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The Do's and Don'ts of Warehouse Design

Track 3 Session 4
Partner
GCL Group
Philippe.gautrin@gclgroup.com
(514) 733-3000
Phil Gautrin
ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Abstract
This pragmatic overview will be valuable to the
existing owner who is seeking refinements, as
well as those looking at a clean sheet of graph
paper. Included will be a structured process for
warehouse configuration, discussion of the
common pitfalls to avoid and guidance in
planning for the unplanned.
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Agenda
Not an every day project
Warehouse design methodology
Dos & Donts
Planning for the unplanned
Key Takeaways
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Not an Every Day Project!
Most companies do such project every 10 years
Rarely logistics managers go through more
than two warehouse design projects
Too many logistics managers do not take the
time to visit other operations
Preconceived ideas are often a hurdle
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
It is a Very Important Project
Requires large capital investments
Competing for funding against other
departments: Manufacturing, R&D, Marketing
Project must be justified with proper ROI
No second chance for funding if failure
Outsourcing is always an option!
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Hopefully You Wont Be One Of
Them!
We never achieved our productivity targets as
our business model drastically changed
We ran out of space the first year
With the fuel cost and our sourcing strategy,
our DC location is not optimal anymore
We thought of everything, except our
employees!
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Location, Location, Location!
Freight accounts for 30-50% of logistics costs
Rising fuel cost and chronically congested
roads
Qualified and loyal labor is harder to find
Shippers are looking at alternate means to ship
their products: rail, waterways
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Define
Benchmarking
Project management
Phase 2
Design
Vision
Phase 1
Characterize
Phase 3
Roadmap
Analyze
Conceptual
design
Detailed
design
Roadmap
Warehouse Design Methodology
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Define
Objective:
Project kick-off and scope validation
Methodology:
Define project scope (perimeter)
Validate top managements objectives
Introduce project team
Define project management guidelines
Define communication protocols
Review proposed methodology
Validate project schedule and identify key dates
Deliverable:
Validated project charter
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Analyze
Objective :
Develop a thorough understanding of current
operations
Methodology :
Review list of required information
Interview Supply Chain stakeholders:
o Procurement, Customer service, Logistics, Transportation,
Finances, IT
Review process mapping & operational observations
Validate layouts and equipment lists
Validate and analyze received information:
questionnaires, files, reports
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Analyze (Continued)
Methodology (Continued)
Perform detailed analysis (level of detail may vary
based on the project scope, budget and information
received):
o Characterize network and service levels
o Characterize products (families, classes, logistics data)
o Inventory deployment and turnover
o Logistics flows
o Layout and capacity evaluation
o Operational costs
Deliverable :
Detailed analysis of current operations
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Vision
Objective :
Transpose strategic master plan and best practices
into design parameters
Methodology :
Review strategic master plan and transpose into
logistics data
Review industry best practices and trends
Perform gap analysis between current state and best
practices
Identify clients strengths and weaknesses
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Vision (Continued)
Methodology (Continued)
Define alternate operating modes and network strategies
to be evaluated:
o Cross-docking, hub and spoke, slow mover centralization, order
profile
Perform pre-slot to select picking and overstock
equipment
Perform SWOT analysis:
o Strengths, Weaknesses, Opportunities, Threats
Deliverables :
Gap analysis completed
Pre-slot analysis validated by client
Selection of operating modes 14
ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Conceptual Design
Objective :
Develop various concepts for new DC taking into
consideration :
o Strategic master plan and best practices
o Future operating modes
o Physical and financial constraints
Methodology :
Identify applicable technologies:
o Storage, picking , material handling, traceability
Re engineer processes (best practices and
kaizen sessions)
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Conceptual Design (Continued)
Methodology (Continuted)
Develop various concepts (3-4):
o Lowest investment
o Flexible and phased concepts
o Optimal concepts (automation)
Evaluate, for each concept:
o Capacity
o Capital expenditure requirements
o Manpower requirements and operational budgets
Deliverables :
Concept description
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Detailed Design
Objective :
Select concept to be implemented
Methodology :
Determine optimal concept:
o Qualitative and quantitative aspects
Finalize recommended concept
o Detailed layout
o List of required equipment
o List of required building changes (if applicable)
o Description of proposed concept (processes and
logistics flows)
o Manpower requirements and productivity levels
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Detailed Design (Continued)
Methodology (Continued)
Finalize recommended concept (Continued)
o List of system modifications (if applicable)
o Implementation cost (capital expenditure & transfer)
Deliverables :
Description of recommended concept:
o Operational modes, logistics flows, equipment required
Detailed layout Plan
Budgetary evaluation of recommended concept
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Roadmap
Objective :
Determine action plan to implement proposed concept
Methodology :
Summarize analysis, assumptions and concepts in a
business case
Prioritize actions:
o Benefits, complexity and cost
Establish implementation schedule
Deliverables :
Business case for top management
Action plan to implement proposed concept
List of additional recommendations (peripherals)
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
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Typical Schedule
Define
W1 W2 W3 W4 W5 W6
Phase 1 : Characterize
Phase 2 : Design
Phase 3 : Action plan
W7 W8
Steering committee
Analyze
Vision
Conceptual design
Detailed design
Action plan
Project management
Benchmarking
Project duration : 8-12 weeks based on data availability
ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Dos
Consider all options
Design for 3-5 years
Visit installations and talk to users
Build a business case (Voice your project)
Optimize slotting
Implement or enhance WMS
Simulate complex concepts
Set baseline to track improvements
Think Green
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Donts
Replicate current operations (apply Lean)
Compromise on flexibility
Fail to plan for Flex areas
Compromise on safety
Try to do miracles with used equipment
Do it as a side project
Apply a cookie cutter approach
Fail to challenge inventory levels
Rely on the average for everything
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Murphys Law Will Apply!
Develop a go-live and roll-back plan
Perform numerous Dry Runs prior Go Live
Beware of Big Bangs
Consider having a mirrored operation
Do not think there will be no client impact
Set the expectations prior D Day
Develop a Disaster Recovery Plan
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Case Study : Success Stories
Company A: Cosmetics
Unit independent case flow racks
Changed the unit pick area layout more than 10 times
in 5 years to adapt to growth and business changes
Company B: E-commerce
Implemented high speed sortation system within a
two-tier picking concept
Able to changeover picking areas every day to
perform over 500 sales a year (textile, toys,
appliances, food)
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Case Study : Horror Stories
Company A: Paper and Printed Forms
AS/RS for full pallet moves
Business model changed and facility became
useless
Company B: Pharmaceuticals
2 tier unit pick mezzanine
Business model changed from direct to indirect
distribution 2 years after opening
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Warehouse of the Future?
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Key Takeaways
Address your C-levels pains
Consider all options
Visit other installations for best practices
Design for flexibility and understand peaks
Simulate complex systems
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ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Questions?
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