Distribution Operations Overview. 1 Distribution Operations Outline Facility Operating Models...

Distribution Operations

Overview

2

Distribution Operations Outline

• Facility Operating Models

• Operating Functions

– Inbound Functions Receiving

Putaway / Takeaway

– Stocking & Picking Slotting & Pick Design

Pick Slot Storage Types

Order Picking Control

Pick Replenishment

Order Release Methodologies

– Flow Through Processing Check-In

Order Allocation

Value Added Services

Order Pick / Pack

Sortation / Consolidation

– Packing / Shipping Packing Functions

Shipping Concepts

Automated Sortation

Quality Control

• Facility Maturity Model

• Facility Capacity Analysis

– Capacity Assessment Basics

– Flow Profiling & Data

– Queuing & Accumulation

– Impact of Capacity

• Facility Design and Layout

• Warehouse Control & Optimization

• Distribution Operation Tools

Facility Operating Models

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• The purpose of distribution facilities is to balance transportation efficiencies between a supplier and an end-user, as well as providing whatever inventory buffer is necessary to ensure required fill rates.

• Facilities help manage transportation costs by providing consolidation efficiencies for both inbound and outbound shipments

– The positioning of facilities within the network depends on the relative costs and frequencies of transportation and the importance of service times

• Different operating models are appropriate for different circumstances and product characteristics, for example:

– Stocking facilities –

Slow moving inventory, long lead time items, high demand variability, requirements for frequent re-allocation

– Flow through facilities –

High value inventory, seasonally variable items, fashion goods,

– Cross-dock facilities –

High volume or fast moving items with predictable demand patterns, commodity items,

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Summary Of Facility Functions And Suitability Considerations

System Description Pros Cons

Stocking The distribution facility serves as a repository for inventory, buffering demand and enabling the use of efficient order quantities as well as the building of efficient delivery loads to customers or end-users.

Most suitable for slower moving inventory or items with long lead times. Higher fill rates for items with less predictability (pooling of inventory risk)

Higher system-wide inventory levels. Additional layer of handling costs (putaway and selection).

Flow Through The facility serves as an assembly point for outbound orders to customers or end-users. Inbound loads from suppliers are broken down and distributed among multiple destinations. No inventory is held beyond the time to build and dispatch the next outbound shipment.

Enables a more efficient inventory model where inventory is allocated to and maintained at the point of demand, where volumes cannot support large end-user shipments. Streamlined processing costs.

Requires sophisticated order management and allocation capabilities. Requires sufficient density of end-user demand volume to justify frequent outbound shipments.

Cross-Dock The facility is a transfer point for inbound shipments which are already separated for delivery to individual customers or end-users. The function is to shorten the supply chain while maintaining transportation efficiencies.

Minimal handling costs. Fastest speed to market.

Requires order scale to justify supplier preparation of end-user shipments. Limited ability to react to last minute changes in demand patterns.

Benchmark is using their

facility in this manner

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7

Stocking Facility

8

Flow Through Facility

Inbound Processing -Receiving and Putaway / Takeaway

This section may be of less

interest

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Physical Receiving

• Physical receiving processes are largely driven by the nature of the goods being received, as well as the ultimate mission of the facility.

– Receiving Process

Unload, stage & check-in

Immediate putaway to reserve

Immediate putaway to primary

Cross-docking or “hot receiving”

– Physical Receiving / Material Handling

Pallet onto Floor / Rails

Pallet to Carton Takeaway

Direct Carton Unload and Takeaway

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Receiving Processing

• Initial processing of goods on the receiving dock generally consists of check-in and receipt verification. The degree of processing depends on the design of upstream and downstream processes and is driven by the relative capacity and productivity of the various processes.

– Detail Receiving

Detail Check In Receiving

Detail Check In Processing (Flow Through Facilities)

No Detail Check In – Carton Count or Assumed Receipt

– Receipt Verification / Check In

Manual validate against PO upon receipt

Scan validate against PO upon receipt

Pre-receiving

Assumed receipt

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Receiving Methods

• Pallets unloaded onto floor conveyor or into floor positions, PO sortation and checking done by re-stacking pallets where necessary

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Receiving Methods

• Pallets unloaded into floor positions, cartons unstacked and sorted onto conveyor by PO and taken away to storage or processing

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Receiving Methods

• Cartons unloaded onto conveyors, sorted by PO and taken away to processing or storage

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Putaway / Takeaway

• After initial receiving processing, products are taken from the dock to either storage or interior locations for further processing. There are various methodologies for executing these moves

– Process

First Come First Serve

Batched by Zone

Batched and Sequenced

Automated Putaway

– Location Selection

Manual (Random)

Manual (locate SKU by zones)

System Confirmed Putaway

System Suggested Putaway

System Directed Putaway

Slotting and Picking

This section presents some critical

considerations as the new facility is

designed

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Slotting & Picking Design Methodology

Order Analysis

• Units-of-measure

• Pick Frequencies (hits per SKU)

Slotting Analysis

• Slot size requirements

• Pick slot storage type

• Slot location

• Product profile data

– Cube

– Weight

– Unit of measures

• Facility Profile

• Sales history & variances by sku

• Order history (line item detail)

• Pick slot capacities

• Assign pick methods

– Storage types

– Handling systems

– Control methods

• Estimate pick rates

• Determine order release method

• Analyze congestion

• Determine automation requirements

• Develop layout drawing

• Estimate capital costs

• Estimate operating costs

• Estimate savings

• Quantify cash flows

DataDataCollectionCollection AnalysisAnalysis BusinessBusiness

CaseCaseLayoutLayoutDesignDesign

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Order Analysis



Slotting Analysis



• Slot location


– Cube

– Weight







– Storage types


– Control methods












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A Pick ZoneA Pick Zone

B Pick ZoneB Pick Zone

C Pick ZoneC Pick Zone

DockDock

Slotting Analysis – Locations

• Generally, the warehouse can be divided into slotting zones based on pick frequencies

80th Percentile of Pick

Frequency

80-90th Percentile

Slow Movers

This is a key slide

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Slotting Analysis – Locations

• Sample product slotting analysis

Output From Slotting Analysis

Comparison of As-Is & To-Be

Slotting

This shows the analysis that is done to assess

how well a facility is laid out

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Slotting Analysis – Travel Path

• Sample picking travel path analysis

Total Travel Distance = 3,480 ft.

Before

Total Travel Distance = 1,110 ft.(68% Reduction)

After Re-Slot

The impact is that efficiency is dramatically

improved

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Order Analysis



Slotting Analysis



• Slot location


– Cube

– Weight







– Storage types


– Control methods












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Pick Slot Storage Types


Static Storage

– Pallet Rack

– Shelving

System in which the product does not move on its own. The most common storage equipment used is the selective pallet rack (single deep) and the steel shelving unit. Storage by size and popularity is critical.

appropriate for the storage and picking of all but the most popular products, initial low investment

excessive travel time, ineffective control system

Dynamic Storage

– Carton Flow

– Pallet Flow

System in which the product flows by gravity (gravity conveyor or air flotation rails) to present a unit of material to the picker at a specified location. There are two basic variations: Carton Flow, used for broken case picking and Pallet Flow Rack, used for case picking.

relatively small picking face, reduced size of zone and travel distance

substantial equipment costs, replenishment costs (labor)

ExampleCarton Flow

ExamplePallet Rack

Replenish Pick

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Order Picking Handling Systems

• Man-to-Part: Traditional material handling approach to order picking that requires the picker to travel to the storage location


Pick to pallet The picker operates an industrial truck with a pallet and commonly used for case picking and broken case picking.

access to hi-rise shelving least productive order picking method

Pick to cart The picker operates a push cart or powered cart.

improved productivity with computer control and radio communication capabilities, able to handle large orders and long distances

restricted access to storage levels that can be reached from the floor

Pick to belt The picker is assigned a zone along a. conveyor where he places picked items. Commonly used with flow rack storage and requires sortation by customer order before shipping

Man-aboard Storage / Retrieval

The picker rides a captive aisle storage/retrieval machine that rides on a rail and is powered by an electric bus overhead.

reduces travel time flexibility of being able to move between storage aisles

ExampleCarton Flow & Pick to Belt

Broken CaseFull Case

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Order Picking Handling Systems (continued)

• Part-to-Man: Material handling system in which the part is delivered via carousels, conveyors, and storage/retrieval systems to the picker


Horizontal Carousels

Storage bins that rotate horizontally on a track under electric motor power

improved cube utilization, full utilization (no waiting, no traveling)

substantial equipment costs; cannot pick & replenish simultaneously

Vertical Carousels

Storage shelves that rotate vertically, always presenting a shelf to the picker at waist level.

excellent for space utilization and organization when storing small volume, small items

substantial equipment costs; cannot pick & replenish simultaneously

Automatic Storage & Retrieval System

Hybrid of the carousel and S/R modules that store and retrieve containers under computer or operator directed control

substantial equipment costs

ExampleHorizontal Carousel

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Picking Control Methods


Paper Picking A printed pick list that includes SKU’s and locations

higher likelihood of picking errors; requires manual pick confirmation

Label Picking A bar coded label is printed for each SKU or full case with correct location address, SKU identity, and customer order number.

reduces likelihood of counting errors, improves productivity

Pick-to-Light The use of a visual display to visually lead the picker through the process of picking each line in the assigned zone.

paperless picking, order accuracy

Radio Frequency (RF) Units

The use of onboard and hand-held terminals displaying picking instructions via RF data communication links from the picker to the control computer in real-time. Also provides a means of confirming or correcting picking orders.

reduced travel time and delays, high order accuracy

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Pick Rate Analysis

• Applying pick rate benchmarks is a quick way to estimate the labor costs associated with various pick methods

• If general benchmarks are inappropriate, then more detailed work studies will be required

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Order Release Methodologies

Release Method

Description Pickers Per

Order

Line Items Per Pick

Periods per

Shift

Pros Cons

Discrete Picking

One person picks one order, one product at a time. Orders are not scheduled and may be picked at any time on a particular day.

Single Single Single simple, risk of picking errors of omission is reduced, provides fastest response in a service window environment, picking accuracy accountable to a single person, little coordination with other pickers required, no space required for order consolidation, and relatively low control system sophistication required

least productive, excessive travel time, relatively low number of orders picked simultaneously, greater risk of picking area congestion

Zone Picking

The total pick area is organized into distinct zones managed by one person responsible for picking all lines for each order for that zone. Two variations of zone picking include: Sequential zone picking, when the order is passed from one zone to the next, one at a time. Simultaneous zone picking, when the order is consolidated in a designated location after zone picking is done from all applicable zones independently.

Multiple Single Single flexible with different skills or equipment associated with a hybrid warehouse, reduced travel time/congestion/delays due to the ability to further subdivide zones, relatively high number of orders picked simultaneously, reduced picking area congestion

Multiple pickers accountable for picking accuracy, high coordination with other pickers required, space and coordination required for order consolidation

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Order Release Methodologies (continued)

Release Method

Description Pickers Per Order

Line Items Per Pick

Periods per

Shift

Pros Cons

Batch Picking

One picker picks a group of orders at the same time, one line at a time.

Single Multiple

Single greater productivity, best for orders with few (1-4) lines and small cube, reduced travel time, drastically reduced picker travel time, very high number of orders picked simultaneously

risk of picking and sorting errors, coordination required between bulk picking and individual order sortation , individual order processing time dependent upon total batch processing time, space required for individual order sortation, residual product handling can be relatively high, relatively high control system sophistication

Wave Picking

One picker picks one order one line at a time however a selected group of orders are scheduled to be picked during a specific planning period

Single Single Multiple better coordination with shipping

Risk of productivity loss if shipping schedule is unbalanced

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Order Release Methodologies (continued)

Release Method

Description Pickers Per Order

Line Items

Per Pick

Periods per Shift

Pros Cons

Zone-Batch Picking

Each picker is assigned a zone, and will pick a part of one or more orders, depending on which lines are stocked in the assigned zone.

Multiple Multiple Single Potential for higher productivity

requires more control due to complexity in nature

Zone-Wave Picking

Each picker is assigned a zone, and picks all lines for all orders stocked in the assigned zone.

Multiple Single Multiple Potential for higher productivity

requires workload balancing between pick zones

Zone-Batch-Wave Picking

Each picker is assigned a zone, and picks all lines for orders stocked in the assigned zone.

Multiple Multiple Multiple Potential for higher productivity

requires more control due to complexity in nature

Flow Through Processing

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Flow Through Processing

• Detail checking in flow through processing areas is similar to the process engaged in during receiving. Often this process is deferred to these processing areas to leverage the need to open and unpack each carton in these areas and avoid duplicate handling.

• A key function of a flow-through process is to delay allocation of incoming product shipments until receipt at the distribution center in order to make more effective decisions on the deployment of inventory.

– Flow through processing includes the physical distribution of goods to final destinations based on these allocations. This can happen in several ways:

Manual distribution (re-packing)

Manual pick / pack processes

Automated sortation

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Flow Through Processing – Value Added Services

• Value added services are typically performed as a function of the flow through processing areas. These areas can be either in-line, or arranged in work-stations for more complex services. Note that these services can also be applied to products in a storage facility as well as a flow-through facility.

– Typical Services

Kitting / Light assembly

Pre-packs

Custom packaging

Labeling

Pricing

Floor-ready displays

– Tracking / Control

Component pick lists

Automated inventory adjustments & conversions

Schedule and coordination

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Flow-Through Processing

• Multi-level processing modules are one way of combining flow-through processes in-line, maintaining flow rates and improving productivity.

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Flow-Through Processing – Pick / Pack Concept

• The Order Pick / Pack concept circulates each product past static locations for each customer or destination, where the allocated quantity for each location is consolidated and packed to containers.

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Flow-Through Processing – Automated Sortation

• Automated sortation is one option for consolidating individual items that have been picked, or are being allocated and distributed into a unitized delivery carton or container.

* Note that this is a representative sample, not a comprehensive list of sorter types

Tilt-Tray Sorter - Tilt Trays sorters require either manual or automatic induction. Once the item is on a tray the item is scanned and transported to the proper lane/chute. At that point the tray is tilted so the product is diverted off. These trays can divert to both sides and receive product at multiple points.

Crossbelt Sorter - Crossbelt sorters are similar to tilt trays, but a dual action belt with dc motor replaces the tray. Products are inducted onto the individual belts then powered off at the proper lane destination.

Packing / Shipping

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Packing / Shipping

– Order verification

– Packing

Master packs / consolidation

Palletization

Freight / postage determination

– Labeling

Content labeling

Compliance labeling

Shipping labeling

Packing slips

– Shipping

Manual Pallet Build, Stage & Load

Carton Sortation to Pallets, Stage & Load

Direct Carton Load

Automated Loading

Pack & Hold

• The shipping function creates unit loads (pallets or containers) for shipping, as well as preparing shipments for delivery to customers. The shipping area is typically responsible for closing out order activity and confirming distribution activities.

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Packing / Shipping

• Pallets built in picking or processing areas are accumulated on the dock and staged for shipping

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Packing / Shipping - Conveyors and Sortation

• Several types of sorters exist for sorting cartons or containers to shipping lanes for palletization or direct loading:

* Note that this is a representative sample, not a comprehensive list of sorter types

Pop Up Wheel - Diverts via a pneumatic powered solenoid, when activated the wheels raises above the sorter plane, changing the case direction. Versions of this concept include pop up chains and roller sections in traditional conveyor sections.

Sliding Shoe Sorter - Suited for heavy duty applications, the cartons are tracked and diverted by pushers (shoes). The number of shoes that diverts are based on the specific carton being tracked. Both the tube and slat can sort left or right at the same time.

Right Angle Pusher - Diverts via a pneumatic powered pusher, when activated the pusher pushes the carton directly in front of it off the sort conveyor onto an outbound lane. While relatively simple and cost efficient, this type of sorter has limited throughput rates.

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Packing / Shipping

• Pallets are built in shipping from individual cartons conveyed from picking / processing areas. Pallets are not staged, but are live loaded. A version of this concept would load cartons directly onto trailers without palletizing (floor loading trailers / containers)

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Quality Control

• Quality control activities are typically either performed upon receipt as part of the detail check-in process, or post-storage as part of a location / SKU verification process (cycle counting)

– Quality Inspection upon Receipt

100% Inspection

Random Inspection (Procedure directed)

Random Inspection (System Directed)

Statistical Inspection (System Directed)

– Cycle Counting

Random

Periodic / Scheduled

Statistical (Experience Based)

Exception Triggered

Facility Maturity Model

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Facility Maturity Model

Time

Usa

ge

Stage IICommon

Middle 20 – 80 %of Companies

Stage IVExcellent

Top 5 % Companies

As a practice becomes more widely adopted, it transitions from excellent through to a standard practice; and then possibly to an outdated practice

Practices which are used but may be

considered out of date

Practices that arewidely used and adopted

across an industry

Practices thatare widely

implemented at leading edge

companies within an industry

Leading, edge practices

based on newor emerging technology

or very innovative processes

Stage IOutdated

Bottom 80 – 100 %of Companies

Stage IIIAdvancedTop 5 – 20 % of Companies

We Categorize practices based on a CapabilityMaturity Model

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10. Distribution Operations: Warehouse Planning & Design

Excellent Advanced Common Outdated

Start-up and Close Downs of Warehouse Operations

Start-up and close-down based on continually updated quantitative network model that determines optimal warehouse location based on trade-off between operational costs, facility costs, transportation costs, inventory investment and customer service.

Start-up and close-down based on quantitative network model that determines optimal warehouse location based on trade-off between operational costs, facility costs, transportation costs, inventory investment and customer service.

Start-up and close down based on perceived need. Use of a detailed project plan for start-up and close-down of operations to ensure seamless customer service.

Start-up and close down based on perceived need. Use of a project plan for move and installation of warehouse resources, equipment and stock. Ad-hoc close-down.

Parameters Used in Layoutand Equipment Decisions

Use of computer based layout and work-flow simulation modeling is used. The model is stand-alone or part of a “Tier-One” WMS solution. It considers slotting by SKU velocity and optimization of work flow and travel paths.

Use of PC based spreadsheet models for layout and equipment needs and cost are used. Some velocity loading is considered for SKU placement.

No models exist. Sizing is based on an estimate of bin, rack and floor space needed for current and future needs, derived from past examples.

No models exist. Layout and equipment are based on past methods and product groupings. Velocity and travel optimization not considered.

Methods and tools for Layout and Equipment Decisions

Layout and Equipment design carried out by using a modeling tool to optimize space, SKU slotting, and travel optimization of the warehouse vs. cost, service and profit targets.

SKU quantities and volumes are used to estimate storage types and space needs. Numerous storage and retrieval methods are evaluated to determine equipment needs.

SKU quantities and volumes are used to estimate storage types and space needs. Past storage and retrieval methods are assumed while determining equipment needs.

Sizing is done based on a comparison of material and quantities to be stored to past examples.

Evaluation of Warehouse Configuration

Dynamic SKU slotting is used to continually optimize warehouse space. Rearrangements are based on changing stock movement patterns.

Frequent, periodic rearrangements of the warehouse (SKU static slotting) when movement patterns of stock changed significantly.

Ad-hoc and infrequent rearrangements of the warehouse.

No optimization of the warehouse. Material is moved only when space needs to be freed up for more material or when earlier such actions are reversed.

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10. Distribution Operations: Operational Processes


Application of Lean Concepts

Lean concepts are extended beyond the 4-walls to drive entire supply chain (“sell-one, buy one” and avoid promotions to reduce demand “lumpiness”).

Lean concepts are used throughout warehousing operations (workplace organization, visual control and standardized work).

Partial application of Lean concepts – particularly due to implementation difficulties in the area of standardized work.

No application of Lean concepts.

Operational Processes Determination

Operational Processes are based on use of modeling tools and WMS outputs.

Operational Processes are based on productivity considerations.

Operational Processes are based on experience and past business requirements.

Poor of non-existent structured determination of Operational Processes.

Operational Improvement Methodology

Operational processes are improved based on 6 Sigma process measures and workflow simulations.

Operational processes are improved when inefficiencies become apparent.

Operational processes are improved only when major inefficiencies are obvious.

Operational processes are changed only when the services provided change.

ProcessAutomation

Processes are managed via integrated WMS system, are RF-driven and include RFID technologies. Conveyor systems and automated sortation are integrated with WMS. Other automation (e.g. ASRS, carousels, etc.) may be utilized to satisfy specific requirements.

Processes are managed via WMS system and are mostly RF driven. Conveyor systems and automated sortation are utilized. Other automation (e.g. ASRS, carousels, etc.) may be utilized to satisfy specific requirements.

Paper or Radio Frequency (RF) driven processes. Some utilization of conveyors to transport orders to packing & shipping.

Paper driven processes with some reporting.

Order Picking Mixture of products cross-docked and pick from stock. Batch and wave picking with automated sortation are utilized to optimize productivity and shipping capacity. Conveyor system includes inline weighing and manifesting.

Mixture of products cross-docked and pick from stock. Batch picking and automated sortation is utilized to optimize productivity.

Mixture of single order and batch picking. Batch picked orders are manually sorted.

Single orders are picked from storage racks.

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10. Distribution Operations: Operational Processes


Receiving Statistical sampling of ASN’s is used to verify accuracy of receipts. No physical counting of receipts is required for consistently accurate vendors. Use of Cross docking with the use of ASN to allocate in-transit prior to actual receipt.

Receipts are verified against ASN and entered into warehouse system via RF terminal. Use of Cross docking from receiving to shipping– allocate upon ASN.

Receipts are verified via physical counts and entered into warehouse system via RF terminal or manually.

Receipts are verified via physical counts compared to receiver document. Receipts are manually entered into warehouse system.

Put-away WMS directs put away and interleaves putaway tasks with other warehouse tasks (e.g. replenishment, stock transfers, order picking, etc.)

WMS directs put away to optimal storage location.

Putaways are non-directed and updated into the warehouse system via RF terminal or manually.

Paper-based put-away process where inventory moves are updated into the warehouse system by clerical, after the fact.

Replenishment Replenishment tasks are interleaved with other warehouse tasks. Wave based replenishment to multiple pick zones based on material handling types. WMS system automatically increases priority of replenishment tasks when pick slot quantities fall below demand.

Replenishment tasks are interleaved with other warehouse tasks. Wave based replenishment may be used. WMS system automatically increases priority of replenishment tasks when pick slot quantities fall below demand.

Replenishment needs are generated from warehouse system report. Stockers use report to fulfill pick slot needs. Emergency pick slot needs are manually communicated.

Replenishment needs are manually tracked and communicated to stockers.

Productivity Tracking

Productivity is captured and reported via WMS at the task and operator level and linked with labor incentives. Engineered standards may be used.

Productivity is captured and reported via WMS at the task and operator level.

Productivity is tracked at the process level (e.g. lines/pieces picked per labor $, etc.)

Productivity is tracked at the operational level (e.g. orders shipped, labor cost, etc.)

Facility Capacity

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Facility Capacity Analysis

• Capacity should be looked at in two dimensions– Throughput– Storage

• Evaluate throughput in terms of several operating parameters– Staging & queuing– Conveyor and accumulation– Productivity and staffing levels– Address through material handling and process changes

• Evaluate storage at peak levels allowing for contingency– Total cube and slot utilization– Operating buffer (10-15%)– Slotting and productivity considerations

• Volume fluctuations drive much of the discussion of capacity– Peak versus average and duration of peaks– Impact of balance of shipments and flow over time

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Facility Capacity – Flow Profiling

R ece iving

F la t Tag

H ang O pen

S toreT ransfers -C rossdock

R eturnsP rocessing

S hipp ing

S hipp ing(S epara te

D oors)

R ece iving(S epara te

D oors)

F la t O pen P rim ary S ort

P inn ing

U tility

H ang Tag H ang S ort

Q uick R esponse

Fla t S orter 1and 2

101 to tecap .

100 to tecap .

310 to tecap .

197 to tecap .

45 to te cap .(a fte r m erge )

143to tecap .

65 to tecap .

162 to tecap .

280 to tecap .

152 to tecap .

205 to tecap .

45 to tecap .

280 to tecap .

110 to tecap .

33% o f V o lum e

17% o f V o lum e

16% o f V o lum e

5% o f V o lum e

11% o f V o lum e

18% o f V o lum e

60% o f V o lum e

40% o f V o lum e

80% o f V o lum e

20% o f V o lum e

28% o f V o lum e

72% o f V o lum e

50% o fR ece iv ing V o lum e

• The first step in evaluating capacity is to accurately chart activity by area and process through the facility, including accurately charting relative volume flows

Sample Facility Flow

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Data Detail for Capacity Analysis

• Data requirements for a capacity analysis are typically more intensive than typical operations projects

Sample Data Sheet

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• Throughput capacity –

– Staging and queuing-

Each process in a distribution facility will require staging, either in the form of dedicated staging areas, or in the equivalent capacity to hold more product than is being currently processed

Pick facings can be thought of as effective staging for order fuflillment

– Conveyor and accumulation

Matching the capacity and flow rates of conveyors and sorters to periodic volume demand, and providing the appropriate amount of accumulation in these systems is a key to optimizing facility throughput

– Productivity and staffing

A critical input to capacity analysis is the productivity of the staff involved in the process being analyzed

– Operating concepts and productivity

Similarly to the storage concept or automation, the selection of operating concepts for key processes such as receiving, shipping, putaway and replenishment can drive the effective capacity of a distribution facility

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CAPACITY CAPACITY STAGING TIME CAPACITY CAPACITY

PROCESS AREA TOTAL UNITS TOTAL UNITS

FTEs MAX AVG. TIME

Units per Week

Units per Week @ Peak

Average Week

Average Week of Peak Month

Peak* Week for Peak Month

FLATINBOUND - STAGING 1,440 CTNS 36,000 PIECES 1 HOURS 36,000 6,324 12,328 26,080

OPEN - THRUPUT (UPH) 634 PCS 15,216 PCS./HR. 24 1,150,330 1,150,330 478,125 931,973 1,971,681

POST-OPEN - STAGING 4,862 TOTES 121,550 PIECES 5 HOURS 121,550 17,034 33,203 70,243

TAG - THRUPUT (UPH) 200 PCS 8,400 PCS./HR. 42 476,280 635,040 193,162 376,517 796,559

POST-TAG - STAGING 3,630 TOTES 90,750 PIECES 2 HOURS 90,750 6,813 13,281 28,097

PRIMARY SORT/FLAT SORTVolume from Flat 478,125 931,973 1,971,681

Volume from Receiving 239,183 466,221 986,336

Volume from Pinning 147,225 286,975 607,124

Volume from Utility 17,617 34,339 72,647

TOTAL VOLUME 882,149 1,719,507 3,637,789

PRIMARY SORTER 404 TOTES 12,928 PIECES 0.5 HOURS 7,779 15,163 32,079

SORT - THRUPUT (UPH) 29,160 PCS./HR AVG 43,740 PCS./HR FALL 1,653,372 2,480,058 882,149 1,719,507 3,637,789

HANGINGINBOUND - STAGING 1,188 CTNS 35,640 PIECES 2 HOURS 35,640 5,011 9,767 20,663

OPEN - THRUPUT (UPH) 481 PCS 15,876 PCS./HR. 33 1,200,248 1,200,248 189,408 369,198 781,076

POST-OPEN - STAGING 1,305 TROLLEYS 32,625 PIECES 3 HOURS 32,625 8,017 15,627 33,061

TAG - STAGING 960 TROLLEYS 24,000 PIECES 2.5 HOURS 24,000 6,681 13,023 27,551


CONSOLIDATION 220 TROLLEYS 5,500 PIECES 0.5 HOURS 5,500 1,670 3,256 6,888

SORT - THRUPUT (UPH) 5,184 DROPS 15,552 PIECES 881,798 1,175,731 189,408 369,198 781,076

PINNINGINBOUND - STAGING 2900 CTNS 72,500 PIECES 5 HOURS 72,500 20,608 40,169 84,981

PINNING - THRUPUT (UPH) 200 PCS 8,000 PCS./HR. 40 453,600 756,000 233,691 455,515 963,689

OUTBOUND STAGING 2,900 CTNS 68,121 PIECES 3 HOURS 68,121 12,365 24,101 50,989

UTILITYINBOUND - STAGING - WS 1008 CTNS 25,200 PIECES 5 HOURS 25,200 11,096 21,629 45,759

UTILITY - THRUPUT (UPH) 175 PCS 4,550 PCS./HR. 26 257,985 429,975 125,833 245,278 518,909


1999CAPACITY CAPACITY STAGING TIME CAPACITY CAPACITY

PROCESS AREA TOTAL UNITS TOTAL UNITS

FTEs MAX AVG. TIME

Units per Week

Units per Week @ Peak

Average Week

Average Week of Peak Month

Peak* Week for Peak Month

FLATINBOUND - STAGING 1,440 CTNS 36,000 PIECES 1 HOURS 36,000 6,324 12,328 26,080

OPEN - THRUPUT (UPH) 634 PCS 15,216 PCS./HR. 24 1,150,330 1,150,330 478,125 931,973 1,971,681

POST-OPEN - STAGING 4,862 TOTES 121,550 PIECES 5 HOURS 121,550 17,034 33,203 70,243


POST-TAG - STAGING 3,630 TOTES 90,750 PIECES 2 HOURS 90,750 6,813 13,281 28,097

PRIMARY SORT/FLAT SORTVolume from Flat 478,125 931,973 1,971,681

Volume from Receiving 239,183 466,221 986,336

Volume from Pinning 147,225 286,975 607,124

Volume from Utility 17,617 34,339 72,647

TOTAL VOLUME 882,149 1,719,507 3,637,789

PRIMARY SORTER 404 TOTES 12,928 PIECES 0.5 HOURS 7,779 15,163 32,079

SORT - THRUPUT (UPH) 29,160 PCS./HR AVG 43,740 PCS./HR FALL 1,653,372 2,480,058 882,149 1,719,507 3,637,789

HANGINGINBOUND - STAGING 1,188 CTNS 35,640 PIECES 2 HOURS 35,640 5,011 9,767 20,663

OPEN - THRUPUT (UPH) 481 PCS 15,876 PCS./HR. 33 1,200,248 1,200,248 189,408 369,198 781,076

POST-OPEN - STAGING 1,305 TROLLEYS 32,625 PIECES 3 HOURS 32,625 8,017 15,627 33,061

TAG - STAGING 960 TROLLEYS 24,000 PIECES 2.5 HOURS 24,000 6,681 13,023 27,551


CONSOLIDATION 220 TROLLEYS 5,500 PIECES 0.5 HOURS 5,500 1,670 3,256 6,888

SORT - THRUPUT (UPH) 5,184 DROPS 15,552 PIECES 881,798 1,175,731 189,408 369,198 781,076

PINNINGINBOUND - STAGING 2900 CTNS 72,500 PIECES 5 HOURS 72,500 20,608 40,169 84,981

PINNING - THRUPUT (UPH) 200 PCS 8,000 PCS./HR. 40 453,600 756,000 233,691 455,515 963,689


UTILITYINBOUND - STAGING - WS 1008 CTNS 25,200 PIECES 5 HOURS 25,200 11,096 21,629 45,759

UTILITY - THRUPUT (UPH) 175 PCS 4,550 PCS./HR. 26 257,985 429,975 125,833 245,278 518,909


1999

Sample Capacity Calculations

54

Conveyor Flow Capacity & Queuing Impact

Hour

Input From Process Areas (Totes)

Load on Primary

Sort (Totes)

Primary Sort

Output

Totes Staged Prior to

Sort

% 0f Capacity

(404 totes) - AS IS

% 0f Capacity (852 totes)- After Implementation

1 680 680 583 97 24% 11%2 680 777 583 194 48% 23%3 680 874 583 291 72% 34%4 680 971 583 388 96% 46%5 680 1068 583 485 120% 57%6 680 1165 583 582 144% 68%7 680 1262 583 679 168% 80%8 0 679 583 96 24% 11%

Hour

Input From Process Areas (Totes)

Load on Primary

Sort (Totes)

Primary Sort

Output

Totes Staged Prior to

Sort

% 0f Capacity

(404 totes) - AS IS

% 0f Capacity (852 totes)- After Implementation

1 680 680 583 97 24% 11%2 680 777 583 194 48% 23%3 680 874 583 291 72% 34%4 680 971 583 388 96% 46%5 680 1068 583 485 120% 57%6 680 1165 583 582 144% 68%7 680 1262 583 679 168% 80%8 0 679 583 96 24% 11%

• Accumulation capacity in a conveyor or sortation system has a dramatic effect in the overall throughput capacity of a system. Over capacity situations lead to extended operating hours or reduced throughput, resulting in higher costs or a need for extensive capital expenditures

Sample Sorter Queuing Analysis

In this case, additional accumulation and staging capacity must be added to accommodate wave sorting of processed merchandise

55

Impact of Facility Capacity Improvement

-

50,000

100,000

150,000

200,000

250,000

300,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Car

ton

s

Week 1 Week 2 Week 3 Week 4

Cap. - 124K

Receiving

-

50,000

100,000

150,000

200,000

250,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Car

ton

s

Week 1 Week 2 Week 3 Week 4

Cap. - 169 K

* Normalized for four weeks per month

• Why focus on capacity analysis and improvement? The combined impact of material handling concepts, balancing of flows, and improved productivity can minimize and localize disruptions over time, while accelerating product turn and minimizing capital requirements.

Before concept modification

After concept modification

Facility Design and Layout

57

Facility Design and Layout

• Conceptual Design

– Concepts Analysis

– Space Requirements

– Conceptual Layout & Flow

• Detail Design

– CAD Layouts

– Material Handling Specifications

– Working Equipment Budgets

58

Concepts Analysis

.25.35.55.65.851

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Pallet Utilization

Cost Per Case

Effective Pallet Storage Putaway Cost

Case Shelving Bid, Equipment & Putaway Cost - 300 $/Case

Pallet

Handling

Case

Handling

.75 .45

0

200

400

600

800

PRESENT METHOD IMPROVED PICKING PICK/PACK

PICK/PACK REPLENISHMENT PICK STORAGE

704.4

617.023

350.956

Thousand $

Least Cost Overall

Pallets become less cost effective as utilization decreases. Pallets are only cost effective with >35% pallet utilization. Use case shelving for items with less than 35% pallet utilization lot size.

Pallet Vs. Case Shelving - Break Even Point (Example) Pick / Pack Alternative Analysis (Example)

Quantitative Comparison - Picking and Packing Methods (Example)

Present Improve Picking Pick/Pack, Improve Pick

Shelving Flow Rack Carousel Shelving Flow Rack Carousel Shelving

100%

70%

29%

1%

100%

70%

29%

1%

100%

3,608

2,526

1,046

36

3,608

2,526

1,046

36

3,608

40

240

150

40

85

60

40

90.2

10.5

7.0

0.9

18.4

29.7

17.4

0.9

48.0

12.4

1.5

1.0

0.1

2.6

4.1

2.4

0.1

6.6

14

14

-

-

14

-

-

-

0

27

-

-

-

17

-

-

-

7

Category Method% of

Lines# of

LinesPick Rate

PIck Hrs/Day Pickers Packers

Total People

Comparison data: Assume: 3,608 lines/day avg. 1,760 pkgs/day avg.

Sample Concepts Comparison

59

Space Requirements

Receiving Area Space Calculations

2002 Forecasted Annual Cartons 31,390,717 CartonsAverage Cartons per Pallet Received 49.9 Cartons/Pallet2002 Forecasted Annual Pallets 628,664 Pallets2002 Average Pallets Received per Week: 12,090 Pallets/WeekTrailer Receiving Peak To Average Ratio: 1.502002 Peak Trailer Pallets Received per Week: 18,135 Pallets/WeekTrailer Receiving Days per Week at Peak: 6 Days/Week2002 Average Day Peak Week Trailer Pallets Received: 3,023 Pallets/DayTrailer Receiving Productivity: 14.8 Pallets/HourTrailer Receiving Hours/Day 11 Hours/Day

Staging Requirements:3,023 Pallets/Day x 4.0 Hrs. Hold / 11.0 Hrs./Day = 1,100 Pallets3,023 Pallets/Day x 5% Trouble = 151 Pallets/Day

151 Pallets/Day x 3.5 Addtnl Hrs. Hold/ 11.0 Hrs./Day = 49 Pallets

1,100 Pallets + 49 Pallets = 1,149 Pallets

Door Requirements (Productivity Driven):3,023 Pallets/Day / 15 Pallets/Hr / 11 Hrs./Door = 19 Doors

19 Doors + 2 Doors For Rotation 21 Doors

Width:39 Doors x 12.5 Ft./Door = 488 Feet2 Aisles x 12.0 Ft./Aisle = 24 Feet

Subtotal Width: 512 Feet

Depth:39 Doors x 2.0 Lines/Door = 78 Lines

1,149 Pallets x 4 Lin. Ft./Plt. = 4,596 Linear Feet4,596 Lin. Ft. / 78 Lines = 60 Feet

1 Dock Face x 18 Ft./Aisle = 18 Feet1 Shd. Aisle x 17 Ft./Aisle = 17 Feet

Subtotal Depth: 95 Feet

Space Required:512 Ft. Wide x 95 Ft. Long = 48,640 Square Feet

48,640 Sq. Ft. x 15% Contingency = 7,300 Square FeetTOTAL SPACE REQUIREMENT: 55,940 Square Feet

Pallet Capacity:78 Lines x 60 Ft./Line / 4.0 Lin. Ft./Plt. = 1170 Pallets

Sample Space Calculations

60

Conceptual Facility Flow

Sample Conceptual Flow

61

Conceptual Facility Design

Sample Conceptual Layout

62

Detail Material Handling Design

Sample Detail Layout

Warehouse Control and Optimization

64

Facility Control

• Communication / Data Capture

– Paper

– Batch Bar Code Scan

– RF Bar Code Scan

– Hands Free Devices / Voice Activated Controls

– RFID

• WMS Functionality

– Location Control / Inventory Integrity

– Directed Work Activity / Process Efficiency

– Quality Control

– Lot Tracking

– Returns

– Compliance / Labeling

– Transaction Auditing / Tracking

The warehouse is moving in the right direction with

respect to technology (i.e. the bar code scanners that are in use), but current and expected needs should be

considered…

65

WMS Conceptual Framework

Materials Requirements

Planning

Distribution Requirements

Planning/ Forecasting

Inventory Management

Order Entry Processing

Purchasing/ Financials/

General Ledger Administrative

Enterprise Resource Planning Systems

Host Interface(s) - API’s

Inventory

Locations

Resources

Vendors

Rates/Carriers

Pallet ID’s

Routes

Customers

Warehouse Management Systems

Dock Management

Receiving/ Putaway

Shipment Planning / Wave Mgt.

Replenish - ment

Picking / Distribution

Location Control

Sortation / Shipping /

Manifesting

Operational Interfaces

User Access

Video Data Terminals

Internet Browser

Data Collection Terminals

PC Workstations

Automatic Identification

Bar Code Labeling

Bar Code Scanning

OCR, RF, RFID

UCC128 Compliance

Radio Frequency

Radio Data Terminals

- Hand Held

- Truck Mouted

- Voice Recognition

Warehouse Control Systems

AS/RS, Carousels

AGV’s, Pick-to-Light

Conveyors, Sorters

Palletizers

66

Labor Optimization

– Work Measurement

No Standards

Standards Used for Planning

Standards Used for Evaluation

Standards Used for Incentives

Continuous Feedback

• No Reporting• Non-Measured

• Area Reporting • Historical Standards 55-65%

65-75%• Individual Productivity Reporting• Historical Standards• Workload Forecasting/Manpower Planning

90+

55%

40

50

60

70

80

90

100

110

• Individual Productivity Reporting• Goal Setting with Performance Counseling• Engineered Standards• Computerized Productivity Management System

75-90%

• Individual Employee Incentive Compensation

% of Engineered Standard

Achievable

67

Engineered Labor Standards

ENGINEERED STANDARD SHEET

AREA: 9209

BUILDING: 2000

FUNCTION: P ick/Pack

ELEMENTAL DESCRIPTION TIME FREQ.

# Of Lines P ick

# Of Cartons

Ship

# Of S tores Ship

10 Get P ick Sheet 0.150 1/1 0.150

20 Travel to P ick Location 0.131 1/1 0.131

40 Check P ick Sheet 0.048 1/1 0.048

50 Take Items from Broken Case Location 0.046 1/1 0.046

60 Check Summary P ick Sheet 0.110 1/3 0.037

70 Go to Pack Area 0.160 1/3 0.053

80 Get an Empty Carton 0.048 1/1 0.048

90 Open Carton 0.080 1/1 0.080

100 Trans fer P ieces from Cart to Carton 0.046 1/1 0.046

110 Write Units on Carton 0.048 1/1 0.048

120 Close Carton and Tape 0.181 1/1 0.181

130 Push Carton Down Conveyor 0.040 1/1 0.040

140 Total Items on P ick Sheet 0.185 1/1 0.185

Total Normal Minutes 0.271 0.487 0.335

Personal, Fatigue, and Delay Allowances 15% 15% 15%

TOTAL S TANDARD MINUTES 0.312 0.560 0.385

ELEMENTAL DETAIL

AREA: 9209

BUILDING: 2000

Function: Pick/Pack

60 CHECK SUMMARY PICK SHEET

Check off on bulletin board summary pick sheet when pick is complete.

70 GO TO PACK AREA

Go to the pack area when the pick is completed to pack merchandise.

80 GET AN EMPTY CARTON

Get an empty carton located on a stack to the right of the packing area.

90 OPEN CARTON

Open the carton.

100 TRANSFER PIECES FROM CART TO CARTON

Take the pieces from the track and place them in a carton located on the conveyor.

110 WRITE UNITS ON CARTON

Write the total units on the carton.

120 CLOSE CARTON AND TAPE

Close carton and place 2 pieces of tape on the carton.

Distribution OperationsTools

Internal Deloitte Tools For Evaluating Distribution Operations

69

SPEED

• SPEED (Supply Chain Enhancement and Effectiveness Diagnostic) is an analytical framework for identifying supply chain issues and performance improvement opportunities

• It embodies our diagnostic methodology, which covers the entire chain and its opportunities

Analytical Template Sample

The SPEED framework is typical of the types of tools we use during our analyses – it is more of a methodology or

approach than a specific computer program

70

Warehouse Designer

• This software was developed in-house and is used to optimally design or reconfigure warehouse layouts by determining, on an individual basis for each item, the most effective size for its picking locations. It factors in product dimensions, shipping volume, stock replenishment and the overall productivity of the warehouse

I don’t know how much “detailed”

design we still do at Deloitte – my sense is that

a higher level assessment is more typically

what we bring to the table…

71

AutoCAD

• AutoCAD is the first choice of architects and engineers in professional computer-assisted design software and we use it in most of our warehouse design projects. AutoCAD can be used to design anything from simple block layouts for optimized material flow to a detailed 3-D analysis of complex automated storage equipment layouts





72

AutoMod

• AutoMod is a software simulator we use to study the behavior of conveyors to optimize their design with respect to:

– Accumulation areas

– Effects of stoppages in different areas

– Bottlenecks during peak volume periods





73

MOST

• The MOST measurement system calculates standard times to evaluate the productivity of future or existing processes. In a MOST study, each movement of a task is part of a sequence with a relative time and frequency. This system is used to analyze most warehouse processes: order filling, packaging, shipping, holding, etc.

# Task Description MOST Sequence Frequency TMU1 Step 1 Picking preparation 0 02 Walk to picking list folder A 3 B 0 G 0 A 0 B 0 P 0 A 0 1 303 Take a picking list and return to pallet jack A 3 B 0 G 3 A 1 B 0 P 0 A 3 1 1004 Travel with pallet jack to empty pallets (included in travel) 1 05 Loading an empty pallet (26 secondes) 1 7256 Step 2 Picking 0 07 Read the picking list (next product location) A 0 B 0 G 0 A 0 B 0 P 0 T 3 A 0 B 0 P 0 A 0 26 7808 Travel to next product location (included in travel) 0 09 Take product and put on pallet A 3 B 3 G 3 A 3 B 3 P 6 A 3 39 936010 Step 2a Put cardboard sheet on pallet 0 011 Put cardboard sheet on pallet A 3 B 3 G 3 A 3 B 3 P 3 A 3 1 21012 Return to front of pallet jack A 3 B 0 G 0 A 0 B 0 P 0 A 0 15,7 47113 Indicate quantity on pick list A 1 B 0 G 1 A 1 B 0 P 3 R 3 A 1 B 0 P 1 A 1 26 312014 Travel to trash compactor 0 0

Distribution Operations Overview. 1 Distribution Operations Outline Facility Operating Models...

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