Case Study – Solution
Solution:
There are several creative alternatives that Henry Bergson could pursue to solve the bin area
inventory stocking and picking problems at ABC Electronics.

Overall problem identification. The basic problem with the bin area is that the original
inventory and storage parameters have grown significantly out of date. In addition, the bin
area could be modernized with the addition of new materials handling equipment.

Inventory. Recommended solution steps:


The storage capacity requirements need to be recalculated based on current maximum
quantities. By having sufficient forward stocking space available, the problems with
excess reserve materials will be significantly reduced.

This step will require an enormous project to review and update individual item sizing
parameters and the expansion or reduction of current space allocation given to items. This
will entail the addition or subtraction of bin boxes or open shelves. This task may involve
movement to other stocking areas.

Any items whose quantities have greatly expanded may be candidates for shelf or pallet
racks.
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The entire bin area should be reorganized on an ABC stocking principle. The current bin
organization, by product group, has completely broken down. A new classification
scheme should be used, such as ABC, followed by product group, product class, or other
criteria. All items would undergo a classification update to fit the new criteria. The next
step would be to divide the entire bin area into three areas, such as A, B, and C. The goal
is to have all fast sellers (A items) in the first rows of the bin area closest to the packing
area with the slow sellers (C items) in the back of the area. The final step would be to
relocate all items so that they reside in their respective classification areas.
Storage systems. Recommended solution steps:

A new bin box that is smaller in height should be introduced to stock the hundreds of
small items currently in Box #1’s. This new box type would significantly reduce the
wasted cube space.

Since smaller boxes would be used, entire bins could be dedicated to small box storage.
This would mean that the number of shelves in these bins could be dramatically
increased. By relocating small-sized items to these bins, significant stocking space would
be opened in other bins.

A more advanced, and expensive, solution to small item storage would be the purchase of
bin cabinets with small drawers or a carousel system.

The forward stocking shelves in bins one through six should also be standardized from
the current three heights to one height large enough to accommodate the current three bin
boxes. Items too large for the standard shelf height should be reviewed for movement to
shelf rack areas.
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


By removing oversized items and expanding forward storage, the bottleneck occurring in
put-away would be reduced.
Picking. Recommended solutions:

While a reorganization of the bin area will definitely speed picking times, the problem of
the manually maneuvered cart remains. An excellent, and low-cost solution, would be to
set up an automated conveyor system that runs up and down the picking and storage
aisles. Picked items would be placed on the conveyor and brought to the packing area
automatically.

This solution would remove the carts altogether. It would also remove the need for the
materials handling equipment currently used to stage received inventories inside the bin
areas.

Currently, the pickers are using paper customer orders for line picking. Possible solutions
would be to install pick-to-light, voice-directed picking, or computer terminal and
monitors to increase both picking times and picking accuracies.
Bin management systems team. Recommended solutions:

A small team of inventory and storage experts should be established. The role of this
group is the continuous review of bin item stocking (capacity) requirements, updating of
system sizing files, and the sizing and placement of all new items in ABC Electronics’
bin inventory area.

This team would also be responsible for performing ongoing cycle counting and problem
resolution.
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