Investigating Warehouse Operations Chapter 2 Activity Profiling: Mining For Gold WHEN PROBLEMS OCCUR IN WAREHOUSE OPERATIONS: REENGINEERING IS OFTEN DONE LAYOUT PROJECTS ARE COMMENCED WITH NO IDEA OF THE ROOT CAUSE OF THE PROBLEMS DUE TO: LACK OF KNOWLEDGE LACK OF TOOLS LACK OF TIME

Warehouse Activity Profiling Systematic analysis of item activity & order activity Profiling is designed to readily identify root causes Of material flow problems Of information flow problems Pinpoint opportunities for process improvement Provide an objective basis for decision making

Advantages of Profiling Can Quickly Reveal: Design and Planning Opportunities Correct Baseline for Justifying New Investments People Feel a Sense of Involvement Picture is Worth a 1000 Words Capture the activities of the warehouse in pictorial form

CAUTION Don’t get stuck on Analysis Paralysis Profiling becomes the goal Forget to solve the problems

7 Key Planning & Design Issues 1. Order Picking & Shipping 2. Receiving & Put-away 3. Slotting 4. Material Transportation System 5. Layout & Material Flow 6. Warehouse Sizing 7. Level of automation & Staffing

Picking & Shipping Order Batch Size Pick Wave Planning Picking Tour Construction Shipping Mode Disposition

Receiving & Put-away Receiving Mode Disposition Put-away Batch Sizing Put-away Tour Construction

Slotting Zone Definition Storage Mode Selection & Sizing Pick Face Sizing Location Assignments

Material Transportation System System Selection System Size

Warehouse Layout & Material Flow Overall Warehouse Flow Relative Functional Locations Building Configuration

Warehouse Sizing Space Requirements

Level of Automation Staffing Requirements Capital-Labor Substitution Level of Mechanization

What do Customers Want? their orders filled Some customers are High Demand Use a large portion of warehouse activity Have high customer service requirements May dedicate a portion of the warehouse to that customer or business unit 3rd Party Providers dedicate aisles to a customer Contract Warehouses have complete support to a customer Warehouse within a Warehouse

Advantages of a Warehouse within a Warehouse Smaller warehouses are more efficient Provide better customer service Can sub-divide the warehouse into self-contained processing units (ie: Divide & Conquer)

Types of Profiles: Customer Order Profile Order mix distributions Lines/Order distribution Cubes/Order distribution Lines & Cubes/ Order distribution

Order Mix Distribution There are several order mix distributions that are helpful in plotting warehouse operating strategies. Family Mix – overall warehouse operating strategy is dictated by order mix If Pure - (orders tend to be from one Product Family) indicates an advantage of virtual warehousing within a warehouse Results in good productivity & customer service

Family Mix Distribution 35% 25% 15% 5% 10% A Only B Only C Only A & B A & C B & C A, B & C 35 25 15 10 5 5 5

Handling Unit Mix Distribution Full or Partial Pallet/Case Mix Separate pick areas for full pallets, partial pallets, cartons Separate areas for full vs broken case mix picking

Handling Unit Mix Distribution % of Orders 50 30 20 55 25 % of lines 75 10 15 60 Loose carton Full pallet Mixed Broken Case Full Case

Order Increment Distribution Determine portion of full unit load (pallets, cartons) vs partial unit loads (½ pallet, ¼ pallet) Build partial unit loads: At the supplier, if possible Upon receipt in necessary Storage space may be sacrificed

Order Increment Distribution % of order lines

Lines/Order Distribution % of orders

Lines & Cubes Per Order Distribution Lines per Cubes per Order (ft3) Totals % Total Order 0-1 1-2 2-5 5-10 10-20 20+ Orders Lines 1 176 15 16 7 3 220 49% 17% 2 - 5 100 24 27 10 2 178 40% 623 47% 6 - 9 8 6 4 33 7% 248 19% 10+ 3% 225 286 46 50 34 21 9 446 100% 1316 % Orders 64% 10% 11% 8% 5% 2%   Total Cube 143 69 175 255 315 270 1227

Purchase Order Profile For inbound material vice outbound material Use same distribution analyses as for outbound profiling Supports the same batching and processing strategies for receiving and putaway

Item Activity Profiling Used to “slot” the warehouse What storage mode should be assigned How much space should be allocated Where should it be located Types of Activity Profiling: Popularity Cube Movement/Volume Popularity-Volume Order Completion Demand Correlation Demand Variability

Item Popularity Distribution Close to the door/Close to the floor Minority of items generate majority of the picks Uses Pareto Analysis or ABC Analysis A – automated-highly productive storage mode Golden Zone – close to aisle – at or near waist high B – semi-automatic – moderately productive storage/picking mode Silver Zone – next most readily accessible C – manual – offers high density storage

Item Popularity Distribution Popularity may be based on: Dollars of Sales Volume # of Requests

Cube Movement / Month % of Items

Popularity-Cube Movement Mix High Popularity-High Cube: Uses carton flow racks located for ease of replenishment High Popularity-Low Cube: Many picks / unit of space – use light directed carousels (carousels are not easy to restock, are expensive per foot of storage) Low Popularity – Low Cube: Lends itself to bin storage

Item-Order Completion Distribution Small groups of items that fill large groups of orders: List most to least popular Determine proportion of orders a subset can complete For example; 10% of the items may fill 50% of the orders. (next slide is an example) Assign these to small order completion zones: Productivity, processing rate, processing quality typically 2-5 time more efficient than general warehouse

Item-Order Completion Distribution 50% of the orders are completed by 10% of the items

Demand Correlation Distribution Identify relationship (affinity) of demand between individual items or families. Determined based on frequency of being requested together on orders Often based on same style or size Sometime complementary items such as shoes & purse This data can be used when slotting the warehouse to minimize movement when filling orders.

Demand Correlation Distribution Item Number Pair Frequency 189-2-4 189-2-1 58 493-2-1 493-2-8 45 007-3-3 007-3-2 36 119-2-1 119-2-7 30 999-1-8 999-1-6 22 207-4-2 207-4-4 15 662-1-9 662-1-1 12 339-7-4 879-2-8 9 112-3-8 112-3-4 6