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Facilities Planning - Unit 11 Storage and Warehousing

Facilities Planning - Unit 11 Storage and Warehousing. Hierarchy of Facility Planning. Facility Location. Structural Design. Facility Planning. Facility Design. Layout Design. Handling System Design. Source for Figure: Tompkins and White, Facilities Planning, 2nd edition, Wiley.

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Facilities Planning - Unit 11 Storage and Warehousing

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  1. Facilities Planning - Unit 11 Storage and Warehousing

  2. Hierarchy of Facility Planning Facility Location Structural Design Facility Planning Facility Design Layout Design Handling System Design Source for Figure: Tompkins and White, Facilities Planning, 2nd edition, Wiley Storage and Warehousing - 2

  3. The Role of the Warehouse in the Logistics System:A Basic Conceptual Rationale The warehouse is where the supply chain holds or stores goods. The true value of warehousing lies in having the right product in the right place at the right time. LOGISTICS VALUE Storage and Warehousing - 3

  4. The Nature and Importance of Warehousing In 1999, $75 billion, or 0.8 percent of GDP was spent on warehousing. The total supply of U.S. warehousing space in 1999 was 6.1 billion square feet, an increase from 1990 of 700 million square feet of space. Warehousing provides time and place utility for raw materials, industrial goods, and finished products, allowing firms to use customer service as a dynamic value-adding competitive tool. Storage and Warehousing - 4

  5. Customer Carrier Distribution center Customer Supplier Carrier Customer Carrier Carrier Customer Supplier Manufacturing site Customer Carrier Carrier Distribution center Supplier Customer Flow Through the Supply Chain Storage and Warehousing - 6

  6. Traditional Supply Chain FlowsDemand and Product Flows Demand Flow Supplier Retailer Distributor Manufacturer Product Flow Storage and Warehousing - 7

  7. Rawmaterialsinventory Finished goodsinventoryat plant Finished goodsinventoryin field In-processinventory Inventory Positions in the Manufacturer’s Logistics System Assumptions: A one-time increase (decrease) in finished goods inventory results in a one-time increase (decrease) in raw materials purchased. Storage and Warehousing - 8

  8. Reasons for Inventories • Improve customer service • Provides immediacy in product availability • Encourage production, purchase, and transportation economies • Allows for long production runs • Takes advantage of price-quantity discounts • Allows for transport economies from larger shipment sizes • Act as a hedge against price changes • Allows purchasing to take place under most favorable price terms • Protect against uncertainties in demand and lead times • Provides a measure of safety to keep operations running when demand • levels and lead times cannot be known for sure • Act as a hedge against contingencies • Buffers against such events as strikes, fires, and disruptions in supply Storage and Warehousing - 9

  9. Capitalcosts Inventory investment Insurance Inventoryservicecosts Taxes Inventory carrying costs Plant warehouses Public warehouses Storagespace costs Rented warehouses Company-owned warehouses Obsolescence Damage Inventoryrisk costs Pilferage Relocation costs Inventory Carrying Cost Method Normative Model Storage and Warehousing - 10

  10. Distribution and Warehousing Trends Material Handling: Storage and Warehousing - 11 Storage and Warehousing - 11

  11. Timely, accurate information flow Smooth, continual product flow matched to demand Information-based Supply Chain Flows Supplier Manufacturer Distributor Retailer Storage and Warehousing - 12

  12. Warehouse Layout and DesignWarehouse System Land and building Management and staff Storage and handling equipment Computers and software Operating methods and procedures Storage and Warehousing - 13

  13. Warehouse Layout and DesignTypical Warehouse Function Receiving Prepackaging (optional) Put-away Storage Order picking (pallets, cases, loose items) Packaging and/or pricing (optional) Sortation and/or accumulation Packing and shipping Cross-docking (optional) Replenishment (optional) Storage and Warehousing - 14

  14. Warehouse Layout and DesignTypical Warehouse Function and Flow Reserve Storage and Pallet Picking Case Picking Broken Case Picking Replenishment Replenishment Direct put-away to primary Direct put-away to reserve Accumulation, Sortation & Packing Receiving Shipping Cross-docking Source for Figure: Tompkins and White, Facilities Planning, 2nd edition, Wiley Storage and Warehousing - 15

  15. Warehouse Layout and DesignA More Comprehensive View of Warehouse Operations Storage and Warehousing - 16

  16. Warehouse Layout and DesignGeneral Space Planning Develop a demand forecast. Determine each item’s order quantity. Convert units into cubic footage requirements. Allow for growth. Allow for adequate aisle space for materials handling equipment. Storage and Warehousing - 17

  17. Warehouse Layout and DesignGeneral Space Planning Provide for the transportation interface. Provide for order-picking space. Provide storage space. Provide recouping, office, and miscellaneous spaces. Storage and Warehousing - 18

  18. Warehouse Layout and Design • Design balances space (cube) utilization & handling cost • Similar to process layout • Items moved between dock & various storage areas • Warehouse Layout Considerations: • Primary decision is where to locate each department relative to the dock • Departments can be organized to minimize load distance “ld” totals • Departments of unequal size require modification of the typical ld calculations to include a calculation of the “ratio of trips to area needed” • The usage of “Cross-docking” modifies the traditional warehouse layouts; more docks, less storage space, and less order picking Storage and Warehousing - 19

  19. Warehouse Layout and DesignCross Docking In-coming Outgoing • Transferring goods • from incoming trucks at receiving docks • to outgoing trucks at shipping docks • Avoids placing goods into storage • Requires suppliers provide effective addressing (bar codes) and packaging that provides for rapid transshipment Storage and Warehousing - 20

  20. Warehouse Layout and DesignLayout and Design Principles Use one story facilities where possible. Move goods in a straight-line. Use the most efficient materials handling equipment. Minimize aisle space. Use full building height. Storage and Warehousing - 21

  21. Warehouse Layout and Design • The primary objective of storage and warehousing functions are to maximize the utilization of: • Space • Equipment • Personnel Storage and Warehousing - 22

  22. Warehouse Layout and DesignUtilization of Warehouse’s Cubic Capacity Storage and Warehousing - 23

  23. Pounds or units per day Employees per pound moved Pounds unloaded per hour Pounds picked per hour Pounds loaded per hour Percentage of orders correctly filled Productivity ratio = pounds handled/day divided by labor hours/day Throughput =amount of material moved through the system in a given time period Warehouse Layout and DesignExamples of Warehouse productivity Metrics Storage and Warehousing - 24

  24. Warehouse EquipmentThe Role of Equipment in Warehouse Operations Reduce cost (labor + space) enhance space utilization by, e.g., enabling the exploitation of the vertical dimension of the facility allowing for denser packing allow for more efficient order-picking by, e.g., increasing the SKU density supporting the automated transfer of material from storage to sorting and consolidation area Storage and Warehousing - 25

  25. Enhance responsiveness increase the throughput of the facility, e.g., increasing the SKU density establishing a more ergonomic environment/arrangement for the warehouse operators facilitating the parallelization of order picking by parallelizing the tasks of order-picking and replenishment Warehouse EquipmentThe Role of Equipment in Warehouse Operations Storage and Warehousing - 26

  26. Maintain Quality of Product and Operations provide an orderly storage environment provide efficient ways for product tracing and identification provide safe and secure material handling facilitate order sortation and consolidation establish and maintain a controlled environment e.g., temperature control access control Warehouse EquipmentThe Role of Equipment in Warehouse Operations Storage and Warehousing - 27

  27. Warehouse EquipmentTypical Pick Equipment Storage and Warehousing - 28

  28. Warehouse EquipmentWarehouse docks and dock-related equipment Warehouse docks: The facility interface with the shipping carriers Dock configurations and dimensioning Storage and Warehousing - 29

  29. Warehouse Equipment - Equipment Facilitating the Interfacing Between Docks and Shipping Carriers Dock levelers:compensate the height difference between the carrier platform and the dock door mobile yard ramps permanent adjustable dock boards truck levelers scissors-type lifting docks Bumper pads:absorb the shock from the impact of the shipping trailer with the dock walls (laminated rubber cushions) 40,000 lb load traveling 4 mph => 150,000 lb force Dock shelter:a flexible shield that when engaged to the carrier provides a closed-environment interface between it and the inner area of the warehouse energy savings, increased safety, product protection, etc. Storage and Warehousing - 30

  30. Packaging Interest in packaging is widespread Logistics Warehousing Transportation Size Marketing Production Legal Storage and Warehousing - 31

  31. The Role of Packaging Identify product and provide information Improve efficiency in handling and distribution Customer interface Protect product Can help prevent theft and damage Packaging affects integrated logistics activities by size, shape, and type of packaging material Storage and Warehousing - 32

  32. Consumer and Industrial Packaging Consumer packaging Marketing managers primarily concerned with how the package fits into the marketing mix. Industrial packaging Logistics managers primarily concerned with efficient shipping characteristics including protection, ability to withstand stacking when on a pallet, cube, weight, shape and other relevant factors. Storage and Warehousing - 33

  33. Warehouse Deployment and Operations Basic Warehouse Operations Storage and Warehousing - 34

  34. Warehouse Deployment and OperationsMajor decisions Configuration issues Organization of the material flow Unit Loads Establishment of a forward area items to be included in the forward area sizing of the forward area Zoning, Time Windows and Pick Waves Equipment selection and its sizing storage modes order picking and material handling equipment Warehouse management system and automatic identification and communication equipment Layout: Allocation of Storage Capacity Personnel skills and sizing Storage and Warehousing - 35

  35. Policies Receiving policies Assigning trucks to docks Storage policies Assigning received material to storage locations Replenishment policies Order processing policies order batching policies zoning policies picker routing Sortation and consolidation policies Shipping policies Warehouse Deployment and OperationsMajor decisions Storage and Warehousing - 36

  36. Warehouse Deployment and OperationsMajor decisions - Forward-pick Area The following schematic shows the flow of material through and the economics of a forward-pick area. The forward-pick area is the most important real estate in a warehouse because it is the most convenient from which to pick. Moreover, it may represent considerable capital investment for special equipment. How large should it be? What should be stored there? In what amounts? Storage and Warehousing - 37

  37. Warehouse Deployment and OperationsMajor decisions - Forward-pick Area Bulk storage, from which the fast-pick area is restocked The fast-pick area, in which picking is concentrated Storage and Warehousing - 38

  38. Warehouse Deployment and OperationsPicking Methods • Discrete - An operator picks one order, one product at a time. • Zone - Picking area is organized into zones with one operator per zone picking multiple orders. • Batch - An operator picks one product for a group of orders (batch) at the same time. • Cluster - Similar to Discrete/Batch. Operator picks all products for a group of orders. • Wave - Similar to Discrete picking in that an operator picks one order, one product at a time. The difference is that a selected group of orders is scheduled to be picked during a specific period. Storage and Warehousing - 39

  39. Warehouse Deployment and OperationsPicking Methods • Zone-Wave - An operator is assigned a zone and picks all products for all orders stocked in the assigned zone, one order at a time, one scheduling period per shift. • Zone-Batch-Wave - Each operator is assigned a zone and picks all lines for orders stocked in the assigned zone, picking more than one order at a time, with multiple scheduling periods each shift. • Zone-Batch - An operator is assigned a zone and picks a part of one or more orders, depending on which products are stocked in the assigned zones. Storage and Warehousing - 40

  40. Warehouse Deployment and OperationsPicking Methods Storage and Warehousing - 41

  41. Warehouse Layout and DesignFactors Affecting the Size of a Warehouse Customer service levels needed! Level and pattern of demand Size of market(s) served Economies of scale Number of products (SKU’s) Size of the product(s) Throughput rate Production lead time Stock layout Material handling system used Aisle requirements Office area in warehouse Storage and Warehousing - 42

  42. Warehouse Layout and DesignFactors Affecting the Size of a Warehouse These Situations Decrease the Need for Storage Space Storage and Warehousing - 43

  43. Warehouse Layout and DesignFactors Affecting the Size of a Warehouse These Situations Increase the Need for Storage Space Storage and Warehousing - 44

  44. Supplement – Warehousing: A Challenging Role Storage and Warehousing - 45

  45. Warehouse Layout and DesignWarehouse Classification Based on Customer Types Factory Warehouse Retail Distribution Warehouse Catalog Retailer Support to Manufacturing operations Storage and Warehousing - 46

  46. Factory warehouse: Interfaces production with wholesalers small number of large orders daily advance info about order composition Focus oncostand order accuracy (responsiveness depends heavily on production schedules) Warehouse Layout and DesignWarehouse Classification Based on Customer Types Storage and Warehousing - 47

  47. Retail Distribution warehouse:Serves a number of captive retail units advance info about order composition carton and item picking from a forward area more orders per shift than consolidation/shipping lanes Focus oncost, accuracyand fill rate (responsiveness depends heavily on truck routing schedules) Remark:If the retail units arenotcaptive, then responsiveness becomes a crucial issue! Warehouse Layout and DesignWarehouse Classification Based on Customer Types Storage and Warehousing - 48

  48. Catalog Retailer:A warehouse filling orders from catalog sales a large number of small (frequently single-line) orders item and, sometimes, carton picking daily composition of orders usually unknown only statistical information available Focus oncostandresponse time Warehouse Layout and DesignWarehouse Classification Based on Customer Types Storage and Warehousing - 49

  49. Support of Manufacturing operations:A stock room providing raw material and/or work-in-process to manufacturing operations many small orders only statistical information available about order composition stringent time requirements (e.g., response in 30 min) Focus onresponse timebut alsoaccuracyandcost Warehouse Layout and DesignWarehouse Classification Based on Customer Types Storage and Warehousing - 50

  50. Warehouse Layout and DesignFunctions and Change Drivers - Consolidation/Sorting/Product Mixing Customer X Plant 1 – Products A & B Warehouse (DC) Customer Y Plant 2 – Products C & D Customer Z Plant 3 – Products E & F Storage and Warehousing - 51

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