Layout Design and Master Plan of Warehouses

Vivek Prayakarao Rakshit Vinnakota UG20113027 UG201113039 System Science System Science IIT Jodhpur. IIT Jodhpur.
Abstract
The purpose of this paper is to develop a systemic approach for designing a third party warehouse and analyse important factors that inuence this designing process. Analysis was performed keeping in mind the current warehouse layout design and some measures were suggested to improve the total throughput based on ecient material handling and storage policies. ter interacting with the owner and studying their current storage and retrieval practices it was determined that there was opportunity for the application of Industrial Engineering concepts in the facility. Their facility is relatively a small one, usually staed by seven to eight. Although the warehouse is currently a small facility, their business has a tremendous scope for growth. Also the current practices followed do not cater to the uctuation in the market demand. These problems resulted in a need for a new and ecient layout design and storage and retrieval practices. The problem addressed in this project is how to accommodate the dierent packaged products in the existing space. Although there are a large number of projects done on layouts of a facility and its racking systems and picking methods, this project is still relevant. This is due to the fact that it focuses on a smaller company, which is seldom done.

Introduction

A warehouse is a commercial building for storage of goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial areas of cities and towns and villages. Stored goods can include any raw materials, packing materials, spare parts, components, or nished goods associated with agriculture, manufacturing and production.

2
2.1

Our Work
Systematic Layout Design

For designing the Layout of the warehouse we have taken into consideration various parameters which are as follows: The type and purpose of the warehouse: As mentioned earlier the warehouse is a third party warehouse which receives spare parts from a leading automobile company. The goods are then shipped to dierent distributors depending on the orders received. Figure 1: Flow of Goods The overall warehouse structure: Material Flow Pattern: As a general best practice, it is recommended that the ow within the facility follow a U shape. The other possible ow patterns are I and L. But the current warehouse has only a single entry and exit gate. So it is not

This project was conducted for a third party warehouse of a major automobile company spare parts. Af-

possible to have dierent entry and exist gates as required in the cases of I and L patterns. The ow throughout should generally move in a U shape. In this facility there is a single door for both incoming shipments and outgoing orders, so the ow should be in a circular manner. Beginning with reception from the manufacturer, to put away and replenishment, to order picking and fullment, and nally concluding with packaging and delivery to the outgoing shipper, each process should be in close proximity to those it relies upon. Necessary Components of the Warehouse: The warehouse essentially consists of receipts and storage space where the goods received are stored, the dispatch bay where the goods ready for shipping are placed in order, Systems area where all the computer operators are present, company sales representatives cabin and the overall supervisors cabin. The storage space constitutes to the major part of the warehouse. The System operators take care of all the company database which include receipts, order quantity, part number, destination, shipping date, invoices etc. Inventory levels: The inventory levels were determined on a daily basis by analysing the data obtained from the company. Annexure A, B,and C represent the data collected. It is an important parameter as it has high impacts on warehouses size and helps to estimate space requirements which are to be determined in early stage of design. Fig 1 in annexure E shows month wise inventory level of each part number. After analysing the data we have decided to propose a mix of random and dedicated storage system. Classication of Goods: An important part of organizing the warehouse is selecting the best type of classication system. An organizational best practice is to arrange the warehouse according to storage zones. In our case there isnt a need for traditional zones such as refrigerated goods, but instead the organization Could be separated by product type, such as fuel lters, suspensions, and other items like the nuts and bolts Although a classication based upon customer can be benecial, the current sales are spread between many customers and do not justify this method. The current classication is based upon product type, with the popularity of items only given secondary consideration. According to Steven Bragg, author of Inventory Best Practices, the

most commonly used and highly recommended best practices are the assignment of location codes to all inventory locations, and the conguration of the warehouse space according to ABC classication. In this system products are categorized as either A, B or C depending on their level of activity. A products have the greatest activity, and are therefore located in the areas with the easiest and best access and given xed locations. B products are medium in priority, and are located in areas less desirable that that of A products. They may be stored in xed or random locations depending on the circumstances. Class C products have the lowest amount of activity and account for the smallest percentage of business. Therefore, they are placed in the least desirable locations, with random storage. This allows for the greatest space utilization at the expense of ease of access; a minimal detriment as C items are seldom needed. According to our data, product number 404530 can be put in category A as it has a high activity. So it should be given a dedicated storage policy. 404526, 404521 and 404523 come under category C as they have a low amount of activity. The reaming products fall under category B. Also products can be classied as unit loads or Loose items. Products like nuts, bolts and springs come under Loose items category as they are dispatched loosely instead of a single unit load carton. So such products have to be stored in racks compulsorily with a dedicated storage system. In case of nuts and bolts, their sizes dier so dedicated storage policy is a must. For items like fuel lters, suspension sets etc they are dispatched in cartons as unit loads. So they need not be stored in racks separately. Material Storage and Handling Policies: We have decided to have a mix of both dedicated and random storage polices. As having aisles for all the products is not cost ecient, we have decided to have few aisles for dedicated storage. The remaining goods will be placed directly one over the other in the storage locations product wise. The ow of goods followed by the company is First in First out(FIFO). It is clearly evident form annexure E that having a dedicated storage policy requires lot of space. To have a dedicated storage space for each product would require place for 4033 unit loads where as random storage would require place for just 3793. So random storage policy is observed to be the best storage policy in

the case as the amount of inventory is not very high. But for few part numbers which are shipped loosely and small in size they require dedicated storage policy. Also part number 404530 requires a dedicated storage space as its movement is very high compared to other parts. The goods which need to be stored in the aisles are generally in large quantities. So all of them cannot be stored in the racks. Certain number of boxes are kept in the racks from where they can be retrieved. The remaining boxes can be stored in reserve storage locations. When the goods are shipped they can be replenished into the racks.

Figure 2: Third Party Warehouse

having automated storage and retrieval systems which reduce the operation time drastically is not advisable. The company has been using manual labour to store and retrieve the goods. The company currently has 4 workers for loading and unloading of goods. Manual labour cost merely Rs 15,000 per month where as AGVs cost is very high and they also require maintenance and add up to electricity bills. Most importantly AGVs do not reduce the total number of work force. Since the total work force remains constant irrespective of the use of AGVs, their use is not economically feasible. However we have learnt that the use of trolleys can be introduced which the company currently does not. It would reduce the total time taken in loading and unloading and also increase the worker satisfaction and eciency. The company currently does not exercise any sorting policies. This leads to errors in shipments at times and also increases the retrieval time as the worker often has to search for the part number on each box. Therefore we proposed a new system where each part number is given a row and column number where they are stored. So it becomes easy for the worker to locate a particular part number. Therefore the location number (eg A2 where A is the Aisle number and 2 is the column number) should be present on the BIN cards. Determining space requirements: The total available space is 7000 sq. ft.(140 * 50 ft.). Each cabin has an area of 80 sq. ft. There are 2 such cabins for the warehouse company supervisor and company sales representative. The systems area is of 100 sq. ft. The receipts area is also of 100 sq. ft. In this area all the receipts and les are stored. The remaining space is utilized for storage purpose. Positioning of the components: We have identied that the location of the cabins of the company supervisor and the sales representative does not play a major role in the goods ow. Only the dispatch section and dispatch bay should be positioned closer to the storage area to ease the movement of the goods and also reduce the shipment time signicantly. Goods which come under category C should be positioned far away from the entry and exit gate as compared to category A and B goods.

Aisle Conguration: Therefore the space between each aisle can be reduced for the movement of the workers to increase storage space. After consulting the company supervisor and analysing the inventory levels, we have come to a conclusion that there is a requirement of 30 aisles but currently only 14 are present in the warehouse. The standard size of each cell of an aisle is xed. Each rack has 8 cells. Each aisle has 10 racks and there are 3 aisles in our layout plan. Storage partition: By making use of the decisions taken in the above steps we therefore identied dierent storage partitions. Space for aisles to store small parts. Space for products classied as A, B and C. Space for dispatch bay where products are kept ready for dispatch. Design of material handling, storage, and sortation systems: Since the company warehouse is a small one catering to orders of upto 8 to 10 per day, its turnover is also less. Hence

2.2

Layout Plan

The detailed Layout Design after taking into consideration of all the parameters is proposed. Annexure D, Fig 4 shows the design plan. The current layout has several aspects which cause the operations to be signicantly less ecient than is possible. A aw readily seen in the drawing of the layout in Figure 3 is the lack of consistent organization throughout the facility. We have observed that certain product groups are spread around in various locations throughout. This makes it dicult to nd specic products, especially for new workers, and is a necessary component for nearly every process. The wasted time equates to a consistent and unnecessary funds spent for workers to complete tasks which could take less time. We have tried to reduce the time and eorts of the workers in storage and retrieval of goods by designing a new layout.

tion of goods,positioning of various components, material handling and storage policies for improving the eciency of the warehouse keeping in mind various factors such as cost and scope of business expansion.

Scope for further work

Our study did not go through details in cost evaluation such as the cost of buying new facilities or substituting old machines with new ones. Further work is needed in order to nd out the exact reduction in the overall cost by the suggestions we made. We have to consider the total investment cost that the company will incur and decrease in the operational cost of the company by implementing the methods we suggested. This type of analysis would help the management of dierent types of warehouses to take an important strategic decision. Further work can also be done in developing of a complete reference model in order to establish a systematic design approach for warehousing redesign process.

References
Figure 3: Old Layout [1] Baker P, Canessa M,. Warehouse design: a structured approach. European Journal of Operational Research (Elsevier) 193, no. 2 (March 2009): 425436. [2] Berg J.P van den. A literature survey on planning and control of warehousing systems. IIE Transactions (Springer Science+Business Media) 31, no. 8 (August 1999): 751-762. [3] Berg J.P van den, Zijm W.H.M,. Models for warehouse management: Classication and examples. International Journal of Production Economics (Elsevier) 59, no. 1-3 (1999): 519528. Figure 4: New Layout [4] Lihui Tsai, Hsieh Ling-feng,. The optimum design of a warehouse system on order picking eciency. The International Journal of Advanced Manufacturing Technology (Springer Science+Business Media) 28, no. 5-6 (March 2006): 626637. [5] Hassan Mohsen M.D. A framework for the design of warehouse layout. Facilities (Emerald) 20, no. 13/14 (2002): 432 - 440.

Conclusion

The aim of this project was to develop an ecient layout plan for a third party warehouse. We followed a systematic design approach for warehouse layout planning. We identied dierent problems with the current layout plan and handling practices followed by the management of this warehouse. Also we discussed the possible options such as classica-