Recently, I was flying into an airport surrounded by industrial parks. Looking out the plane window, I couldn’t help but notice the various shapes of the vast number of distribution centers. My first thought was what a great place to advertise. But, then the logistics side of my brain took over and I was amazed at the shapes and sizes of the buildings on display. There were squares, rectangles, L shapes and others with no specific shape at all. Many seemed to be the same exact shape!
Looking at the shapes got me to thinking that while facilities come in all sizes and configurations, the processes within the buildings are the most critical factors. Before naysayers get offended, it is true that the clear height, bay spacing, floor design, the number of dock doors, fire protection and other facility configuration factors impact the layout design. But, too often little planning is done when establishing a new operation. A simple strategy of floor storage and standard pallet rack across the entire facility might work for a few companies but very likely won’t result in an efficient operation.
The modern distribution center must handle receipts from international and domestic suppliers and endure an increasing amount of value added services to satisfy customers. Often, it’s a company’s own retail stores that are the most demanding! Today’s distribution center must deliver accurate and on-time shipments, with an efficient and nimble operation. Such demands can’t be satisfied with basic racking and floor storage.
Where does management start with this level of challenges and expectations? The answer is receiving, but they must continue with planning for all major warehouse processes through shipping. The order fulfillment area typically has the most labor and the greatest demand for accuracy. It is also the area where technology and automation can make a big difference in achieving both accuracy and higher throughputs while controlling labor costs.
An untapped and overlooked area is often the last 100 feet, where packaging, manifesting and shipping occur. An order fulfillment solution can kick-out volumes only as fast as the last 100 feet can free-up space on the shipping dock. More often than not, the picking area gets the necessary attention, but many of the other areas lack the required planning. The fact is that every area, starting with receiving, is critical to the successful fulfillment of customer demands. Stepping through the major warehouse functions, you can see the important considerations in each area.
Receiving
Receiving controls the receipt of inventory into the facility and can impact pending orders. It can also impact the allocation and release for future orders. Ignore it at your peril.
How can you speed-up receiving? Automated shipping notices (ASNs) come to mind first. ASNs are generated from your suppliers and give the receiver a forewarning of the purchase orders and inventory arriving. Additionally, ASNs enable the receiving clerk to manage the dock equipment, staging space and staffing for a receipt before it arrives. Most importantly, ASNs allow for the rapid receipt of entire purchase orders with the scan of a pallet identification bar code vs. the scanning of each case or piece in the receipt.
Stocking/Cross-Docking
The speed and accuracy of the receiving process directly integrates with the stocking of products into the storage area. Additionally, when products are received, they can be flagged for immediate cross-docking for completion of a staged order ready for shipping. The stocking of products is most efficient when directed by a warehouse management system (WMS), and with the use of a random storage philosophy.
While random, the WMS should also consider the planned volume or activity profile of the products so they can be stored in the most accessible location for replenishment or picking. Depending on your operation, you might store products within the same area/equipment from which orders are fulfilled. Alternatively, you might have a separate forward picking area for order fulfillment that is replenished from a reserve storage area. Traditionally, the stocking activity is directed into the reserve storage area. However, more advanced systems may be able to direct the putaway into a forward pick area should there be no overstock and the picking location is empty.
Replenishment
Not running out of product in the pick location is cardinal rule no. 1 or 2. The replenishment process alone can’t be blamed should a location run out of product during picking. The first objective should be to size the pick locations so that they hold enough product to limit the need for replenishment. This is a delicate balance between reducing replenishments to an average of every two weeks and not over sizing the picking area.
Assuming that the pick locations are adequately sized, the success of replenishment falls on the process and technology supporting the process. The ideal technology enables the system to trigger replenishment when the pick location reaches a minimum quantity in the pick location. The replenishment would occur during an off-picking shift and ready the pick location for the proper amount of inventory prior to the picking activity. Should the replenishment function be based on a visual queue, then the operation is at risk for stock-outs during picking.
Picking
Of all the areas in a warehouse, the picking area is often the most critical when it comes to design. There are many details to work-out including the process, equipment and technology. The process ranges from discrete to various combinations of batching, zone-batch, zone-pass and zone-batch-pass. The decision depends on the level of technology to support these applications and the complexity of the orders to fulfill.
Discrete picking puts complete accountability for the accuracy of the order on one picker, but it often provides the lowest order throughout. Simply batching multiple small orders with a single picker can improve the productivity of order completion.
Technology is a must for moving to various zone combinations if you’re going to accurately manage the orders moving through the system and consolidate them in shipping.
The Last 100 Feet
Once the order has been picked, the following functions often result in a bottleneck due to a lack of focus in planning and execution. Let’s dig into each of these areas and point out the challenges and opportunities.
Value Added—The space and design for providing value-added services is rarely mentioned. These are mostly tasks to prepare products for the store within the distribution center. This might include adding hangers, inserting product within a clear bag, changing pricing labels/tags or putting product into a new packaging design. The decision often is where to provide this service, at the source (domestically or internationally), in manufacturing, at receiving or after picking. Most perform the activity after order processing and in a separate area setup with tables and conveyors.
Packaging/Manifesting—If you pick directly into a shipping case, the packaging area within a facility disappears. These cases go through a print-and-apply process to automatically be manifested and receive a shipping label. However, picking into the shipper isn’t always possible. The alternative most used is picking into totes or onto a pallet. In these situations, a packaging area is required. Much like the value-added area, the packaging area is often crunched into the corner of the shipping area and becomes a bottleneck for facility throughput. To avoid this situation, clearly calculate the capacity required to support the operation over the planning horizon. Consider the use of conveyor technology, divert systems and efficient workstations to ensure this area is efficient to handle the future volumes.
Shipping—Regardless of how the orders were processed or packaged, the shipping area is the last step in most warehouse operations. However, if orders are being batch picked by warehouse zone and must be consolidated on the shipping dock, additional space may be required. Adequate space should be provided to stage larger orders for full-truck or less-than-truck-load shipments. And, if you have high volumes of small parcel shipments, consider the use of conveyors to “fluid-load” trailers. If you have conveyor loading systems, there needs to be enough space to also potentially load a pallet onto the trailer.
Final Thoughts
Spend time planning your next warehouse transition and focus on each area of the facility up front to ensure the best solution. Then consider process, layout, labor and technology factors of your next facility strategy.
Process—Visually map the process within your operation to validate if the proper processes are being followed, to identify inefficient steps, and to improve solutions. Use colored totes to identify different types of orders, such as rush, internet, value-added services required, etc. Study various picking methods, such as cluster batch picking, which is the method of picking multiple one- to two-line orders onto a uniquely designed cart.
Layout—Visually map the flow of goods and people on your facility layout to identify backtracking and inefficient movement. Limit “white space” on the layout plan, including aisles and dock space. Utilize “vertical space” in the selection of rack types, mezzanines and within storage positions.
Labor—Train for exceptions and ensure employees understand and are following the proper procedures. Establish a “get to know” employee monthly board to improve team synergy and recognition of an employee’s family, hobbies and other interests.
Technology—Technology can further enhance your productivity, including voice, pick-to-light and conveyors. Perform a gap assessment on your WMS to benchmark against what a best-of-breed solution can provide. Identify the major functionality gaps and quantify the savings potential in upgrading those functions. Look into forklift management software to improve the utilization of the equipment, including energy used, safety, efficiency and ultimately if you really need to buy a new truck.
Finally, product slotting software can increase picking productivity 15-30%, reduce product damage, employee injuries and typically has an ROI of less than a year.
Norman Saenz is senior vice president, supply chain, and principal at TranSystems. He has more than 20 years experience in planning, designing, and implementing distribution centers and manufacturing facilities. He can be reached at 817-919-1753 or [email protected].
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