy, quality, and timeliness of the operations they deliver

The reduction of fixed assets in the form of physical plant and equipment is a major source of LSP value

The overall reduction of logistics channel costs is by far the primary objective of using a LSP provider

Trust

Information

Capital utilization

Expense control

Chapter 12dp&c12-26


Chapter 12



Process

Chapter 12dp&c12-27

Warehouse Management Process

Standards OK?

Warehouse Strategy

Warehouse Performance

Capacities OK?

Performance OK?

Timeliness OK?

Work Standards

Receiving and Stocking

Order Picking and Shipping

Performance Measurement

Chapter 12dp&c12-28

Exercise 12.1 Calculating Warehouse Standards – Efficiency

Standard picking hours with a 6 person crew

Demonstrated (actual) lines picked per day

2,250 lines picked in 39 hours

• Standard available hours = 6 pickers × 7 hrs. per day per picker = 42 hours per day

• Standard lines picked per hour per picker = 60 lines

• Standard lines picked (per day) = 42 hrs. × 60 lines = 2,520 lines

Picking efficiency calculation (picking crew of 6)

Chapter 12dp&c12-29

Exercise 12.1 Calculating Warehouse Standards – Utilization

Capacity available for bin picking team

Demonstrated (actual) daily hours used

Total hours used per day = 40 hours

Capacity = number of pickers × daily hours available

Capacity = 6 pickers × 7 hrs. per day per picker = 42 hours

Picking utilization calculation (picking crew of 6)

Chapter 12dp&c12-30

Exercise 12.1 Calculating Warehouse Standards – Daily Capacity

Data elements for bin picking team

Shifts = 2 shifts per day

Picking team = 6 pickers

Hours available = 7 hrs./per day per picker

Efficiency = 108%

Utilization = 95%

Bin picking team daily capacity

C = 2 × 6 × 7 × 95% × 108% = 86 hrs. daily capacity

Chapter 12dp&c12-31

Work Standard Sources

Historical Standards

Calculated as an average time to perform activities by compiling actual time past work records for a designated period.

Pre-determined Standards

Standards published by professional organizations like the U.S. Department of Defense or WERC

Work Sample/Time

Study

Standards created by accepting the statistical outcome for a random sampling of work activities or use detailed time and motion studies to establish process best practices

Multiple Regression

Analysis

Calculate a work standard by combining actual work content with the associated values impacting the activity

Chapter 12dp&c12-32

Advantages of Warehouse Standards

Resource availability. Warehouse standards provide managers with metrics detailing the capacities of labor, equipment, and facilities.

Scheduling. Warehouse management can then develop an everyday schedule designed to match resources with warehouse requirements

Problem identification. Standards pinpoint efficiency and utilization problems in the warehouse and permit managers to redistribute resources to meet requirements

Costing. When determining selling prices, it is absolutely necessary that the firm know the exact content of operations cost

Continuous improvement. Standards also form the basis for all quality programs targeted at continuous improvement

Chapter 12dp&c12-33

Receiving Flow

Delivery Planning

Product Deliveryand Unloading

Disposition

Return toSupplier Scrap

ToStock

QCInspection

MRB

Count, Inspect,Process Documents Packing List

Bill of LadingLabels

Chapter 12dp&c12-34

Warehouse Stock Activities

Receiving put-away. After receipt, warehouse stocking personnel is responsible for the timely and accurate placement of inventory into the warehouse locations (known as slotting) assigned during the receiving process

Product movement between locations. Sometimes products must be relocated because of changes in stocking quantity, construction or phase-out of stocking areas, change in material handling equipment, and others

Inventory balance count verification. Validation of counts occurs when items are put away, moved to alternate locations, serviced, picked, cycle counted, and/or counted during the annual periodic physical inventory

Location servicing. Stocking personnel are responsible for ensuring that all stocking locations are clean and free of debris and for refilling forward picking bins and racks from reserve locations

Chapter 12dp&c12-35

Warehouse Stock Activities (cont.)

Transaction and move reporting. Each time an item balance record needs to be adjusted or an item is relocated, it is the responsibility of warehouse personnel to quickly and accurately report the transaction

Product staging for order picking. For large, bulky items or large quantities of a product that are palletized or containerized, stocking personnel often will facilitate the order picking process by staging the required quantities

Stock rotation and lot control. Stocking personnel are responsible for the rotation of goods that have a fixed shelf life, are prone to spoilage, or must be lot controlled

Chapter 12dp&c12-36

Order Picking Functions

Automated Picking

Combination

Non-Sequential

Sequential

Manual Picking

Performed by teams that either walk or operate from a vehicle and pick inventory as determined by paper picking lists or computerized visual displays

Utilizes computer-controlled systems to retrieve inventory from each picking location, in the quantity and at the time specified to meet order demand

Driven by the nature of demand, the product, and the availability of picking equipment

Characterized by the fact that picking routes are completely random and determined by the arrangement of the order lines

Characterized by the use of several sequencing methods that seek to increase picker productivity, reduce picking time, and reduce picker fatigue

Chapter 12dp&c12-37

Methods of Picking

Unit LoadThe nature of the product permits the picker to fill the order requirement by pulling a full pallet/container load from stock

Case Lot

Often products are pulled to fill orders in full cases only. Case-lot quantities can be stored on a shelf or on a pallet, depending on the order point and replenishment quantities

Broken Case

Used by companies that allow picking quantities in less than full case-lot quantities. This method of picking can be done from a shelf, pallet, or other form of storage unit

Chapter 12dp&c12-38

Zone Picking

Serial Zones

In a fixed-zone picking route, order pickers must follow a prescribed zone sequence. As an order is completed in one zone, it is conveyed to the successor zone by use of a cart or conveyor system

Parallel Zones

In a parallel-zone picking route, the filler picks from independent zones, located, for example, on either side of the picking aisle. The picker subsequently can choose to fill orders in a sequence of zones. Finally, a consolidation point is used to reassemble the order for shipment or for movement to the manufacturing line

Serial/Parallel Zones

This arrangement permits the existence of a number of serial zones arranged in a parallel configuration

Chapter 12dp&c12-39

Order Shipping Objectives

Efficient receipt and handling of picked orders into a shipment

Prompt and accurate checking of order quantities and ship-to information

Selection of a carrier that will best deliver the order at the minimum cost

Efficient packaging/packing of orders in a manner that will prevent damage, reduce handling costs, and facilitate delivery

Development of an effective schedule of docking and loading facilities that eliminates outbound shipment bottlenecks and optimizes labor and equipment availabilities

Maintenance of shipping documentation that expedites order delivery and permits performance measurement

Chapter 12dp&c12-40

Shipping Flow

Delivery Planning

Product Deliveryand Unloading

Disposition

Return toSupplier

Scrap QCInspection

MRB

Count, Inspect,Process Documents Packing List

Bill of LadingLabels

ToStock

Chapter 12dp&c12-41

Warehouse Performance Measurements

Throughput

Order Filling

Inventory Accuracy

Storage Utilization

Shipping Accuracy

Refers to the volume of product storage and retrieval transactions that can be accomplished in a given unit of time.

Determined by lines filled without error, orders filled without error, and orders filled on time

Determined by comparing lines packed accurately, total orders packed completely, orders packed and shipped on time, and incidence of packing damage

Measurements for isolating the root cause of inventory errors and devising the appropriate action to be taken to eliminate the error from reoccurring

Metrics that assist managers to effectively utilize and evaluate all warehouse storage space

Chapter 12dp&c12-42

Principles of Warehouse Performance

SimplicityBecause performance metrics are really targeted at warehouse employees, they should be clear and easy to understand

Goal Oriented

Performance measurements should not only chart the performance of each individual warehouse department and the warehouse as a whole, but they should also clearly illustrate the goals and progress toward goals

Standards Consistency

Constant changes in measurements destroy standards integrity and render performance goals meaningless

PunishmentPerformance measurements should never be used as a basis to discipline employees. Effective measurements depend on employee cooperation

Continuous Improvement

The best performance measurements will provide procedures, processes, and policies that will lead to continuous improvement

Chapter 12dp&c12-43


Chapter 12


Warehouse Design and

Layout

Chapter 12dp&c12-44

Warehouse Design and Layout Objectives

Space utilization. The efficient and cost-effective use of warehouse space. The existence of underutilized or poorly designed and maintained warehouse space is a significant financial waste

Labor/equipment utilization. The efficient and cost-effective use of the labor and equipment to perform warehouse functions

Good housekeeping. An effective warehouse is one that is clean and orderly. Storage areas should be kept free of debris and forward picking areas should be regularly serviced. Good housekeeping prevents damage and facilitates the processes of item put-away and order picking

Optimal economical storage. The most economical storage of goods in relation to costs of equipment, use of space, potential damage to inventories, and managing warehouse personnel

Chapter 12dp&c12-45

Warehouse Design and Layout Objectives

Warehouse flexibility. Although warehousing assets are usually fixed, they should be designed to allow personnel and materials handling equipment to be flexible enough to quickly respond to changes in the marketplace or to pursue an unplanned opportunity

Warehouse scalability. The amount of available warehouse must be scalable to meet storage requirements. For example, if there is much fluctuation in warehouse storage needs over a period of time, designers may opt to size the warehouse and equipment to handle average storage and then to use rented space on a short-term basis to meet peak space requirements

Chapter 12dp&c12-46

Computing Warehouse Size

100 ft.

100 ft.

25 ft. 50 ft.

Floor Space = 10,000 Sq. Ft. Floor Space = 10,000 Sq. Ft.

Capacity = 250,000 Cubic Ft. Capacity = 500,000 Cubic Ft.

Chapter 12dp&c12-47

Exercise 12.2 Calculating Warehouse Costs

a. Warehouse Data

Inventory turns/month 3 Warehouse size/sq. ft. 50,000Remaining stocked inventory/cs 1 Amoritization/yrs 20Product stocking space per cs/ cubic feet 2 Height/ft/stacked 16 Construction cost/sq. ft. 60.00$

Throughput cost/per cs 0.05$ Cost to build 3,000,000$ Rented space/month per cs 1.00$ Amoritized cost/annual 150,000$ Rented handling charge/ per cs 1.50$ Percent of total warehouse space available

50%

Percent of warehouse space available utilized

70%

Annual fixed cost/per sq ft 6.00$

MonthWarehouse Demand, cs

Space Requirement,

sq. ft.January 280,000 33,333February 320,000 38,095March 390,000 46,429April 430,000 51,190May 450,000 53,571June 530,000 63,095July 450,000 53,571August 390,000 46,429September 360,000 42,857October 310,000 36,905November 290,000 34,524December 260,000 30,952

Totals 4,460,000 530,952

Demand and spacerequirements

Chapter 12dp&c12-48


b. Monthly space requirements calculation

1. (remaining stocked inventory / inventory turns) times

2. [product stocking size (per cs per cubic ft.) / stocking height] times

3. [1 (warehouse doubled to account for aisles, etc.) / percent of

warehouse space available] times

4. (1 / percent of warehouse space available utilized) times period

demand

5. or, (1/3) × (2/16) × (1/50%) × (1/70%) = 0.119 × period demand =

space requirement, sq. ft. For January demand, 0.119 × 280,000 =

33,333 (rounded)

Chapter 12dp&c12-49


c. Results for a 50,000 sq. ft. warehouse

a. Warehouse allocation: target warehouse / space requirements.

b. Monthly fixed cost: [(annual fixed cost × warehouse size) + annual amortized cost)]

/ 12.

c. Monthly variable cost: period demand × warehouse allocation (%) × operating cost

per cs.

d. Public monthly storage cost: [(period demand × public warehouse allocation) /

turns] × monthly rented space cost per cs.

e. Public monthly handling cost: period demand × public warehouse allocation x

monthly rented handling charge per cs.

f. Total monthly cost: monthly fixed cost + monthly variable cost + public monthly

storage cost + public monthly handling cost

g. Total yearly cost for 50,000 sq. ft. warehouse = US$994,000.

Chapter 12dp&c12-50


d. Results for a 50,000 sq. ft. warehouse

Warehouse Allocation

Monthly Fixed Cost

Monthly Variable Cost

Public Warehouse Allocation

Public Monthly

Storage Cost

Monthly Handling

Cost

Total Monthly

Cost100% 37,500$ 14,000$ 0.00% -$ -$ 51,500$ 100% 37,500$ 16,000$ 0.00% -$ -$ 53,500$ 100% 37,500$ 19,500$ 0.00% -$ -$ 57,000$

97.67% 37,500$ 21,000$ 2.33% 3,333$ 15,000$ 76,833$ 93.33% 37,500$ 21,000$ 6.67% 10,000$ 45,000$ 113,500$ 79.25% 37,500$ 21,000$ 20.75% 36,667$ 165,000$ 260,167$ 93.33% 37,500$ 21,000$ 6.67% 10,000$ 45,000$ 113,500$ 100% 37,500$ 19,500$ 0.00% -$ -$ 57,000$ 100% 37,500$ 18,000$ 0.00% -$ -$ 55,500$ 100% 37,500$ 15,500$ 0.00% -$ -$ 53,000$ 100% 37,500$ 14,500$ 0.00% -$ -$ 52,000$ 100% 37,500$ 13,000$ 0.00% -$ -$ 50,500$

450,000 214,000$ 60,000$ 270,000$ 994,000$

Chapter 12dp&c12-51

Conventional Warehouse Layout

ReceivingInspection

Staging

Storage and Picking

Manufacturing Packing Loading/Shipping

Office

Chapter 12dp&c12-52

Warehouse Functions

Receiving. This function is normally positioned close to the dock doors designated for incoming receipts. Receipts are validated, unpacked, appropriate documentation generated, and transaction update performed

Inspection and staging. Receipts are often moved first to an inspection location where they are quality certified and then palletized, containerized, and prepared for storage in a staging area

Production. For companies that perform production, storage and picking areas are located close to the production area. Once products are made, they move to finished goods storage

Storage and picking. This area of the warehouse is dedicated to the storage of production and finished goods inventories

Chapter 12dp&c12-53

Warehouse Functions (cont.)

Packing. A demand order results in finished goods being picked and transferred to the packing area where items are packaged, labeled, and prepared for shipment

Loading and shipping. The packing area should be located close to the loading and shipping area where demand orders are then sent to the customer

Chapter 12dp&c12-54

Alternative Storage Layouts

Slow Movers

Medium Movers

Fast Movers

Dock and Shipping Area

ABC storage layout

Zone 1Receive & Ship

Bins&

Drawers

Small Racks


Large Racks

Semi-Automated Storage & Retrieval


Automated Storage & Retrieval

Mixed storage layout

Chapter 12dp&c12-55

Warehouse Layout – Steps

Establish a comprehensive warehouse planning process. Determining an effective warehouse layout is a multitasked process that requires detailed project management. A successful project is one that is governed by a task schedule outlining due dates, responsible roles, and costs

Define layout objectives. Establish precise objectives such as: provide minimum cost warehousing while maintaining established customer service levels and improve space utilization by 25 percent over last year's average without reducing operating efficiency

Define warehouse profiles. Detail the following elements: 1) what products are to be stored; 2) what is the storage size necessary to stock these products; 3) exact dimensions of the warehouse; 4) capacities of the storage area racks, pallets, bins, and so on; and, 5) capacities of planned material handling equipment

Chapter 12dp&c12-56

Warehouse Layout – Steps (cont.)

Generate layout alternatives. planners must "juggle" physical restrictions, such as pillars and walls, receiving and shipping functions, and so on. A critical part of this process is determining layout constraints.

Layout evaluation. Use of several philosophes such as ABC analysis, storing items normally shipped together, products with similar characteristics, total cubic utilization

Layout implementation. Once the alternatives have been evaluated, a specific layout must be chosen and implemented. At this point, project activities should be structured around tasks, schedules, and costs necessary for warehouse layout actualization

Chapter 12dp&c12-57

Exercise 12-3 Calculating Layout Dimensions

a. Warehouse Layout Data

a. Total warehouse perimeter: 2(300) + 2(600) = 1,800 ft.

b. Construction cost: US$120 × 180,000 sq. ft. = US$21,600,000

c. Annualized cost of construction: US$21,600,000 / 25 = US$864,000

d. Cost per perimeter foot (k): US$864,000 / 1,800 = US$480

e. Sum of the total cost per foot to move an item in and out of stock

multiplied by the expected number of items to move per year (C):

0.005 ×120,000 / 12 = US$7,200.

Chapter 12dp&c12-58

Exercise 12-3 Calculating Layout Dimensions

b. Warehouse Width Calculation

𝑊=√¿¿¿c. Warehouse Length Calculation

𝐿=180,000330.07

=545.34 𝑓𝑡 .

d. Warehouse Total Cost Calculation

2√¿¿

Chapter 12dp&c12-59

Warehouse Configuration Principles

Optimize storage cube. Planners should utilize the vertical space in the warehouse, not just the horizontal space (cubic capacity). When planning cube utilization, designers must be careful to assess the capacities of materials handling equipment

Optimize equipment. Select the appropriate materials handling equipment for warehouse configuration management to more effectively utilize warehouse storage cubic capacities, minimize the necessary aisle space, reduce the amount of handling, and increase the velocity of product movement through the warehouseoperate more cost effectively

Move goods in a straight line. Moving goods in a straight line increases warehouse movement velocities. Eliminate obstructions that decrease movement velocities to reduce travel time and distance, increase stocking and picking efficiency, and decrease safety issues relating to too many turns and blind corners

Chapter 12dp&c12-60

Warehouse Configuration Principles (cont.)

Minimize aisle space. enables warehouse designers to increase total storage capacities without increasing warehouse dimensions. Note (below) that the redesigned rack storage is increased from five aisles to eight aisles. The amount of aisle space depends on the types of materials handling equipment and storage equipment a warehouse uses

This... Not This...

Receiving

Shipping

Receiving

Shipping

This... Not This...

Receiving

Shipping

Receiving

Shipping

Chapter 12dp&c12-61

Exercise 12-4 Calculating Warehouse Handling Times

a. Warehouse Layout Data

ShippingArea

Shipping

Storage Area 2

Receiving

300 ft125 ft

175 ft 400 ft

Storage Area 1

Rail siding

Chapter 12dp&c12-62

Exercise 12-4 Calculating Warehouse Handling Times (cont.)

b. Warehouse Handling Times Calculation

Receiving Storage Area 1Storage Area 2 Variance/ft.

Distance from rail dock to storage/ft. 300 125Number of trips to unload 50,000 lb. car/ft. 50 50

Total distance/ft. 15,000 6,250 8,750

Shipping Storage Area 1Storage Area 2 Variance/ft.

Distance from storage to shipping dock/ft. 175 400Number of trips to ship 50,000 lb. 125 125

Total distance/ft. 21,875 50,000 28,125

Analysis Storage Area 1Storage Area 2 Variance/ft.Total distance/ft 36,875 56,250 19,375

Total miles 7.0 10.7 3.7Average Speed/mph. 4 4 4

Total travel time per 50,000 lb. load/hrs. 1.7 2.7 0.9Percent variance 34.44%

Chapter 12dp&c12-63


Chapter 12


Warehouse Storage

Equipment

Chapter 12dp&c12-64

Principles of Warehouse Storage Equipment

Materials flow. the creation of operation sequencing and equipment layout that optimizes materials flow through the warehouse

Simplification. Simplify materials handling by reducing, eliminating, or combining unnecessary movements and /or equipment

Gravity. Designing warehouse storage and materials handling solutions that use gravity to move material wherever practical

Space utilization. Designing warehouse storage systems that enable optimal use of both the building and the storage area cube

Equipment analysis. Performing analysis of materials handling equipment that optimizes the velocity and ease of movement of products and materials stored in the warehouse

Chapter 12dp&c12-65

Principles of Warehouse Storage Equipment

Standardization. Designing storage and materials handling systems that allow for the standardization of methods, as well as types and sizes of warehouse equipment

Adaptability. Designing warehouse storage and materials handling equipment to be adaptable to the widest variety of tasks and applications

Chapter 12dp&c12-66

Types of Storage Systems

Warehouse Storage

Large-Item or Large-Volume Product Storage

Small-Item or Low-Volume Product Storage

Automated Storage Systems

Chapter 12dp&c12-67

Open Floor Storage

Pallet Racks

Drive-In/Double-Deep Pallet Racks

Storage Racks

Cantilever Racks

Flow Racks

Specialty Racks

Large-Item/Large- Volume Storage

Large-Item or Large-Volume Storage

Chapter 12dp&c12-68

FIGURE 11.24 Small parts shelving.

Bin Shelving

Modular Storage Drawers

Small-Item/Low Volume Storage

Small-Item or Low-Volume Storage

Chapter 12dp&c12-69

Carousels

Movable-Aisle Systems


Unit-Load Automated Storage and Retrieval Systems (AS/RS)

FIGURE 11.25 Horizontal carousel.

Miniload Storage and Retrieval Systems (AS/RS)


Chapter 12dp&c12-70

Stocking Inventory in Warehouse Locations

Basic Systems

Fixed Location

Random Storage

Point-of-Use Storage

Grouping items together using functional characteristics or using working stock and reserve

Inventory is assigned to the next available storage area randomly

Inventory is stored at the location where it is being used

Inventory is assigned a permanent location

Central Storage Inventory is stored in a single location

Chapter 12dp&c12-71

Exercise 12-5 Cube Utilization and Accessibility

Step 1: Basic data

BASIC DATA Height Width Depth Square Inches Cubic inches

Item box size/inches 24 24 24 576 13,824Pallet size/inches 6 48 48 2,304Max storage quantity 1,500Current on-hand balance 1,200Stocking units high per pallet/levels 3Pallets stacked 4Aisle allowance 10%Honneycomb allowance 30%Distance between pallets/inches 4

Chapter 12dp&c12-72

Exercise 12-5 Cube Utilization and Accessibility (cont.)

Step 2: Pallet calculation

Case size, square feet: 576 in. / 144 in. = 4 square feet

Case size, cubic feet: 13,824 / 1728 in. = 8 cubic feet

Cubic feet of one pallet of item: 2 ft. wide × 2 ft. long ×6 (3 levels) ft. high = 96 cubic feet

Cases per pallet: 96 cubic ft. / 8 cubic ft. (per case) = 12 cases per pallet

Adjusted pallet height (allowances):

1. Height (6 ft. + .5 ft. pallet height) × width (4 ft.+ .33 ft. distance separating pallets) × depth (4 ft.) = 112.66 cubic feet

2. Number of cases = 4 pallets high × 12 cases per pallet = 48 cases

Chapter 12dp&c12-73


Step 3: Allowance calculation for aisles and honeycombing

1. Aisles (1-10%) × Honeycombing (1-30%) × 48 cases = 30.24

2. 112.66 / 30.24 = 3.72575 cubic ft.

3. Adjusted space/one pallet = ((width (48/12) + stocking units high (3/12))

+ depth (48/12) = 17 sq. ft.

4. Adjusted storage allowance per case = 17 sq. ft. / ((1-10%) × (1-30%) ×

48 cases = 0.56217 sq. ft.

Step 4: Total storage cube required

1,500 × 3.72575 = 5,5886.4 cubic ft.

Chapter 12dp&c12-74


Step 5: Amount of linear storage space needed

Step 6: Total number of pallet positions (max quantity)

1,500 cases × 0.56217 sq. ft. = 843.254 linear feet

1,500 cases / 48 pallets = 31.25 positions

Step 7: Max possible pallets stockable

15,000 cases / 12 cases per pallet = 125 pallets

Step 8: Current pallets in stock

1,200 cases / 12 cases per pallet = 100 pallets

Step 9: Cube utilization

(100 pallets / 125 pallets) × 100 pallets = 80 percent utilization

Chapter 12dp&c12-75

Cross-Docking Warehouse

Supplier

Supplier

Supplier

Supplier

Supplier

Supplier

Dock Doors Dock Doors

UnloadingArea

Merge-in-TransitArea

Loading Area w/ Routing Zones

OutboundTrucks

.

.

.

Chapter 12dp&c12-76


Chapter 12


Warehouse Materials Handling

Equipment

Chapter 12dp&c12-77

Dock Door Systems

Forklifts

Pallets

Door seal

Bumpers

Dock Leveler

Dock Equipment

Chapter 12dp&c12-78

Dock Equipment

Cranes

Conveyors

Jib

Mobile

Bridge

Roller

BeltBulk

Jib

Mobile

Bridge

Bulk

Belt

Roller

Chapter 12dp&c12-79

Manual Lift Trucks

Walkie Trucks

Reach Trucks

Mobile Materials Handling Equipment

Chapter 12dp&c12-80

Turret or Side-Loader Truck

Order Picker

Automated Guided Vehicle (AGV)

Mobile Materials Handling Equipment (cont.)

Chapter 12dp&c12-81

Protection

Information

Containment

Protection from damage from normal functions of warehouse and distribution

Reference to contents, control markings, brand image, and identification.

Ability to resist leakage, spilling, tampering, handling, and theft

UtilityEfficiency of handling, storing, distributing, and opening and closing

Role of Packaging

Chapter 12dp&c12-82

Unitization

What is product unitization?

Lower handling costs

Labor savings

Transportation savings

Security

Minimize warehouse damage

Minimize transit damage

Increased inventory control

Increased customer service

Chapter 12dp&c12-83

Unitization Principles

• The unit load size should fit all modes of materials handling equipment and transportation

• The unit load should be designed to optimize space utilization

• Unit load height should optimize the cube utilization of both warehouse space and transportation equipment

• Stacking patterns impact the dynamics of load stability and potential for damage

• The weight of the unit load must be in alignment with materials handling systems

• Packaging and unitization equipment should be reusable/returnable or recyclable

Chapter 12dp&c12-84

Unitization Examples

Boxes/Crates/ Bundles

Pallets

Steel Baskets

Containers

Barrels

Chapter 12dp&c12-85

Warehouse Automation – Key Drivers

Lean Warehouse

Sustainable Warehouse

Horizontal Collaboration

WMS and TMS Integration

Web-enabled Warehouse

Labor Management

Application of lean thinking and practices to warehouse management

Application and adoption of sustainable practices in warehouse operations

Increased collaboration between the warehouse and other business functions

Integration of warehouse management systems (WMS) and transportation management systems (TMS)

Application of web-enabled business functions to warehousing

Effective management of warehouse labor through labor management and scheduling systems

Chapter 12dp&c12-86

Warehouse Automation Components

Conveyors/ Robotics

Automated Carousels

AS/RS Systems

Bar Code/ Scanning

RF Wireless/ RFID

Automated Picking

WarehouseAutomation


Systems

Automated Guided

Vehicles

Chapter 12dp&c12-87

Warehouse Management System (WMS)

Warehouse Management System

GeneralFunctions

ReceivingPlanning/

ForecastingPut-Away

Location& Storage

Mgmt.

OrderProcessing

PickingLabeling& FloorReady

ShippingLaborMgmt.

DCEquipment

Support

- RFID capable- VMI- Damage mgmt- Salvage mgmt- Multi-currency- Decision support- Supplier/Hub mgmt

- Demand forecasting- Multi-channel plan- Financial planning- Item planning- Assortment planning- Promotion planning- Store clustering

- ASN planning- In-bound track- Delivery appointscheduling

- PO Verify- Sup compliance- Returns- Inspection

- Palletizing- Zone & slotting- Random/directedput-away

- Off-site storagesupport

- Bar coding- Location capacity mgmt- Cycle count- Transfers- Space reservation- Packaging- Utilization optim.- Yard management

- Host download- Order checking- Order batching- Allocation- Auto-replenish.- Auto-replenish.by store

- Pick list print- Manual/directedpicking

- Pallet, case/ itempicking.

- Wave picking- Zone picking- Carton/pallet select

- Assembly/kitting- Pick-to-light

- UPC tagging- Container marking

- ASN- Special packing- Custom labeling.- International shipdocumentation

- Bar code/RFID

- Ship planning- Pallet sequence

- Load planning- Pallet layering- LT/LTL linkage.

- Trailer mgmt.- UPS on-line

- Performancemanagement

- Team performmanagement

- Work areameasurement

- Labor scheduling

- Time standardsdevelopment

- Auto sortation- Conveyors- TCP, UDP, FTFinterface

- RF units- Speech recog..- Equipment/vehicle maint.management

Chapter 12dp&c12-88


Chapter 12


Warehouse Management and

Environmental Sustainability

Chapter 12dp&c12-89

Components of Warehouse Sustainability

Design and layout

Material handling

Products

Packaging

• Location• Energy efficiencies• Resource metering

• Sustainable equipment• Emissions• Digitization

• Collaboration• Sustainable processes

• Reduced packaging• Recyclable• Biodegradable• Containers/pallets

Chapter 12dp&c12-90


Chapter 12


Today’s Warehouse Challenges

Chapter 12dp&c12-91


More and larger facilities demanding high-speed communications virtually everywhere on or off the floor.

A virtual across-the-board customer demand for personalization is driving an increase in the number of SKUs leading to increased inventory visibility, accuracy, and efficiency needs.

New government regulations requiring more accurate product tracking and tracing.

The movement to re-shoring is bringing manufacturing and other business closer to the customer, creating a need for more efficient and effective warehousing and labor management.

The continuous rise in fuel costs has caused planners to view the distances products must be transported through the supply chain.

Chapter 12dp&c12-92


Increased warehouse complexity requires the implementation of more automated processes and equipping warehouse personnel with ore technology.

Desire to consolidate and integrate warehouse information contained in ERP, WMS, yard management systems (YMS), and transportation management systems (TMS) to increase visibility and accuracy in every aspect of supply chain operations.

Increasing use of advanced shipping notices (ASNs), GS1-compliant barcodes, and RFID tags for accurate, automated inbound/outbound shipment identification.

The growth of omni-channel transactions creates the need for increased inventory control, flexibility, and faster, more accurate fulfillment.

Chapter 12dp&c12-93

Chapter 12

End of Session

“Education in Pursuit of Supply Chain Leadership”

Chapter 12dp&c

Chapter 12 dp&c 12-1 “Education in Pursuit of Supply Chain Leadership” Chapter 12 dp&c Warehouse Management.

Documents

dpc warehouse management

public warehouse

warehouse space

demand forecast slide

accompanying storage

shortterm basis slide

process of demand planning

monthly sop process