Professional Documents
Culture Documents
Chapter 7 - Warehouse
Chapter 7 - Warehouse
Handling
1. Overview
2. Warehousing Activities
3. Inventory Record System
4. Warehouse Planning
5. Layout
6. Material Handling
1
1. Overview
Other names: distribution
center, logistics center.
Amazon warehouse
(Source: http://www.lakelandedc.com/)
Incoming trailers
Outbound trailers
Aims of Warehousing
To support the broader logistics function by giving a
combination of high customer service and low costs.
Specific aims include:
Providing and giving secure necessary storage.
Keeping storage in good condition and with minimal damage.
Efficient and low – cost operations with high productivity,
resources utilization: movements, sorting, picking, consolidating
deliveries.
Giving safe working conditions, and compliance with regulations.
Giving high customer service.
Factors in Warehouse Design
Warehouses are expensive to run and need careful
planning.
Important factors in choosing the best size for a warehouse.
Total throughput
The number of products using the warehouse
The type of demand for each product, how much it varies, average
order size, and so on
Physical features of the products, particularly size and weight
Special storage conditions, such as climate control, packaging etc.
Target customer service level
Lead times from suppliers and promised to customers
Economies of scale
Type of material handling equipment
Layout of storage and related facilities.
Ownership
Private warehouses are owned or leased by an organization
as part of its own supply chains.
Public warehouses: independent business, charging users a
fee.
Types of public warehouses: bonded warehouses, cold
stores, bulk storage, tankers…
Benefits of public warehouse: flexibility, avoiding large capital
investment, easy access to a wider geographical area, short-
term tests, use of economies of scale to reduce warehousing
costs, consolidating loads with other organizations to reduce
transport costs, high quality and efficient service
Meeting demand with a mixture of
private and public warehouses
Break-even analysis for public/private
warehouses
BACK TO MAIN
Common Warehouse Issues:
Ground Storage
Common Warehouse Issues:
Honeycombing
Common Warehouse Issues:
Stacking Items Above 3
Levels are Difficult Reached
Common Warehouse Issues:
Non-rigid Items
Common Warehouse Issues:
Accessibility to items from both ends of
aisles is preferred to facilitate FIFO
Common Warehouse Issues:
Partial Load Pallets Eliminate Vertical Space
Utilization
Common Warehouse Issues:
Safety Issues
Common Warehouse Issues:
Forklift Issues
2. Warehousing Activities
Inbound
Receiving
Put Away
Outbound
Order Processing and Picking
Checking, Packing, and Shipping
Major operations in a DC or warehouse
Receiving Function
Cross Storage
Dock Function
Shipping Function
Avg Operation
Cost 55%
Receiving
Tasks
Check, inspect, unload, record,
Facilities
Docks, Lift trucks, forklift
Computer terminals
Decisions
Dock design
Schedule of arrivals
Priorities
Problem handling
Cost ~ 10% of operation cost
Putaway
Tasks
Move pallets or cases to storage
locations
Facility
Pallet truck
Lift truck
… more in following slides
Decisions
Where
When
Equipment 2-pallet pallet truck
WMS systems
Cost ~ 15%
Order Picking
Checking, Packing and Packaging
Shipping
Other Activities in Warehouses
Key Warehouse Processes
Receiving process: Receive Parts – Check quantity and quality (loop)
– System suggests put away locations (can be done manually also) -
Put away at respective locations – payment.
Shipping process: Sales orders – Print picking tickets – Assign picker
– System specifies picking sequence – pick parts - packing and
checking - enter quantity and confirm - shipping
Inventory control process: Reviewing – Planning (capacity, ordering)
– Ordering – Receiving – Checking – Updating.
Other processes:
Product Identity & Traceability
Control of Inspection, Measuring and Testing process/equipment
Control of Non-conforming Product
Control Of Shipping Records
Warehouse Management Systems
A warehouse management system is basically just a software
to track and manage warehouse activities.
Functions are
Stock Locator Systems
Shipping and Receiving
Inventory Control
Order Selection
Automated inventory replenishment
Report Generation
Etc.
3. Inventory Record System
Technologies in use for automating data capture
Linear or 1-D barcodes
RFID system:
Bar-coding System
The bar code symbols: the AIM USD -2 standard
Elements of a bar code system: software
(generating/reading bar-codes), printer, operator,
scanner/decoder/reader, computer, database.
Wireless Systems
RFID Technology (cont.)
Active RFID:
Battery powered: 3-5 years
Higher storage capacities (512KB)
Longer reading range (30-50m)
Can be rewritten
Devices in buildings: real-time location systems (RTLS)
External devices: GPS systems
Active RFID System:
RFID Technology (cont.)
Passive RFID:
Do not require power
Lower storage capacities (few bits to 1KB)
Shorter reading range (3 – 10m)
Usually Write-Once-Read Many/ Read Only tags
Near Field Communication (NFC) tags: up to 10cm, Credit card EPOS
system
Passive RFID system:
Costs and Benefits of RFID
Costs = Tag cost + Reader cost + software cost + running costs
Benefits in Supply Chain:
Shipping, Customs and Tariffs Tracing and Traceability Inbound and Outbound
• Take full advantage of free trade • Track defectives, recalls and returns • Reduce manual receiving
agreements and zones • Track product through processing • Reduce manual nature of audits
• Validate country of origin areas • Create electronic proof of delivery
• Create accurate export • Track inventory throughout the • Improve outbound accuracy
documentation supply chain • Eliminate claims
• Increase 3rd party consolidation • Track counterfeits • Increase claims accuracy
efficiency
Store Operations
• Improve PI accuracy
• Reduce shrink
Inventory Management DC Operations
• Cycle count
• Improve backroom-to-shelf
• Reduce carrying costs • Cycle count
replenishment
• Improved multichannel management • Increase pick/pack speed and
• Consolidate EAS technology
• Reduce dormant inventory accuracy
• Eliminate physical inventory counts
• Improve put away process
• Improve store to store transfer
• Reduce shrink
processes
RFID Application in Warehouse and DCs
Addressing in Warehouse
1. Clearly mark items with an SKU identifier (internal code/number) and a
unit of measure (e.g., pack size: pair/dozen/barrel/pound/case):
2. Clearly mark location addresses on bins/slots/shelves/racks/floor
locations/drawers/and so on:
Requirements: easy to understand, short, convey all needed
information
Systems: numeric, alphabetic, alpha-numeric
Location numbers need to be bar coded
3. Tie SKU numbers and location addresses together : Use a simple card
file system
4. Update product moves: manual tracking(stock movement reporting),
computerized approaches, or bar-coding coupled with radio frequency
scanners
Marking SKUs
Addressing Racks, Drawers, and Shelving
Addressing System
Example
Number of AISLES : 14
01 : Aisle Number
R : Rack Storage (‘R’ for rack and ‘G’ for ground storage)
37
Example
AISLE - 02
02-R-01C 02-R-03C 02-R-05C 02-R-07C 02-R-08C 02-R-06C 02-R-04C 02-R-02C
Left Right
02-R-01B 02-R-03B 02-R-05B 02-R-07B 02-R-08B 02-R-06B 02-R-04B 02-R-02B
Aisle Entry
38
AISLE - 12
AISLE - 13
39
4. Warehouse Planning
Dock Aisle
Storage Area
Warehouse arrangement solution: minimize load-distance scores
( total load*traveled distance)
Equal areas: If all departments require the same space, simply place
the one generating the most trips closest to the dock.
Unequal areas: if some departments need more space than others, give
the closet to the dock to the department with largest ratio of trip
frequency to block space.
Example
The following information is given to different kind of goods
that is needed to store to the warehouse. Determine the
warehouse layouts that minimizes the load-distance scores
Department Trips to and from Area Needed
Dock (blocks)
1. Item1 280 1
2. Item 2 160 2
3. Item 3 360 1
4. Item 4 375 3
5. Item 5 800 4
6. Item 6 150 1
7. Item 7 100 2
Solution
Because the departments have different area
requirements, we need to calculate the ratio of trips
to block spaces
Department Ratio Rank
1. Item1 280/1=280 2
2. Item 2 160/2 = 80 6
3. Item 3 360/1 = 360 1
4. Item 4 375/3 =125 5
5. Item 5 800/4=200 3
6. Item 6 150/1 = 150 4
7. Item 7 100/2 = 50 7
Solution
Subject to:
n
x
j 1
j ,k 1; k 1, 2,..., s
x
k 1
j ,k S j ; j 1, 2,..., n
x
j 1
j ,k 1; k 1, 2,..., 6
6 6 6
x
k 1
1, k 2; x2,k 1; x3,k 3;
k 1 k 1
I/
Solution
We have
I/
Location of shipping and receiving
Flow through configuration
Receiving and shipping on opposite side of the warehouses
Makes many storage locations of equal convenience
More appropriate for extremely high volume
Preferable when building is long and narrow
Good
locations I/O
Order Picking
Order Picking is the process of retrieving items
from storage in response to a specific customer
request.
Examples:
a grocery warehouse: orders for retail stores are
selected once or twice a week.
a drug store distribution center: the orders, consisting of
certain drugs are picked from the storage shelves by a
picker carrying a tote box.
Retrieval Strategies
Orders contain one or more items. It is important to know about the
structure of the orders (such as number of items per order, correlation
among items in an order), since it affects storage/retrieval strategies and
design of order picking systems. Simple plot of percentage of orders vs.
number of items in an order would give considerable insights.
A very common strategy is batch-picking of small orders, that is picking
several orders in one travel. This can bring significant reductions in travel
time, which is the most significant part of total time spent in order picking.
Here is a simple example that illustrates the concept (red points are
locations of single-item orders, and blue ellipse represents the picker):
Order Pickers Time Consumption
PICKERS TIME CONSUMPTION
Extracting
Traveling
Extracting 55% Paperwork and other
10% activities
Searching
15%
A A A A A
IS IS IS IS IS
L L L L L
E E E E E
http://www.roodbergen.com/warehouse/
Cycle Counting/ Stock Taking
94
Stock Taking
95
Stock Taking Process
Initiate Cycle Count/
Stock Take Request
Confirm
cycle count inv/
stock take
of all inv.
Perform count
& verification
96
Inventory Record Accuracy - IRA
97
How to Setup Tolerance?
Based on the following factors:
Amount quantity used/processed
Inventory value
Leadtime
BOM levels/complexity
Important degree
ABC/Pareto Classification
Important SKU will have low acceptance error level (small tolerance)
98
Practice: Determine IRA of ABC Company
AMG Company
Physical Inventory Tolerance
SKUs Class Count Record (%) Hit Miss
Toilet Menthol 700 B 94 100 ±2
Bath Menthol 5000 C 95 100 ±5
Bath Pro 5000 C 96 100 ±5
Floor Cleaner Spring 1L B 97 100 ±2
Floor Cleaner Menthol 1L B 98 100 ±2
Floor Cleaner Repel 1L B 99 100 ±2
Floor Cleaner Ylang 1L A 100 100 ±0
Floor Cleaner Lily 1L A 101 100 ±0
Floor Cleaner Menthol 5L C 102 100 ±5
Floor Cleaner Lily 5L B 103 100 ±2
Floor Cleaner Spring 5L C 104 100 ±5
Floor Cleaner Ylang 5L C 105 100 ±5
Glass Cleaner 800 A 106 100 ±0
100
Cycle Counting
Select sample from all SKUs
Determine counting frequency by day, week, month.
Calculate IRA of sample ~ IRA of warehouse
The maximum value is determined. From that, identify
the main reasons creating errors and analyze these
causes to improve IRA
Cycle Counting is useful to improve IRA
101
Some Popular Cycle Counting
Methods
102
Random Sample Cycle Counting
Selects randomly samples to count: for example selecting randomly 50
SKUs in 1000 SKUs.
103
ABC Cycle Counting
Counting frequency is based on ABC classification, pay attention on
high value items.
104
5. Layout
STRAIGHT LINE FLOW ‘U’ FLOW ‘L’ FLOW ‘O’ FLOW SERPENTINE FLOW
Smooth flow
Simplify movements, eliminating or combining separate movements
where possible
Have movements in straight lines on one floor
Some Suggestions for Good Layouts
Avoid Dead Ends In Aisles
Seek Many Alternatives: Best solutions are not obtained at initial design stage.
Develop possible alternatives and the best solution will result from iteration
within generated alternate solutions
Offices must outside the main warehouse area
Consider mezzanine floors for picking and administration
Locating Materials on Shelves
Many costs of running a warehouse are fixed – such as rent,
local taxes, utilities, and depreciation.
Some of these fixed costs are set by management policy, such
as the total investment in stock.
The main variable cost comes from the details of the layout,
and depends on the time needed to locate items and either
add them to stock or remove them.
When there are thousands of items in store, small differences
in the way they are arranged can give markedly different
service and costs.
Example
A small store has a rack with nine colors of paint in five liter tins.
At one end of the rack is an issue area where the storekeeper works.
Weekly demand for the paint is as follows:
Colour Red Blue White Black Brown Green Yellow Grey Pink
Tins 150 210 1290 960 480 180 360 60 90
If all paint is stored in bins that are 5 m wide, design a layout for the rack. Design a layout if
the size of bins varies with the weekly demand.
Solution
A reasonable aim: minimize the distance walked by the storekeeper, assuming that each tin of paint needs a
separate journey.
The paint should be laid out so that colors with highest demand are nearest the issue area, so the layout has
paint in order white, black, brown, yellow, blue, green, red, pink and grey.
Assuming that tins come from the middle of bins, the total distance moved by the storekeeper = 2×
(2.5×1290 + 7.5×960 + 12.5×480 + 17.5×360 + 22.5×210 + 27.5×180 + 32.5×150 + 37.5×90 + 42.5×60) =
86,400 m
If the size of bin is proportional to the weekly demand, and assuming that paint is taken from the middle of
the bins, the paint can be stored equally well in any order.
Turnaround time
Apart from the layout of the storage areas, the efficiency of a warehouse
also depends on how quickly it deals with delivery vehicles.
There are several measures of turnaround time, but the most common is
the time taken between a vehicle arriving (either delivering materials or
collecting them) and departing.
Transport operators get paid for having their vehicles and drivers
moving, so they do not want them sitting idly in a warehouse during
loading or unloading.
Everybody’s interest to minimize the turnaround time. Three
arrangements can help with this.
First, orders can be assembled and waiting to move onto a vehicle –
when the vehicle arrives it is loaded quickly and moved on.
Second, special loading and unloading equipment can be used to speed
operations. With, for example, rollers on vehicle floors a standard vehicle
can be loaded and unloaded in five minutes or less.
Third, the bays can be laid out carefully to minimize congestion.
6. Materials Handling
MATERIALS HANDLING is concerned with the movement of
materials for short distances generally within a warehouse, or
between storage areas and transport.
Objectives:
Moving materials around a warehouse as required
Moving materials quickly, reducing the number and
length of movements
Increasing storage density, by reducing the amount of
wasted space
Reducing costs, by using efficient operations
Making few mistakes, with efficient material
management systems.
Pallet racks and bin shelving
Floor stacking
Bulk Storage
Roller Conveyor Belt Conveyor
Forklift Truck
Reach Truck
Carousels: parallel processing
Vertical carousels
Small items
Valuable items
Trailer Order-picking machine
Tractor
Towline
Crane
Automated
Storage &
Retrieval
System
(AS/RS)