2Design and Integration Case Study – Health & Beauty Aid Manufacturer Distribution CenterDesign and IntegrationCase Study – Health & Beauty Aid ManufacturerPresented to:Warehouse & Distribution ScienceISyE 6202Georgia Institute of TechnologyBy:Dean M. StarovasnikPractice Director, Distribution Engineering DesignPeach State Integrated Technology
3Overview 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 OverviewProcess High PointsCase StudyData Analysis ResultsDesign RequirementsFinancial ReviewSite PhotosDiscussionThough “Discussion” is listed last, questions or comments throughout the session are welcome and encouraged.
5Corporate 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.
6Industry – Thought Leadership Council of Supply Chain Management Professionals (CSCMP) Track Chair 2004 and 2006Conference PresentationsProMatRetail Leaders Industry Association (RILA)National Conference on Operations & Fulfillment (NCOF)HK Systems Annual Material Handling and Logistics ConferencePeach State Speakers’ BureauNumerous White Paper PublicationsMaterial Handling Equipment Distributors Association (MHEDA) – Member, Past Board Member, President 2003The National Logistics & Distribution Conference (NLDC) Founder and ProducerGeorgia Tech Supply Chain and Logistics Institute – Lecture Presenter since 2000DC Velocity – Editorial Board MemberFrequent contributor to major trade journal articles
7Core Services Focused on Results – “From Strategy to Reality” Global Consulting & EngineeringFacility Design & EngineeringMaterial Handling SolutionsCustomer Service and SupportLogistics network strategy and designStrategic distribution master planningRationalizing for outsourcing/3PLLabor Management and Operational ExcellenceFacility 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 systemsHigh-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.
8Healthcare & Pharmaceuticals Major ClientsServing the ‘Best of the Best’…Healthcare & PharmaceuticalsFood &BeveragePartsDistributionConsumerProducts/RetailManufacturing
10Process 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 ReviewData CollectionData AnalysisProfilingSelect an Order Fulfillment Methodology (OFM)Based on order, customer and SKU profilesMinimize handling, maximize service levelHow big? & How fast?Forward pick? Which tools?Numbers of slots, facings, locationsSortation parameters and requirements.Connect the dotsKeeping this process in view while examining each of the individual steps will help keep the forest in view while looking at each tree.
11Data Analysis Methodology Our analysis methodology transformed historical data into future design requirements:CollectDataAnalyzeDataConstructProfilesDevelopParametersModelScenariosDefineRequirementsAssumptions:SKU BaseHandling Unit TypeCartons ShippedPick Face Days SupplyDesign Parameters:Planning HorizonGrowth RatesInventory TurnsShip WindowHourly SurgesNetworkDesign Requirements:Order Fulfillment MethodologyMHE Throughput RatesPick ZonesStorage Media
12Facility 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 IssueKey FocusPrimary Data SourceProfilesStorage SizingRight storage media & corresponding facings for reserve slotsItem, Location & Inventory DataABC inventory distributionHandling unit (pallets, cube, cases, etc.) inventory profileOrder Fulfillment MethodologiesEffective strategies for picking & packing (e.g., zone pick & sort opportunities?)Order FilesPer order distributions (lines, units, cartons, cube, etc.)Per carton distributionsOrder mix/completion distributionHandling unit profile (broken/full case, full pallet, mixed)Material Handling System Throughput & CapacityPeak hourly volumes to be processedDaily activity profile (orders, lines, full cases, split cartons, total boxes)Hourly activity distribution (particularly with respect to order drop & cutoff times)Warehouse Zone & Facing RequirementsRight storage media & corresponding facings for primary slotsOrder, Item & Location FilesABC activity (Pareto) profileCube movement distributionStorage 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.
13Profiling – 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.OrderProfilesHandling UnitProfilesSKUProfilesPer ship method (parcel vs. truck)Per order distributionsPer carton distributionsOrder completionSingle line percentagePer day & hr distributionsFull Case PctBroken Case PctFull Pallet PctMixed Orders PctSpecial handlingLot controlHazmatRefrig/FreezerABC (Pareto) DistributionFull Case, Broken Case, Full Pallet VolumesCube movementORDERFULFILLMENTMETHODOLOGIESPrimary Manual vs. Automated Considerations:Throughput requirements (hourly volumes)Labor requirements (amount, cost, availability)Service requirements (accuracy, service levels, costs of non-conformance)BrokenCaseOFMsFullCaseOFMs
14OFM 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 OrderOrder to ProductSKU Pick/SortPick to AutoPakDynamic ZonePick & PassAutomated PickingAutomationVolumeStoreroomsGaragesCart Batch PickOP to PalletLine/OrderCube/Order(media)
15Broken Case Methodologies Complexity (Automation & Technology)Order PickingSKU PickingDiscrete(Single)Order PickPick &PassPick To CartonSequential(Static) ZoneBatch(Cluster)Order PickPick &PassSKU Pick & MarryLow volumesSmall footprint (travel path)High Lines/orderLarge Cube/orderLimited WMSLow Lines/orderLow Cube/orderSmall travel pathFrequent order releaseWMS capableCan fit >1 order on pick vehicleMed-high volumesMed Cube/orderLimited SKUs complete ordersMed-high Lines/orderLow lines/orderOpportunity to batch & release many ordersHigh SKU commonality across ordersBulkPick &Re-PickPickToPutPick&Sort(Tilt-tray)Auto.Pick(A Frame)Pick To TotePick To CartonPrecise order cube cannot be pre-determinedRe-handling/VAS at packingPrecise order cube can be pre-determinedOrder ship ready at point of pickLimited WMSLarge number of SKUs needed to complete ordersLow number of customer-order sort points per waveHigh hourly volumesSturdy/ durable productsVery high hourly volumesSturdy/ durable productsUniform/ standard product shapes & sizesSequential(Static) ZoneDynamic ZoneEnhancements:RF VoicePTL RFIDLow order complete % within pick zonesHigh order completion pct within pick zones
16Full Case Methodologies Complexity (Automation & Technology)Order PickingSKU PickingSingleOrder PickTo PalletMultiOrder PickTo PalletSKUPick & SortDownstreamSKUPick & SortDownstreamLow volumesMost applicable for large, truck (LTL) ordersSmall order sizePick vehicle has capacity for >1 orderPick toPallet & SortZone pick& drop to inductpointPick to BeltPick to BeltAutomation Considerations:Throughput requirements (peak hourly volumes)Labor requirements (amount, cost, availability) –current & projectedService requirements (accuracy, service levels, costs of non-conformance)Dock doors available/requiredStaging space available/requiredLimited WMSLarge number of SKUs needed to complete ordersAdequate sort & staging spaceMed-high volumeMost applicable for ParcelSmall footprintRandom storageVery high hourly volumesSmall # SKUs represent high % volume
18Project OverviewThe 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 firmHigh profile, luxury product identityPersistent demand from existing customersNew customers gained through Internet and QVCOriginally in two fulfillment facilitiesBoth space constrainedRetail & QVC fulfilled in one facilityInternet fulfilled (from same SKU base) at HQSpec building selected prior to designSize and door count validated immediatelySufficient for 2015 and beyondSome expansion capability availableThey were moving very fast, with aggressive growth projections and desired a rapid evidence of return on investment.
30Pareto Profile - LinesA 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.
31Pareto Profile - UnitsThe below shows the variation in unit activity across the SKU base for Retail, Internet and Combined orders.
32Pareto Profile - CubeThe below shows the variation in cubic velocity across the SKU base for Retail, Internet and Combined orders.
33Total 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.
35Outbound 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.
36Outbound 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.
37OFM 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 yearIncreased opportunity to use shipping sortation automationCommon shipping area increases flexibility due to variations in channel seasonalityHandling 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.
38OFM Flow ChartThe below chart shows how orders would be managed in this OFM.
40Full 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 apick to label approach will eliminatethe non-value added handling ofrepacking all case quantities intorepack containers.Pick to label addresses the issue withsmall cases while retaining efficientpicking. Cases 3” tall or less will behandled 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
41Pick 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
44ZPP – RationaleThe 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
45Broken 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
48Growth ProjectionsThe different fulfillment channels contribute varying amounts to the overall corporate growth of Client.48
49Storage RequirementsStorage 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
50Pick Module SizingEach 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
57Broken 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
58PackingThe packing configuration below allows for future expansion, consumable material staging and operator egress.58
59ShippingThe shipping sorter supports a peak throughput of less than 40 cpm. Technology of this type can manage approximately twice that, if necessary.59
61Detailed BudgetThe 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
62Note: Peak values reflect operating for 1.5 shifts for peak. Outbound StaffingThe 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