Investigating Warehouse Operations Chapter 2 Activity Profiling: Mining For Gold

1. Investigating Warehouse Operations Chapter 2Activity Profiling: Mining For Gold WHEN PROBLEMS OCCUR IN WAREHOUSE OPERATIONS: REENGINEERING IS OFTEN DONE LAYOUT PROJECTS ARE COMMENCED WITH NO IDEA OF THE ROOT CAUSE OF THE PROBLEMS DUE TO: LACK OF KNOWLEDGE LACK OF TOOLS LACK OF TIME

2. Warehouse Activity Profiling • Systematic analysis of • item activity & • order activity • Profiling is designed to readily identify root causes • Of material flow problems • Of information flow problems • Pinpoint opportunities for process improvement • Provide an objective basis for decision making

3. Advantages of Profiling • Can Quickly Reveal: • Design and Planning Opportunities • Correct Baseline for Justifying New Investments • People Feel a Sense of Involvement • Picture is Worth a 1000 Words • Capture the activities of the warehouse in pictorial form

4. CAUTION • Don’t get stuck on Analysis Paralysis • Profiling becomes the goal • Forget to solve the problems

5. 7 Key Planning & Design Issues • 1. Order Picking & Shipping • 2. Receiving & Put-away • 3. Slotting • 4. Material Transportation System • 5. Layout & Material Flow • 6. Warehouse Sizing • 7. Level of automation & Staffing

6. Picking & Shipping • Order Batch Size • Pick Wave Planning • Picking Tour Construction • Shipping Mode Disposition

7. Receiving & Put-away • Receiving Mode Disposition • Put-away Batch Sizing • Put-away Tour Construction

8. Slotting • Zone Definition • Storage Mode Selection & Sizing • Pick Face Sizing • Location Assignments

9. Material Transportation System • System Selection • System Size

10. Warehouse Layout & Material Flow • Overall Warehouse Flow • Relative Functional Locations • Building Configuration

11. Warehouse Sizing • Space Requirements

12. Level of Automation • Staffing Requirements • Capital-Labor Substitution • Level of Mechanization

13. What do Customers Want? • their orders filled • Some customers are High Demand • Use a large portion of warehouse activity • Have high customer service requirements • May dedicate a portion of the warehouse to that customer or business unit • 3rd Party Providers dedicate aisles to a customer • Contract Warehouses have complete support to a customer • Warehouse within a Warehouse

14. Advantages of a Warehouse within a Warehouse • Smaller warehouses are more efficient • Provide better customer service • Can sub-divide the warehouse into self-contained processing units (ie: Divide & Conquer)

15. Types of Profiles: Customer Order Profile • Order mix distributions • Lines/Order distribution • Cubes/Order distribution • Lines & Cubes/ Order distribution

16. Order Mix Distribution • There are several order mix distributions that are helpful in plotting warehouse operating strategies. • Family Mix – overall warehouse operating strategy is dictated by order mix • If Pure - (orders tend to be from one Product Family) • indicates an advantage of virtual warehousing within a warehouse • Results in good productivity & customer service

17. Family Mix Distribution 35 25 15 10 5 5 5

18. Handling Unit Mix Distribution • Full or Partial Pallet/Case Mix • Separate pick areas for full pallets, partial pallets, cartons • Separate areas for full vs broken case mix picking

19. Handling Unit Mix Distribution

20. Order Increment Distribution • Determine portion of full unit load (pallets, cartons) vs partial unit loads (½ pallet, ¼ pallet) • Build partial unit loads: • At the supplier, if possible • Upon receipt in necessary • Storage space may be sacrificed

21. Order Increment Distribution % of order lines

22. Lines/Order Distribution % of orders

23. Lines & Cubes Per Order Distribution

24. Purchase Order Profile • For inbound material vice outbound material • Use same distribution analyses as for outbound profiling • Supports the same batching and processing strategies for receiving and putaway

25. Item Activity Profiling • Used to “slot” the warehouse • What storage mode should be assigned • How much space should be allocated • Where should it be located • Types of Activity Profiling: • Popularity • Cube Movement/Volume • Popularity-Volume • Order Completion • Demand Correlation • Demand Variability

26. Item Popularity Distribution • Close to the door/Close to the floor • Minority of items generate majority of the picks • Uses Pareto Analysis or ABCAnalysis • A – automated-highly productive storage mode Golden Zone – close to aisle – at or near waist high • B – semi-automatic – moderately productive storage/picking mode Silver Zone – next most readily accessible • C – manual – offers high density storage

27. Item Popularity Distribution • Popularity may be based on: • Dollars of Sales • Volume • # of Requests

28. Cube Movement / Month % of Items

29. Popularity-Cube Movement Mix • High Popularity-High Cube: • Uses carton flow racks located for ease of replenishment • High Popularity-Low Cube: • Many picks / unit of space – use light directed carousels (carousels are not easy to restock, are expensive per foot of storage) • Low Popularity – Low Cube: • Lends itself to bin storage

30. Item-Order Completion Distribution • Small groups of items that fill large groups of orders: • List most to least popular • Determine proportion of orders a subset can complete • For example; 10% of the items may fill 50% of the orders. (next slide is an example) • Assign these to small order completion zones: • Productivity, processing rate, processing quality typically 2-5 time more efficient than general warehouse

31. Item-Order Completion Distribution 50% of the orders are completed by 10% of the items

32. Demand Correlation Distribution • Identify relationship (affinity) of demand between individual items or families. • Determined based on frequency of being requested together on orders • Often based on same style or size • Sometime complementary items such as shoes & purse • This data can be used when slotting the warehouse to minimize movement when filling orders.

33. Demand Correlation Distribution