Warehouse Activity Profiling for Operational Efficiency

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Logistics Performance Index (LPI)

WORLD BANK 2010
4.11
4.09 3.88 3.86 3.84 3.63
World Bank ranks India 47th in logistics efficiency

3.49 3.12

Performance Indicators
Customs Infrastructure International Shipments Logistics Competence Tracking and Tracing Timeliness

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Logistics : Evolving Landscape in India

India spends around 13% of its GDP on logistics, compared to a global average of 10-11 %. Globally better supply chain management has reduced logistics costs by nearly 1% over last 10 years. However Supply Chain Management still remains a very new concept for Indian industries which are increasingly looking to gain competitive edge by adopting logistics and Supply Chain Management concepts and practice. Key trend in the industry is towards outsourcing logistics requirements to Third Party Logistics (3PL) players. The demand is specially driven by the entry of MNCs and increasing export focus of Indian companies .The estimated market for 3PL players in 2003 was US$ 250 mn and is likely to grow at a CAGR of more than 20% during next five years. Consistent good performance of the economy (over 8% growth rate), is the key force, driving the growth in the logistics sector. Vibrant economic scenario of the country has ignited the activities in manufacturing/infrastructure sector.
Estimated Cost Saving by Reducing Logistics Cost by 1%
Functions At 13% of GDP (US$ bn) At 12% of GDP (US$ bn 29.95 21.40 9.41 Amount Saved (US$ bn 2.50 1.78 0.78

Indian companies can save substantial cost by adopting modern supply chain and logistics solutions

Transportation Inventory Packaging Handling and Warehousing

32.45 23.18 10.20

8.34
18.54 92.72

7.70
17.12 85.58

0.64
1.43 7.13

Others Total Logistics Costs

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*(source: Credit Analysis & Research Limited)

Current Indian Scenario

The Indian warehousing sector is expected to grow at the rate of 35-40 % every year
45 million sq ft warehousing space is expected to be developed in the country in next five years supplemented by around 110 logistics parks. Warehousing activities account for about 20 per cent of the total Indian logistics industry and offer tremendous growth potential The entry of global third party logistics players is fast changing the face of the logistics industry

From a mere combination of transportation and storage services, logistics is fast emerging as a strategic function that involves end-to-end solutions that improves efficiencies
The total share of organized warehousing space is less than 8% of the total warehousing space in India The industry is fragmented and largely unorganized and is dominated by small players with small capacities
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Source Cushman & Wakefield

The Changing Landscape

In view of the quantum increase in logistics and warehousing requirements in the country, the way these needs are addressed has to be different

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To summarize

10 -15% reduction in net logistics cost is definitely achievable with greater efficiencies in the changing landscape of warehousing in India

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Understand the Role of your Warehouse

C1

Yard

C2

Stores
W/h

DC / RDC / Depots

C3

C4

Godown
C5

C6

VENDOR

INBOUND PLANTS TRANSPORTATION

DISTRIBUTION INTERFACILITY TRANSPORTATION CENTERS

OUTBOUND TRANSPORTATI ON

CUSTOMERS

Supply chain Management(SCM) is the management of network of organizations that are involved through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer.

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Distribution Centre Vs Warehouse

a distribution center (DC / RDC) is a "facility from which wholesale and retail orders are filled, adding that "the term is used to describe a high-velocity operation as opposed to a static storage warehouse. DCs evolved from warehousing and share much of the same DNA
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Challenges of Warehouse
Execute more, smaller transactions Handle and store more items Provide more product and service customization

Offer more value-added services

Process more returns

Receive and ship more international orders

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Challenges of Warehouse

Less time to process an order Less margin for error Less young, skilled, English speaking personnel

Less WMS Capability

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Centre of Excellence - Supply Chain Management Institute of Logistics

Design & Related Issues

Sl. No 1 Planning & Design Issues
Receiving and Put Away Process Design

Key Questions
Receiving Mode Disposition Put away batch sizing Put away tour construction

Required Profile
Purchase Order Profile

Profile Components
Order Mix Distributions Lines per receipt distribution Lines and cubes per receipt distribution

Storing

Zone Defining Storage Mode selection /sizing Pick face sizing Item location assignment

Item activity profile

Popularity profile Cube Movement volume profile Order completion profile Demand correlation profile Demand Variable profile Order Mix Distributions Lines per order distribution Line & cube per order distribution

Order Picking & Shipping Design Process

Order Batch Size Pick wave Picking Picking Tour Construction Shipping Mode Disposition

Customer Order Profile

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Design & Related Issues

Sl. No 4 Planning & Design Issues
Material Transport Systems Engineering

Key Questions
Material handling Systems selection & sizing

Required Profile
Calendar Clock profile

Profile Components
Seasonality Profile Daily Activity Profile

Warehouse layout & Material Flow Design

Overall warehouse flow design :U, S, I or L Relative Functions Locations Building Configuration
Overall Warehouse space requirement

Activity Relationship Profile

Order Mix Distributions Lines per receipt distribution Lines and cubes per receipt distribution
Item family inventory distribution Handling Unit inventory distribution Economic factor distribution

Warehouse Sizing

Inventory profile

Level of Automation & Staffing

Staffing Requirements Capital Labor Substitution Level of Mechanization

Automation Profile

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Suggested methodology to improve Warehouse Operational Efficiency in 3 stages

Longer term next 2 years Needs both Capital and facility changes

Short term changes Next 3 to 6 months

Savings
Quick Fixes This week or next

Savings

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Factors that impede the WH efficiency

Cluttered In bound docks Trucks waiting in parking lot Over flow warehouses Difficulty in locating empty slots / Pick Locs Check Congested Aisles Goods IN inventory & Storage Partially Executed orders Pick errors., look like errors Goods OUT Order Processing Time efficiency
Increase the Velocity of FLOW CII Institute of Logistics
Transportation Delivery

Quick Fixes This week

Procedural changes No change to layout or the warehouse facility. No capital required Do it this week (or the next)

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Understand : Products, Orders ( Customer & Purchase Indents ), Processes

INV. MASTER ORDER MASTER ITEM MASTER

Inventory Snapshots
Maximum, Average Inventory Levels, Service levels

Order Detail
Customers ordering pattern, Seasonality, UOM., Receiving frequency, UOM

SKU Number Description Item Cube Pieces Per Case Cases Per Pallet Product Group Item Weight

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16

Mapping the Processes

LSPs Suppli (Carriers)er
Materials ready

Shipment Pre-advise booking creation Cargo flow updates

Receive Payment

Transportation Process
Transportation

Custom LSP (Warehousing) er

Receiving Picking Put-away Deliver y

Inventory Management (cycle counting, stock reconciliation etc.) Customer Service Line replenishment request Delivery & confirmation billing of material

Material and Inventory Management

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Understanding of processes is necessary

Process Functionality Impact if not done properly Gate Entry

ASN based gate entry. The GE stickers (with barcodes) printed and travels along with the truck to the receipt dock.
System-directed put away into the Goods Inward locations. Put away slips in different colors for single / multiple inventory locations. Immediate updation in the master System-directed picking - online updation of picking confirmation by scanning the pick location and the part being picked. Simultaneous updation of system stock accordingly. On completion of primary packing, systemdirected creation of transfer instruction (transfer order) indicating the completion of primary packing and instructing the putaway location into the stock

Need manual entry, longer truck turn around time

Putaway into Receipt bins

Low Flexibility and High Stock Discrepancy

Picking process

Longer lead time or more pickers, Low traceability resulting in High Stock Discrepancy

Creating transfer instruction

Low traceability resulting in High Stock Discrepancy

Dynamic Storage Location

Changing storage bin for SKUs depending on availability

Very low flexibility resulting in more area

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Location Numbering(with Logic)

XX XX X XX
Position on a Level, counting from left to right between rack supports Level or shelf, counting from the floor

Section, or bay, the portion of the storage aid between uprights Aisle
TRAVEL
Picklist

Stage,Pack,ship

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PICKING

Row, Aisle, Bin numbers & signages

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Smart Slotting thru Item Popularity Distributions

Principle: A place for Every thing and Every thing in its Place Assign the most popular items to the most accessible locations.

C B

C B

C B

C B

A
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Slotting based on Item Popularity

Popularity Profile
1.000 0.900 0.800 0.700 0.600 0.500 0.400 0.300 0.200 0.100 0.000 0.000 0.200 0.400 0.600 0.800 1.000

% of picks

% of items

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Slotting based on Item Popularity

Medium Popular Slow Movers

Highly Popular

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Multi Dimensional Pareto Analysis

STOCK TURNOVER

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V LU O

ABC based on Volume ABC based on Frequency ABC based on Turnover

M E
FREQUENCY

Share of Consumer Care Division sales

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Non-Moving ?
After the Item Popularity calculation, some items are found to be non moving.,

>> ideally dispose them immediately, alternatively, move them to remote area.
2500 pallets, 250 are NM.,
4 ft 4 ft

At 100 orders/day, 4feet per pallet, extra dist=100000ft/day. At 200ft/min, 500 mins/day, 2499 hrs/yr, Rs55/hr, Wasted
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is Rs.137500/yr

One storage location only per part number

One product (part number) must be stored in only one location (i.e. no separate locations for the same part) The location will obviously be dimensioned according to the quantity stored In case the quantity demands more than one location, these will be grouped together and managed as one This location shall be kept stable in order to create work habits, although it must be periodically revised in accordance to turnover

A1
C3 D4
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D4
B2 A1

B2
D4 C3

A1
C3 B2

A1
A1 A1

B2
B2 B2

C3
C3 C3

D4
D4 D4

 Cube Movement / Volume distribution - to assign items to storage modes based on their cube
movement.
Inventory Container Graph

Drawers
25000 20000

# of SKUs

15000

10000 5000 0 0.125 1.5 8 Cubic Feet of Storage Needed 40 320

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Cube movement

Popularity - Cube-movement Distribution

Flow rack

Storage Bin shelving drawers

Carousels

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Popularity

Volume Vs Storage Medium

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Once the storage mode assignments have been made, the preference regions for each storage mode are determined

Cube movement

Bronze zone

Silver zone
Golden zone

Popularity

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Slotting based on Item Family affinity

70 60 50 40 30 20 10 0 Month 1
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Item A Item B

Month 2

Month 3

Storage by family
Storage, within the same zone, of different products of the same type, as: Exhaust systems of different models or different spirit drinks... Storage, within the same zone, of different products that are usually sold together as:

Paint and paint brushes

Seeds and gardening tools Storage, within the same zone, of different products having similar weights, dimensions and shapes

The aim here is also to create work habits that improve the productivity of operations

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Deciding on a Picking Approach

Order 3

Order 2

Order 1
Single Order Picking Multi-Order Picking Batch Picking

Single Line Orders

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Changes over Short Term

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Material Flow in a Warehouse

RECEIVING
pallets pallets cases overpacks mul (items totes) cases

PALLET RESERVE
pallets (items cases) pallets

pallets

CASE PICK
cases cases cases

Breakdown function

totes (cases)

ITEM PICK
items (items cases) totes (items cases) totes

SORTING A
totes totes

SORTING B
totes cases overpacks UNITIZING totes mul cases pallets overpacks
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Consolidation Function

SHIPPING

Understanding Customer ordering pattern

It is a good idea to establish separate areas for pallet and case picking, especially if mixed orders are a small % of all orders >> Warehouses inside Warehouse
70 60 50 40 30 20 10 0 Loose carton
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% of orders % of lines

Full pallet

Mixed

SKUs
DABUR CHAWANPRASH (Regular) 24 x 500 gm. (17.5 Oz.) DABUR CHAYWANPRASH (Regular) 12 x 1 Kg. (2.2 Lbs.) DABUR HONEY ( SHELF LIFE 18 MONTHS) 120 x 50 gm. (1.75 Oz.) DABUR HONEY 72 x 100 gm. (3.5 Oz.) DABUR HONEY 32 x 250 gm. (8.75 Oz.) DABUR HONEY 16 x 500 Gm. (17.5 Oz.) DABUR HONEY 9 x 1 Kg. (2.2 Lbs.) DABUR PUDIN HARA 200 x 30 Ml. GLUCOSE D DABUR 80 x 200 gm. (7 Oz.)

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Distribution hierarchy
Depots ( 50 ~ 60 )

CFA ( 3000 ~ 4000 )

Distributors / Stockists (50 k ~ 60 k )

Large Retailers (Hyper markets)

Medium Retailers (Super markets)

Small Retailers (Grocery shops)

1.5 ~ 2 Million

Consumers - 20-30 Millions

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A schematic representation of the warehouse material flow

Replenishment Replenishment Reserve Storage and Pallet Picking

Case Picking

Broken Case Picking

Accumulation, Sortation & Packing Direct Direct putaway putaway to reserve to primary Receiving Shipping Cross-docking
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Organizing Principle
Tasks correspond to flow in a functional network
Inspection Receiving Bulk storage Order picking

Shipping

Carton storage and picking

Order sort/ accumulate

Handling unit conversions Processing options Total workload

Material flow

Function-to-department mapping

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Separate inbound and outbound flows

Warehouse layout must be designed in order to separate inbound and outbound flows This means providing physically different spaces and aisles for replenishment and for picking or operating inbound and outbound at different times The result will be increased productivity, reduced stock loss and reduced accidents

Inbound / replenishment flow Outbound / picking flow

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Elimination of wasted transport and movement

The warehouse layout must ensure there is no wasted transport or movement
Long journeys Empty returns

Cross Aisle
Dist Travelled = 74 ft
(4 ft pallet & 9ft aisle)

Dist Travelled = 118 ft

(4 ft pallet & 9ft aisle)

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Number of Docks
Number of Docks Needed :
Daily demand of orders (T) * Time for load/unload a truck Truck capacity (T) * Daily time available to load/unload

= 360 * 30 / 16 * 420 = 10800/6720 ~ 1.6 = 2 docks

> 3 docks would be good,

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Storage Subsystem Capacity

Dedicated space
each product is stored in a specific area assign storage location to products
md max I j (t )
j 1 t n

Random space: products can be stored anywhere

the products are randomly distributed over the m max I (t ) r j t warehouse j 1
product 1 2 3 4 5 6 7 CII Institute of Logistics total space: batch size safety stock 1000 200 2500 400 11600 1250 850 300 1750 500 4500 1000 2600 950 space dedicated random 1200 700 2900 1650 12850 7050 1150 725 2250 1375 5500 3250 3550 2250 29400 17000
n

Location of shipping and receiving

U shaped or cross docking configuration
Receiving and shipping on the same side of the warehouse Provides dock flexibility.If one experiences surge of activity, can make use of additional doors from the other function Minimizes truck apron and roadway

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Location of shipping and receiving

Flow through configuration
Receiving and shipping on opposite side of the warehouses Makes many storage locations of equal convenience More appropriate for extremely high volume Preferable when building is long and narrow

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Example Layout 1

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Example Layout 2

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Angled aisles can enable more direct travel between receiving / shipping and storage locations.

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 For Long Term

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Storage and handling equipment

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Material Handling equipments Selection

Typical Storage Facility Load
1000 kg / 1500 kg 1200mm deep x 1000mm x 1000mm 1200mm deep x 800mm x 1000mm Stable Load

Product
2400 Pallet Locations

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Material Handling equipments Selection...

CONVENTIONAL SYSTEM NARROW AISLE SYSTEM VERY NARROW AISLE SYSTEM
Electric Very Narrow Aisle Trucks Clear aisle 1650mm Stack 4 high (1 on the ground; 3 in the air)
The truck pick up & deposits loads from staging and pick & deposits loads in the rack systems

Gas, LPG or Electric Trucks Clear aisle 4200mm Stack 4 high (1 on the ground; 3 in the air)
The truck loads & unloads trailers, loads & unloads rack plus pick up & deliver to manufacturing

Electric Reach Trucks Clear aisle 2700mm Stack 4 high (1 on the ground; 3 in the air)
The truck pick up & deposits loads from staging and pick & deposits loads in the rack systems

80% Travel. 20% Lift 76% Aisle

60% Travel. 40% Lift 71% Aisle

50% Travel. 50% Lift 59% Aisle

Travel & Lift are simultaneous

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Material Handling equipments Selection...

1
2

Counter Balance System vs Very Narrow Aisle

2980 sq meters 1730 sq meters = 1250 sq meters 1250 sq meters x ### per sq meter per month =

Total Savings: Rs. Xx,xx,xxx per annum Narrow Aisle Reach Truck vs Very Narrow Aisle
2147 sq meters 1730 sq meters = 417 sq meters 417 sq meters x ### per sq meter per month =

Total Savings: Rs. Xx,xx,xxx per annum

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Material Handling equipments Selection...

17,000mm lift height
Very high bay warehousing further leverages property footprint potential Global trend, with projects and installed facilities on most continents.

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Automated Monorail & AGV

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Warehouse Space Requirements Worksheet

Receiving, Pallet Storage Case Picking Broken Case Picking Packing & Unitizing, Shipping, Staging Cross Docking Warehouse Offices Front Office, Support Services Rest Rooms, Dining Hall Customizing (VAS) Consumables Storage area Material Handling Equipments Parking / Maintenance Returned or Rejections storage Future expansion Detail
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