A State-of-the-Art Warehouse

A Forklift Driver Brings Down the Warehouse

Outline

2 Optimized Warehouse Design

1 Introduction

3 Operations Based on Best Practices

4 Best-of-Breed Applications – Warehouse Management System

5 New Technologies in Warehousing

6 Personnel Skills and Knowledge

7 Continuous Improvement Program

Projects Completed Last Year

Who we are

26Supply Chain Consultants

100 Success Rate

374Offices

The 1 thing we do Supply Chain

%

Our customers

Introduction

• From store management to full blown warehousing logistics

• The warehouse is at the heart of any supply chain• The warehouse constitutes one of the largest capital

expenditures of any company• Warehouse Operations constitute one of the largest

operating expenses of any company• Warehousing is now a science and even taught as majors

in universities

Introduction

• Elements of warehousing:– Facility (land, building, flooring, racking systems)– Material Handling Equipment (riders, reach trucks, dock

levelers…)– Systems (Warehouse Management System)– Technology (Voice Picking, Pick-to-light, AS/RS)– People and operations

• Having a State-of-the-Art warehouse implies optimizing all elements togetherto achieve the best results

How to optimize your warehouse design?

Optimized Warehouse Design

• Having the right warehouse design is critical to:– Optimizing storage capacity– Streamlining Throughput and Operational Flow– Minimizing Shrinkage– Maximizing Stock Safety – Ensuring Overall Facility Security– Ensuring Compliancy with Warehousing Best Practices i.e.

FEFO/FIFO, ABC Slotting, Replenishment, etc…

Optimized Warehouse Design

• Some of the common mistakes in design:– Not benefiting from full building height– Maximized storage capacity that slows down the whole

operations(full VNA design in an FMCG warehouse)

– Large storage areas that increase travel distance– Reduced marshalling and staging areas that generate

congestion in loading/unloading activities– Non-energy efficient designs (lack of skylights, non-colored

roofs…)– Non safety compliant system

Optimized Warehouse Design

Data Analysis• Total Pallet Storage required• Total non-pallet storage

required• SKU classification• Average movement of goods

Required Storage Systems• Different racking systems to

suit operations• Aisle Spaces

Required Docks

+

Required Warehouse Size

Optimized Warehouse Design

• Sample Racking Systems:

Standard Selective:• Aisle Width = 3.3 m• Good Order Picking: (100%

selectivity; average pick rate)• Poor floor Area Utilization: 31% net

pallet area

VNA:• Aisle Width = 2.2 – 2.4 m• Good Order Picking: (100%

selectivity; average pick rate)• Average floor Area Utilization: 50%

net pallet area

Optimized Warehouse Design

• Sample Racking Systems:

Drive-In/Drive-Through:• Drive-through: Stock Rotation FIFO• Drive-In: Stock Rotation LIFO• Selectivity limited• Good Floor Area Utilization: 60%

net pallet area

Pallet Flow Racks:• Stock Rotation FIFO • Selectivity Limited • Good Floor Area Utilization: 60%+• Expensive (cost per pallet position)

Link between Storage Systems

Optimized Warehouse Design

• Security – Column Guards: Ensure the security of racking

material

Optimized Warehouse Design

How to optimize your warehouse operations?

• Receiving• Put-away• Inventory Management• Picking• Loading and Shipping

Operations Based on Best Practices

• What Not to Do– Excessive Labeling

– Double Safety Stock

– Pick from Permanent Storage Areas

Operations Based on Best Practices

• What Not to Do– Pick from bottom of the stack

– Cycle Counting Using Labels

Operations Based on Best Practices

Operations Based on Best Practices

ASNs are downloadedor manually created inthe WMS

Inbound Supervisor retrievescorresponding ASN. If it is not

available then it should be created

Goods arrive at theWarehouse

Receiving Tally Sheet(RTS) is printed andhanded to the receivers

Goods are offloaded andthe details on the RTS areconfirmed

Goods are palletized ifnecessary

The RF Operator attachesa pre-printed pallet labeland receives the goodswith his RF Device

When the QC process iscomplete, the InboundSupervisor Closes the ASN

Damages and defectedgoods are palletizedseparately

The QC Supervisor examines the goods

NoThe Location is

invalid or the Palletdoes not fit?

Yes

The Inventory Controller is informed so that the problem would be resolvedin Infor WM or so that another location is suggested to Putaway into

The Forklift driverdeposits the palletsin the target /suggested location

The forklift driver uses his RFdevice to scan the PalletLablel for Putaway

Pallets ready forPutaway

Forklift heads backfor the next pallet

The forklift driver scansthe target location andconfirms the quantitybeing Putaway

Infor WM applies thePutaway Strategy and

suggests a target location

Receiving Putaway

Counted Qty=

System Qty ?

YesThe next cycle count task is dispatched

Inventory Controller releasesCycle Count tasks based on apre-defined strategy

Cycle Count Tasksare dispatched to theRF operators

RF Operator heads tothe displayed location

on the RF screen

Stock in thelocation is counted

The location is recountedor the user can post onlythe original count byexiting the screen

Cycle Counts

No

Yes

The outbound supervisorprints the Pick List andhands it over to the pickers

Picker follows instructionson the Pick List

The RF Picker goes to thespecified location / ID, picks thequantity and places it on a Drop ID( while scanning / entering info)

Short Pick?

The Outbound Supervisorchecks the order informationand solves the problem. Anew Pick List is generated.

The order isfully picked?

The RF Picker places the Drop ID in theAssigned Load Lane on in the Staging Area

Yes

Picking

Operations Based on Best Practices

• Receiving :– Use Real-time or Online systems– Use barcodes– Standardize palletization– Capture data at receiving docks– Segregate damages– Respect products validations– QC received goods

Operations Based on Best Practices

• Putaway:– System driven strategies– Optimize storage space– Respect products specs– Classify items based on A B C analysis

Operations Based on Best Practices

• Cycle Counts:– Daily, weekly counts– Partial stock counts– Maintain high accuracy throughout the year– Investigate problems progressively– Reach the 99+% mark on location level

Operations Based on Best Practices

• Picking:– Reserve stocks based on FIFO, FEFO– Pick based on unit of measure– Slot items in locations– Use real-time or online picking– Use Paperless picking– Label pallets or cases on picking– Pick to assigned door

What are the Best-of-Breed applications for warehouses?

Best-of-Breed Applications – WMS

• A Warehouse Management System (WMS) is an advanced solution that will Control and Monitor all the activities performed within the 4 Walls of your Warehouse.

• A WMS will organize work and align resources and labor to satisfy your customer requirements.

• A WMS is not an inventory system

Best-of-Breed Applications –WMS

• Differentiating Functionalities:– Storer specific, inventory separation based on account,

division and SKU– Multi-warehousing, enterprise control– SKU references, alternative and substitute capabilities– Flexible, user defined lotting capabilities– Ability to capture Expiry Dates, Manufacturing Dates and

other SKU attributes– Ability to capture Weight and Serial Numbers– Full tracking and visibility of different data/lot attributes– Shelf Life Validations on Inbound and Outbound– Bill of Materials

Best-of-Breed Applications –WMS

• Differentiating Functionalities:– Traceability

• Full Traceability of a product from Receiving to Shipping• Ability to easily recall products from the market

– Cycle Counts • Highly developed modules for daily counts• Ability to generate counts by Class, SKU, Location…• User defined rules for automatic stock update based on

counts• Access on full counts history

– RF Directed Functionalities

Best-of-Breed Applications – WMS

WMS Cost Savings For All Warehouses1 Month 1 Year 2 Years 3 Years 4 Years 5 Years

Paper & Printing Savings $2,500.00 $30,000.00 $60,000.00 $90,000.00 $120,000.00 $150,000.00Labor Overtime Savings $3,000.00 $36,000.00 $72,000.00 $108,000.00 $144,000.00 $180,000.00Sales Increase $5,000.00 $60,000.00 $120,000.00 $180,000.00 $240,000.00 $300,000.00Reduction in Sales Returns $500.00 $6,000.00 $12,000.00 $18,000.00 $24,000.00 $30,000.00Inventory Accuracy $250.00 $3,000.00 $6,000.00 $9,000.00 $12,000.00 $15,000.00Reduction in Inventory $2,500.00 $30,000.00 $60,000.00 $90,000.00 $120,000.00 $150,000.00Better Warehouse Space Utilization $250.00 $3,000.00 $6,000.00 $9,000.00 $12,000.00 $15,000.00Energy Savings $250.00 $3,000.00 $6,000.00 $9,000.00 $12,000.00 $15,000.00Savings on the Planning Side (Olayan Staff on Excel payroll) $250.00 $3,000.00 $6,000.00 $9,000.00 $12,000.00 $15,000.00Increase Customer Satisfaction Level $300.00 $3,600.00 $7,200.00 $10,800.00 $14,400.00 $18,000.00Reduce Labor Turnover (Increase Morale/Motivation) $150.00 $1,800.00 $3,600.00 $5,400.00 $7,200.00 $9,000.00Reduce Theft/Shrinkage $150.00 $1,800.00 $3,600.00 $5,400.00 $7,200.00 $9,000.00Optimize Transportation/ Maximize Loading Capacity $250.00 $3,000.00 $6,000.00 $9,000.00 $12,000.00 $15,000.00Help in Winning ONLY 1 More 3PL Account $0.00 $0.00 $200,000.00 $200,000.00 $200,000.00 $200,000.00Reduce Port Demurrage and Penalty Fees $2,500.00 $30,000.00 $60,000.00 $90,000.00 $120,000.00 $150,000.00Reduce Damages $100.00 $1,200.00 $2,400.00 $3,600.00 $4,800.00 $6,000.00Reduce Obsolete Stock $250.00 $3,000.00 $6,000.00 $9,000.00 $12,000.00 $15,000.00Reduce Labor (10%) - Optional $500.00 $6,000.00 $12,000.00 $18,000.00 $24,000.00 $30,000.00

Total $18,700.00 $224,400.00 $648,800.00 $873,200.00 $1,097,600.00 $1,322,000.00

What are some of the new technologies that can be used in warehousing?

New Technologies in Warehousing

• Pick to Light

New Technologies in Warehousing

• Pick to Light– 3 -5 errors per 1,000 or 99.50%– Order picking productivity can range between 100 –350+

lines / hour depending on the industrial application– Most suitable for high hit-frequency “split case” products as

measured in order line activity or “reaches”

New Technologies in Warehousing

• Voice Picking

New Technologies in Warehousing

• Voice Picking– 0.2 -2 errors per 1,000 or 99.8 –99.98%– Order picking productivity can range

between 100 –300 order lines / hour depending on the industrial application

– Suitable for both low-hit and high-hit frequency environments

– Suitable for “full case” and “split case” products

How to improve of the personnel skills and knowledge?

• Think Tank

• Training Curriculum

• Pay for Performance

• Employee of the month

• Affix Billboards

• Suggestion box in warehouse

• Annual events

• Rotate people in warehouse

• Clean environment

Personnel Skills and Knowledge

How to continuously improve your warehouse performance?

• Define list of KPIs to evaluate warehouse

• Calculate KPIs and identify lowest score

• Design and implement solutions to increase KPIs

• Re-measure KPIs and select new ones

Continuous Improvement Program

Thank you