1 WAREHOUSING MANAGEMENT Presenter By Rajeev Kumar IIMM Jamshedpur Indian Institute of Materials Management Jamshedpur

2 Indian Institute of Materials Management Warehouse „In the past, warehouse management could focus solely on controlling the movement and storage of materials within an warehouse operation and processing the associated transactions of picking, packing, shipping and receiving. However, today’s systems must integrate warehouse operations, so that visibility extends beyond the four walls of the warehouse and to the rest of the value chain.”

3 Indian Institute of Materials Management The roles of the Warehouse in contemporary distribution networks – Buffer – Consolidation – Value Adding Processing Warehouse classification based on Customer types – Factory Warehouse – Retail Distribution Warehouse – Catalog Retailer – Support to Manufacturing operations

4 Indian Institute of Materials Management Major warehouse equipment, its functionality, and justification – Containers & Unitizing Equipment – Storage and Retrieval Equipment Unit Load Small Load – Conveyors – Warehouse docks and dock-related equipment – Automatic Identification and Communication Equipment

5 Indian Institute of Materials Management Major decisions underlying the Warehouse deployment and operations Configuration issues – Organization of the material flow Unit Loads Establishment of a forward area – items to be included in the forward area – sizing of the forward area Zoning, Time Windows and Pick Waves – Equipment selection and its sizing storage modes order picking and material handling equipment Warehouse management system and automatic identification and communication equipment – Layout: Allocation of Storage Capacity – Personnel skills and sizing Policies – Receiving policies Assigning trucks to docks – Storage policies Assigning received material to storage locations – Replenishment policies – Order processing policies order batching policies zoning policies – Sortation and consolidation policies – Shipping policies

6 Indian Institute of Materials Management Role of the Warehouse in the Logistics system The warehouse is where the supply chain holds or stores goods. Functions of warehousing include – Transportation consolidation – Product mixing – Docking – Service – Protection against contingencies

7 Indian Institute of Materials Management Type of Warehouse Public Warehousing Private Warehousing Contract Warehousing Multi-client Warehousing

8 Indian Institute of Materials Management Public Warehouses On the basis of the range of specialized operations performed, public warehouses are classified as (1) general merchandise, (2) refrigerated, (3) special commodity, (4) bonded, and (5) household goods and furniture. Each warehouse type differs in its material handling and storage technology as a result of the product and environmental characteristics.

9 Indian Institute of Materials Management Private Warehouses A private warehouse is operated by the firm owning the product. The actual facility, however, may be owned or leased. The decision as to which strategy best fits an individual firm is essentially financial. Often it is not possible to find a warehouse for lease that fits the exact requirements of a firm.

10 Indian Institute of Materials Management Contract Warehouses Contract warehousing combines the best characteristics of both private and public operations. The long-term relationship and shared risk result in lower cost than typical public warehouse arrangements. Contract warehouse operations can provide benefits of expertise, flexibility, and economies of scale by sharing management, labor, equipment, and information resources across a number of clients.

11 Indian Institute of Materials Management Design Consideration Ideal Facility for Pure Supplier Consolidation (Full Pallet Movement) Warehouse Space Requirements

12 Indian Institute of Materials Management Principle of Warehouse Layout Design

13 Indian Institute of Materials Management WAREHOUSE PROCESS Put-away Identify Product Identify Product Location Move Products Update Records Storage Equipment Stock Location –Popularity –Unit Size –Cube Shipping Preparation Packing Labeling Stacking Order Picking Information Walk & Pick Batch Picking Shipping Schedule Carrier Load Vehicle Bill of Loading Record Update RECEIVING Schedule Carrier Unload Vehicle Inspect for damage INPUT OUTPUT

14 Indian Institute of Materials Management Decision / Performance Criteria Responsiveness Quality Cost Investment + Operational Space/Equipment/Labor Product quality Order accuracy Order flow time throughput fill rate volume flexibility/storage capacity mix flexibility

15 Indian Institute of Materials Management Yoon & Sharp’s design procedure MANAGERIAL CONSIDERATIONS PRODUCT DATAORDER DATA DATA ANALYSIS SPECIFICATION OF ORDER PICK SYSTEM STRUCTURE SPECIFICATION OF EQUIPMENT SPECIFICATION OP. STRATEGIES MATERIAL FLOW INFORMATION FLOW SUBSYSTEM I SUBSYSTEM II SUBSYSTEM N SUBSYSTEM RECONCILIATION EVALUATION & SELECTION OVERALL PERFORMANCE ANALYSIS INPUT STAGE SELECTION STAGE EVALUATION STAGE

16 Indian Institute of Materials Management Determining the basic system structure Product data: Activity level requested quantities product properties vendor types Order data: number of line items number of items cubic volume shipping priorities product correlation Managerial requirements / company strategy Definition of major functional areas / departments Definition of departmental sub- systems Storage and material handling modes Operational policies storage policies replenishment policies order picking policies batching sorting zoning routing receiving & shipping policies

17 Indian Institute of Materials Management Strategic-Level Concerns ReceivingStoringOrderpickingShipping Resources Processes Organization Separate reserve area? Batching? Different types of storage? Types of storage Storage unit Types of sorting eq.

18 Indian Institute of Materials Management ReceivingStoringOrderpickingShipping Resources Processes Organization Tactical-level concerns Forward and reserve area Storage concept Pick zones Batch size Number of docks Tech. zones Number of docks Layout Storing and Picking eq. capacity Peripheral eq. and workforce capacity

19 Indian Institute of Materials Management Operational-level concerns ReceivingStoringOrderpickingShipping Resources Processes Organization Dock Assignment Replenish- ment Policy Storage plan Dock Assignment Batch formation Picking task Assignment Routing Dwell point Chute Assignment Workforce Assignment

20 Indian Institute of Materials Management OBJECTIVES OF EFFICIENT WAREHOUSE OPERATIONS Provide timely customer service. Keep track of items so they can be found readily & correctly. Minimize the total physical effort & thus the cost of moving goods into & out of storage. Provide communication links with customers Benefits of Warehouse Management Provide a place to store & protect inventory Reduce transportation costs Improve customer service levels Complexity of warehouse operation depends on the number of SKUs handled & the number of orders received & filled. Most activity in a warehouse is material handling

21 Indian Institute of Materials Management WAREHOUSE ACTIVITIES Receive goods Identify the goods Dispatch goods to storage Hold goods Pick goods Marshal shipment Dispatch shipment Operate an information system

22 Indian Institute of Materials Management Accepts goods from ‒ Outside transportation or attached factory & accepts responsibility Check the goods against an order & the bill of loading Check the quantities Check for damage & fill out damage reports if necessary Inspect goods if required Receive goods ‒items are identified with the appropriate stock-keeping unit (SKU) number (part number) & the quantity received recorded Identify the goods Dispatch goods to storage ‒goods are sorted & put away

23 Indian Institute of Materials Management Hold goods ‒goods are kept in storage & under proper protection until needed Pick goods ‒items required from stock must be selected from storage & brought to a marshalling area Marshal the shipment ‒goods making up a single order are brought together & checked for omissions or errors; order records are updated Dispatch the shipment ‒orders are packaged, shipping documents are prepared, & goods loaded on the vehicle Operate an information system ‒a record must be maintained for each item in stock showing the quantity on hand, quantity received, quantity issued, & location in the warehouse

24 Indian Institute of Materials Management Factor Influencing Effective Use of Warehouse Cube utilization and accessibility Stock location Order picking and assembly Physical Control & Security - Elements

25 Indian Institute of Materials Management Cube utilization and accessibility ‒Goods stored not just on the floor, but in the cubic space of the warehouse; warehouse capacity depends on how high goods can be stored ‒Accessibility means being able to get at the goods wanted with a minimum amount of work

26 Indian Institute of Materials Management Cube utilization and accessibility continued…

27 Indian Institute of Materials Management Stock Location Objectives – To provide the required customer service – To keep track of where items are stored – To minimize effort to receive, put away, and retrieve items Basic Stock Locating Systems – Group functionally related items together – Group fast-moving items together – Group physically similar items together – Locate working stock and reserve stock separately

28 Indian Institute of Materials Management Fixed Location – SKU assigned a permanent location, & no other items are stored there – Fixed-location systems usually have poor cube utilization – Usually used in small warehouses; throughput is small, & there are few SKUs Floating (Random) Location – Goods stored wherever there is appropriate space – Advantage is improved cube utilization – It requires accurate and up-to-date information – Warehouses using floating-location systems are usually computer-based Stock Location continued…

29 Indian Institute of Materials Management Advantages of Point-of-use Storage – Materials are readily accessible to users – Material handling is reduced or eliminated – Central storage costs are reduced – Material is accessible all the time Stock Location continued…

30 Indian Institute of Materials Management Advantages of Central Storage – Ease of control – Inventory record accuracy is easier to maintain – Specialized storage can be used – Reduced safety stock, since users do not need to carry their own safety stock Stock Location continued…

31 Indian Institute of Materials Management Order Picking and Assembly When an order is received, items must be obtained from the warehouse, grouped, & prepared for shipment, systems used – Area system – Zone system – Multi-order system

32 Indian Institute of Materials Management Area system – Order picker circulates throughout warehouse selecting items on an order -- order is ready to ship when order picker is finished Zone system – Warehouse is divided into zones, & each picker works only in an assigned zone -- order is divided by zone, & the items from each zone are sent to the marshaling area Order Picking and Assembly continued… Multi-order system – Same as the zone system, except that each picker collects items for a number of orders at the same time

33 Indian Institute of Materials Management PHYSICAL CONTROL & SECURITY - ELEMENTS Good part numbering system Simple, well-documented transaction system – Identify the item – Verify the quantity – Record the transaction – Physically execute the transaction Limited access – Inventory must be kept in a safe, secure (locked) place with limited general access Well-trained workforce

34 Indian Institute of Materials Management Technology Use in Warehouse MX3X Standard Ethernet 2.4GHz Access Points 2.4GHz Access Points Protocols Protocols MX7 Typical 2.4GHz Installation Application Host VX7

35 Indian Institute of Materials Management Designing Wireless Networks

36 Indian Institute of Materials Management   More than just gain, it’s pattern   Consistent coverage patterns at operator level   Superior performance in multipath environments   Maximum throughput and range of coverage RF Coverage Guarantee

37 Indian Institute of Materials Management Vehicle Mobile Computers

38 Indian Institute of Materials Management Handheld Mobile Computers

39 Indian Institute of Materials Management Handheld Vehicle Computers

40 Indian Institute of Materials Management Barcode 1D & 2D Barcode – imaging Bluetooth cordless scanning

41 Indian Institute of Materials Management Wearable Computer Non Optional Safety Features Crucial components “break away” when snagged.

42 Indian Institute of Materials Management Order picking is costly and accounts for 42% of warehouse labor expense ORDER PICKING – SWEET SPOT FOR VOICE Warehouse Labor Expense Pie Chart Receiving 3% Putaway 8% Picking 42% Stocking 15% Indirect Labor 11% Loading 4% Replenishment 11% Packing/ Checking 6%

43 Indian Institute of Materials Management RFID in the Warehouse Realize reduction in verification costs. Produce accurate ASNs effortlessly. Reduce customer claims by shipping The perfect order in the perfect order. Faster, more accurate order staging. Automatically insure shipments get on the right truck Settle invoices faster With auto validations against ASNs. Increase “check-in” speed & accuracy by auto-reading pallets with forklift- mounted RFID reader Faster, more accurate material moves through auto location identification via forklift-mounted RFID reader Full pallet picks completed faster, more accurately, without operator data collection Build pallets faster & more accurately with forklift-mounted RFID reader – no manual scanning needed With RFID mobility, automate data capture at the time/place of movement

44 Indian Institute of Materials Management Thanks