sc1x w9l2 warehousebasics final annotated ·...

MIT Center for Transportation & Logistics ctl.mit.edu

Warehousing Fundamentals

MIT Center for Transportation & Logistics 2

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MIT Center for Transportation & Logistics

Three Key Questions to Answer

§ Why do we have warehouses?§ Store, Handle, and/or Flow Product

§ What are the core operational functions?§ Receive, Putaway, Store, Pick, Pack, Ship

§ How do we assess and improve performance? § Activity Profiling and Benchmarking

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Why have warehouses?

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Why have warehouses or other facilities?

§ Better Match Supply & Demand (store)§ Demand and supply are not always in synch§ Storing product buffers for unexpected shortages/demands

§ Enables Consolidation Opportunities (flow)§ Larger shipments have lower per unit transportation costs§ Bulk buying discount opportunities

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m originsn destinations

mn versus m+n total arcs


Types of Warehouses in the Supply Chain

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Raw Materials Warehouse

Work-‐In Process (WIP) Warehouse

Finished Goods (FG) Warehouse

FG Warehouse

FG Warehouse

FG Warehouse

Distribution Center (DC)

Fulfillment Center (FC) Regional or Local DC

adapted from Frazelle, E. (2001) World Class Warehousing and Material Handling


Different Facilities Serving Different Roles

§ Raw Material Storage – close to a source or manufacturing points§ WIP Warehouses – partially completed assemblies and components§ Finished Goods warehouses – buffers located near point of manufacture§ Local Warehouses – in the field near customer locations to provide rapid

response to customers § Fulfillment Centers – holds product and ships small orders to individual

consumers (cases or eaches) – predominately for e-‐commerce§ Distribution Centers – accumulate and consolidate products from multiple

sources for common shipment to common destination/customer§ Mixing Centers – receives material from multiple sources for cross-‐docking and

shipment of mixed materials (pallets to pallets)

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Two Competing ObjectivesStore – maximize utilization of spaceFlow – optimizing throughput

Fundamental Warehousing Trade-‐off:

Space vs. Time


Form of the Product Along Supply Chain

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The unit of storage for a product gets smaller as it moves downstream from container to pallet to case to eaches.

adapted from Bartholdi, J. and S. Hackman (2016) Warehouse & Distribution Science (Release 0.97)

A General Handling Rule:The smaller the handling unit, the

greater the handling cost!

Fundamental Warehousing Design Element:

Inbound to Outbound size

§ Size impacts design & operations§ Inbound vs. Outbound

§ Pallets to Pallets§ Pallets to Cases§ Pallets to Eaches


Core Operational Functions

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Core Warehouse Functions

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Receive Put-‐Away Check, Pack, ShipPickStore

Receive• Scheduling arrivals• Dock management• Receipt of materials• Unloading & staging• Inspection for damage, short, incomplete, etc.

Put-‐Away• Material handling• Verify storage location• Move material in storage location• Record level & location• Set slotting location

Store• Physically hold the material• Consumes space more than time• Multiple forms of storage (pallet, case, each)

Pick• Moving items from storage for orders• Verify inventory on hand• Create shipping documentation• Consists of travel, search, & extract

Check-‐Pack-‐Ship• Check order for completeness• Confirm documents• Place in package(s)• Collect common orders• Schedule pick ups• Load vehicle

Value-‐Add Services Returns

• Customization of products: • Labeling & tagging, Special packaging, Minor assembly, Kitting, Re-‐pricing, etc.

• Postponement of components

• Handling product reverse flows for multiple reasons (damage, expired, returned, etc.) • Can run 5% (retail) and up to 30% (e-‐commerce) of volume• Steps can include inspection, repair, reuse, refurbish, recycle, and/or dispose

~10% ~15% ~55% ~20% Percent of Labor Costs


Common Flow Patterns

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Receiving

Pallet Reserve

Case Pick

Eaches Pick

Sorting

Unitizing

Shipping

Crossdock

Pallets

Cases

Cases

Pallets

Eaches


Drop Ship or Direct


Activity Based Layout

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Receiving

Putaway

Pallet Storage & Retrieval Systems

Case/Carton Picking Systems

Broken Case / EachesPicking Systems

Unitizing &ShippingCrossdocking

Sortation & Accumulation



Receiving

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Receiving§ Sets up the entire interaction at the warehouse§ Some best practices

§ Use ASNs (advanced shipping notice)§ Electronic notification of pending deliveries (EDI 856 and EDIFACT DESADV, Dispatch Advice, message)

§ Can save 40% of receiving costs & used to trigger payment of the vendor§ Integrate yard and dock scheduling

§ Queuing at facilities (dwell time) can exceed 20% of driver’s day§ Coordinating deliveries with carriers reduces carbon footprint

§ Prepare for shipment at receiving§ Pre-‐package in issue increments – try to match order size§ Capture and communicate cube/weight info at receiving§ Apply tags and labels as needed

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Receiving§ The best option is to minimize receiving activity§ Pursue drop shipping when ever possible

§ Direct shipping removes need for all touches and handling§ Explore multi-‐stop or multi-‐compartment options

§ If drop ship is not possible, explore cross-‐docking§ IB pallets are sorted and moved to OB staging docks§ There is no staging, inspection, or storage at IB § Cross-‐docking operations should not interfere with

other warehouse functions

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Putaway

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§ Essentially order picking in reverse! § Role of Warehouse Management System (WMS)

§ Determines storage location for received items (slotting)§ Directs staff where to place product and records inventory level§ Requires:

§ Data: size, weight, cube, height, segmentation status, current orders, current status of pick face, etc.

§ Identification (bar coding or RFID) of products and locations

§ Different approaches & strategies§ Directed – to specific location selected ahead of time

§ Primary vs Secondary Storage§ Fixed Location vs Random Most Efficient§ Shared vs Dedicated spaces

§ Batched & Sequenced – pre-‐sort at staging for commonly located items§ Chaotic – user picks any location and records item-‐location

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Putaway


Putaway – Minimizing Distance Traveled

Empty slot location for pallet storage

Location of pallet to be retrieved

Loaded movement (with pallet)

Empty movement (no pallet)

Current location adapted from Bartholdi, J. and S. Hackman (2016) Warehouse & Distribution Science (Release 0.97)


Putaway – Minimizing Distance Traveled

Empty slot location for pallet storage

Location of pallet to be retrieved

Loaded movement (with pallet)

Empty movement (no pallet)

Current location

Interleaving Putaways and Retrievals Dual Cycle OperationsSimilar to vehicle routing in transportation



Order Picking I: Pallets

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Picking – Pallets, Cases, & Eaches§ Order Picking is the most labor intensive task ~50-‐60%

§ Traveling 55% § Searching 15%§ Extracting 10%§ Other tasks 20%

§ The method of picking differs based on the size of the thing being picked§ Full Pallet Retrieval – easiest and fastest§ Case Picking § Small Item Picking – most expensive and time consuming

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Pallet or Unit Loads


Receiving

Shipping

What is a convenient location?• Try one that minimizes total labor time

(distance) to putaway and retrieve:Min c*Σi(dini)

• where:c = labor cost per distance di = distance for pallet location i from

receiving to location to shippingni = average number of times location i is

visited per year ≅ # pallets sold / # pallets in order

e.g., A sells 30 pallets/year and Q=5, nA=6B sells 60 pallets/year and Q 30, nB=2

Simple Heuristic:1. Rank all positions from low to high di2. Rank all SKUs from high to low nj3. Assign next highest SKU (nj) to next

lowest location (di)

most convenient

leastconvenient

leastconvenient

Note that convenience is a function of warehouse layout and flow!This is a Flow-‐Through design.


Flow Through U-‐Shape (Centered)

U-‐Shape (Divided)Corner


Cross aisles can shorten trips – but may slow down total time

Angled or fishbone aisles can increase

efficiency by 20% but take up more space.

Aisle Layout• Usually best to have aisles parallel to flow• Cross aisles can shorten distances – but

take up space & increases aisle crossing• Angled/fishbone aisles can increase

efficiency – especially with central dispatch point

• Fast moving items should be put in convenient locations

• Convenience is a function of layout and shipping & receiving locations



Order Picking II: Cases & Eaches

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Cases – weighs 5-‐50 lbs (2.3-‐23 kg)Can be handled by 1 personUsually stored on palletUniform shape and size (conveyable)

pick faces

Case Picking from Pallets

By Adamhallgmbh (Own work) [CC BY-‐SA 3.0 de (http://creativecommons.org/licenses/by-‐sa/3.0/de/deed.en)], via Wikimedia Commons


Case Picking

29All photos from Bartholdi, J. warehouse-‐science.com

Case picking of fast-‐movers from pallet to conveyor (far left side) at Toys’R Us

At Pepsi Co distribution center, order-‐pickers ride through the forward pick area, picking cartons to pallets.

Carton picking area from both pallets (left and front) and carton flow racks (right side back) at ABG.


A stock to picker system – Kiva (now Amazon Robotics) – which brings items to pick to the picking station. Other STP systems include carousels and automated storage/retrieval systems (AS/RS).

Eaches Picking

30photos from Bartholdi, J. warehouse-‐science.com

Fast-‐pick area for eaches at ABG. The flow rack is shallow on the conveyor side and deeper on the opposite side.

Pick-‐to-‐light system where the zone control panel says "Pick tote 02287" and lights up the appropriate storage locations to pick from.

Slow-‐pick area for eaches – note that there is no pick to light system here. Workers pick according to the shipping list in each box.


Order Picking III: Strategies

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Picking Strategies

A E

B F

C G

D H

I M

J N

K O

L P

Q U

R V

S W

T X

Order 1: B-‐E-‐J-‐K-‐O-‐VOrder 2: D-‐C-‐B-‐Q-‐R-‐SOrder 3: B-‐I-‐J-‐T-‐S-‐U-‐V

Single Picker -‐ Single Order

• Similar to grocery shopping with a list• Good for low number of lines/order• Suitable for short pick paths• No need to “marry” the orders afterwards• Expected travel time (distance) per item can be high


Picking Strategies

A E

B F

C G

D H

I M

J N

K O

L P

Q U

R V

S W

T X


Single Picker -‐ Single Order Single Picker – Multiple Orders (Batch)

Picklist: D-‐C-‐B-‐B-‐B-‐E-‐I-‐J-‐J-‐K-‐O-‐T-‐S-‐S-‐R-‐Q-‐U-‐V-‐V

• Similar to grocery shopping for many at one time• Expected travel time (distance) per item is reduced• Requires sorting and “marrying” items• Can sort “on-‐cart” or after tour• Works for both picker-‐to-‐stock and stock-‐to-‐picker


Picking Strategies

A E

B F

C G

D H

I M

J N

K O

L P

Q U

R V

S W

T X


Single Picker -‐ Single Order Single Picker – Multiple Orders (Batch)

• Similar to divide and conquer grocery shopping for multiple people

• Well suited for orders with high line count• Expected travel time (distance) per item is reduced• Minimizes congestion & socializing in pick aisles• Pickers can become “experts” in a zone but lose order

completion accountability• Requires sorting and consolidation of items• Allows for simultaneous filling of orders• Difficult to balance workload across zones

Multiple Picker – Multiple Orders (Zone)

Zone II Picklist: K-‐J-‐J-‐I-‐OZone I Picklist: D-‐C-‐B-‐B-‐B-‐E

Zone III Picklist: T-‐S-‐S-‐R-‐Q-‐U-‐V-‐V


Check, Pack, & Ship

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Check, Pack, & Ship

§ Checking§ Create & verify shipping labels§ Confirm weight and cube

§ Pack§ Package for damage protection§ Unitizing pallets

§ Ship§ Essentially reverse of receiving§ Dock door and yard management§ Minimize staging requirements§ Container/trailer loading

optimization

36By heb@Wikimedia Commons (mail) -‐ Own work, CC BY-‐SA 3.0, https://commons.wikimedia.org/w/index.php?curid=17332612


Profiling & Assessing Performance

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Warehouse Activity Profiling§ How do we determine how to design and operate a warehouse or

distribution center? § Data worth examining . . .

§ Number of SKUs in the warehouse§ Number of pick-‐lines per day & number of units per pick-‐line§ Number & size of customer orders shipped and shipments received per day§ Rate of new SKU introductions and respective lifecycle

§ Be sure to look at the distribution, not just averages! § Data sources:

§ Master SKU data – physical, financial, and other characteristics § Order History – customer transactions (physical rather than financial)§ Warehouse Layout -‐ location information – least standardized

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Segmentation Analysis§ It’s not just for demand planning!§ Different segmentation views give different insights

§ Frequency of SKUs sold§ Top selling SKUs influence retail operations – not necessarily warehouse operations

§ Frequency of pallets/cases/cartons by SKU§ Will not necessarily follow SKU frequency§ Provides insights into receiving, putaway, and restocking§ SKUs with few pieces per case will rise to the top

§ Frequency of picks by SKU§ Order picking drives most labor costs § Determines slotting and forward pick locations

§ Variability of demand § Seasonality – by year, quarter, day of week, time of day . . . § Correlation to other products – affinity between items and families

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Measuring and Benchmarking§ Major Warehousing Cost Drivers

§ Labor = (person-‐hours/year) x (labor rate)§ Space = (area occupied) x (cost of space)§ Equipment = (money invested) x (amortization rate)

§ Performance Measures§ Productivity/Efficiency

§ Ratio of output to the inputs required§ e.g., labor = (units, cases, or pallets) / (labor hours expended)

§ Utilization§ Percentage of an asset being actively used§ e.g., storage density = (storage capacity in WH) / (total area of WH)

§ Quality / Effectiveness§ Accuracy in putaway, inventory, picking, shipping, etc.

§ Cycle Time§ Dock-‐to-‐Stock time – time from receipt to being ready to be picked§ Order Cycle Time – time from when order is dropped until it is ready to ship

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Key Points

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Core Warehouse Functions

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Receive Put-‐Away Check, Pack, ShipPickStore

Receive• Scheduling arrivals• Dock management• Receipt of materials• Unloading & staging• Inspection for damage, short, incomplete, etc.

Put-‐Away• Material handling• Verify storage location• Move material in storage location• Record level & location• Set slotting location

Store• Physically hold the material• Consumes space more than time• Multiple forms of storage (pallet, case, each)

Pick• Moving items from storage for orders• Verify inventory on hand• Create shipping documentation• Consists of travel, search, & extract

Check-‐Pack-‐Ship• Check order for completeness• Confirm documents• Place in package(s)• Collect common orders• Schedule pick ups• Load vehicle

Value-‐Add Services Returns

• Customization of products: • Labeling & tagging, Special packaging, Minor assembly, Kitting, Re-‐pricing, etc.

• Postponement of components

• Handling product reverse flows for multiple reasons (damage, expired, returned, etc.) • Can run 5% (retail) and up to 30% (e-‐commerce) of volume• Steps can include inspection, repair, reuse, refurbish, recycle, and/or dispose

~10% ~15% ~55% ~20% Percent of Labor Costs


Common Flow Patterns

43

Receiving

Pallet Reserve

Case Pick

Eaches Pick

Sorting

Unitizing

Shipping

Crossdock

Pallets

Cases

Cases

Pallets

Eaches


Drop Ship or Direct


Activity Based Layout

44

Receiving

Putaway

Pallet Storage & Retrieval Systems

Case/Carton Picking Systems

Broken Case / EachesPicking Systems

Unitizing &ShippingCrossdocking

Sortation & Accumulation



Trade-‐Offs & General Rules

45

Two Competing ObjectivesStore – maximize utilization of spaceFlow – optimizing throughput

Fundamental Warehousing Trade-‐off:

Space vs. Time

A General Handling Rule:The smaller the handling unit, the

greater the handling cost!

Fundamental Warehousing Design Element:

Inbound to Outbound size


Primary References

§ Bartholdi, John, And Steven Hackman (2016) Warehouse & Distribution Science, Release 0.97. Available at: www.warehouse-‐science.com. Additionally, there are photos and videos of different warehouses and distribution centers as well as other tools available here.

§ Frazelle, Edward (2001) World-‐Class Warehousing and Material Handling, McGraw Hill.

§ Richards, Gwynne (2011) Warehouse Management, Kogan Page Limited. § Napolitano, Maida (2003) The Time, Space, and Cost Guide to Better Warehouse

Design, Distribution Group.


ctl.mit.eduMIT Center for Transportation & Logistics

Questions, Comments, Suggestions?Use the Discussion Forum!

[email protected]

“Pele – biting off more than he can chew”courtesy Brady Kay Goodman

sc1x w9l2 warehousebasics final annotated ·...

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