Distribution Operations
Overview
2
Distribution Operations Outline
• Facility Operating Models
• Operating Functions
– Inbound Functions Receiving
Putaway / Takeaway
– Stocking & Picking Slotting & Pick Design
Pick Slot Storage Types
Order Picking Control
Pick Replenishment
Order Release Methodologies
– Flow Through Processing Check-In
Order Allocation
Value Added Services
Order Pick / Pack
Sortation / Consolidation
– Packing / Shipping Packing Functions
Shipping Concepts
Automated Sortation
Quality Control
• Facility Maturity Model
• Facility Capacity Analysis
– Capacity Assessment Basics
– Flow Profiling & Data
– Queuing & Accumulation
– Impact of Capacity
• Facility Design and Layout
• Warehouse Control & Optimization
• Distribution Operation Tools
Facility Operating Models
4
Facility Operating Models
• The purpose of distribution facilities is to balance transportation efficiencies between a supplier and an end-user, as well as providing whatever inventory buffer is necessary to ensure required fill rates.
• Facilities help manage transportation costs by providing consolidation efficiencies for both inbound and outbound shipments
– The positioning of facilities within the network depends on the relative costs and frequencies of transportation and the importance of service times
• Different operating models are appropriate for different circumstances and product characteristics, for example:
– Stocking facilities –
Slow moving inventory, long lead time items, high demand variability, requirements for frequent re-allocation
– Flow through facilities –
High value inventory, seasonally variable items, fashion goods,
– Cross-dock facilities –
High volume or fast moving items with predictable demand patterns, commodity items,
5
Facility Operating Models
Summary Of Facility Functions And Suitability Considerations
System Description Pros Cons
Stocking The distribution facility serves as a repository for inventory, buffering demand and enabling the use of efficient order quantities as well as the building of efficient delivery loads to customers or end-users.
Most suitable for slower moving inventory or items with long lead times. Higher fill rates for items with less predictability (pooling of inventory risk)
Higher system-wide inventory levels. Additional layer of handling costs (putaway and selection).
Flow Through The facility serves as an assembly point for outbound orders to customers or end-users. Inbound loads from suppliers are broken down and distributed among multiple destinations. No inventory is held beyond the time to build and dispatch the next outbound shipment.
Enables a more efficient inventory model where inventory is allocated to and maintained at the point of demand, where volumes cannot support large end-user shipments. Streamlined processing costs.
Requires sophisticated order management and allocation capabilities. Requires sufficient density of end-user demand volume to justify frequent outbound shipments.
Cross-Dock The facility is a transfer point for inbound shipments which are already separated for delivery to individual customers or end-users. The function is to shorten the supply chain while maintaining transportation efficiencies.
Minimal handling costs. Fastest speed to market.
Requires order scale to justify supplier preparation of end-user shipments. Limited ability to react to last minute changes in demand patterns.
Benchmark is using their
facility in this manner
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Facility Operating Models
7
Stocking Facility
8
Flow Through Facility
Inbound Processing -Receiving and Putaway / Takeaway
This section may be of less
interest
10
Physical Receiving
• Physical receiving processes are largely driven by the nature of the goods being received, as well as the ultimate mission of the facility.
– Receiving Process
Unload, stage & check-in
Immediate putaway to reserve
Immediate putaway to primary
Cross-docking or “hot receiving”
– Physical Receiving / Material Handling
Pallet onto Floor / Rails
Pallet to Carton Takeaway
Direct Carton Unload and Takeaway
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Receiving Processing
• Initial processing of goods on the receiving dock generally consists of check-in and receipt verification. The degree of processing depends on the design of upstream and downstream processes and is driven by the relative capacity and productivity of the various processes.
– Detail Receiving
Detail Check In Receiving
Detail Check In Processing (Flow Through Facilities)
No Detail Check In – Carton Count or Assumed Receipt
– Receipt Verification / Check In
Manual validate against PO upon receipt
Scan validate against PO upon receipt
Pre-receiving
Assumed receipt
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Receiving Methods
• Pallets unloaded onto floor conveyor or into floor positions, PO sortation and checking done by re-stacking pallets where necessary
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Receiving Methods
• Pallets unloaded into floor positions, cartons unstacked and sorted onto conveyor by PO and taken away to storage or processing
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Receiving Methods
• Cartons unloaded onto conveyors, sorted by PO and taken away to processing or storage
15
Putaway / Takeaway
• After initial receiving processing, products are taken from the dock to either storage or interior locations for further processing. There are various methodologies for executing these moves
– Process
First Come First Serve
Batched by Zone
Batched and Sequenced
Automated Putaway
– Location Selection
Manual (Random)
Manual (locate SKU by zones)
System Confirmed Putaway
System Suggested Putaway
System Directed Putaway
Slotting and Picking
This section presents some critical
considerations as the new facility is
designed
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Slotting & Picking Design Methodology
Order Analysis
• Units-of-measure
• Pick Frequencies (hits per SKU)
Slotting Analysis
• Slot size requirements
• Pick slot storage type
• Slot location
• Product profile data
– Cube
– Weight
– Unit of measures
• Facility Profile
• Sales history & variances by sku
• Order history (line item detail)
• Pick slot capacities
• Assign pick methods
– Storage types
– Handling systems
– Control methods
• Estimate pick rates
• Determine order release method
• Analyze congestion
• Determine automation requirements
• Develop layout drawing
• Estimate capital costs
• Estimate operating costs
• Estimate savings
• Quantify cash flows
DataDataCollectionCollection AnalysisAnalysis BusinessBusiness
CaseCaseLayoutLayoutDesignDesign
18
Slotting & Picking Design Methodology
Order Analysis
• Units-of-measure
• Pick Frequencies (hits per SKU)
Slotting Analysis
• Slot size requirements
• Pick slot storage type
• Slot location
• Product profile data
– Cube
– Weight
– Unit of measures
• Facility Profile
• Sales history & variances by sku
• Order history (line item detail)
• Pick slot capacities
• Assign pick methods
– Storage types
– Handling systems
– Control methods
• Estimate pick rates
• Determine order release method
• Analyze congestion
• Determine automation requirements
• Develop layout drawing
• Estimate capital costs
• Estimate operating costs
• Estimate savings
• Quantify cash flows
DataDataCollectionCollection AnalysisAnalysis BusinessBusiness
CaseCaseLayoutLayoutDesignDesign
19
A Pick ZoneA Pick Zone
B Pick ZoneB Pick Zone
C Pick ZoneC Pick Zone
DockDock
Slotting Analysis – Locations
• Generally, the warehouse can be divided into slotting zones based on pick frequencies
80th Percentile of Pick
Frequency
80-90th Percentile
Slow Movers
This is a key slide
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Slotting Analysis – Locations
• Sample product slotting analysis
Output From Slotting Analysis
Comparison of As-Is & To-Be
Slotting
This shows the analysis that is done to assess
how well a facility is laid out
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Slotting Analysis – Travel Path
• Sample picking travel path analysis
Total Travel Distance = 3,480 ft.
Before
Total Travel Distance = 1,110 ft.(68% Reduction)
After Re-Slot
The impact is that efficiency is dramatically
improved
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Slotting & Picking Design Methodology
Order Analysis
• Units-of-measure
• Pick Frequencies (hits per SKU)
Slotting Analysis
• Slot size requirements
• Pick slot storage type
• Slot location
• Product profile data
– Cube
– Weight
– Unit of measures
• Facility Profile
• Sales history & variances by sku
• Order history (line item detail)
• Pick slot capacities
• Assign pick methods
– Storage types
– Handling systems
– Control methods
• Estimate pick rates
• Determine order release method
• Analyze congestion
• Determine automation requirements
• Develop layout drawing
• Estimate capital costs
• Estimate operating costs
• Estimate savings
• Quantify cash flows
DataDataCollectionCollection AnalysisAnalysis BusinessBusiness
CaseCaseLayoutLayoutDesignDesign
23
Pick Slot Storage Types
System Description Pros Cons
Static Storage
– Pallet Rack
– Shelving
System in which the product does not move on its own. The most common storage equipment used is the selective pallet rack (single deep) and the steel shelving unit. Storage by size and popularity is critical.
appropriate for the storage and picking of all but the most popular products, initial low investment
excessive travel time, ineffective control system
Dynamic Storage
– Carton Flow
– Pallet Flow
System in which the product flows by gravity (gravity conveyor or air flotation rails) to present a unit of material to the picker at a specified location. There are two basic variations: Carton Flow, used for broken case picking and Pallet Flow Rack, used for case picking.
relatively small picking face, reduced size of zone and travel distance
substantial equipment costs, replenishment costs (labor)
ExampleCarton Flow
ExamplePallet Rack
Replenish Pick
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Order Picking Handling Systems
• Man-to-Part: Traditional material handling approach to order picking that requires the picker to travel to the storage location
System Description Pros Cons
Pick to pallet The picker operates an industrial truck with a pallet and commonly used for case picking and broken case picking.
access to hi-rise shelving least productive order picking method
Pick to cart The picker operates a push cart or powered cart.
improved productivity with computer control and radio communication capabilities, able to handle large orders and long distances
restricted access to storage levels that can be reached from the floor
Pick to belt The picker is assigned a zone along a. conveyor where he places picked items. Commonly used with flow rack storage and requires sortation by customer order before shipping
Man-aboard Storage / Retrieval
The picker rides a captive aisle storage/retrieval machine that rides on a rail and is powered by an electric bus overhead.
reduces travel time flexibility of being able to move between storage aisles
ExampleCarton Flow & Pick to Belt
Broken CaseFull Case
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Order Picking Handling Systems (continued)
• Part-to-Man: Material handling system in which the part is delivered via carousels, conveyors, and storage/retrieval systems to the picker
System Description Pros Cons
Horizontal Carousels
Storage bins that rotate horizontally on a track under electric motor power
improved cube utilization, full utilization (no waiting, no traveling)
substantial equipment costs; cannot pick & replenish simultaneously
Vertical Carousels
Storage shelves that rotate vertically, always presenting a shelf to the picker at waist level.
excellent for space utilization and organization when storing small volume, small items
substantial equipment costs; cannot pick & replenish simultaneously
Automatic Storage & Retrieval System
Hybrid of the carousel and S/R modules that store and retrieve containers under computer or operator directed control
substantial equipment costs
ExampleHorizontal Carousel
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Picking Control Methods
System Description Pros Cons
Paper Picking A printed pick list that includes SKU’s and locations
higher likelihood of picking errors; requires manual pick confirmation
Label Picking A bar coded label is printed for each SKU or full case with correct location address, SKU identity, and customer order number.
reduces likelihood of counting errors, improves productivity
Pick-to-Light The use of a visual display to visually lead the picker through the process of picking each line in the assigned zone.
paperless picking, order accuracy
Radio Frequency (RF) Units
The use of onboard and hand-held terminals displaying picking instructions via RF data communication links from the picker to the control computer in real-time. Also provides a means of confirming or correcting picking orders.
reduced travel time and delays, high order accuracy
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Pick Rate Analysis
• Applying pick rate benchmarks is a quick way to estimate the labor costs associated with various pick methods
• If general benchmarks are inappropriate, then more detailed work studies will be required
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Order Release Methodologies
Release Method
Description Pickers Per
Order
Line Items Per Pick
Periods per
Shift
Pros Cons
Discrete Picking
One person picks one order, one product at a time. Orders are not scheduled and may be picked at any time on a particular day.
Single Single Single simple, risk of picking errors of omission is reduced, provides fastest response in a service window environment, picking accuracy accountable to a single person, little coordination with other pickers required, no space required for order consolidation, and relatively low control system sophistication required
least productive, excessive travel time, relatively low number of orders picked simultaneously, greater risk of picking area congestion
Zone Picking
The total pick area is organized into distinct zones managed by one person responsible for picking all lines for each order for that zone. Two variations of zone picking include: Sequential zone picking, when the order is passed from one zone to the next, one at a time. Simultaneous zone picking, when the order is consolidated in a designated location after zone picking is done from all applicable zones independently.
Multiple Single Single flexible with different skills or equipment associated with a hybrid warehouse, reduced travel time/congestion/delays due to the ability to further subdivide zones, relatively high number of orders picked simultaneously, reduced picking area congestion
Multiple pickers accountable for picking accuracy, high coordination with other pickers required, space and coordination required for order consolidation
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Order Release Methodologies (continued)
Release Method
Description Pickers Per Order
Line Items Per Pick
Periods per
Shift
Pros Cons
Batch Picking
One picker picks a group of orders at the same time, one line at a time.
Single Multiple
Single greater productivity, best for orders with few (1-4) lines and small cube, reduced travel time, drastically reduced picker travel time, very high number of orders picked simultaneously
risk of picking and sorting errors, coordination required between bulk picking and individual order sortation , individual order processing time dependent upon total batch processing time, space required for individual order sortation, residual product handling can be relatively high, relatively high control system sophistication
Wave Picking
One picker picks one order one line at a time however a selected group of orders are scheduled to be picked during a specific planning period
Single Single Multiple better coordination with shipping
Risk of productivity loss if shipping schedule is unbalanced
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Order Release Methodologies (continued)
Release Method
Description Pickers Per Order
Line Items
Per Pick
Periods per Shift
Pros Cons
Zone-Batch Picking
Each picker is assigned a zone, and will pick a part of one or more orders, depending on which lines are stocked in the assigned zone.
Multiple Multiple Single Potential for higher productivity
requires more control due to complexity in nature
Zone-Wave Picking
Each picker is assigned a zone, and picks all lines for all orders stocked in the assigned zone.
Multiple Single Multiple Potential for higher productivity
requires workload balancing between pick zones
Zone-Batch-Wave Picking
Each picker is assigned a zone, and picks all lines for orders stocked in the assigned zone.
Multiple Multiple Multiple Potential for higher productivity
requires more control due to complexity in nature
Flow Through Processing
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Flow Through Processing
• Detail checking in flow through processing areas is similar to the process engaged in during receiving. Often this process is deferred to these processing areas to leverage the need to open and unpack each carton in these areas and avoid duplicate handling.
• A key function of a flow-through process is to delay allocation of incoming product shipments until receipt at the distribution center in order to make more effective decisions on the deployment of inventory.
– Flow through processing includes the physical distribution of goods to final destinations based on these allocations. This can happen in several ways:
Manual distribution (re-packing)
Manual pick / pack processes
Automated sortation
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Flow Through Processing – Value Added Services
• Value added services are typically performed as a function of the flow through processing areas. These areas can be either in-line, or arranged in work-stations for more complex services. Note that these services can also be applied to products in a storage facility as well as a flow-through facility.
– Typical Services
Kitting / Light assembly
Pre-packs
Custom packaging
Labeling
Pricing
Floor-ready displays
– Tracking / Control
Component pick lists
Automated inventory adjustments & conversions
Schedule and coordination
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Flow-Through Processing
• Multi-level processing modules are one way of combining flow-through processes in-line, maintaining flow rates and improving productivity.
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Flow-Through Processing – Pick / Pack Concept
• The Order Pick / Pack concept circulates each product past static locations for each customer or destination, where the allocated quantity for each location is consolidated and packed to containers.
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Flow-Through Processing – Automated Sortation
• Automated sortation is one option for consolidating individual items that have been picked, or are being allocated and distributed into a unitized delivery carton or container.
* Note that this is a representative sample, not a comprehensive list of sorter types
Tilt-Tray Sorter - Tilt Trays sorters require either manual or automatic induction. Once the item is on a tray the item is scanned and transported to the proper lane/chute. At that point the tray is tilted so the product is diverted off. These trays can divert to both sides and receive product at multiple points.
Crossbelt Sorter - Crossbelt sorters are similar to tilt trays, but a dual action belt with dc motor replaces the tray. Products are inducted onto the individual belts then powered off at the proper lane destination.
Packing / Shipping
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Packing / Shipping
– Order verification
– Packing
Master packs / consolidation
Palletization
Freight / postage determination
– Labeling
Content labeling
Compliance labeling
Shipping labeling
Packing slips
– Shipping
Manual Pallet Build, Stage & Load
Carton Sortation to Pallets, Stage & Load
Direct Carton Load
Automated Loading
Pack & Hold
• The shipping function creates unit loads (pallets or containers) for shipping, as well as preparing shipments for delivery to customers. The shipping area is typically responsible for closing out order activity and confirming distribution activities.
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Packing / Shipping
• Pallets built in picking or processing areas are accumulated on the dock and staged for shipping
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Packing / Shipping - Conveyors and Sortation
• Several types of sorters exist for sorting cartons or containers to shipping lanes for palletization or direct loading:
* Note that this is a representative sample, not a comprehensive list of sorter types
Pop Up Wheel - Diverts via a pneumatic powered solenoid, when activated the wheels raises above the sorter plane, changing the case direction. Versions of this concept include pop up chains and roller sections in traditional conveyor sections.
Sliding Shoe Sorter - Suited for heavy duty applications, the cartons are tracked and diverted by pushers (shoes). The number of shoes that diverts are based on the specific carton being tracked. Both the tube and slat can sort left or right at the same time.
Right Angle Pusher - Diverts via a pneumatic powered pusher, when activated the pusher pushes the carton directly in front of it off the sort conveyor onto an outbound lane. While relatively simple and cost efficient, this type of sorter has limited throughput rates.
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Packing / Shipping
• Pallets are built in shipping from individual cartons conveyed from picking / processing areas. Pallets are not staged, but are live loaded. A version of this concept would load cartons directly onto trailers without palletizing (floor loading trailers / containers)
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Quality Control
• Quality control activities are typically either performed upon receipt as part of the detail check-in process, or post-storage as part of a location / SKU verification process (cycle counting)
– Quality Inspection upon Receipt
100% Inspection
Random Inspection (Procedure directed)
Random Inspection (System Directed)
Statistical Inspection (System Directed)
– Cycle Counting
Random
Periodic / Scheduled
Statistical (Experience Based)
Exception Triggered
Facility Maturity Model
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Facility Maturity Model
Time
Usa
ge
Stage IICommon
Middle 20 – 80 %of Companies
Stage IVExcellent
Top 5 % Companies
As a practice becomes more widely adopted, it transitions from excellent through to a standard practice; and then possibly to an outdated practice
Practices which are used but may be
considered out of date
Practices that arewidely used and adopted
across an industry
Practices thatare widely
implemented at leading edge
companies within an industry
Leading, edge practices
based on newor emerging technology
or very innovative processes
Stage IOutdated
Bottom 80 – 100 %of Companies
Stage IIIAdvancedTop 5 – 20 % of Companies
We Categorize practices based on a CapabilityMaturity Model
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10. Distribution Operations: Warehouse Planning & Design
Excellent Advanced Common Outdated
Start-up and Close Downs of Warehouse Operations
Start-up and close-down based on continually updated quantitative network model that determines optimal warehouse location based on trade-off between operational costs, facility costs, transportation costs, inventory investment and customer service.
Start-up and close-down based on quantitative network model that determines optimal warehouse location based on trade-off between operational costs, facility costs, transportation costs, inventory investment and customer service.
Start-up and close down based on perceived need. Use of a detailed project plan for start-up and close-down of operations to ensure seamless customer service.
Start-up and close down based on perceived need. Use of a project plan for move and installation of warehouse resources, equipment and stock. Ad-hoc close-down.
Parameters Used in Layoutand Equipment Decisions
Use of computer based layout and work-flow simulation modeling is used. The model is stand-alone or part of a “Tier-One” WMS solution. It considers slotting by SKU velocity and optimization of work flow and travel paths.
Use of PC based spreadsheet models for layout and equipment needs and cost are used. Some velocity loading is considered for SKU placement.
No models exist. Sizing is based on an estimate of bin, rack and floor space needed for current and future needs, derived from past examples.
No models exist. Layout and equipment are based on past methods and product groupings. Velocity and travel optimization not considered.
Methods and tools for Layout and Equipment Decisions
Layout and Equipment design carried out by using a modeling tool to optimize space, SKU slotting, and travel optimization of the warehouse vs. cost, service and profit targets.
SKU quantities and volumes are used to estimate storage types and space needs. Numerous storage and retrieval methods are evaluated to determine equipment needs.
SKU quantities and volumes are used to estimate storage types and space needs. Past storage and retrieval methods are assumed while determining equipment needs.
Sizing is done based on a comparison of material and quantities to be stored to past examples.
Evaluation of Warehouse Configuration
Dynamic SKU slotting is used to continually optimize warehouse space. Rearrangements are based on changing stock movement patterns.
Frequent, periodic rearrangements of the warehouse (SKU static slotting) when movement patterns of stock changed significantly.
Ad-hoc and infrequent rearrangements of the warehouse.
No optimization of the warehouse. Material is moved only when space needs to be freed up for more material or when earlier such actions are reversed.
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10. Distribution Operations: Operational Processes
Excellent Advanced Common Outdated
Application of Lean Concepts
Lean concepts are extended beyond the 4-walls to drive entire supply chain (“sell-one, buy one” and avoid promotions to reduce demand “lumpiness”).
Lean concepts are used throughout warehousing operations (workplace organization, visual control and standardized work).
Partial application of Lean concepts – particularly due to implementation difficulties in the area of standardized work.
No application of Lean concepts.
Operational Processes Determination
Operational Processes are based on use of modeling tools and WMS outputs.
Operational Processes are based on productivity considerations.
Operational Processes are based on experience and past business requirements.
Poor of non-existent structured determination of Operational Processes.
Operational Improvement Methodology
Operational processes are improved based on 6 Sigma process measures and workflow simulations.
Operational processes are improved when inefficiencies become apparent.
Operational processes are improved only when major inefficiencies are obvious.
Operational processes are changed only when the services provided change.
ProcessAutomation
Processes are managed via integrated WMS system, are RF-driven and include RFID technologies. Conveyor systems and automated sortation are integrated with WMS. Other automation (e.g. ASRS, carousels, etc.) may be utilized to satisfy specific requirements.
Processes are managed via WMS system and are mostly RF driven. Conveyor systems and automated sortation are utilized. Other automation (e.g. ASRS, carousels, etc.) may be utilized to satisfy specific requirements.
Paper or Radio Frequency (RF) driven processes. Some utilization of conveyors to transport orders to packing & shipping.
Paper driven processes with some reporting.
Order Picking Mixture of products cross-docked and pick from stock. Batch and wave picking with automated sortation are utilized to optimize productivity and shipping capacity. Conveyor system includes inline weighing and manifesting.
Mixture of products cross-docked and pick from stock. Batch picking and automated sortation is utilized to optimize productivity.
Mixture of single order and batch picking. Batch picked orders are manually sorted.
Single orders are picked from storage racks.
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10. Distribution Operations: Operational Processes
Excellent Advanced Common Outdated
Receiving Statistical sampling of ASN’s is used to verify accuracy of receipts. No physical counting of receipts is required for consistently accurate vendors. Use of Cross docking with the use of ASN to allocate in-transit prior to actual receipt.
Receipts are verified against ASN and entered into warehouse system via RF terminal. Use of Cross docking from receiving to shipping– allocate upon ASN.
Receipts are verified via physical counts and entered into warehouse system via RF terminal or manually.
Receipts are verified via physical counts compared to receiver document. Receipts are manually entered into warehouse system.
Put-away WMS directs put away and interleaves putaway tasks with other warehouse tasks (e.g. replenishment, stock transfers, order picking, etc.)
WMS directs put away to optimal storage location.
Putaways are non-directed and updated into the warehouse system via RF terminal or manually.
Paper-based put-away process where inventory moves are updated into the warehouse system by clerical, after the fact.
Replenishment Replenishment tasks are interleaved with other warehouse tasks. Wave based replenishment to multiple pick zones based on material handling types. WMS system automatically increases priority of replenishment tasks when pick slot quantities fall below demand.
Replenishment tasks are interleaved with other warehouse tasks. Wave based replenishment may be used. WMS system automatically increases priority of replenishment tasks when pick slot quantities fall below demand.
Replenishment needs are generated from warehouse system report. Stockers use report to fulfill pick slot needs. Emergency pick slot needs are manually communicated.
Replenishment needs are manually tracked and communicated to stockers.
Productivity Tracking
Productivity is captured and reported via WMS at the task and operator level and linked with labor incentives. Engineered standards may be used.
Productivity is captured and reported via WMS at the task and operator level.
Productivity is tracked at the process level (e.g. lines/pieces picked per labor $, etc.)
Productivity is tracked at the operational level (e.g. orders shipped, labor cost, etc.)
Facility Capacity
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Facility Capacity Analysis
• Capacity should be looked at in two dimensions– Throughput– Storage
• Evaluate throughput in terms of several operating parameters– Staging & queuing– Conveyor and accumulation– Productivity and staffing levels– Address through material handling and process changes
• Evaluate storage at peak levels allowing for contingency– Total cube and slot utilization– Operating buffer (10-15%)– Slotting and productivity considerations
• Volume fluctuations drive much of the discussion of capacity– Peak versus average and duration of peaks– Impact of balance of shipments and flow over time
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Facility Capacity – Flow Profiling
R ece iving
F la t Tag
H ang O pen
S toreT ransfers -C rossdock
R eturnsP rocessing
S hipp ing
S hipp ing(S epara te
D oors)
R ece iving(S epara te
D oors)
F la t O pen P rim ary S ort
P inn ing
U tility
H ang Tag H ang S ort
Q uick R esponse
Fla t S orter 1and 2
101 to tecap .
100 to tecap .
310 to tecap .
197 to tecap .
45 to te cap .(a fte r m erge )
143to tecap .
65 to tecap .
162 to tecap .
280 to tecap .
152 to tecap .
205 to tecap .
45 to tecap .
280 to tecap .
110 to tecap .
33% o f V o lum e
17% o f V o lum e
16% o f V o lum e
5% o f V o lum e
11% o f V o lum e
18% o f V o lum e
60% o f V o lum e
40% o f V o lum e
80% o f V o lum e
20% o f V o lum e
28% o f V o lum e
72% o f V o lum e
50% o fR ece iv ing V o lum e
• The first step in evaluating capacity is to accurately chart activity by area and process through the facility, including accurately charting relative volume flows
Sample Facility Flow
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Data Detail for Capacity Analysis
• Data requirements for a capacity analysis are typically more intensive than typical operations projects
Sample Data Sheet
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Facility Capacity Analysis
• Throughput capacity –
– Staging and queuing-
Each process in a distribution facility will require staging, either in the form of dedicated staging areas, or in the equivalent capacity to hold more product than is being currently processed
Pick facings can be thought of as effective staging for order fuflillment
– Conveyor and accumulation
Matching the capacity and flow rates of conveyors and sorters to periodic volume demand, and providing the appropriate amount of accumulation in these systems is a key to optimizing facility throughput
– Productivity and staffing
A critical input to capacity analysis is the productivity of the staff involved in the process being analyzed
– Operating concepts and productivity
Similarly to the storage concept or automation, the selection of operating concepts for key processes such as receiving, shipping, putaway and replenishment can drive the effective capacity of a distribution facility
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Facility Capacity Analysis
CAPACITY CAPACITY STAGING TIME CAPACITY CAPACITY
PROCESS AREA TOTAL UNITS TOTAL UNITS
FTEs MAX AVG. TIME
Units per Week
Units per Week @ Peak
Average Week
Average Week of Peak Month
Peak* Week for Peak Month
FLATINBOUND - STAGING 1,440 CTNS 36,000 PIECES 1 HOURS 36,000 6,324 12,328 26,080
OPEN - THRUPUT (UPH) 634 PCS 15,216 PCS./HR. 24 1,150,330 1,150,330 478,125 931,973 1,971,681
POST-OPEN - STAGING 4,862 TOTES 121,550 PIECES 5 HOURS 121,550 17,034 33,203 70,243
TAG - THRUPUT (UPH) 200 PCS 8,400 PCS./HR. 42 476,280 635,040 193,162 376,517 796,559
POST-TAG - STAGING 3,630 TOTES 90,750 PIECES 2 HOURS 90,750 6,813 13,281 28,097
PRIMARY SORT/FLAT SORTVolume from Flat 478,125 931,973 1,971,681
Volume from Receiving 239,183 466,221 986,336
Volume from Pinning 147,225 286,975 607,124
Volume from Utility 17,617 34,339 72,647
TOTAL VOLUME 882,149 1,719,507 3,637,789
PRIMARY SORTER 404 TOTES 12,928 PIECES 0.5 HOURS 7,779 15,163 32,079
SORT - THRUPUT (UPH) 29,160 PCS./HR AVG 43,740 PCS./HR FALL 1,653,372 2,480,058 882,149 1,719,507 3,637,789
HANGINGINBOUND - STAGING 1,188 CTNS 35,640 PIECES 2 HOURS 35,640 5,011 9,767 20,663
OPEN - THRUPUT (UPH) 481 PCS 15,876 PCS./HR. 33 1,200,248 1,200,248 189,408 369,198 781,076
POST-OPEN - STAGING 1,305 TROLLEYS 32,625 PIECES 3 HOURS 32,625 8,017 15,627 33,061
TAG - STAGING 960 TROLLEYS 24,000 PIECES 2.5 HOURS 24,000 6,681 13,023 27,551
TAG - THRUPUT (UPH) 200 PCS 6,000 PCS./HR. 30 340,200 453,600 151,526 295,359 624,861
CONSOLIDATION 220 TROLLEYS 5,500 PIECES 0.5 HOURS 5,500 1,670 3,256 6,888
SORT - THRUPUT (UPH) 5,184 DROPS 15,552 PIECES 881,798 1,175,731 189,408 369,198 781,076
PINNINGINBOUND - STAGING 2900 CTNS 72,500 PIECES 5 HOURS 72,500 20,608 40,169 84,981
PINNING - THRUPUT (UPH) 200 PCS 8,000 PCS./HR. 40 453,600 756,000 233,691 455,515 963,689
OUTBOUND STAGING 2,900 CTNS 68,121 PIECES 3 HOURS 68,121 12,365 24,101 50,989
UTILITYINBOUND - STAGING - WS 1008 CTNS 25,200 PIECES 5 HOURS 25,200 11,096 21,629 45,759
UTILITY - THRUPUT (UPH) 175 PCS 4,550 PCS./HR. 26 257,985 429,975 125,833 245,278 518,909
OUTBOUND STAGING 1,040 CTNS 15,600 PIECES 3 HOURS 15,600 6,658 12,978 27,456
1999CAPACITY CAPACITY STAGING TIME CAPACITY CAPACITY
PROCESS AREA TOTAL UNITS TOTAL UNITS
FTEs MAX AVG. TIME
Units per Week
Units per Week @ Peak
Average Week
Average Week of Peak Month
Peak* Week for Peak Month
FLATINBOUND - STAGING 1,440 CTNS 36,000 PIECES 1 HOURS 36,000 6,324 12,328 26,080
OPEN - THRUPUT (UPH) 634 PCS 15,216 PCS./HR. 24 1,150,330 1,150,330 478,125 931,973 1,971,681
POST-OPEN - STAGING 4,862 TOTES 121,550 PIECES 5 HOURS 121,550 17,034 33,203 70,243
TAG - THRUPUT (UPH) 200 PCS 8,400 PCS./HR. 42 476,280 635,040 193,162 376,517 796,559
POST-TAG - STAGING 3,630 TOTES 90,750 PIECES 2 HOURS 90,750 6,813 13,281 28,097
PRIMARY SORT/FLAT SORTVolume from Flat 478,125 931,973 1,971,681
Volume from Receiving 239,183 466,221 986,336
Volume from Pinning 147,225 286,975 607,124
Volume from Utility 17,617 34,339 72,647
TOTAL VOLUME 882,149 1,719,507 3,637,789
PRIMARY SORTER 404 TOTES 12,928 PIECES 0.5 HOURS 7,779 15,163 32,079
SORT - THRUPUT (UPH) 29,160 PCS./HR AVG 43,740 PCS./HR FALL 1,653,372 2,480,058 882,149 1,719,507 3,637,789
HANGINGINBOUND - STAGING 1,188 CTNS 35,640 PIECES 2 HOURS 35,640 5,011 9,767 20,663
OPEN - THRUPUT (UPH) 481 PCS 15,876 PCS./HR. 33 1,200,248 1,200,248 189,408 369,198 781,076
POST-OPEN - STAGING 1,305 TROLLEYS 32,625 PIECES 3 HOURS 32,625 8,017 15,627 33,061
TAG - STAGING 960 TROLLEYS 24,000 PIECES 2.5 HOURS 24,000 6,681 13,023 27,551
TAG - THRUPUT (UPH) 200 PCS 6,000 PCS./HR. 30 340,200 453,600 151,526 295,359 624,861
CONSOLIDATION 220 TROLLEYS 5,500 PIECES 0.5 HOURS 5,500 1,670 3,256 6,888
SORT - THRUPUT (UPH) 5,184 DROPS 15,552 PIECES 881,798 1,175,731 189,408 369,198 781,076
PINNINGINBOUND - STAGING 2900 CTNS 72,500 PIECES 5 HOURS 72,500 20,608 40,169 84,981
PINNING - THRUPUT (UPH) 200 PCS 8,000 PCS./HR. 40 453,600 756,000 233,691 455,515 963,689
OUTBOUND STAGING 2,900 CTNS 68,121 PIECES 3 HOURS 68,121 12,365 24,101 50,989
UTILITYINBOUND - STAGING - WS 1008 CTNS 25,200 PIECES 5 HOURS 25,200 11,096 21,629 45,759
UTILITY - THRUPUT (UPH) 175 PCS 4,550 PCS./HR. 26 257,985 429,975 125,833 245,278 518,909
OUTBOUND STAGING 1,040 CTNS 15,600 PIECES 3 HOURS 15,600 6,658 12,978 27,456
1999
Sample Capacity Calculations
54
Conveyor Flow Capacity & Queuing Impact
Hour
Input From Process Areas (Totes)
Load on Primary
Sort (Totes)
Primary Sort
Output
Totes Staged Prior to
Sort
% 0f Capacity
(404 totes) - AS IS
% 0f Capacity (852 totes)- After Implementation
1 680 680 583 97 24% 11%2 680 777 583 194 48% 23%3 680 874 583 291 72% 34%4 680 971 583 388 96% 46%5 680 1068 583 485 120% 57%6 680 1165 583 582 144% 68%7 680 1262 583 679 168% 80%8 0 679 583 96 24% 11%
Hour
Input From Process Areas (Totes)
Load on Primary
Sort (Totes)
Primary Sort
Output
Totes Staged Prior to
Sort
% 0f Capacity
(404 totes) - AS IS
% 0f Capacity (852 totes)- After Implementation
1 680 680 583 97 24% 11%2 680 777 583 194 48% 23%3 680 874 583 291 72% 34%4 680 971 583 388 96% 46%5 680 1068 583 485 120% 57%6 680 1165 583 582 144% 68%7 680 1262 583 679 168% 80%8 0 679 583 96 24% 11%
• Accumulation capacity in a conveyor or sortation system has a dramatic effect in the overall throughput capacity of a system. Over capacity situations lead to extended operating hours or reduced throughput, resulting in higher costs or a need for extensive capital expenditures
Sample Sorter Queuing Analysis
In this case, additional accumulation and staging capacity must be added to accommodate wave sorting of processed merchandise
55
Impact of Facility Capacity Improvement
-
50,000
100,000
150,000
200,000
250,000
300,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Car
ton
s
Week 1 Week 2 Week 3 Week 4
Cap. - 124K
Receiving
-
50,000
100,000
150,000
200,000
250,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Car
ton
s
Week 1 Week 2 Week 3 Week 4
Cap. - 169 K
* Normalized for four weeks per month
• Why focus on capacity analysis and improvement? The combined impact of material handling concepts, balancing of flows, and improved productivity can minimize and localize disruptions over time, while accelerating product turn and minimizing capital requirements.
Before concept modification
After concept modification
Facility Design and Layout
57
Facility Design and Layout
• Conceptual Design
– Concepts Analysis
– Space Requirements
– Conceptual Layout & Flow
• Detail Design
– CAD Layouts
– Material Handling Specifications
– Working Equipment Budgets
58
Concepts Analysis
.25.35.55.65.851
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Pallet Utilization
Cost Per Case
Effective Pallet Storage Putaway Cost
Case Shelving Bid, Equipment & Putaway Cost - 300 $/Case
Pallet
Handling
Case
Handling
.75 .45
0
200
400
600
800
PRESENT METHOD IMPROVED PICKING PICK/PACK
PICK/PACK REPLENISHMENT PICK STORAGE
704.4
617.023
350.956
Thousand $
Least Cost Overall
Pallets become less cost effective as utilization decreases. Pallets are only cost effective with >35% pallet utilization. Use case shelving for items with less than 35% pallet utilization lot size.
Pallet Vs. Case Shelving - Break Even Point (Example) Pick / Pack Alternative Analysis (Example)
Quantitative Comparison - Picking and Packing Methods (Example)
Present Improve Picking Pick/Pack, Improve Pick
Shelving Flow Rack Carousel Shelving Flow Rack Carousel Shelving
100%
70%
29%
1%
100%
70%
29%
1%
100%
3,608
2,526
1,046
36
3,608
2,526
1,046
36
3,608
40
240
150
40
85
60
40
90.2
10.5
7.0
0.9
18.4
29.7
17.4
0.9
48.0
12.4
1.5
1.0
0.1
2.6
4.1
2.4
0.1
6.6
14
14
-
-
14
-
-
-
0
27
-
-
-
17
-
-
-
7
Category Method% of
Lines# of
LinesPick Rate
PIck Hrs/Day Pickers Packers
Total People
Comparison data: Assume: 3,608 lines/day avg. 1,760 pkgs/day avg.
Sample Concepts Comparison
59
Space Requirements
Receiving Area Space Calculations
2002 Forecasted Annual Cartons 31,390,717 CartonsAverage Cartons per Pallet Received 49.9 Cartons/Pallet2002 Forecasted Annual Pallets 628,664 Pallets2002 Average Pallets Received per Week: 12,090 Pallets/WeekTrailer Receiving Peak To Average Ratio: 1.502002 Peak Trailer Pallets Received per Week: 18,135 Pallets/WeekTrailer Receiving Days per Week at Peak: 6 Days/Week2002 Average Day Peak Week Trailer Pallets Received: 3,023 Pallets/DayTrailer Receiving Productivity: 14.8 Pallets/HourTrailer Receiving Hours/Day 11 Hours/Day
Staging Requirements:3,023 Pallets/Day x 4.0 Hrs. Hold / 11.0 Hrs./Day = 1,100 Pallets3,023 Pallets/Day x 5% Trouble = 151 Pallets/Day
151 Pallets/Day x 3.5 Addtnl Hrs. Hold/ 11.0 Hrs./Day = 49 Pallets
1,100 Pallets + 49 Pallets = 1,149 Pallets
Door Requirements (Productivity Driven):3,023 Pallets/Day / 15 Pallets/Hr / 11 Hrs./Door = 19 Doors
19 Doors + 2 Doors For Rotation 21 Doors
Width:39 Doors x 12.5 Ft./Door = 488 Feet2 Aisles x 12.0 Ft./Aisle = 24 Feet
Subtotal Width: 512 Feet
Depth:39 Doors x 2.0 Lines/Door = 78 Lines
1,149 Pallets x 4 Lin. Ft./Plt. = 4,596 Linear Feet4,596 Lin. Ft. / 78 Lines = 60 Feet
1 Dock Face x 18 Ft./Aisle = 18 Feet1 Shd. Aisle x 17 Ft./Aisle = 17 Feet
Subtotal Depth: 95 Feet
Space Required:512 Ft. Wide x 95 Ft. Long = 48,640 Square Feet
48,640 Sq. Ft. x 15% Contingency = 7,300 Square FeetTOTAL SPACE REQUIREMENT: 55,940 Square Feet
Pallet Capacity:78 Lines x 60 Ft./Line / 4.0 Lin. Ft./Plt. = 1170 Pallets
Sample Space Calculations
60
Conceptual Facility Flow
Sample Conceptual Flow
61
Conceptual Facility Design
Sample Conceptual Layout
62
Detail Material Handling Design
Sample Detail Layout
Warehouse Control and Optimization
64
Facility Control
• Communication / Data Capture
– Paper
– Batch Bar Code Scan
– RF Bar Code Scan
– Hands Free Devices / Voice Activated Controls
– RFID
• WMS Functionality
– Location Control / Inventory Integrity
– Directed Work Activity / Process Efficiency
– Quality Control
– Lot Tracking
– Returns
– Compliance / Labeling
– Transaction Auditing / Tracking
The warehouse is moving in the right direction with
respect to technology (i.e. the bar code scanners that are in use), but current and expected needs should be
considered…
65
WMS Conceptual Framework
Materials Requirements
Planning
Distribution Requirements
Planning/ Forecasting
Inventory Management
Order Entry Processing
Purchasing/ Financials/
General Ledger Administrative
Enterprise Resource Planning Systems
Host Interface(s) - API’s
Inventory
Locations
Resources
Vendors
Rates/Carriers
Pallet ID’s
Routes
Customers
Warehouse Management Systems
Dock Management
Receiving/ Putaway
Shipment Planning / Wave Mgt.
Replenish - ment
Picking / Distribution
Location Control
Sortation / Shipping /
Manifesting
Operational Interfaces
User Access
Video Data Terminals
Internet Browser
Data Collection Terminals
PC Workstations
Automatic Identification
Bar Code Labeling
Bar Code Scanning
OCR, RF, RFID
UCC128 Compliance
Radio Frequency
Radio Data Terminals
- Hand Held
- Truck Mouted
- Voice Recognition
Warehouse Control Systems
AS/RS, Carousels
AGV’s, Pick-to-Light
Conveyors, Sorters
Palletizers
66
Labor Optimization
– Work Measurement
No Standards
Standards Used for Planning
Standards Used for Evaluation
Standards Used for Incentives
Continuous Feedback
• No Reporting• Non-Measured
• Area Reporting • Historical Standards 55-65%
65-75%• Individual Productivity Reporting• Historical Standards• Workload Forecasting/Manpower Planning
90+
55%
40
50
60
70
80
90
100
110
• Individual Productivity Reporting• Goal Setting with Performance Counseling• Engineered Standards• Computerized Productivity Management System
75-90%
• Individual Employee Incentive Compensation
% of Engineered Standard
Achievable
67
Engineered Labor Standards
ENGINEERED STANDARD SHEET
AREA: 9209
BUILDING: 2000
FUNCTION: P ick/Pack
ELEMENTAL DESCRIPTION TIME FREQ.
# Of Lines P ick
# Of Cartons
Ship
# Of S tores Ship
10 Get P ick Sheet 0.150 1/1 0.150
20 Travel to P ick Location 0.131 1/1 0.131
40 Check P ick Sheet 0.048 1/1 0.048
50 Take Items from Broken Case Location 0.046 1/1 0.046
60 Check Summary P ick Sheet 0.110 1/3 0.037
70 Go to Pack Area 0.160 1/3 0.053
80 Get an Empty Carton 0.048 1/1 0.048
90 Open Carton 0.080 1/1 0.080
100 Trans fer P ieces from Cart to Carton 0.046 1/1 0.046
110 Write Units on Carton 0.048 1/1 0.048
120 Close Carton and Tape 0.181 1/1 0.181
130 Push Carton Down Conveyor 0.040 1/1 0.040
140 Total Items on P ick Sheet 0.185 1/1 0.185
Total Normal Minutes 0.271 0.487 0.335
Personal, Fatigue, and Delay Allowances 15% 15% 15%
TOTAL S TANDARD MINUTES 0.312 0.560 0.385
ELEMENTAL DETAIL
AREA: 9209
BUILDING: 2000
Function: Pick/Pack
60 CHECK SUMMARY PICK SHEET
Check off on bulletin board summary pick sheet when pick is complete.
70 GO TO PACK AREA
Go to the pack area when the pick is completed to pack merchandise.
80 GET AN EMPTY CARTON
Get an empty carton located on a stack to the right of the packing area.
90 OPEN CARTON
Open the carton.
100 TRANSFER PIECES FROM CART TO CARTON
Take the pieces from the track and place them in a carton located on the conveyor.
110 WRITE UNITS ON CARTON
Write the total units on the carton.
120 CLOSE CARTON AND TAPE
Close carton and place 2 pieces of tape on the carton.
Distribution OperationsTools
Internal Deloitte Tools For Evaluating Distribution Operations
69
SPEED
• SPEED (Supply Chain Enhancement and Effectiveness Diagnostic) is an analytical framework for identifying supply chain issues and performance improvement opportunities
• It embodies our diagnostic methodology, which covers the entire chain and its opportunities
Analytical Template Sample
The SPEED framework is typical of the types of tools we use during our analyses – it is more of a methodology or
approach than a specific computer program
70
Warehouse Designer
• This software was developed in-house and is used to optimally design or reconfigure warehouse layouts by determining, on an individual basis for each item, the most effective size for its picking locations. It factors in product dimensions, shipping volume, stock replenishment and the overall productivity of the warehouse
I don’t know how much “detailed”
design we still do at Deloitte – my sense is that
a higher level assessment is more typically
what we bring to the table…
71
AutoCAD
• AutoCAD is the first choice of architects and engineers in professional computer-assisted design software and we use it in most of our warehouse design projects. AutoCAD can be used to design anything from simple block layouts for optimized material flow to a detailed 3-D analysis of complex automated storage equipment layouts
I don’t know how much “detailed”
design we still do at Deloitte – my sense is that
a higher level assessment is more typically
what we bring to the table…
72
AutoMod
• AutoMod is a software simulator we use to study the behavior of conveyors to optimize their design with respect to:
– Accumulation areas
– Effects of stoppages in different areas
– Bottlenecks during peak volume periods
I don’t know how much “detailed”
design we still do at Deloitte – my sense is that
a higher level assessment is more typically
what we bring to the table…
73
MOST
• The MOST measurement system calculates standard times to evaluate the productivity of future or existing processes. In a MOST study, each movement of a task is part of a sequence with a relative time and frequency. This system is used to analyze most warehouse processes: order filling, packaging, shipping, holding, etc.
# Task Description MOST Sequence Frequency TMU1 Step 1 Picking preparation 0 02 Walk to picking list folder A 3 B 0 G 0 A 0 B 0 P 0 A 0 1 303 Take a picking list and return to pallet jack A 3 B 0 G 3 A 1 B 0 P 0 A 3 1 1004 Travel with pallet jack to empty pallets (included in travel) 1 05 Loading an empty pallet (26 secondes) 1 7256 Step 2 Picking 0 07 Read the picking list (next product location) A 0 B 0 G 0 A 0 B 0 P 0 T 3 A 0 B 0 P 0 A 0 26 7808 Travel to next product location (included in travel) 0 09 Take product and put on pallet A 3 B 3 G 3 A 3 B 3 P 6 A 3 39 936010 Step 2a Put cardboard sheet on pallet 0 011 Put cardboard sheet on pallet A 3 B 3 G 3 A 3 B 3 P 3 A 3 1 21012 Return to front of pallet jack A 3 B 0 G 0 A 0 B 0 P 0 A 0 15,7 47113 Indicate quantity on pick list A 1 B 0 G 1 A 1 B 0 P 3 R 3 A 1 B 0 P 1 A 1 26 312014 Travel to trash compactor 0 0