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

Distribution and Fulfillment centers By Dr. Albert Tan 1 1

Lecture 3 • Overview of warehousing design and strategy • Contents are from – Warehouse Science – The Handbook of Logistics and Distribution Management 2 2

Warehouses processes and the associated material flow Replenishment Replenishment Broken Case Case Reserve Storage Picking Picking and Pallet Picking Accumulation, Sortation & Packing Direct Direct putaway putaway to reserve to primary Receiving Shipping Cross-docking 3 3

Figure 18.2 Floor area usage Original source: Baker and Perotti (2008) Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6 th Edition, Kogan Page, London, p297 4 4

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 5 5

Decision / Performance Criteria Order flow time throughput Responsiveness fill rate volume flexibility/storage capacity mix flexibility Investment + Cost Operational Space/Equipment/Labor Product quality Quality Order accuracy 6 6

Determining the basic system structure Product data: • Definition of major functional •Activity level areas / departments •requested quantities • Definition of departmental sub- •product properties systems • Storage and material handling •vendor types modes • Operational policies Order data: • storage policies •number of line items • replenishment policies •number of items • order picking policies •cubic volume • batching •shipping priorities • sorting •product correlation • zoning • routing • receiving & shipping policies Managerial requirements / company strategy 7 7

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. Summary statistics SKU data Warehouse Activity Order data Distributions Profiling Location � Structural � data Characterizations, e.g., • prevailing patterns/trends • relations • dominant elements 8 8

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 9 9

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 10 10

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 11 11

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 12 12

Figure 18.1 Typical warehouse functions in a stockholding warehouse Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6 th Edition, Kogan Page, London, p295 13 13

2. Define and obtain data 14 14

Figure 23.2 Pareto diagram, for throughput (sales) and inventory Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6 th Edition, Kogan Page, London, p391 15 15

3. Formulate planning base for defined throughout Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6 th Edition, Kogan Page, London, p389 16 16

4. Define and describe activity requirements • What are the key activities to perform in the DC or warehouse? 17 17

Figure 23.3 Time profile of warehouse operations Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6 th Edition, Kogan Page, London, p392 18 18

Figure 18.3 Typical warehouse functions in a cross-dock warehouse Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6 th Edition, Kogan Page, London, p297 19 19

5. Selecting Equipment • What equipment features are desired? – Temperature and humidity – Speed and load factors • What are the most important selection criteria? 20 20

Figure 23.4 Decision tree to identify possible pallet storage systems Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6 th Edition, Kogan Page, London, p393 21 21

Storage Type Access to Each FIFO Low Rack Cost Suitable for Ground Operating Speed Pallet Case Picking Block storage 1 1 5 1 4 Drive-in 1 1 2 1 3 Satellite 1 1 (SA)5 1 1 3 (DA) 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) Table 19.3 Palletized storage attributes matrix Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6 th Edition, Kogan Page, London, p325 22 22

Figure 21.6 Decision tree for order picking equipment Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6 th Edition, Kogan Page, London, p355 23 23

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 24 24

7. Define information system operations • Warehousing Management system • Track and Trace system • Interface to ERP and TMS 25 25

Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6 th Edition, Kogan Page, London, p413 26 26

Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6 th Edition, Kogan Page, London, p417 27 27

8. Estimate capital and operating costs • Capital costs to acquire the property, equipment and information systems • Operating costs cover utilities, labor and taxes 28 28

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? 29 29

10. Finalize design • Does the design meet its timing, budget and quality? • Does the design flexible to meet long term business objectives and goals? 30 30

Extra Capacity Additional Resources Flexible Resources when Needed Land/buildings Available height for Using extra space when Free-standing future mezzanine floor needed in a shared user mezzanine, rather than DC a shelf-supported mezzanine Equipment Conveyor capacity Hire-in additional fork- ‘Combi’ narrow-aisle lift trucks during peak trucks that can be used period for picking or pallet put- away/retrieval Staffing Staffing at above Agency staff Multi-skilling average throughput level Processes/systems Availability of multiple Use of software on Processes in place to processes within the demand support pallet-, case- WMS and item-level picking Table 23.1 Examples of flexible design options Source: Rushton, A, Croucher, P. & Baker, P. (2017) The Handbook of Logistics and Distribution Management, 6 th Edition, Kogan Page, London, p399 31 31