Warehouse Management
After working with few warehouses from B2B to B2C models (I’m a software engineer which gets involved to get things done), I thought it would be good if I can consolidate my learnings in one post. This most likely a very basic post however it most warehouses when I talked to its managers, I found out that it is quite missing or the know-how isn’t complete.
A large glossary of terms and acronyms can be downloaded for free from the following website: https://howtologistics.com/
In today’s market with expensive land, buildings, labour and energy costs, together with the introduction of concepts such as just in time (JIT), efficient consumer response (ECR), and quick response (QR), companies are continually looking to minimize the amount of stock help and speed up throughput. The use of tools such as postponement — where product are finalized in warehouse, not at the manufacturing location — are becoming commonplace.
We’ve gone from ‘push’ to ‘pull’ supply chain over recent years. In fact, the phrase ‘supply chain’ can be a bit of misnomer; rather, it should be called demand chain, with consumers holding the sway.
There are many different roles for a warehouse in today’s supply chain. As you can see in following picture, warehouses can be operated by raw material suppliers, component & finished goods, wholesalers, retailers and companies involved in reversed logistics.
Intermediate, postponement, sub-assembly and customizations warehouses are used to store products temporary at different stages in production. These facilities are also used to customize a product before final delivery to customers (either B2B or B2C). These activities can include the following:
- specific packaging or labeling being added or changed, such as change the language, store-ready item packaging, etc
- product bundling for promotions
- country-specific items are added like electrical plugs
- special messages are being added
Cross Docking
Cross-dock centers are seen as being the future for warehousing alongside fulfilment centers. Efficient consumer response and quick responses within retail require operations to be able to move goods quickly through the supply chain. According to Datex Corporations there are four main scenarios where cross docking is used more frequently:
- When demand for any given inventory item is stable and shows strong consistency. These items can be placed on a recurring fulfilment schedule using cross docking which eliminates the surplus in inventory in case of out of stock.
- When dealing with time-sensitive and perishable inventory. Due to reduced shelf life, inventory needs to reach to retailer in reasonable remaining shelf life.
- When fulfilling orders for which customers are willing to wait such as furniture, in this case customers expect a short delivery period.
Cross docking has its disadvantages too. Cross docking more space is required in and around the despatch bays. Also suppliers might change the load which will cause stock being held longer and delay in delivery.
Advance Put, Pick and Pack
The growth of e-retailers has seen an increase in number of customer fulfilment centers. These warehouses have been designed and equipped specifically to manage large volume of small orders. The following two videos show the fulfilment operation of an internet retailer called i-herb.com and how it was moved from person-to-goods system to that of a goods-to-person system.
Notice few interesting techniques in this video, specially one of my favourite is the put to light technology. Lightning Pick is a provider of light-directed and advanced order picking technologies. Our best-in-class pick-to-light, put-to-light, pack-to-light, voice, radio frequency (RF), cart-based solutions and other paperless systems drive increased productivity, accuracy and cost efficiency from production through order fulfillment. Lightning Pick delivers projects on time, on budget, every time so our customers can deliver the perfect order, time after time.
Warehouse Location
I found this figure represents all what is needed to consider when you’re looking for a new warehouse location.
For cold storage warehouses I found SSI and Swisslog experts when it comes to this type of warehousing.
Lean Warehousing
One of the most challenging task for warehouse managers are how to manage data. Today’s supply chain produces vast amount of data and it is up to the warehouse manager among others to analyze this data and use it effectively which sometimes I called it “Centralized Data Tower”. According to Dematic Corporations, these are the biggest challenges for a warehouse management:
One of the way to overcome some of the above challenges is the introduction of Lean Warehousing into operation of warehouse. Lean Thinking revolves around having a clean and streamlined operation and removing non-value-adding processes. Waiting time is one of the biggest and most expensive wastes. One way of remembering these wastes is to use the acronym of ‘Tim Woods’ which is:
- T — Transport — unnecessary movement of people, products, information and equipments such as empty running forklifts
- I — Inventory — storing parts, pieces, documentation ahead of requirements or the storage of obsolete items
- M — Motion — bending, turning, reaching, lifting. Ensure the fast moving items are in easy reach.
- W — Waiting — the bottlenecks at pick locations
- O — Over-production — holding too much inventory
- O — Over-processing — unnecessary steps like re-labeling and checking
- D — Defects — time spend correcting errors such as miss-picks
- S — Skills — under-utilizing capabilities, creativity and knowledge and delegating tasks with inadequate training. Also a failure on multi-tasking staff.
There are various cost elements in warehouse which pick, pack and despatch operations are the most expensive operational ones. Following figure represents the typical cost-breakdown of warehouse however these numbers can be changed based on type of operations.
For example, companies that are under pressure to speed up throughput are more likely to use concepts such as cross docking, thus reducing the amount of time spent on put-away, picking and retrieval. In the following graph we show the typical warehouse processes:
There are various innovations in each of these steps, pick-to-light, put-to-light, pack-to-light are some of these innovations. Also there is another concept called Slip Sheet. International freight forwarder SBS Worldwide has found a simple, greener way of fitting more books inside the traditional sea container. It is a solution that allows publishers to save money (15% on freight costs) and trees (200 million) by allowing up to 30% more books to be loaded into the container. SBS Worldwide is launching the slipsheet and push/pull forklift attachment in partnership with Cascade, the largest manufacturers of push/pull equipment, in Europe and the USA.
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This video demonstrates the significant advantages of implementation slip sheets into the publishers supply chain.
If you are looking for a calculator to help you to calculate TiHi — It refers to the number of boxes/cartons stored on a layer, or tier, (the TI) and the number of layers high that these will be stacked on the pallet (the HI), It can also be used in reference to the stacking pattern used to load a pallet in order to generate a relatively stable stack — you can use this website: http://onpallet.com/ Also the following graph can help you to measure retail operation goods in planned vs actual.
Picking
In order to apply Lean Warehousing in pick, we need to have an excellent pick preparations. The imperative in here is to measure pick accuracy before the order leaves the warehouse. Following figure shows the interrelationship between labor, technology, equipment and warehouse layout.
ABC analysis is quite important in pick preparation. The following figure shows the relationship between frequency of sales and the value of product. Different strategies will be required for each sectors such stock-ordering frequency and method, stock-counting frequency and customer and supplier relationship.
There are a number of dimensions to the picking process. These include how and when orders are presented, how the items are stored, how the actual items are picked and required equipments as shown in following figure:
There are many different picking strategies that can be utilized within a warehouse operation. Each one will depend on the nature of product, the velocity of throughput and company budget. Following figure (courtesy of Operations Design) provides some guideline to the type of picking and storage equipment to use, based on product size, number of orders, speed of throughput and size of inventory.
Productivity Measurements
Some of Traditional metrics:
- Warehouse utilizations = (space used * 100) / space available. Benchmark: ≥ 97.04%
- Cost as % of cogs = (total warehouse cost * 100) / total sales revenue. Benchmark: < 1.674 per cent with median of 5.00 per cent
- cost per unit despatched = total warehouse cost / total number of units shipped. Benchmark: $0.23 with median $1.405
- lined picked per hour = lines picked / total hours available. Benchmark: ≥ 92.8 lines per hour with median 34
- units picked per hour = units picked / total hours available. Benchmark: 191.2 per hour with median 67.
- dock-to-stock (from arrival to appear in system) and benchmark is less than 2 hours and median 6 hours
- Order accuracy = (orders picked & despatched accurately * 100) / total orders received. Benchmark: ≥ 99.8 per cent with median 99.3 per cent
Some of new metrics:
- stock cover in days = current level of stock / (total annual sales * 365). Benchmark <14 median 45 days.
2. Stock turn = total number of units sold / average number of units in stock
3. Stock inventory accuracy
Book Recommendations
There are many good books, these are some of my favourite which was used in writing this blog post and many of improvements I caused in B2B or B2C warehouses:
