chapter 12 dp&c 12-1 “education in pursuit of supply chain leadership” chapter 12 dp&c...
TRANSCRIPT
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
Warehouse Management
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
Information Transfer
Information Transfer
Transaction Management
Inventory Balance Accuracy
Warehouse Capacities
Chapter 12dp&c12-12
Inventory Management Basics
Chapter 12
Warehouse Management
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
Inventory Management Basics
Chapter 12
Warehouse Management
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
Inventory Management Basics
Chapter 12
Warehouse Management
Warehouse Management
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
Inventory Management Basics
Chapter 12
Warehouse Management
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
Exercise 12.2 Calculating Warehouse Costs
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
Exercise 12.2 Calculating Warehouse Costs
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$994,000.
Chapter 12dp&c12-50
Exercise 12.2 Calculating Warehouse Costs
d. Results for a 50,000 sq. ft. warehouse
Warehouse Allocation
Monthly Fixed Cost
Monthly Variable Cost
Public Warehouse Allocation
Public Monthly
Storage Cost
Monthly Handling
Cost
Total Monthly
Cost100% 37,500$ 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
Zone 2Receive & Ship
Large Racks
Semi-Automated Storage & Retrieval
Zone 3Receive & Ship
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
Inventory Management Basics
Chapter 12
Warehouse Management
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
Automated Storage Systems
Unit-Load Automated Storage and Retrieval Systems (AS/RS)
FIGURE 11.25 Horizontal carousel.
Miniload Storage and Retrieval Systems (AS/RS)
Automated Storage Systems
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
Exercise 12-5 Cube Utilization and Accessibility (cont.)
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
Exercise 12-5 Cube Utilization and Accessibility (cont.)
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
Inventory Management Basics
Chapter 12
Warehouse Management
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
Warehouse Management
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
Inventory Management Basics
Chapter 12
Warehouse Management
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
Inventory Management Basics
Chapter 12
Warehouse Management
Today’s Warehouse Challenges
Chapter 12dp&c12-91
Today’s Warehouse Challenges
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
Today’s Warehouse Challenges
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