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© 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Distribution Center Design and Integration Case Study –

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Presentation on theme: "© 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Distribution Center Design and Integration Case Study –"— Presentation transcript:

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3 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Distribution Center Design and Integration Case Study – Health & Beauty Aid Manufacturer By : Dean M. Starovasnik Practice Director, Distribution Engineering Design Peach State Integrated Technology Presented to: Warehouse & Distribution Science ISyE 6202 Georgia Institute of Technology

4 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Overview 3 Peach State Overview Process High Points Case Study Data Analysis Results Design Requirements Financial Review Site Photos Discussion This session will provide an overview of an objective design methodology and an example case study where this process was used. Though Discussion is listed last, questions or comments throughout the session are welcome and encouraged.

5 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Peach State Overview

6 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Corporate Credentials 5 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.

7 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Industry – Thought Leadership 6 Council of Supply Chain Management Professionals (CSCMP) Track Chair 2004 and 2006 Conference Presentations o ProMat o Retail Leaders Industry Association (RILA) o National Conference on Operations & Fulfillment (NCOF) o 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

8 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Core Services 7 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 Toolset tm 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.

9 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Major Clients 8 Serving the Best of the Best… Healthcare & Pharmaceuticals Food & Beverage Parts Distribution Consumer Products/Retail Manufacturing

10 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Facility Design Process

11 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Process Overview 10 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 To begin, a summary of the overall process will help visualize the destination. This will help in understanding the path to get there. Keeping this process in view while examining each of the individual steps will help keep the forest in view while looking at each tree.

12 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Data Analysis Methodology 11 Our analysis methodology transformed historical data into future design requirements: Collect Data Collect Data Analyze Data Analyze Data Construct Profiles Construct Profiles Develop Parameters Develop Parameters Model Scenarios Model Scenarios Define Requirements Define Requirements Assumptions: SKU Base Handling Unit Type Cartons Shipped Pick Face Days Supply Design Requirements : Order Fulfillment Methodology MHE Throughput Rates Pick Zones Storage Media Design Parameters: Planning Horizon Growth Rates Inventory Turns Ship Window Hourly Surges Network

13 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Facility Design Profiles 12 Planning & Design Issue Key FocusPrimary Data Source Profiles Storage SizingRight 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 FilesPer 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 Order FilesDaily 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.) Profiles of different data elements help to address the variety of questions that must be answered in the facility design effort. Actual development of most profiles involves generating each days activity, statistically analyzing them then developing the distributions.

14 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Profiling – Input to the OFM Decision Order Profiles Order Profiles Handling Unit Profiles Handling Unit Profiles SKU Profiles SKU Profiles Broken Case OFMs Broken Case OFMs Full Case OFMs Full Case OFMs Primary Manual vs. Automated Considerations: Throughput requirements (hourly volumes) Labor requirements (amount, cost, availability) Service requirements (accuracy, service levels, costs of non-conformance) 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 Identifying the correct OFMs for each portion of the operation is the first step in developing the facility design. 13 ORDER FULFILLMENT METHODOLOGIES ORDER FULFILLMENT METHODOLOGIES

15 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. OFM Matrix 14 Storerooms Garages Cart Batch Pick OP to Pallet SKU Pick/Sort Pick to AutoPak Dynamic Zone Pick & Pass Automated Picking Volume Line/Order Product to OrderOrder to Product Automation Two primary factors in determining the appropriate order fulfillment methodologies (OFM) are facility volume and order profile. Cube/Order (media)

16 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Low Lines/order Low Cube/order Small travel path Frequent order release WMS capable Can fit >1 order on pick vehicle Broken Case Methodologies 15 Discrete (Single) Order Pick Discrete (Single) Order Pick Batch (Cluster) Order Pick Batch (Cluster) Order Pick Pick & Pass Pick & Pass SKU Pick & Marry Sequential (Static) Zone Sequential (Static) Zone Pick To Tote Bulk Pick & Re-Pick Bulk Pick & Re-Pick Pick To Put Pick To Put Pick & Sort (Tilt-tray) Pick & Sort (Tilt-tray) Auto. Pick (A Frame) Auto. Pick (A Frame) Complexity (Automation & Technology) 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 Low order complete % within pick zones High order completion pct within pick zones Med-high volumes Med Cube/order Limited SKUs complete orders Med-high Lines/order 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 Limited WMS Large number of SKUs needed to complete orders Order PickingSKU Picking Low lines/order Opportunity to batch & release many orders High SKU commonality across orders Enhancements: RFVoice PTLRFID Low volumes Small footprint (travel path) High Lines/order Large Cube/order Limited WMS Pick & Pass Pick & Pass Pick To Carton Sequential (Static) Zone Sequential (Static) Zone Dynamic Zone

17 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Full Case Methodologies 16 Single Order Pick To Pallet Single Order Pick To Pallet Multi Order Pick To Pallet Multi Order Pick To Pallet SKU Pick & Sort Downstream SKU Pick & Sort Downstream Pick to Pallet & Sort Pick to Pallet & Sort Zone pick & drop to induct point Zone pick & drop to induct point Pick to Belt Med-high volume Most applicable for Parcel Small footprint Random storage Very high hourly volumes Small # SKUs represent high % volume Limited WMS Large number of SKUs needed to complete orders Adequate sort & staging space Order PickingSKU Picking Low volumes Most applicable for large, truck (LTL) orders Small order size Pick vehicle has capacity for >1 order 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 SKU Pick & Sort Downstream SKU Pick & Sort Downstream Pick to Belt Complexity (Automation & Technology)

18 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Case Study

19 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Project Overview 18 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 The design project we are reviewing proceeded through implementation. The client is philosophy, a high end skin care cream manufacturer. They were moving very fast, with aggressive growth projections and desired a rapid evidence of return on investment.

20 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Data Analysis Results 19

21 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Outbound Profiles – Daily Activity 20 The below statistics help to illustrate the activity levels of the combined business, Retail DSDC and Internet channels. Combined Retail DSDC Internet

22 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Outbound Profiles – Order Statistics 21 The below statistics help to illustrate the nature of the orders across the combined business, Retail DSDC and Internet channels. Combined Retail DSDC Internet

23 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Outbound Profiles - Throughput 22 The daily throughput profile reveals considerable seasonality, peaking in October & November.

24 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Outbound Profiles - Internet 23 The daily throughput profile reveals considerable seasonality, peaking in November.

25 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Outbound Profiles – Retail DSDC 24 The daily throughput profile reveals some seasonality, peaking in September & October.

26 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Outbound Profiles – Lines Per Order 25 Lines per order profiles were developed for Retail DSDC and Internet orders.

27 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Outbound Profiles – Units Per Order 26 Unit per order profiles were developed for Retail DSDC and Internet orders.

28 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Outbound Profiles – Cube Per Order 27 Cube per order profiles were developed for Retail DSDC and Internet orders.

29 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Outbound Profiles – Cartons Per Order 28 Cartons per order profiles were developed for Retail DSDC and Internet orders.

30 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. SKU Data Review 29

31 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Pareto Profile - Lines 30 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.

32 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Pareto Profile - Units 31 The below shows the variation in unit activity across the SKU base for Retail, Internet and Combined orders.

33 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Pareto Profile - Cube 32 The below shows the variation in cubic velocity across the SKU base for Retail, Internet and Combined orders.

34 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Total Active SKUs by Month 33 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.

35 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. OFM - Zone Pick & Consolidate 34

36 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Outbound Profiles – Full Case vs. Broken Case 35 To determine how orders are fulfilled, full case and broken case volumes were calculated for both Retail DSDC and Internet orders, first in lines.

37 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Outbound Profiles – Full Case vs. Broken Case 36 To determine how orders are fulfilled, full case and broken case volumes were calculated for both Retail DSDC and Internet orders, next in units.

38 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. OFM Rationale & Criteria 37 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. The benefit of zone pick & consolidate OFM is a reduction in non-value added labor and an improvement in quality & cycle time.

39 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. OFM Flow Chart 38 The below chart shows how orders would be managed in this OFM.

40 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Full Case OFM – Pick to Label 39

41 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Full Case Pick to Label Rationale 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. 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. 40

42 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 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

43 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Full Case Picking 42

44 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Broken Case OFM – Zone Pick & Pass 43

45 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. ZPP – Rationale 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. The expected benefit of a pick and pass order fulfillment methodology is the elimination/reduction of non-value added labor. 44

46 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 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

47 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Broken Case Picking 46

48 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 47 Design Requirements

49 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Growth Projections The different fulfillment channels contribute varying amounts to the overall corporate growth of Client. 48

50 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 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

51 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 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

52 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Conceptual Design 51

53 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Facility Overview While the overall concept has remained unchanged, some elements were modified to meet requirements and improve design. 52

54 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 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

55 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Material Flow Key Inbound Internal Outbound 54

56 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Kitting Area 55

57 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Reserve Storage 56

58 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 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

59 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Packing The packing configuration below allows for future expansion, consumable material staging and operator egress. 58

60 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 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

61 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Budget & Staffing 60

62 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. The below reflects some budgeting allowances but could serve as a GMP. Detailed Budget 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

63 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. The modifications to the order fulfillment method recommended will affect only the outbound personnel. Below is the conservative staffing estimate. Outbound Staffing Note: Peak values reflect operating for 1.5 shifts for peak. 62

64 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Project Implementation 63

65 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. 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. Implementation Schedule 64

66 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. Questions? 65

67 © 2011 Peach State Integrated Technologies. Contents are confidential. All rights reserved. CONTACT INFORMATION E-mail: dstar@peachstate.com Web:www.peachstate.com Phone:678-327-2013


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