Distribution and Fulfillment centers By Dr. Albert Tan 1 1 - - PowerPoint PPT Presentation

1 1

Distribution and Fulfillment centers

By Dr. Albert Tan

2 2

Lecture 3

• Overview of warehousing design and strategy
• Contents are from

– Warehouse Science – The Handbook of Logistics and Distribution Management

3 3

Warehouses processes and the associated material flow

Receiving Shipping Reserve Storage and Pallet Picking Case Picking Broken Case Picking Accumulation, Sortation & Packing Cross-docking Direct putaway to reserve Direct putaway to primary Replenishment Replenishment

4 4

Original source: Baker and Perotti (2008) Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6th Edition, Kogan Page, London, p297

Figure 18.2 Floor area usage

5 5

Major warehouse equipment and its functionality

– Containers & Unitizing Equipment – Storage and Retrieval Equipment

• Unit Load
• Small Load

– Conveyors – Warehouse docks and dock-related equipment – Automatic Identification and Communication Equipment

6 6

Decision / Performance Criteria

Responsiveness Quality Cost

Investment + Operational Space/Equipment/Labor Product quality Order accuracy Order flow time throughput fill rate volume flexibility/storage capacity mix flexibility

7 7

Determining the basic system structure

Product data:

• Activity level
• requested quantities
• product properties
• vendor types

Order data:

• number of line items
• number of items
• cubic volume
• shipping priorities
• product correlation

Managerial requirements / company strategy

• Definition of major functional

areas / departments

• Definition of departmental sub-

systems

• Storage and material handling

modes

• Operational policies
• storage policies
• replenishment policies
• order picking policies
• batching
• sorting
• zoning
• routing
• receiving & shipping policies

8 8

Warehouse Activity Profiling

• The careful measurement and statistical analysis of the

warehouse activity.

• The process of understanding the customer orders that drive the

system

• Sifting through historical data for opportunities and insights that

might confer advantage. Warehouse Activity Profiling

SKU data Order data Location data Summary statistics Distributions Structural Characterizations, e.g.,

• prevailing patterns/trends
• relations
• dominant elements

9 9

Warehouse Design Decision

• Strategic-level decisions: they have the longer-lasting impact on

the operation of the warehouse, and involve major investment

– process flow design – equipment selection

• Tactical-level decisions: medium-term decisions which might

still involve significant investment

– sizing of the facility areas and its equipment – Storage layout – resolution of organizational issues like the storage and replenishment schemes, and batch sizing

• Operational-level decisions: Decisions and policies related to

the real-time operation of the facility

– assignment and control problems of people and equipment

10 10

Warehouse Design Process

• 1. Define business requirements and design

constrains

• 2. Define and obtain data
• 3. Formulate planning base for defined

throughout

• 4. Define and describe activity requirements
• 5. Select equipment

11 11

Warehouse Design Process

• 6. Create internal and external layouts
• 7. Define information system operations
• 8. Estimate capital and operation costs
• 9. Evaluate design against requirements and

constraints

• 10. Finalize design

12 12

• 1. Define business requirements and

design constrains

• What tasks to perform?
• What is the estimated required throughput

and storage capacity?

• What is the desired customer service level?
• Constraints

– Timing – Costs – Regulations – Insurer conditions

13 13

Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6th Edition, Kogan Page, London, p295

Figure 18.1 Typical warehouse functions in a stockholding warehouse

14 14

• 2. Define

and

• btain

data

15 15

Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6th Edition, Kogan Page, London, p391

Figure 23.2 Pareto diagram, for throughput (sales) and inventory

16 16

3. Formulate planning base for defined throughout

Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6th Edition, Kogan Page, London, p389

17 17

• 4. Define and describe activity

requirements

• What are the key activities to perform in the

DC or warehouse?

18 18

Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6th Edition, Kogan Page, London, p392

Figure 23.3 Time profile of warehouse operations

19 19

Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6th Edition, Kogan Page, London, p297

Figure 18.3 Typical warehouse functions in a cross-dock warehouse

20 20

• 5. Selecting Equipment
• What equipment features are desired?

– Temperature and humidity – Speed and load factors

• What are the most important selection

criteria?

21 21

Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6th Edition, Kogan Page, London, p393

Figure 23.4 Decision tree to identify possible pallet storage systems

22 22

Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6th Edition, Kogan Page, London, p325

Table 19.3 Palletized storage attributes matrix

Storage Type Access to Each Pallet FIFO Low Rack Cost Suitable for Ground Case Picking Operating Speed Block storage 1 1 5 1 4 Drive-in 1 1 2 1 3 Satellite 1 1 (SA)5 (DA) 1 1 3 Push-back 2 1 1 1 3 APR (with reach truck) 5 5 3 5 4 Double deep 2 1 3 2 3 Narrow-aisle 5 5 3 2 4–5 Powered mobile 5 5 1 1 1 Pallet live 1 5 1 5 5 AS/RS – single deep 5 5 3 1 5 AS/RS – double deep 2 1 3 1 5 AS/RS – high density 1 1 3 1 3

Key: scale from 5 (= favourable attribute) to 1 (= unfavourable attribute) SA: single aisle DA: dual aisle (ie one aisle at each end of racking)

23 23

Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6th Edition, Kogan Page, London, p355

Figure 21.6 Decision tree for order picking equipment

24 24

• 6. Create internal and external layouts
• Internal

– Dock height – Vertical clearance for sprinkles – Distance between racking

• External

– Yard, – Access roadways and parking areas – Fencing and security structures

25 25

• 7. Define information system
• perations
• Warehousing Management system
• Track and Trace system
• Interface to ERP and TMS

26 26

Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6th Edition, Kogan Page, London, p413

27 27

Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6th Edition, Kogan Page, London, p417

28 28

• 8. Estimate capital and operating costs
• Capital costs to acquire the property,

equipment and information systems

• Operating costs cover utilities, labor and taxes

29 29

• 9. Evaluate design
• Seek approval from management and clients
• Evaluated against warehouse requirements

and constraints

• Is the design flexible for business changes?
• Does it align with the business’s value?
• Does it meet government regulation?

30 30

• 10. Finalize design
• Does the design meet its timing, budget and

quality?

• Does the design flexible to meet long term

business objectives and goals?

31 31

Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6th Edition, Kogan Page, London, p399

Table 23.1 Examples of flexible design options Extra Capacity Additional Resources when Needed Flexible Resources

Land/buildings Available height for future mezzanine floor Using extra space when needed in a shared user DC Free-standing mezzanine, rather than a shelf-supported mezzanine Equipment Conveyor capacity Hire-in additional fork- lift trucks during peak period ‘Combi’ narrow-aisle trucks that can be used for picking or pallet put- away/retrieval Staffing Staffing at above average throughput level Agency staff Multi-skilling Processes/systems Availability of multiple processes within the WMS Use of software on demand Processes in place to support pallet-, case- and item-level picking

32 32

Read case example

1

Design and Planning of Warehouses:

Application to the Case of Sociedade da Água do Luso João Mestre

Department of Engineering and Management, Instituto Superior Técnico Abstract The supply chain design and planning is essential for any company, since its competitiveness is closely related with the efficient integration of logistic activities and the fulfilment of the required service levels, at the lowest possible cost. In particular, warehouses are known as an area where significant performance improvements can be achieved. The problem in study was presented by the company Sociedade da Água do Luso, producer of bottled water. This company aims to redesign one of its current facilities, merging all its production and warehousing activities in this new facility, with the intention of reducing its logistic costs (Project One-Site). This work attempts not only to redesign the existing facility but also to plan its operations, since these decisions are strictly interrelated. A financial analysis and a performance evaluation is also performed in

• rder to evaluate the viability of project One-Site.

The present work follows the framework proposed by Gu et al. (2007) for warehouse design and

• peration problems, comprising three main interrelated areas: design, operation and performance
• evaluation. The decision process regarding warehouse design and operation planning is made

simultaneously, translating their close interrelation. In particular, the sections that compose the warehouse are dimensioned and a proposed layout is presented. It is also performed the equipment selection and it is determined the required workforce. This work is expected to be a useful tool for the decision process for the managers of company Sociedade da Água de Luso. Keywords:*warehouse planning and design, redesign, operation planning, storage.

• 1. Introduction

The supply chain design and planning is essential for any company, since its competitiveness is closely related with the efficient integration of logistic activities and the fulfilment of the required service levels, at the lowest possible cost. A supply chain is an integrated manufacturing process, which starts at the raw materials and ends with the delivery of specified final products to customers, through a number of various business entities (suppliers, manufacturers, warehouses, distributors and retailers). Traditionally, this chain is characterized by a forward flow of products and a backward flow of information (Beamon, 1998). During the optimization process of supply chains, warehouses are known as an area where significant performance improvements can be achieved (Won and Olafsson, 2005). Warehouses allow companies to buffer the material flow along the supply chain, accommodating variability caused by factors

33 33

Summary

1. Define business requirements and design constrains 2. Define and obtain data 3. Formulate planning base for defined throughout 4. Define and describe activity requirements 5. Select equipment 6. Create internal and external layouts 7. Define information system operations 8. Estimate capital and operation costs

• 9. Evaluate design against requirements and constraints
• 10. Finalize design