2. Design and Integration Case Study – Health & Beauty Aid Manufacturer
Distribution Center
Design and Integration
Case Study – Health & Beauty Aid Manufacturer
Presented to:
Warehouse & Distribution Science
ISyE 6202
Georgia Institute of Technology
By:
Dean M. Starovasnik
Practice Director, Distribution Engineering Design
Peach State Integrated Technology

3. Overview Peach State Overview Process High Points Case Study
This session will provide an overview of an objective design methodology and an example case study where this process was used.
Peach State Overview
Process High Points
Case Study
Data Analysis Results
Design Requirements
Financial Review
Site Photos
Discussion
Though “Discussion” is listed last, questions or comments throughout the session are welcome and encouraged.

4. Peach State Overview

5. Corporate Credentials
Headquarters in Atlanta, GA.
Regional offices throughout North America.
Over 34 years of experience engineering and integrating supply chain logistics, distribution, and material handling solutions on a national and global scale.
Results Oriented, Performance Driven, Team Based Culture.
Deep expertise in Supply Chain Strategy, Distribution/Manufacturing Design and Engineering, Site Operational Optimization and Labor Standards, Material Handling Systems Integration, and Customer Support.

6. Industry – Thought Leadership
Council of Supply Chain Management Professionals (CSCMP) Track Chair 2004 and 2006
Conference Presentations
ProMat
Retail Leaders Industry Association (RILA)
National Conference on Operations & Fulfillment (NCOF)
HK Systems Annual Material Handling and Logistics Conference
Peach State Speakers’ Bureau
Numerous White Paper Publications
Material Handling Equipment Distributors Association (MHEDA) – Member, Past Board Member, President 2003
The National Logistics & Distribution Conference (NLDC) Founder and Producer
Georgia Tech Supply Chain and Logistics Institute – Lecture Presenter since 2000
DC Velocity – Editorial Board Member
Frequent contributor to major trade journal articles

7. Core Services Focused on Results – “From Strategy to Reality”
Global Consulting & Engineering
Facility Design & Engineering
Material Handling Solutions
Customer Service and Support
Logistics network strategy and design
Strategic distribution master planning
Rationalizing for outsourcing/3PL
Labor Management and Operational Excellence
Facility Designer Toolsettm determines the appropriate mix of people, space, equipment, and systems.
Solution development focused on delivering a rapid ROI.
Detailed engineering, bid management, procurement, and implementation of integrated material handling systems
High-speed sortation, automated order fulfillment, AS/RS, AGV/LGVs, and palletization.
Material handling systems spare parts to keep your facility running.
Service and maintenance programs that are tailored to ensure maximum ‘uptime’ and performance.

8. Healthcare & Pharmaceuticals
Major Clients
Serving the ‘Best of the Best’…
Healthcare & Pharmaceuticals
Food &
Beverage
Parts
Distribution
Consumer
Products/Retail
Manufacturing

9. Facility Design Process

10. Process Overview Where do we start?
To begin, a summary of the overall process will help visualize the destination. This will help in understanding the path to get there.
Where do we start?
Operational Review
Data Collection
Data Analysis
Profiling
Select an Order Fulfillment Methodology (OFM)
Based on order, customer and SKU profiles
Minimize handling, maximize service level
How big? & How fast?
Forward pick? Which tools?
Numbers of slots, facings, locations
Sortation parameters and requirements.
Connect the dots
Keeping this process in view while examining each of the individual steps will help keep the forest in view while looking at each tree.

11. Data Analysis Methodology
Our analysis methodology transformed historical data into future design requirements:
Collect
Data
Analyze
Data
Construct
Profiles
Develop
Parameters
Model
Scenarios
Define
Requirements
Assumptions:
SKU Base
Handling Unit Type
Cartons Shipped
Pick Face Days Supply
Design Parameters:
Planning Horizon
Growth Rates
Inventory Turns
Ship Window
Hourly Surges
Network
Design Requirements:
Order Fulfillment Methodology
MHE Throughput Rates
Pick Zones
Storage Media

12. Facility Design Profiles
Profiles of different data elements help to address the variety of questions that must be answered in the facility design effort.
Planning & Design Issue
Key Focus
Primary Data Source
Profiles
Storage Sizing
Right storage media & corresponding facings for reserve slots
Item, Location & Inventory Data
ABC inventory distribution
Handling unit (pallets, cube, cases, etc.) inventory profile
Order Fulfillment Methodologies
Effective strategies for picking & packing (e.g., zone pick & sort opportunities?)
Order Files
Per order distributions (lines, units, cartons, cube, etc.)
Per carton distributions
Order mix/completion distribution
Handling unit profile (broken/full case, full pallet, mixed)
Material Handling System Throughput & Capacity
Peak hourly volumes to be processed
Daily activity profile (orders, lines, full cases, split cartons, total boxes)
Hourly activity distribution (particularly with respect to order drop & cutoff times)
Warehouse Zone & Facing Requirements
Right storage media & corresponding facings for primary slots
Order, Item & Location Files
ABC activity (Pareto) profile
Cube movement distribution
Storage zone profiles (SKUs, volumes, etc. by special requirements - drug, cooler, etc.)
Actual development of most profiles involves generating each “day’s” activity, statistically analyzing them then developing the distributions.

13. Profiling – Input to the OFM Decision
Identifying the correct OFM’s for each portion of the operation is the first step in developing the facility design.
Order
Profiles
Handling Unit
Profiles
SKU
Profiles
Per ship method (parcel vs. truck)
Per order distributions
Per carton distributions
Order completion
Single line percentage
Per day & hr distributions
Full Case Pct
Broken Case Pct
Full Pallet Pct
Mixed Orders Pct
Special handling
Lot control
Hazmat
Refrig/Freezer
ABC (Pareto) Distribution
Full Case, Broken Case, Full Pallet Volumes
Cube movement
ORDER
FULFILLMENT
METHODOLOGIES
Primary Manual vs. Automated Considerations:
Throughput requirements (hourly volumes)
Labor requirements (amount, cost, availability)
Service requirements (accuracy, service levels, costs of non-conformance)
Broken
Case
OFMs
Full
Case
OFMs

14. OFM Matrix Product to Order Order to Product Automation Volume
Two primary factors in determining the appropriate order fulfillment methodologies (OFM) are facility volume and order profile.
Product to Order
Order to Product
SKU Pick/Sort
Pick to AutoPak
Dynamic Zone
Pick & Pass
Automated Picking
Automation
Volume
Storerooms
Garages
Cart Batch Pick
OP to Pallet
Line/Order
Cube/Order
(media)

15. Broken Case Methodologies
Complexity (Automation & Technology)
Order Picking
SKU Picking
Discrete
(Single)
Order Pick
Pick &
Pass
Pick To Carton
Sequential
(Static) Zone
Batch
(Cluster)
Order Pick
Pick &
Pass
SKU Pick & Marry
Low volumes
Small footprint (travel path)
High Lines/order
Large Cube/order
Limited WMS
Low Lines/order
Low Cube/order
Small travel path
Frequent order release
WMS capable
Can fit >1 order on pick vehicle
Med-high volumes
Med Cube/order
Limited SKUs complete orders
Med-high Lines/order
Low lines/order
Opportunity to batch & release many orders
High SKU commonality across orders
Bulk
Pick &
Re-Pick
Pick To
Put
Pick
&
Sort
(Tilt-tray)
Auto.
Pick
(A Frame)
Pick To Tote
Pick To Carton
Precise order cube cannot be pre-determined
Re-handling/VAS at packing
Precise order cube can be pre-determined
Order ship ready at point of pick
Limited WMS
Large number of SKUs needed to complete orders
Low number of customer-order sort points per wave
High hourly volumes
Sturdy/ durable products
Very high hourly volumes
Sturdy/ durable products
Uniform/ standard product shapes & sizes
Sequential
(Static) Zone
Dynamic Zone
Enhancements:
RF Voice
PTL RFID
Low order complete % within pick zones
High order completion pct within pick zones

16. Full Case Methodologies
Complexity (Automation & Technology)
Order Picking
SKU Picking
Single
Order Pick
To Pallet
Multi
Order Pick
To Pallet
SKU
Pick & Sort
Downstream
SKU
Pick & Sort
Downstream
Low volumes
Most applicable for large, truck (LTL) orders
Small order size
Pick vehicle has capacity for >1 order
Pick to
Pallet & Sort
Zone pick
& drop to induct
point
Pick to Belt
Pick to Belt
Automation Considerations:
Throughput requirements (peak hourly volumes)
Labor requirements (amount, cost, availability) –current & projected
Service requirements (accuracy, service levels, costs of non-conformance)
Dock doors available/required
Staging space available/required
Limited WMS
Large number of SKUs needed to complete orders
Adequate sort & staging space
Med-high volume
Most applicable for Parcel
Small footprint
Random storage
Very high hourly volumes
Small # SKUs represent high % volume

17. Case Study

18. Project Overview
The design project we are reviewing proceeded through implementation. The client is philosophy, a high end skin care cream manufacturer.
Growing through the recession (20%)
Recently purchased by a private equity firm
High profile, luxury product identity
Persistent demand from existing customers
New customers gained through Internet and QVC
Originally in two fulfillment facilities
Both space constrained
Retail & QVC fulfilled in one facility
Internet fulfilled (from same SKU base) at HQ
Spec building selected prior to design
Size and door count validated immediately
Sufficient for 2015 and beyond
Some expansion capability available
They were moving very fast, with aggressive growth projections and desired a rapid evidence of return on investment.

19. Data Analysis Results

20. Outbound Profiles – Daily Activity
The below statistics help to illustrate the activity levels of the combined business, Retail DSDC and Internet channels.
Combined
Retail DSDC
Internet

21. Outbound Profiles – Order Statistics
The below statistics help to illustrate the nature of the orders across the combined business, Retail DSDC and Internet channels.
Combined
Retail DSDC
Internet

22. Outbound Profiles - Throughput
The daily throughput profile reveals considerable seasonality, peaking in October & November.

23. Outbound Profiles - Internet
The daily throughput profile reveals considerable seasonality, peaking in November.

24. Outbound Profiles – Retail DSDC
The daily throughput profile reveals some seasonality, peaking in September & October.

25. Outbound Profiles – Lines Per Order
Lines per order profiles were developed for Retail DSDC and Internet orders.

26. Outbound Profiles – Units Per Order
Unit per order profiles were developed for Retail DSDC and Internet orders.

27. Outbound Profiles – Cube Per Order
Cube per order profiles were developed for Retail DSDC and Internet orders.

28. Outbound Profiles – Cartons Per Order
Cartons per order profiles were developed for Retail DSDC and Internet orders.

29. SKU Data Review

30. Pareto Profile - Lines
A Pareto profile helps illustrate the concentration (or lack thereof) of activity within a particular range of products. The below shows the variation in line activity across the SKU base for Retail, Internet and Combined orders.

31. Pareto Profile - Units
The below shows the variation in unit activity across the SKU base for Retail, Internet and Combined orders.

32. Pareto Profile - Cube
The below shows the variation in cubic velocity across the SKU base for Retail, Internet and Combined orders.

33. Total Active SKUs by Month
The total SKUs active in a month at peak is over 800 SKUs. This compares to a baseline of ~1,370 total SKUs with activity across the timeframe analyzed.

34. OFM - Zone Pick & Consolidate34

35. Outbound Profiles – Full Case vs. Broken Case
To determine how orders “are” fulfilled, full case and broken case volumes were calculated for both Retail DSDC and Internet orders, first in lines.

36. Outbound Profiles – Full Case vs. Broken Case
To determine how orders “are” fulfilled, full case and broken case volumes were calculated for both Retail DSDC and Internet orders, next in units.

37. OFM Rationale & Criteria
The benefit of zone pick & consolidate OFM is a reduction in non-value added labor and an improvement in quality & cycle time.
Multi-channel order fulfillment in common areas provides considerable benefits:
Improved utilization of labor throughout year
Increased opportunity to use shipping sortation automation
Common shipping area increases flexibility due to variations in channel seasonality
Handling full case separate from piece pick allows for proper slotting of the SKU by cubic velocity in that UOM while reducing the walk time.
Performing all piece picks in a common module consolidates repack operations in one location for enhanced process control and efficiency.
Consolidation can be error prone and also increase non-value added handling. A shipping sorter assist with palletization of LTL and fluid load of parcel carriers will address both issues.
Repack replenishment can also be supported by “picking” the required replenishment cases, and then delivering to the repack module, either via conveyor or, after palletizing by SKU, by vehicle.

38. OFM Flow Chart
The below chart shows how orders would be managed in this OFM.

39. Full Case OFM – Pick to Label39

40. Full Case Pick to Label Rationale
The benefit of a pick to label OFM is the elimination of non-value added repack activity while improving quality with verification of cases at the shipping sorter.
Retail orders require a large portion of their volume in full case quantities (80%).
Creating a full case pick zone using a
pick to label approach will eliminate
the non-value added handling of
repacking all case quantities into
repack containers.
Pick to label addresses the issue with
small cases while retaining efficient
picking. Cases 3” tall or less will be
handled as piece picks.
Repack replenishment can also be supported by “picking” the required replenishment cases, palletizing by SKU and then delivering to the repack module. 40

41. Pick To Belt – MHE Capital
The Pick to Belt concept is quite simple and economical. The below budgetary estimate illustrates the expected capital needed to implement this capability. 41

42. Full Case Picking 42

43. Broken Case OFM – Zone Pick & Pass43

44. ZPP – Rationale
The expected benefit of a pick and pass order fulfillment methodology is the elimination/reduction of non-value added labor.
Cartons requiring units from multiple zones must be manually moved from zone to zone increasing walk time by pickers.
Pickers remaining in their zones while conveyor moves the cartons from zone to zone will eliminate the non-value walk time.
By separating full case volumes from broken case, the pick faces in the ZPP can be reduced to minimize pick travel paths.
Appropriate configuration of powered and gravity conveyors can assist with the passing required to complete cartons. 44

45. Broken Case Pick Module
A broken case pick module with pallet & carton flow and static shelving provides flexibility and efficient order fulfillment across both Retail and Internet channels. 45

46. Broken Case Picking 46

47. Design Requirements 47

48. Growth Projections
The different fulfillment channels contribute varying amounts to the overall corporate growth of Client. 48

49. Storage Requirements
Storage requirements were based on increases in shipping volumes for all three channels. Baseline storage for 2012 was calculated from inventory data for retail and internet volumes and historical requirements for Primary Location storage.
Note that the driving factor is kitting storage. The growth associated with this area does not overcome the improvement in turns until 2012. 49

50. Pick Module Sizing
Each SKU was assessed for its broken case volume, Internet and Retail. These volumes were then assigned to pick media. Replenishment was assumed to be every four days on average for a slot classification.
A “slice” is one bay wide, includes both sides and all levels of the module. The number of slices determines the overall length of the module. 50

51. Conceptual Design 51

52. Facility Overview
While the overall concept has remained unchanged, some elements were modified to meet requirements and improve design. 52

53. Full Case Pick Lines
The below two lanes with shelving in 3 bays at the downstream end support over 99.2% of the full case units, 73% of those in the pallet flow bays. 53

54. Material Flow
Key
Inbound
Internal
Outbound 54

55. Kitting Area 55

56. Reserve Storage 56

57. Broken Case Pick Module
There are currently 18 “slices” in the module. However, as the below illustrates, there will be some losses due to stairs, trash chutes, etc.
Note: Each slice increases capital by about $20K. 57

58. Packing
The packing configuration below allows for future expansion, consumable material staging and operator egress. 58

59. Shipping
The shipping sorter supports a peak throughput of less than 40 cpm. Technology of this type can manage approximately twice that, if necessary. 59

60. Budget & Staffing 60

61. Detailed Budget
The below reflects some budgeting allowances but could serve as a GMP.
Note: ~1,500 pallet positions are lost above the used rack. To cube out this area completely would increase capital by ~$225K with re-used beams). 61

62. Note: Peak values reflect operating for 1.5 shifts for peak.
Outbound Staffing
The modifications to the order fulfillment method recommended will affect only the outbound personnel. Below is the conservative staffing estimate.
Note: Peak values reflect operating for 1.5 shifts for peak. 62

63. Project Implementation63

64. Implementation Schedule
This schedule reflects a first pass at the phases of the implementation. It reflects decommissioning the existing facility as well as relocating equipment to the new DC. 64

65. Questions?
M.I.T 65

66. E-mail: dstar@peachstate.com
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