Improving Warehouse Productivity Without Tier 1 Technology

Improving Warehouse Productivity Without Resorting to Tier 1 Technology

http://commonwealth.spokeapps.net/

What is “Tier 1” Technology?

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The term “Tier 1” is frequently used, but is a gross over-simplification

Conjures up images of “expensive” technology

“Overkill” “The Cadillac” Often used in context of WMS vendors

Image source: General Motors

Tier 1 Technology Isn’t Bad

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For many large, complex operations, the only path to supply chain improvement involves making a large capital investment

Many of the technologies which we consider “Tier 1” have been the pioneers – developing cutting edge technology that improves efficiency

This technology then get adapted and trickles down to mid-tier providers over time

An Alternate Title for our Presentation…

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"How can I improve my warehousing problems without a major capital

investment?“

But how?

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Isn’t this asking to get something for nothing?

No. There are two basic ideas

which are under-exploited by many enterprises today:1. Leveraging new advances in

technology which they may not be aware of

2. Sharpening the saw – stepping back and making fundamental process changes to improve the operation

Common Challenges

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Whether their capital budget is 5 figures or 8 figures, companies face the same basic set of challenges:– Reduce labor costs– Improve accuracy– Improve space utilization

Secondary challenges:– Meet regulatory compliance

mandates– Meet retail compliance

mandates

No Shortage of Solutions…

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There are countless solutions available to address these challenges…

Image sources, clockwise from top left: Intermec, Abel-Womack Integrated Handling Solutions, Lightning Pick, Voxware, Remstar, Diamond Phoenix, TGW Ermanco, Kiva Systems, FORTE Industries

Conveyor-based pick modules

Carousels AS/RS Robotic Handling

Pick-to-Light Systems Speech

Warehouse Control Software (WCS)

WMS

Process-Centric Approach

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Rather than jumping immediately to technology, let’s look at several strategies to address these challenges…A. Pick more efficientlyB. Put-away more efficientlyC. Pack and ship more efficientlyD. Reduce walkingE. Improve labor productivityF. Improve accuracyG. Improve space utilization


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Each strategy has a set of execution tactics…1. Cluster picking2. "Tandem" picking3. Receiving staging by zone4. Clustered put-away 5. Put-away by movable unit6. Implement specialized packing

processes7. Pre-manifesting 8. Dynamic label application9. Cartonization 10. Palletization11. Seal cases more quickly12. Weight-based accuracy confirmation13. Create a forward pick area14. Two-tier bin system 15. SKU Mirroring

16. Pick restriction 17. Large quantity override 18. Min/max replenishment19. Demand-based replenishment 20. Slot the warehouse more effectively21. Basic productivity tracking22. Advanced productivity tracking23. Task interleaving 24. Pick confirmation 25. Cycle counting26. Track product by lot #27. Pick product by lot #28. Track serial numbers29. Track country of origin30. High density storage


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Some Tactics require enabling technology…

Focus on Mid-Tier WMS

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Mid-Tier WMS has been in use for at least 15 years

Generally, mid-tier means a more limited set of functionality for a lower price

Often, mid-tier WMS systems had some key gaps which made them not practical for many users with special requirements

The SaaS Model

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In the last 5 years, the Software-as-a-Service (SaaS) model has become a popular means of deploying WMS

With the SaaS model, the software vendor hosts the WMS application on their own server and deploys it via a web connection

True SaaS is multi-tenant: multiple users are on the same instance of the software

Customers do not pay an up-front license fee – just a monthly usage fee

Upgrading and remaining on the current version of the software is much easier

What are the TRUE Capabilities?

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Commonwealth Supply Chain Advisors conducted a survey of three of the top mid-Tier WMs providers to assess the extent to which functionality gaps have been plugged in recent years

Two providers offer only SaaS-based WMS

The third offers both traditional, licensed WMS and a SaaS WMS

What are the TRUE Capabilities?

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We created a list of 30 functionality points which have traditionally been challenging for mid-tier WMS providers to address

We asked each vendor to indicate whether this functionality was:– Standard Functionality– Configurable Functionality– Customization Required– Not Available Currently

We also asked about actual usage amongst their client base. Was the functionality:– Currently in-use with referenceable clients– Available but not currently in use– Not available

The vendors responded on the condition that they not be identified by name in this presentation

Challenges Strategies Tactics Enabling Technology

Level of support

from Mid-Tier WMS

Cluster picking - pick multiple orders at the same time and put them in discrete containers by order

WMS 3

WMS 2Double-length electric pallet

jacksn/a

Tugger vehicles n/aReceiving staging by zone - at receiving, direct that inbound product be staged on a pre-defined movable units based upon it’s destination zone

WMS 1

Clustered put-away - allow multiple SKUs to be put away in the same trip through the warehouse in a logical pick path

WMS 2

Put-away by movable unit - allow multiple SKUs to be placed on a license plated movable unit; allow the movable unit license plate to be scanned once at put-away, and direct put-away of all SKUs on that movable unit in a logical pick-path

WMS 2

Implement specialized packing process Process change n/aPre-manifesting - Calculate weight and quantity of all the multi-SKU pallets on an order before picking

WMS 3

Dynamic label application: Apply a retail-compliuant label to cases at time of picking with scan confirmation

WMS 2

Cartonization - determine the optimal size shipping container based on the cube and longest dimension of the items which are to be picked for an order

WMS 2

Palletization - prior to case picking, determine the number of cases to be picked to each pallet based on cube

WMS 1

Tape dispensers n/aCase sealer n/a

Weight-based accuracy confirmation - weight a carton or a pallet and compare it to a database of the actual weights - verify if the carton or pallet is within tolerance

WMS 1

Create a forward pick area n/aTwo-tier bin system - the same SKU can exist in two different bins in the distribution center

WMS 3

SKU Mirroring - the same SKU can exist in two different bins in the same ZONE WMS 3Pick restriction - the system can limit picking only to bins designated as "forward pick bins"

WMS 3

Large quantity override - if a single pick exceed x quantity and will drastically deplete the forward pick area, the system will direct the pick to be made from the overstock bin

WMS 2

Min/max replenishment - replenish to a bin if the quantity falls below a pre-set minimum level

WMS 3

Demand-based replenishment - proactively replenish to a bin if known demand for the item will exceed the quantity in the bin, EVEN IF the bin is not currently below it’s minimum stocking level

WMS 1

Slotting software n/aSlotting spreadsheet n/a

WMS 2Labor management software n/a

WMS 2

Labor management software n/a

WMS 1

Labor management software n/aPick confirmation - confirm that the correct product was picked based on a bar-code scan of the item or bin

WMS 3

Cycle counting - allow incremental cycle counting in lieu of physical inventory WMS 3Track product by lot # WMS 3Pick product by lot # WMS 3Track serial numbers WMS 3Track country of origin WMS 3

Push back rack n/aDouble deep rack n/a

Very narrow aisle (VNA) storage

n/a

Mobile storage rack n/a

Pick more effi ciently

Reduce walking

Improve labor productivity

Reduce labor costs

Put-away more

effi ciently

Pack and ship more

effi ciently

Improve accuracy

Improve space utilization

Accuracy is poor

The DC is out of space

Basic Productivity Tracking: Track lines picked per hour by worker regardless of pick type

Advanced Productivity Tracking: Track lines picked per hour by worker by pick type (i.e. distinguish between piece picks, case picks, pallet picks)

Task interleaving - combined put-away/picking cycles - when full pallet is put-away, search for full pallet picks which need to occur in proximity to the put-away bin and place this pick as the next task in queue

Improve storage density

Slot the warehouse more effectively

"Tandem" picking - when case picking, two different orders can be picked at the same time utilizing a double-length electric pallet jack

Seal cases more quickly

The Rating System

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Three levels…

Level: 3 Generally available

with minimal customization required

In use by at least some referenceable companies

Level: 2 Available but often

with some customization required

Might not be currently in use by any companies

Level: 1 If available at all,

customization is required


The Tactics…

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1. Cluster picking2. "Tandem" picking3. Receiving staging by zone4. Clustered put-away 5. Put-away by movable unit6. Implement specialized packing

processes7. Pre-manifesting 8. Dynamic label application9. Cartonization 10. Palletization11. Seal cases more quickly12. Weight-based accuracy confirmation13. Create a forward pick area14. Two-tier bin system 15. SKU Mirroring

16. Pick restriction 17. Large quantity override 18. Min/max replenishment19. Demand-based replenishment 20. Slot the warehouse more effectively21. Basic productivity tracking22. Advanced productivity tracking23. Task interleaving 24. Pick confirmation 25. Cycle counting26. Track product by lot #27. Pick product by lot #28. Track serial numbers29. Track country of origin30. High density storage

1. Cluster picking

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Definition: pick multiple orders at the same time and put them in discrete containers by order

WMS Availability Assessment




2. "Tandem" picking

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Definition: when case picking, two different orders can be picked at the same time utilizing a double-length electric pallet jack or tugger vehicle





Deep Dive: Pick Methodologies

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Which style of picking is best?

Discrete Order Picking Cluster Picking

Zone Pick: Pick & Pass Zone Pick: Pick & Consolidate

Batch Picking


• Pro’s:– Simple for operators– Less error prone– Little/no technology required– May be the only practical method to

pick very high-cube items• Con’s– Very high levels of walking– Operators return to home-base after

each order is picked– Each order requires a trip through

the entire warehouse

Discrete Order Picking


• Pro’s:– Dramatically reduces walking– Possible to do on a limited scale without a

high degree of technology– Each order is only touched once– Orders are ready-to-ship as soon as picking is

done

• Con’s– Hard to pick a large group of orders without

real-time instructions– Orders may travel significant distances

without any picks being performed– Travel distances are excessive in large

warehouses with many SKUs– Increased likelihood of errors

Cluster Picking


• Pro’s:– Reduces walking in larger distribution

centers– Each order can only be routed to zones

where there are picks– Orders are ready-to-ship as soon as

picking is done• Con’s

– Almost impossible to manage without real-time warehousing

– Zone routing can only be done with complex conveyor systems

– All of the SKU’s in the order travel through the entire DC

Zone Pick: Pick & Pass


• Pro’s:– Reduces overall travel distances for

the SKU’s in the order– Well-suited for orders with diverse

sizes and shapes of SKU’s– Well-suited for mixing case and piece

picking on the same order

• Con’s– Very complex for software to manage

consolidation process– Requires labor downstream to

consolidate orders– Requires space to buffer product

Zone Pick: Pick & Consolidate


• Pro’s:– Well suited for instances where the

same SKU appears on a large number of orders

– Well suited for single line, single piece orders

• Con’s– Only suits a limited order profile– Requires additional downstream

handling– Can be complex to execute

Batch Picking

3. Receiving staging by zone

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Definition: at receiving, direct that inbound product be staged on a pre-defined movable unit based upon it’s destination zone





Inbound

Zone 1 Zone 2 Zone 3

4. Clustered put-away

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Definition: allow multiple SKUs to be put away in the same trip through the warehouse in a logical pick path





5. Put-away by movable unit

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Definition: allow multiple SKUs to be placed on a license plated movable unit; allow the movable unit license plate to be scanned once at put-away, and direct put-away of all SKUs on that movable unit in a logical pick-path





Zone 1

MU #T-745

6. Implement specialized packing process

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Definition: separate the less skilled packing functions from the more skilled manifesting functions

10-step process

7. Pre-shipping

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Definition: Calculate weight and quantity of all the multi-SKU pallets on an order before picking





8. Dynamic label application

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Definition: Apply a retail-compliant (or other) label to cases at time of picking with scan confirmation





Case label

9. Cartonization

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Definition: determine the optimal size shipping container based on the cube and longest dimension of the items which are to be picked for an order





Image source: Tetris

10. Palletization

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Definition: prior to case picking, determine the number of cases to be picked to each pallet based on cube





11. Seal cases more quickly

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Definition: speed up the case sealing process without adding excess labor

Image sources: Betterpack, 3M

12. Weight-based accuracy confirmation

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Definition: weigh a carton or a pallet and compare it to a database of the actual weights - verify if the carton or pallet is within tolerance





13. Create a forward pick area

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Definition: stock a smaller supply of many SKUs in a high-density area of the warehouse

8 SKUs stored on 8 pallets = 32 walking feet

vs.

Smaller supply of the same 8 SKUs stored in carton flow

rack

8 SKUS = 8 walking feet*

*(Can be increased to 32 SKUs per walking foot)

13. Create a forward pick area

Storage mediums include:– carton flow– static shelving

Image source: Borroughs Corporation, Frazier Industrial Company | 36

14. Two-tier bin system

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Definition: the same SKU can exist in two different bins in the distribution center





Overstock

Forward pick

15. SKU Mirroring

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Definition: the same SKU can exist in two different bins in the same ZONE





Overstock

Forward pick

16. Pick restriction

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Definition: the system can limit picking only to bins designated as "forward pick bins"





Overstock

Forward pick

17. Large quantity override

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Definition: if a single pick exceeds x quantity and will drastically deplete the forward pick area, the system will direct the pick to be made from the overstock bin





18. Min/max replenishment

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Definition: replenish to a bin if the quantity falls below a pre-set minimum level





19. Demand-based replenishment

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Definition: proactively replenish to a bin if known demand for the item will exceed the quantity in the bin, EVEN IF the bin is not currently below it’s minimum stocking level





20. Slot the warehouse more effectively

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3 Methods of Slotting:– Level 1: Determine the correct

STORAGE MEDIUM– Level 2: Determine the correct BIN

#– Level 3: Dynamic slotting

Factors influencing slotting methodology:– Demand volatility– Product lifecycle– # of new product introductions per

year– Stackability requirements– Segregation rules– Family grouping rules

Slotting Tools:– Spreadsheet tools– Specialty slotting software

Image source: Rubic’s

How to slot with a spreadsheet…

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Create Item Master– SKU– Description– Length– Width– Height– Overall cube– Conveyabiility– Pack size info

Determine Current Quantity on Hand

Determine rationalization strategy for current QOH

TG511A1000 THERMOSTAT GUARD - CLEAR COVER 05050C0601 176.83 N 189SC16124 16X12X4 SCREW COVER ENCLOSURE 10040E0101 835.52 N 46HGM-SZ SINGLE ZONE REFRIGERANT MONITOR 08010D0202 5,751.18 N 14AT150F1022 50VA TRANS 120/208/240V C BRK 08010E0101 76.62 N 197220B BRASS FLOW SENSOR 07010B0601 444.35 N 47RIB2401B SPDT POWER RELAY 24VAC/DC,120V 03070B0601 73.32 N 306UCP-422-43 MA/PSI XDUCER W/PSI IND. 07020E0601 193.69 N 124T-PB202-0 24VAC POWER SOURCE,4A,PNL 03040B0601 161.76 N 180

SKU Description Current Location Overall

Cube

Qty. on Hand, 2008

Item Master

Non-Conveyable?


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Define variables:– Velocity Variables– Growth Rate Variables– Bin Variables, Primary Pick Area– Bin Variables, Overstock– Tote Variables– Current Storage Capacity– Current Bin Box Used by Client– Pallet Rack Bays Available


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Establish multiple replenishment intervals…


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Create storage medium rules Calculate theoretical qty on

hand Rationalize against actual qty on

hand Determine optimal storage

medium Summarize results:

– # of units of each storage medium required

– “walk-back” bays required– Impact of various replenishment

intervals– Changes over time

21. Basic Productivity Tracking

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Definition: Track lines picked per hour by worker regardless of pick type


Level: 2 Available but often with

some customization required


22. Advanced Productivity Tracking

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Definition: Track lines picked per hour by worker by pick type (i.e. distinguish between piece picks, case picks, pallet picks)





22. Advanced Productivity Tracking

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LMS on Demand?

YES.

23. Task interleaving

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Definition: combined put-away/picking cycles - when full pallet is put-away, search for full pallet picks which need to occur in proximity to the put-away bin and place this pick as the next task in queue





1. Pickup inbound

pallet

3. Pick outbound

pallet

4. Stage outbound

pallet

2. Put-away

inbound pallet

24. Pick confirmation

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Definition: using some form of automatic data capture technology to confirm that the correct item was picked (at the time of pick)





25. Cycle counting

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Definition: counting portions of the inventory each day to ensure bin and item-level accuracy





26. Track product by lot #

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27. Pick product by lot

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28. Track serial numbers

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29. Track country of origin

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30. Improve storage density

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Double-deep storage

Push-back rack

Mobile storage rack

3 Under-Utilized Storage Systems…

On-Demand WMS: What does it cost?

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Cost estimates…– Vendor #1

• Ongoing monthly cost: Averages $3,000-$4,500 per month, but could be as much as $6,000.

• Implementation cost estimate: $20,000 - $40,000– Vendor #2

• Ongoing monthly cost: Averages $1,700 – 2,500per month• Implementation cost estimate: $4,000 (editorial note: Commonwealth feels this is a

significant under-estimate)– Vendor #3

• Ongoing monthly cost: $0• Implementation cost estimate: Under $100,000 for license and implementation for a

moderate-complexity project

Hardware: The above prices do not include:• Installation of wireless network in the DC• Handheld computers• Bar-code printers

WMS: Keys to success

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Don’t rush it!– Allow 12 – 18 months for selection and implementation

Evaluate all the options (even Tier 1!) Document EVERYTHING about the current state

– Al normal processes– All exceptions

Test thoroughly Train Assign ownership Ensure visibility & reporting exist Conduct an honest readiness assessment

18 Steps to Success

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Strategy Solution Selection

Execution ManagementVis

ion WMS Vendor Selection

RFI: Determine Vendor Pool

Round 2: Scripted Demos

Round 3: Site Visits

Negotiation & Selection

Round 1: RFP (Written Bids)

Distribution Optimization

Detailed Discovery with Data Analysis

Define Current State

Design Future State

Estimate Implementation Costs

Project Future Savings

Build Business Case

WMS Implementation

Functional Alignment

Test

Train

Convert

Build

Go-Live

Optimize

In Summary…

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Improved distribution efficiency IS within reach, providing a company is willing to make at least SOME investment in processes or technology

Savvy companies who conduct a thorough evaluation of technology can often find that improvement is not as expensive as they thought

Don’t rush the process – take the time required to design the solution correctly the first time.

Thank You

20 Park Plaza, Suite 400 | Boston, Massachusetts 02116(O) 617.948.2153 | (F) 617.507-6112www.commonwealth-sca.com Distribution Optimization | Transportation Optimization | Supply Chain Planning

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http://www.commonwealth-sca.com/

http://commonwealth.spokeapps.net/