“H.E.B. Simulation Project” Gabriel Carreno Gonzalez Richard Wambua Andrew Fails Stephen Rosales Supervisor: Dr. Jesus Jimenez 1 Industrial Engineering Ingram School of Engineering Capstone Design Project

 Background  H.E.B Logistics/System Configuration  Terminology  Witness Simulation Overview  Objective  Model  Data Mining(R studio)  Simulation model and Analysis  Assumptions of Improvement  Recommendations Agenda 2

 A Retail Support Center is a warehouse that is stocked with inventory to be redistributed to wholesalers, retailers, or directly to consumers. 3 Background Source: Material Handling Institute of America (

 Formally known as H.E. Butt Grocery Company.  Started in Kerrville, Texas with one family-owned store in  One of the largest food chain, with annual sales of more than $15 billion.  Supplies families all over Texas and Mexico in 155 communities, with more than 340 stores and 76,000 employees.  Named Retailer of the Year in 2010 by Progressive Grocer Magazine.  Ranked 15 th in America’s Largest Private Companies by Forbes. Company Background 4 Source:

H-E-B Logistics San Marcos Retail Support Center (SM-RSC) Purpose: Slow-Moving Merchandise Size: Approx. 400K sq. ft. 5 Existing Facilities Layout:

Terminology  A picker is the human resource who: 1.Receives assignments 2.Picks products on to Pallet 3.Wraps the Assignment- filled pallets 4.Loads all work assignments into the truck supported by machinery equipment. 6

Problem Statement 7  Arrange the locations of products in order to improve cases per hour by at least one percent.  Make travel routes shorter to increase efficiency.  Reduce traffic congestion due to unnecessary transport moves.

Objectives 8  Use Witness simulation to compare the order picking process of current layout configuration and proposed data mined solution  Use R to data mine associations between items ordered by stores

9 Witness Simulation Model

 The new layout is based on market basket analytic techniques using an apriori algorithm  Rules formulated using the CRAN “arules” and “arulesviz” package for R  Implemented rules chosen based on a measure of how frequent the items are selected together 10 Proposed Layout

11 R-Studio Results

Rule Example 12

Results for New Layout 13

Conclusion 14  Several valuable process improvement variables (Relevance, Timeliness, Accessibility and Comparability) were considered and implemented to the results.  With a series of process improvement goal, an objective of reducing cases per hour throughput by one percent was achievable

Recommendations 15  Implement a family grouping storage assignment system to ensure time efficient traveling routes.  Rearrange the products according to association rules support.  Reduce traffic flow by adopting unidirectional routing.

Q&A Session Special thanks to: Jessica Johnson (HEB) & Dr. Mendez( McCoy School of Business Texas State University *Sponsor of problem and data *Sponsor of WITNESS simulation language Would like to become a sponsor of a IE capstone design project? If Yes, please contact Dr. Jesus Jimenez 16 Q&A & Acknowledgements