Order Processing Packaging & Shipment Chapter 3 Chapter 4

Traffic Through Warehouse Step 1 - Product enters a warehouse (Receiving) Step 2 – Product is placed in appropriate warehouse location (Stocking) Step 3 – Product is prepared to leave warehouse (Order Processing) Step 4 – Product is placed in a vehicle for transport to next destination (Shipping)

Definitions Order: Requirements & instructions for picking and shipping a set of inventory items Stock Keeping Unit (SKU): unique alpha- numeric characters identifying an item Line: Multiple requirements for an SKU Pick List: Items in an order Picking: Selecting, counting and dispensing items in an order Order Pickers: People selecting, counting and dispensing items in an order Value Added: Service that adds value

Order Processing Customer receives order Customer screens order Customer inputs order into WMS Order Picker retrieves pick list from WMS Order Picker locates & picks items Order Picker follows instructions for Added Value (packaging, labeling, assembly…) Order Picker delivers prepared items on Pick List to staging area for shipping

Customer Receives Order Order Processing begins when Customer (not warehouse) receives an order Internal: Warehouse & Customer are same company External: Warehouse & Customer are different companies Customer: Internal or external owner of product in inventory

Customer/Order Examples Amazon – Online purchase of product Internal Customer – Operates own DC’s Walmart – Automatic electronic store update of stock SPECS – Allocation of inventories External Customer – Uses 3PL Warehouse Exxon – Manufacturing material request Internal – Owns tanker terminal that feeds into refinery Tanker Terminal serves Same purpose as warehouse

Amazon Client’s Order

Screening an Order Customer needs to assess if an order can be fulfilled Quantity – Enough in inventory? Quality – Order requirements met? Time – Time parameters? Value-Added – Other services Since warehouse holds inventory, access to some of this information can be obtained through WMS

WMS Inventory List

Order in WMS Customer inputs order into WMS Order should/could include Quantity – Number & types of items Quality – Customer’s Vendor Compliance Time – Scheduled delivery/pick up Other – Assembly, packaging, labeling, testing and other services… Amazon uses internet to receive client orders then software processes order into WMS

Pick List The WMS transforms customer order into a Pick List customized for individual warehouse operations or systems

Picking There are 3 basic Picking systems Area System/Single Order Pick Zone Pick Multi-order/Batch Pick

Area System/Single Order Pick Order Picker moves throughout warehouse picking items for order (like grocery shopping) Order Picker takes items in order and takes them to shipping area The Gulf Winds warehouse system

Zone Pick Warehouse items are added to single orders as they pass through different zones Items related to each other (SKU, parts to assemble) Warehouse equipment used (forklift, by hand, robotics) Specialty storage (reefer) Value-added services (assembly, packaging labeling) Order Pickers only work in their own zone Ford, Chevy, Chrysler assembly plant system Parts of an automobile are stored in zones and added to the vehicle as it passes through assembly line

Multi-Order/Batch Pick Warehouse is divided into zones Items related to each other (SKU, parts to assemble) Warehouse equipment used (forklift, by hand, robotics) Specialty storage (reefer) Value Added services (assembly, packaging labeling) Order Pickers only work in their own zone

Definitions Within each of these systems, picking can be carried out as: Pick-To-Order: An Order Picker picks items for one order (each order handled separately) Batch Picking: An Order Picker picks all items for a group of orders (reduce trips to warehouse by picking same items for group of orders) Pick-By-Line/Pick-To-Zero: Exact number of items in one product line are available for picking (same type & number of items are delivered until line is exhausted)

Processes to Improve Accuracy Processes with limited technology: Pick By Label: WMS prints a label for item to be picked and attached to picked item Issue Pack Optimization: Items in measured lots (pallets, cases, batches) Pick Task Simplification: Eliminating & combining picking tasks Order Batching: Grouping orders in a batch to reduce travel time by Order Picker Move to Forward Pick Location: Large warehouses batch orders for a day and moved to staging area

Processes to Improve Accuracy Processes with technology: Bar Codes: Item identification in WMS linked to scannable barcodes (SKU, Model/Serial number) Batch Picking: Radio data terminals in workstations communicate with WMS Pick-To-Light/Put-To-Light: System scans barcodes to confirm accurate pick or , in a return, put back accurately Voice Technology: Order Picker receives pick list and confirms pick via headphones

Staging of Picked Items After picking, items are brought together, consolidated and prepared for delivery to customers Kitting: Individually separate but related items are grouped, packaged and supplied together as one unit