Distribution Operations
Overview
Distribution Operations Outline
• Facility Operating Models
• Operating Functions
– Inbound Functions
 Receiving
 Putaway / Takeaway
– Stocking & Picking
 Slotting & Pick Design
– Packing / Shipping
 Packing Functions
 Shipping Concepts
 Automated Sortation
 Quality Control
• Facility Maturity Model
• Facility Capacity Analysis
 Pick Slot Storage Types
– Capacity Assessment Basics
 Order Picking Control
– Flow Profiling & Data
 Pick Replenishment
– Queuing & Accumulation
 Order Release Methodologies
– Impact of Capacity
– Flow Through Processing
 Check-In
• Facility Design and Layout
 Value Added Services
• Warehouse Control &
Optimization
 Order Pick / Pack
• Distribution Operation Tools
 Order Allocation
 Sortation / Consolidation
1
Facility Operating Models
Facility Operating Models
• The purpose of distribution facilities is to balance transportation
efficiencies between a supplier and an end-user, as well as providing
whatever inventory buffer is necessary to ensure required fill rates.
• Facilities help manage transportation costs by providing consolidation
efficiencies for both inbound and outbound shipments
– The positioning of facilities within the network depends on the relative costs
and frequencies of transportation and the importance of service times
• Different operating models are appropriate for different circumstances
and product characteristics, for example:
– Stocking facilities –

Slow moving inventory, long lead time items, high demand variability, requirements for frequent
re-allocation
– Flow through facilities –

High value inventory, seasonally variable items, fashion goods,
– Cross-dock facilities –

High volume or fast moving items with predictable demand patterns, commodity items,
3
Facility Operating Models
Summary Of Facility Functions And Suitability Considerations
System
Description
Pros
Benchmark is
using their
facility in this
manner
Cons
Stocking
The distribution facility serves as a
repository for inventory, buffering
demand and enabling the use of
efficient order quantities as well as
the building of efficient delivery loads
to customers or end-users.
Most suitable for slower
moving inventory or
items with long lead
times. Higher fill rates
for items with less
predictability (pooling of
inventory risk)
Higher system-wide
inventory levels.
Additional layer of
handling costs
(putaway and
selection).
Flow Through
The facility serves as an assembly
point for outbound orders to
customers or end-users. Inbound
loads from suppliers are broken
down and distributed among multiple
destinations. No inventory is held
beyond the time to build and
dispatch the next outbound
shipment.
Enables a more efficient
inventory model where
inventory is allocated to
and maintained at the
point of demand, where
volumes cannot support
large end-user
shipments. Streamlined
processing costs.
Requires sophisticated
order management and
allocation capabilities.
Requires sufficient
density of end-user
demand volume to
justify frequent
outbound shipments.
Cross-Dock
The facility is a transfer point for
inbound shipments which are already
separated for delivery to individual
customers or end-users. The
function is to shorten the supply
chain while maintaining
transportation efficiencies.
Minimal handling costs.
Fastest speed to market.
Requires order scale to
justify supplier
preparation of end-user
shipments. Limited
ability to react to last
minute changes in
demand patterns.
4
Facility Operating Models
5
Stocking Facility
6
Flow Through Facility
7
Inbound Processing Receiving and Putaway / Takeaway
This section
may be of
less interest
Physical Receiving
• Physical receiving processes are largely driven by the nature of
the goods being received, as well as the ultimate mission of the
facility.
– Receiving Process
 Unload, stage & check-in
 Immediate putaway to reserve
 Immediate putaway to primary
 Cross-docking or “hot receiving”
– Physical Receiving / Material Handling
 Pallet onto Floor / Rails
 Pallet to Carton Takeaway
 Direct Carton Unload and Takeaway
9
Receiving Processing
• Initial processing of goods on the receiving dock generally
consists of check-in and receipt verification. The degree of
processing depends on the design of upstream and downstream
processes and is driven by the relative capacity and
productivity of the various processes.
– Detail Receiving
 Detail Check In Receiving
 Detail Check In Processing (Flow Through Facilities)
 No Detail Check In – Carton Count or Assumed Receipt
– Receipt Verification / Check In
 Manual validate against PO upon receipt
 Scan validate against PO upon receipt
 Pre-receiving
 Assumed receipt
10
Receiving Methods
• Pallets unloaded onto floor conveyor or into floor positions, PO
sortation and checking done by re-stacking pallets where
necessary
11
Receiving Methods
• Pallets unloaded into floor positions, cartons unstacked and
sorted onto conveyor by PO and taken away to storage or
processing
12
Receiving Methods
• Cartons unloaded onto conveyors, sorted by PO and taken away
to processing or storage
13
Putaway / Takeaway
• After initial receiving processing, products are taken from the
dock to either storage or interior locations for further
processing. There are various methodologies for executing
these moves
– Process
 First Come First Serve
 Batched by Zone
 Batched and Sequenced
 Automated Putaway
– Location Selection
 Manual (Random)
 Manual (locate SKU by zones)
 System Confirmed Putaway
 System Suggested Putaway
 System Directed Putaway
14
Slotting and Picking
This section presents
some critical
considerations as the
new facility is designed
Slotting & Picking Design Methodology
Data
Collection
• Product profile
data
– Cube
– Weight
– Unit of
measures
Analysis
Order Analysis
• Units-ofmeasure
• Pick
Frequencies
(hits per SKU)
• Facility Profile
Layout
Design
• Assign pick
methods
– Storage types
– Handling
systems
– Control
methods
• Sales history
& variances by
sku
Slotting Analysis
• Estimate pick
rates
• Slot size
requirements
• Determine order
release method
• Order history
(line item
detail)
• Pick slot
storage type
• Analyze
congestion
• Slot location
• Determine
automation
requirements
• Pick slot
capacities
Business
Case
• Estimate
capital costs
• Estimate
operating
costs
• Estimate
savings
• Quantify cash
flows
• Develop layout
drawing
16
Slotting & Picking Design Methodology
Data
Collection
• Product profile
data
– Cube
– Weight
– Unit of
measures
Analysis
Order Analysis
• Units-ofmeasure
• Pick
Frequencies
(hits per SKU)
• Facility Profile
Layout
Design
• Assign pick
methods
– Storage types
– Handling
systems
– Control
methods
• Sales history
& variances by
sku
Slotting Analysis
• Estimate pick
rates
• Slot size
requirements
• Determine order
release method
• Order history
(line item
detail)
• Pick slot
storage type
• Analyze
congestion
• Slot location
• Determine
automation
requirements
• Pick slot
capacities
Business
Case
• Estimate
capital costs
• Estimate
operating
costs
• Estimate
savings
• Quantify cash
flows
• Develop layout
drawing
17
Slotting Analysis – Locations
This is a key
slide
• Generally, the warehouse can be divided into slotting zones
based on pick frequencies
Slow
Movers
C Pick Zone
80-90th
Percentile
B Pick Zone
80th Percentile
of Pick
Frequency
A Pick Zone
Dock
18
This shows the
analysis that is
done to assess
how well a facility
is laid out
Slotting Analysis – Locations
• Sample product slotting analysis
Comparison of
As-Is & To-Be
Slotting
Output From
Slotting Analysis
% in Pick Zone
Class
% of Hits # of Items % of Items
A
B
C
Items
%
Needing Needing
Reslot
Reslot
A
80%
339
17%
4%
5%
8%
251
74%
B
10%
188
9%
2%
2%
6%
151
80%
C
9%
580
29%
3%
4%
22%
148
26%
D
1%
881
44%
2%
2%
41%
66
7%
Total
100%
1988
100%
11%
12%
76%
616
31%
Pick Zone Legend
A=
Aisles 70 & 80, or Location < 13
B=
13 < Location < 40
C=
No Location, Aisle 90, Location >= 40, or Level = C/D
19
Slotting Analysis – Travel Path
• Sample picking travel path analysis
Before
The impact is that
efficiency is
dramatically
improved
After Re-Slot
Total Travel Distance = 3,480 ft.
Total Travel Distance = 1,110 ft.
(68% Reduction)
20
Slotting & Picking Design Methodology
Data
Collection
• Product profile
data
– Cube
– Weight
– Unit of
measures
Analysis
Order Analysis
• Units-ofmeasure
• Pick
Frequencies
(hits per SKU)
• Facility Profile
Layout
Design
• Assign pick
methods
– Storage types
– Handling
systems
– Control
methods
• Sales history
& variances by
sku
Slotting Analysis
• Estimate pick
rates
• Slot size
requirements
• Determine order
release method
• Order history
(line item
detail)
• Pick slot
storage type
• Analyze
congestion
• Slot location
• Determine
automation
requirements
• Pick slot
capacities
Business
Case
• Estimate
capital costs
• Estimate
operating
costs
• Estimate
savings
• Quantify cash
flows
• Develop layout
drawing
21
Pick Slot Storage Types
System
Static Storage
– Pallet Rack
– Shelving
Dynamic
Storage
– Carton Flow
– Pallet Flow
Description
Pros
Cons
System in which the product does
not move on its own. The most
common storage equipment used is
the selective pallet rack (single
deep) and the steel shelving unit.
Storage by size and popularity is
critical.
appropriate for the
storage and picking of all
but the most popular
products, initial low
investment
excessive travel time,
ineffective control
system
System in which the product flows
by gravity (gravity conveyor or air
flotation rails) to present a unit of
material to the picker at a specified
location. There are two basic
variations: Carton Flow, used for
broken case picking and Pallet Flow
Rack, used for case picking.
relatively small picking
face, reduced size of
zone and travel distance
substantial equipment
costs, replenishment
costs (labor)
Example
Carton Flow
Example
Pallet Rack
Replenish
Pick
22
Order Picking Handling Systems
• Man-to-Part: Traditional material handling approach to order
picking that requires the picker to travel to the storage location
System
Description
Pros
Cons
Pick to pallet
The picker operates an industrial truck
with a pallet and commonly used for
case picking and broken case picking.
access to hi-rise shelving
least productive order
picking method
Pick to cart
The picker operates a push cart or
powered cart.
improved productivity with
computer control and radio
communication capabilities,
able to handle large orders
and long distances
restricted access to
storage levels that can be
reached from the floor
Pick to belt
The picker is assigned a zone along a.
conveyor where he places picked items.
Commonly used with flow rack storage
and requires sortation by customer
order before shipping
Man-aboard
Storage /
Retrieval
The picker rides a captive aisle
storage/retrieval machine that rides on
a rail and is powered by an electric bus
overhead.
reduces travel time
flexibility of being able to
move between storage
aisles
Full Case
Broken Case
Example
Carton Flow &
Pick to Belt
23
Order Picking Handling Systems (continued)
• Part-to-Man: Material handling system in which the part is
delivered via carousels, conveyors, and storage/retrieval
systems to the picker
System
Description
Pros
Cons
Horizontal
Carousels
Storage bins that rotate horizontally
on a track under electric motor
power
improved cube utilization,
full utilization (no
waiting, no traveling)
substantial equipment
costs; cannot pick &
replenish
simultaneously
Vertical
Carousels
Storage shelves that rotate
vertically, always presenting a shelf
to the picker at waist level.
excellent for space
utilization and
organization when storing
small volume, small
items
substantial equipment
costs; cannot pick &
replenish
simultaneously
Automatic
Storage &
Retrieval
System
Hybrid of the carousel and S/R
modules that store and retrieve
containers under computer or
operator directed control
substantial equipment
costs
Example
Horizontal
Carousel
24
Picking Control Methods
System
Description
Pros
Paper Picking
A printed pick list that includes
SKU’s and locations
Label Picking
A bar coded label is printed for each
SKU or full case with correct location
address, SKU identity, and customer
order number.
reduces likelihood of
counting errors, improves
productivity
Pick-to-Light
The use of a visual display to
visually lead the picker through the
process of picking each line in the
assigned zone.
paperless picking, order
accuracy
Radio
Frequency
(RF) Units
The use of onboard and hand-held
terminals displaying picking
instructions via RF data
communication links from the picker
to the control computer in real-time.
Also provides a means of confirming
or correcting picking orders.
reduced travel time and
delays, high order
accuracy
Cons
higher likelihood of
picking errors;
requires manual pick
confirmation
25
Pick Rate Analysis
• Applying pick rate benchmarks is a quick way to estimate the
labor costs associated with various pick methods
• If general benchmarks are inappropriate, then more detailed
work studies will be required
26
Order Release Methodologies
Release
Method
Description
Pickers
Per
Order
Line
Items
Per
Pick
Periods
per
Shift
Pros
Cons
Discrete
Picking
One person picks one
order, one product at a
time. Orders are not
scheduled and may be
picked at any time on a
particular day.
Single
Single
Single
simple, risk of picking errors
of omission is reduced,
provides fastest response in
a service window
environment, picking
accuracy accountable to a
single person, little
coordination with other
pickers required, no space
required for order
consolidation, and relatively
low control system
sophistication required
least productive, excessive
travel time, relatively low
number of orders picked
simultaneously, greater
risk of picking area
congestion
Zone
Picking
The total pick area is
organized into distinct
zones managed by one
person responsible for
picking all lines for each
order for that zone. Two
variations of zone picking
include: Sequential zone
picking, when the order is
passed from one zone to
the next, one at a time.
Simultaneous zone
picking, when the order is
consolidated in a
designated location after
zone picking is done from
all applicable zones
independently.
Multiple
Single
Single
flexible with different skills
or equipment associated
with a hybrid warehouse,
reduced travel
time/congestion/delays due
to the ability to further
subdivide zones, relatively
high number of orders
picked simultaneously,
reduced picking area
congestion
Multiple pickers
accountable for picking
accuracy, high
coordination with other
pickers required, space
and coordination required
for order consolidation
27
Order Release Methodologies (continued)
Release
Method
Description
Picker
s Per
Order
Line
Items
Per
Pick
Periods
per
Shift
Pros
Cons
Batch
Picking
One picker picks a group
of orders at the same
time, one line at a time.
Single
Multiple
Single
greater productivity, best for
orders with few (1-4) lines
and small cube, reduced
travel time, drastically
reduced picker travel time,
very high number of orders
picked simultaneously
risk of picking and sorting
errors, coordination
required between bulk
picking and individual
order sortation , individual
order processing time
dependent upon total
batch processing time,
space required for
individual order sortation,
residual product handling
can be relatively high,
relatively high control
system sophistication
Wave
Picking
One picker picks one
order one line at a time
however a selected group
of orders are scheduled
to be picked during a
specific planning period
Single
Single
Multiple
better coordination with
shipping
Risk of productivity loss if
shipping schedule is
unbalanced
28
Order Release Methodologies (continued)
Release
Method
Description
Pickers
Per Order
Line
Items
Per Pick
Periods
per Shift
Pros
Cons
ZoneBatch
Picking
Each picker is assigned a
zone, and will pick a part of
one or more orders,
depending on which lines are
stocked in the assigned zone.
Multiple
Multiple
Single
Potential for higher
productivity
requires more control due
to complexity in nature
ZoneWave
Picking
Each picker is assigned a
zone, and picks all lines for
all orders stocked in the
assigned zone.
Multiple
Single
Multiple
Potential for higher
productivity
requires workload
balancing between pick
zones
ZoneBatchWave
Picking
Each picker is assigned a
zone, and picks all lines for
orders stocked in the
assigned zone.
Multiple
Multiple
Multiple
Potential for higher
productivity
requires more control due
to complexity in nature
29
Flow Through Processing
Flow Through Processing
• Detail checking in flow through processing areas is similar to
the process engaged in during receiving. Often this process is
deferred to these processing areas to leverage the need to
open and unpack each carton in these areas and avoid
duplicate handling.
• A key function of a flow-through process is to delay allocation
of incoming product shipments until receipt at the distribution
center in order to make more effective decisions on the
deployment of inventory.
– Flow through processing includes the physical distribution of goods
to final destinations based on these allocations. This can happen in
several ways:
 Manual distribution (re-packing)
 Manual pick / pack processes
 Automated sortation
31
Flow Through Processing – Value Added Services
• Value added services are typically performed as a function of
the flow through processing areas. These areas can be either
in-line, or arranged in work-stations for more complex services.
Note that these services can also be applied to products in a
storage facility as well as a flow-through facility.
– Typical Services
 Kitting / Light assembly
 Pre-packs
 Custom packaging
 Labeling
 Pricing
 Floor-ready displays
– Tracking / Control
 Component pick lists
 Automated inventory adjustments & conversions
 Schedule and coordination
32
Flow-Through Processing
• Multi-level processing modules are one way of combining flowthrough processes in-line, maintaining flow rates and improving
productivity.
33
Flow-Through Processing – Pick / Pack Concept
• The Order Pick / Pack concept circulates each product past
static locations for each customer or destination, where the
allocated quantity for each location is consolidated and packed
to containers.
34
Flow-Through Processing – Automated Sortation
• Automated sortation is one option for consolidating individual
items that have been picked, or are being allocated and
distributed into a unitized delivery carton or container.
Tilt-Tray Sorter - Tilt Trays sorters require either
manual or automatic induction. Once the item is on
a tray the item is scanned and transported to the
proper lane/chute. At that point the tray is tilted so
the product is diverted off. These trays can divert to
both sides and receive product at multiple points.
Crossbelt Sorter - Crossbelt sorters are similar to tilt
trays, but a dual action belt with dc motor replaces
the tray. Products are inducted onto the individual
belts then powered off at the proper lane destination.
* Note that this is a representative sample, not a comprehensive list of
sorter types
35
Packing / Shipping
Packing / Shipping
• The shipping function creates unit loads (pallets or containers) for
shipping, as well as preparing shipments for delivery to customers.
The shipping area is typically responsible for closing out order activity
and confirming distribution activities.
– Order verification
– Packing
 Master packs / consolidation
 Palletization
 Freight / postage determination
– Labeling
 Content labeling
– Shipping
 Manual Pallet Build, Stage & Load
 Carton Sortation to Pallets, Stage
& Load
 Direct Carton Load
 Automated Loading
 Pack & Hold
 Compliance labeling
 Shipping labeling
 Packing slips
37
Packing / Shipping
• Pallets built in picking or processing areas are accumulated on the dock
and staged for shipping
38
Packing / Shipping - Conveyors and Sortation
• Several types of sorters exist for sorting cartons or containers
to shipping lanes for palletization or direct loading:
Right Angle Pusher - Diverts via a pneumatic powered pusher, when
activated the pusher pushes the carton directly in front of it off the
sort conveyor onto an outbound lane. While relatively simple and
cost efficient, this type of sorter has limited throughput rates.
Sliding Shoe Sorter - Suited for heavy duty applications, the cartons
are tracked and diverted by pushers (shoes). The number of shoes
that diverts are based on the specific carton being tracked. Both the
tube and slat can sort left or right at the same time.
Pop Up Wheel - Diverts via a pneumatic powered solenoid, when
activated the wheels raises above the sorter plane, changing the
case direction. Versions of this concept include pop up chains and
roller sections in traditional conveyor sections.
* Note that this is a representative sample, not a comprehensive list of
sorter types
39
Packing / Shipping
• Pallets are built in shipping from individual cartons conveyed from
picking / processing areas. Pallets are not staged, but are live loaded.
A version of this concept would load cartons directly onto trailers without
palletizing (floor loading trailers / containers)
40
Quality Control
• Quality control activities are typically either performed upon
receipt as part of the detail check-in process, or post-storage as
part of a location / SKU verification process (cycle counting)
– Quality Inspection upon Receipt
 100% Inspection
 Random Inspection (Procedure directed)
 Random Inspection (System Directed)
 Statistical Inspection (System Directed)
– Cycle Counting
 Random
 Periodic / Scheduled
 Statistical (Experience Based)
 Exception Triggered
41
Facility Maturity Model
Facility Maturity Model
We Categorize practices based on a Capability
Maturity Model
Stage III
Advanced
Stage II
Common
Stage I
Outdated
Top 5 %
Companies
Top 5 – 20 %
of Companies
Middle 20 – 80 %
of Companies
Bottom 80 – 100 %
of Companies
Leading, edge
practices
based on new
or emerging
technology
or very
innovative
processes
Practices that
are widely
implemented
at leading edge
companies
within an
industry
Practices that are
widely used and adopted
across an industry
Practices which are
used but may be
considered
out of date
Usage
Stage IV
Excellent
Time
As a practice becomes more widely adopted, it transitions from excellent through to a standard practice; and
then possibly to an outdated practice
43
10. Distribution Operations: Warehouse Planning & Design
Excellent
Advanced
Common
Outdated
Start-up and
Close Downs of
Warehouse
Operations
Start-up and close-down
based on continually updated
quantitative network model
that determines optimal
warehouse location based on
trade-off between
operational costs, facility
costs, transportation costs,
inventory investment and
customer service.
Start-up and close-down
based on quantitative
network model that
determines optimal
warehouse location based on
trade-off between
operational costs, facility
costs, transportation costs,
inventory investment and
customer service.
Start-up and close down
based on perceived need.
Use of a detailed project plan
for start-up and close-down
of operations to ensure
seamless customer service.
Start-up and close down
based on perceived need.
Use of a project plan for
move and installation of
warehouse resources,
equipment and stock. Adhoc close-down.
Parameters
Used in Layout
and Equipment
Decisions
Use of computer based
layout and work-flow
simulation modeling is used.
The model is stand-alone or
part of a “Tier-One” WMS
solution. It considers
slotting by SKU velocity and
optimization of work flow and
travel paths.
Use of PC based spreadsheet
models for layout and
equipment needs and cost
are used. Some velocity
loading is considered for SKU
placement.
No models exist. Sizing is
based on an estimate of bin,
rack and floor space needed
for current and future needs,
derived from past examples.
No models exist. Layout and
equipment are based on past
methods and product
groupings. Velocity and
travel optimization not
considered.
Methods and
tools for Layout
and Equipment
Decisions
Layout and Equipment
design carried out by using a
modeling tool to optimize
space, SKU slotting, and
travel optimization of the
warehouse vs. cost, service
and profit targets.
SKU quantities and volumes
are used to estimate storage
types and space needs.
Numerous storage and
retrieval methods are
evaluated to determine
equipment needs.
SKU quantities and volumes
are used to estimate storage
types and space needs. Past
storage and retrieval
methods are assumed while
determining equipment
needs.
Sizing is done based on a
comparison of material and
quantities to be stored to
past examples.
Evaluation of
Warehouse
Configuration
Dynamic SKU slotting is used
to continually optimize
warehouse space.
Rearrangements are based
on changing stock movement
patterns.
Frequent, periodic
rearrangements of the
warehouse (SKU static
slotting) when movement
patterns of stock changed
significantly.
Ad-hoc and infrequent
rearrangements of the
warehouse.
No optimization of the
warehouse. Material is
moved only when space
needs to be freed up for
more material or when
earlier such actions are
reversed.
44
10. Distribution Operations: Operational Processes
Excellent
Advanced
Common
Outdated
Application of
Lean Concepts
Lean concepts are extended
beyond the 4-walls to drive
entire supply chain (“sellone, buy one” and avoid
promotions to reduce
demand “lumpiness”).
Lean concepts are used
throughout warehousing
operations (workplace
organization, visual control
and standardized work).
Partial application of Lean
concepts – particularly due
to implementation difficulties
in the area of standardized
work.
No application of Lean
concepts.
Operational
Processes
Determination
Operational Processes are
based on use of modeling
tools and WMS outputs.
Operational Processes are
based on productivity
considerations.
Operational Processes are
based on experience and
past business requirements.
Poor of non-existent
structured determination of
Operational Processes.
Operational
Improvement
Methodology
Operational processes are
improved based on 6 Sigma
process measures and
workflow simulations.
Operational processes are
improved when inefficiencies
become apparent.
Operational processes are
improved only when major
inefficiencies are obvious.
Operational processes are
changed only when the
services provided change.
Process
Automation
Processes are managed via
integrated WMS system, are
RF-driven and include RFID
technologies. Conveyor
systems and automated
sortation are integrated with
WMS. Other automation
(e.g. ASRS, carousels, etc.)
may be utilized to satisfy
specific requirements.
Processes are managed via
WMS system and are mostly
RF driven. Conveyor
systems and automated
sortation are utilized. Other
automation (e.g. ASRS,
carousels, etc.) may be
utilized to satisfy specific
requirements.
Paper or Radio Frequency
(RF) driven processes.
Some utilization of
conveyors to transport
orders to packing & shipping.
Paper driven processes with
some reporting.
Order Picking
Mixture of products crossdocked and pick from stock.
Batch and wave picking with
automated sortation are
utilized to optimize
productivity and shipping
capacity. Conveyor system
includes inline weighing and
manifesting.
Mixture of products crossdocked and pick from stock.
Batch picking and automated
sortation is utilized to
optimize productivity.
Mixture of single order and
batch picking. Batch picked
orders are manually sorted.
Single orders are picked
from storage racks.
45
10. Distribution Operations: Operational Processes
Excellent
Advanced
Common
Outdated
Receiving
Statistical sampling of ASN’s
is used to verify accuracy of
receipts. No physical
counting of receipts is
required for consistently
accurate vendors. Use of
Cross docking with the use
of ASN to allocate in-transit
prior to actual receipt.
Receipts are verified against
ASN and entered into
warehouse system via RF
terminal. Use of Cross
docking from receiving to
shipping– allocate upon ASN.
Receipts are verified via
physical counts and entered
into warehouse system via
RF terminal or manually.
Receipts are verified via
physical counts compared to
receiver document. Receipts
are manually entered into
warehouse system.
Put-away
WMS directs put away and
interleaves putaway tasks
with other warehouse tasks
(e.g. replenishment, stock
transfers, order picking,
etc.)
WMS directs put away to
optimal storage location.
Putaways are non-directed
and updated into the
warehouse system via RF
terminal or manually.
Paper-based put-away
process where inventory
moves are updated into the
warehouse system by
clerical, after the fact.
Replenishment
Replenishment tasks are
interleaved with other
warehouse tasks. Wave
based replenishment to
multiple pick zones based
on material handling types.
WMS system automatically
increases priority of
replenishment tasks when
pick slot quantities fall
below demand.
Replenishment tasks are
interleaved with other
warehouse tasks. Wave
based replenishment may be
used. WMS system
automatically increases
priority of replenishment
tasks when pick slot
quantities fall below demand.
Replenishment needs are
generated from warehouse
system report. Stockers use
report to fulfill pick slot
needs. Emergency pick slot
needs are manually
communicated.
Replenishment needs are
manually tracked and
communicated to stockers.
Productivity
Tracking
Productivity is captured and
reported via WMS at the
task and operator level and
linked with labor incentives.
Engineered standards may
be used.
Productivity is captured and
reported via WMS at the task
and operator level.
Productivity is tracked at the
process level (e.g.
lines/pieces picked per labor
$, etc.)
Productivity is tracked at the
operational level (e.g. orders
shipped, labor cost, etc.)
46
Facility Capacity
Facility Capacity Analysis
• Capacity should be looked at in two dimensions
– Throughput
– Storage
• Evaluate throughput in terms of several operating parameters
– Staging & queuing
– Conveyor and accumulation
– Productivity and staffing levels
– Address through material handling and process changes
• Evaluate storage at peak levels allowing for contingency
– Total cube and slot utilization
– Operating buffer (10-15%)
– Slotting and productivity considerations
• Volume fluctuations drive much of the discussion of capacity
– Peak versus average and duration of peaks
– Impact of balance of shipments and flow over time
48
Facility Capacity – Flow Profiling
• The first step in evaluating capacity is to accurately chart
activity by area and process through the facility, including
accurately charting relative volume flows
60% of
Volume
Sample Facility Flow
Flat Open
Flat Tag
143
tote
cap.
50% of
Receiving
Volume
Primary Sort
101 tote
cap.
40% of
Volume
Flat Sorter 1
and 2
100 tote
cap.
162 tote 17% of
cap. Volume
33% of
Volume
65 tote
cap.
310 tote
cap.
Pinning
28% of
Volume
205 tote 16% of
cap. Volume
Receiving
152 tote
cap.
72% of
Volume
5% of
Volume
Utility
280 tote
cap.
18% of
Volume
45 tote 197 tote
cap.
cap.
Shipping
11% of
Volume
Hang Open
80% of
Volume
Hang Tag
45 tote cap.
(after merge)
Hang Sort
20% of
Volume
280 tote
cap.
Quick Response
Receiving
(Separate
Doors)
Store
Transfers Crossdock
Returns
Processing
110 tote
cap.
Shipping
(Separate
Doors)
49
Data Detail for Capacity Analysis
• Data requirements for a capacity analysis are typically more intensive
than typical operations projects
Sample Data Sheet
FLAT
# Days per Week
Percent of sort from tag/open
Percent Open sent to Flat tag
PIECES/CARTON (inbound)
PIECES/Black TOTE
HOURS/SHIFT - OPEN
# OF SHIFTS - OPEN
HOURS/SHIFT - TAG
# OF SHIFTS - TAG
# OF SHIFTS - TAG (Peak)
# of lanes for open (inbound)
# of lanes per person - Open
# of lanes for Tag
# of lanes per person - tag
5.4
54.2% LBR
40.4% LBR
25
25
7
2.0
7
1.5
2.0
72
3.0
127
3.0
PIECES/ Orange TOTE
HOURS/SHIFT - SORT
# OF SHIFTS - SORT
# OF SHIFTS - SORT (Peak)
SORTATION - STATIONS
TRAYS/HOUR/STATION (@100%)
People per induction
MAX. UTILIZATION PIECES/DROP
PIECES/DROP @ PEAK
32
50 SPRING
32 Fall Season
7
1.5
2.0
2 (290 stores max)
5,400 (CURRENT SPEED) (MAX SPEED) - 6,000
2
45.0% per person inducting
3.0
3 Spring
4.5
4.5 Fall
PINNING
PIECES/CARTON (rec)
PIECES/shipping carton
PIECES/TOTE (black)
Pieces/Tote (overall)
% of volume sent to shipping
HOURS/SHIFT
# OF SHIFTS
# OF SHIFTS (Peak)
# of lanes
# of lanes per person
% of pinning/utility volume
25
9
32
23
37%
7
1.5
2.5
120
3.0
65.0%
PIECES/CARTON (rec)
PIECES/Orange Tote
HOURS/SHIFT
# OF SHIFTS
# OF SHIFTS (peak)
# of lanes
# of lanes per person
% of volume sent to shipping
25
15
7
1.5
2.5
52
2.0
86%
UTILITY
SORT
HANGING
PIECES/CARTON (rec)
PIECES/TROLLEY
PIECES/TOTE
HOURS/SHIFT - OPEN
# OF SHIFTS - OPEN
HOURS/SHIFT - TAG
# OF SHIFTS - TAG
# OF SHIFTS - TAG (Peak)
HOURS/SHIFT - SORT
# OF SHIFTS - SORT
# OF SHIFTS - SORT (Peak)
# of lanes for open
# of lanes per person - Open
# of lanes for Tag
30
25
22
7
2.0
7
1.5
2.0
7
1.5
2.0
66
2.0
60
27 SPRING SEASON 22.4 Fall Season
50
Facility Capacity Analysis
• Throughput capacity –
– Staging and queuing Each process in a distribution facility will require staging, either in the form of
dedicated staging areas, or in the equivalent capacity to hold more product than is
being currently processed
 Pick facings can be thought of as effective staging for order fuflillment
– Conveyor and accumulation
 Matching the capacity and flow rates of conveyors and sorters to periodic volume
demand, and providing the appropriate amount of accumulation in these systems
is a key to optimizing facility throughput
– Productivity and staffing
 A critical input to capacity analysis is the productivity of the staff involved in the
process being analyzed
– Operating concepts and productivity
 Similarly to the storage concept or automation, the selection of operating concepts
for key processes such as receiving, shipping, putaway and replenishment can
drive the effective capacity of a distribution facility
51
Facility Capacity Analysis
Sample Capacity Calculations
CAPACITY
PROCESS AREA
TOTAL
UNITS
CAPACITY
TOTAL
UNITS
STAGING TIME
FTEs
MAX
AVG.
TIME
CAPACITY
CAPACITY
Units per
Week
Units per
Week @
Peak
1999
Average
Week
Average
Week of
Peak* Week
Peak Month for Peak Month
FLAT
INBOUND - STAGING
1,440
6,324
12,328
26,080
1,150,330
478,125
931,973
1,971,681
17,034
33,203
70,243
635,040
193,162
376,517
796,559
6,813
13,281
28,097
Volume from Flat
478,125
931,973
1,971,681
Volume from Rec eiving
239,183
466,221
986,336
Volume from Pinning
147,225
286,975
607,124
17,617
34,339
72,647
882,149
1,719,507
3,637,789
OPEN - THRUPUT (UPH)
634
POST- OPEN - STAGING
4,862
TAG - THRUPUT (UPH)
200
POST- TAG - STAGING
3,630
CTNS
36,000
PIECES
PCS
15,216
PCS./HR.
TOTES
PCS
TOTES
121,550
8,400
90,750
1 HOURS
24
PIECES
PCS./HR.
5
HOURS
42
PIECES
36,000
1,150,330
121,550
476,280
2
HOURS
90,750
PRIMARY SORT/FLAT SORT
Volume from Utility
TOTAL VOLUME
PRIMARY SORTER
SORT - THRUPUT (UPH)
404
TOTES
29,160 PCS./HR AVG
12,928
PIECES
0.5
HOURS
43,740 PCS./HR FALL
1,653,372
7,779
15,163
32,079
2,480,058
882,149
1,719,507
3,637,789
5,011
9,767
20,663
1,200,248
189,408
369,198
781,076
33,061
HANGING
INBOUND - STAGING
OPEN - THRUPUT (UPH)
POST- OPEN - STAGING
1,188
481
CTNS
35,640
PIECES
PCS
15,876
PCS./HR.
2
HOURS
33
35,640
1,200,248
1,305 TROLLEYS
32,625
PIECES
3
HOURS
32,625
8,017
15,627
TAG - STAGING
960 TROLLEYS
24,000
PIECES
2.5
HOURS
24,000
6,681
13,023
27,551
TAG - THRUPUT (UPH)
200
453,600
151,526
295,359
624,861
1,670
3,256
6,888
1,175,731
189,408
369,198
781,076
20,608
40,169
84,981
756,000
233,691
455,515
963,689
12,365
24,101
50,989
CONSOLIDATION
SORT - THRUPUT (UPH)
PCS
220 TROLLEYS
6,000
PCS./HR.
5,500
PIECES
5,184
DROPS
15,552
PIECES
2900
CTNS
72,500
30
340,200
0.5
HOURS
5,500
881,798
PINNING
INBOUND - STAGING
PINNING - THRUPUT (UPH)
PIECES
PCS
8,000
PCS./HR.
2,900
CTNS
68,121
PIECES
INBOUND - STAGING - WS
1008
CTNS
25,200
UTILITY - THRUPUT (UPH)
175
OUTBOUND STAGING
200
5
HOURS
40
72,500
453,600
3
HOURS
5
HOURS
68,121
UTILITY
OUTBOUND STAGING
1,040
PIECES
PCS
4,550
PCS./HR.
CTNS
15,600
PIECES
26
25,200
257,985
3
HOURS
15,600
429,975
11,096
21,629
45,759
125,833
245,278
518,909
6,658
12,978
27,456
52
Conveyor Flow Capacity & Queuing Impact
• Accumulation capacity in a conveyor or sortation system has a
dramatic effect in the overall throughput capacity of a system. Over
capacity situations lead to extended operating hours or reduced
throughput, resulting in higher costs or a need for extensive capital
expenditures
Sample Sorter Queuing Analysis
Hour
1
2
3
4
5
6
7
8
Input From
Load on
Process
Primary
Areas
Sort (Totes)
(Totes)
680
680
680
777
680
874
680
971
680
1068
680
1165
680
1262
0
679
Primary
Sort
Output
583
583
583
583
583
583
583
583
Totes
Staged
Prior to
Sort
97
194
291
388
485
582
679
96
% 0f
Capacity
(404 totes) AS IS
24%
48%
72%
96%
120%
144%
168%
24%
% 0f Capacity
(852 totes)- After
Implementation
11%
23%
34%
46%
57%
68%
80%
11%
In this case, additional
accumulation and staging
capacity must be added to
accommodate wave sorting of
processed merchandise
53
Impact of Facility Capacity Improvement
• Why focus on capacity analysis and improvement? The combined
impact of material handling concepts, balancing of flows, and improved
productivity can minimize and localize disruptions over time, while
accelerating product turn and minimizing capital requirements.
Before concept modification
300,000
Cartons
250,000
200,000
150,000
After concept modification
Cap. - 124K
100,000
Receiving
250,000
50,000
200,000
Feb
Mar
Apr
May
Jun
Week 1
Week 2
Jul
Week 3
Aug
Week 4
Sep
Oct
Nov
Dec
Cap. - 169 K
Cartons
Jan
150,000
100,000
50,000
Jan
Feb
Mar
Apr
May
Jun
Week 1
Week 2
Jul
Week 3
Aug
Week 4
Sep
Oct
Nov
Dec
* Normalized for four weeks per month
54
Facility Design and Layout
Facility Design and Layout
• Conceptual Design
– Concepts Analysis
– Space Requirements
– Conceptual Layout & Flow
• Detail Design
– CAD Layouts
– Material Handling Specifications
– Working Equipment Budgets
56
Concepts Analysis
Sample Concepts Comparison
Pallet Vs. Case Shelving - Break Even Point (Example)
Pick / Pack Alternative Analysis (Example)
Comparison data: Assume: 3,608 lines/day avg.
1,760 pkgs/day avg.
Category
Method
% of
Lines
# of
Lines
Present
Shelving
100%
3,608
Improve
Picking
Flow Rack
70%
2,526
Carousel
29%
1,046
Shelving
1%
36
100%
3,608
Flow Rack
70%
2,526
Carousel
29%
1,046
Shelving
1%
36
100%
3,608
Pick/Pack,
Improve Pick
Pick
Rate
PIck
Hrs/Day
Pickers
40
90.2
12.4
14
27
240
10.5
1.5
14
-
150
7.0
1.0
-
-
40
0.9
0.1
-
-
18.4
2.6
14
17
85
29.7
4.1
-
-
60
17.4
2.4
-
-
40
0.9
0.1
-
-
48.0
6.6
0
7
Packers
Total
People
Pallets become less cost effective as utilization decreases. Pallets are only cost effective with >35%
pallet utilization. Use case shelving for items with less than 35% pallet utilization lot size.
Thousand $
Quantitative Comparison - Picking and Packing Methods (Example)
800
704.4
617.023
600
Least Cost Overall
400
350.956
200
0
PRESENT METHOD
PICK/PACK
IMPROVED PICKING
REPLENISHMENT
PICK/PACK
PICK STORAGE
57
Space Requirements
Sample Space Calculations
Receiving Area Space Calculations
2002 Forecasted Annual Cartons
Average Cartons per Pallet Received
2002 Forecasted Annual Pallets
2002 Average Pallets Received per Week:
Trailer Receiving Peak To Average Ratio:
2002 Peak Trailer Pallets Received per Week:
Trailer Receiving Days per Week at Peak:
2002 Average Day Peak Week Trailer Pallets Received:
Trailer Receiving Productivity:
Trailer Receiving Hours/Day
Staging Requirements:
3,023 Pallets/Day
3,023 Pallets/Day
151 Pallets/Day
x
x
x
1,100 Pallets
+
31,390,717
49.9
628,664
12,090
1.50
18,135
6
3,023
14.8
11
4.0 Hrs. Hold
/
5% Trouble
3.5 Addtnl Hrs. Hold/
11.0 Hrs./Day
11.0 Hrs./Day
49 Pallets
Door Requirements (Productivity Driven):
3,023 Pallets/Day
/
15 Pallets/Hr
/
19 Doors
+
2 Doors For Rotation
11 Hrs./Door
Cartons
Cartons/Pallet
Pallets
Pallets/Week
Pallets/Week
Days/Week
Pallets/Day
Pallets/Hour
Hours/Day
=
=
=
1,100 Pallets
151 Pallets/Day
49 Pallets
=
1,149 Pallets
=
19 Doors
21 Doors
Width:
39 Doors
2 Aisles
x
x
12.5 Ft./Door
12.0 Ft./Aisle
Subtotal Width:
=
=
488 Feet
24 Feet
512 Feet
Depth:
39
1,149
4,596
1
1
Doors
Pallets
Lin. Ft.
Dock Face
Shd. Aisle
x
x
/
x
x
Space Required:
512 Ft. Wide
48,640 Sq. Ft.
x
x
Pallet Capacity:
78 Lines
x
2.0
4
78
18
17
Lines/Door
Lin. Ft./Plt.
Lines
Ft./Aisle
Ft./Aisle
Subtotal Depth:
=
=
=
=
=
95 Ft. Long
15% Contingency
TOTAL SPACE REQUIREMENT:
60 Ft./Line
/
4.0 Lin. Ft./Plt.
=
=
=
78
4,596
60
18
17
95
Lines
Linear Feet
Feet
Feet
Feet
Feet
48,640 Square Feet
7,300 Square Feet
55,940 Square Feet
1170 Pallets
58
Conceptual Facility Flow
Sample Conceptual Flow
59
Conceptual Facility Design
Sample Conceptual Layout
60
Detail Material Handling Design
Sample Detail Layout
61
Warehouse Control and Optimization
Facility Control
• Communication / Data Capture
– Paper
– Batch Bar Code Scan
– RF Bar Code Scan
The warehouse is moving in
the right direction with
respect to technology (i.e.
the bar code scanners that
are in use), but current and
expected needs should be
considered…
– Hands Free Devices / Voice Activated Controls
– RFID
• WMS Functionality
– Location Control / Inventory Integrity
– Directed Work Activity / Process Efficiency
– Quality Control
– Lot Tracking
– Returns
– Compliance / Labeling
– Transaction Auditing / Tracking
63
WMS Conceptual Framework
Distribution
Requirements
Planning/
Forecasting
Materials
Requirements
Planning
Inventory
Management
Purchasing/
Financials/
General Ledger
Administrative
Order Entry
Processing
Enterprise Resource Planning Systems
Host Interface(s) - API’s
Warehouse Management Systems
Inventory
Resources
Rates/Carriers
Routes
Locations
Vendors
Pallet ID’s
Customers
Dock
Management
Receiving/
Putaway
Shipment
Planning /
Wave Mgt.
Replenish ment
Picking /
Distribution
Location
Control
Sortation /
Shipping /
Manifesting
Operational Interfaces
User Access
Automatic
Identification
Radio Frequency
Warehouse
Control Systems
Video Data Terminals
Internet Browser
Bar Code Labeling
Bar Code Scanning
Radio Data Terminals
- Hand Held
AS/RS, Carousels
AGV’s, Pick-to-Light
Data Collection Terminals
PC Workstations
OCR, RF, RFID
UCC128 Compliance
- Truck Mouted
- Voice Recognition
Conveyors, Sorters
Palletizers
64
Labor Optimization
– Work Measurement
 No Standards
 Standards Used for Planning
 Standards Used for Evaluation
 Standards Used for Incentives
 Continuous Feedback
110
• Individual Employee
Incentive Compensation
100
90+
90
•
•
•
•
80
% of
Engineered
Standard
Achievable
•
•
•
70
50
Individual Productivity Reporting
Historical Standards
Workload Forecasting/Manpower Planning
• Area Reporting
• Historical Standards
60
• No Reporting
• Non-Measured
Individual Productivity Reporting
Goal Setting with Performance Counseling
75-90%
Engineered Standards
Computerized Productivity Management System
65-75%
55-65%
 55%
40
65
Engineered Labor Standards
ELEMENTAL DETAIL
AREA: 9209
BUILDING: 2000
ENGINEERED STANDARD SHEET
Function: Pick/Pack
AREA: 9209
60
CHECK SUMMARY PICK SHEET
BUILDING: 2000
FUNCTION: Pick/Pack
Check off on bulletin board summary pick sheet when pick is complete.
70
GO TO PACK AREA
ELEMENTAL DESCRIPTION
Go to the pack area when the pick is completed to pack merchandise.
80
GET AN EMPTY CARTON
Get an empty carton located on a stack to the right of the packing area.
90
OPEN CARTON
Open the carton.
100
TRANSFER PIECES FROM CART TO CARTON
Take the pieces from the track and place them in a carton located on the conveyor.
110
WRITE UNITS ON CARTON
Write the total units on the carton.
120
CLOSE CARTON AND TAPE
TIME
FREQ.
# Of
Lines
Pick
# Of
Cartons
Ship
10
Get Pick Sheet
0.150
1/1
20
Travel to Pick Location
0.131
1/1
0.131
40
Check Pick Sheet
0.048
1/1
0.048
50
Take Items from Broken Case Location
0.046
1/1
0.046
60
Check Summary Pick Sheet
0.110
1/3
0.037
70
Go to Pack Area
0.160
1/3
0.053
80
Get an Empty Carton
0.048
1/1
0.048
90
Open Carton
0.080
1/1
100
Transfer Pieces from Cart to Carton
0.046
1/1
110
Write Units on Carton
0.048
1/1
0.048
120
Close Carton and Tape
0.181
1/1
0.181
130
Push Carton Down Conveyor
0.040
1/1
0.040
140
Total Items on Pick Sheet
0.185
1/1
Total Normal Minutes
Personal, Fatigue, and Delay Allowances
TOTAL S TANDARD MINUTES
# Of
Stores
Ship
0.150
0.080
0.046
0.185
0.271
0.487
0.335
15%
15%
15%
0.312
0.560
0.385
Close carton and place 2 pieces of tape on the carton.
66
Distribution Operations
Tools
Internal Deloitte Tools For Evaluating Distribution Operations
SPEED
The SPEED framework is typical of the types of tools we
use during our analyses – it is more of a methodology or
approach than a specific computer program
• SPEED (Supply Chain Enhancement and Effectiveness
Diagnostic) is an analytical framework for identifying supply
chain issues and performance improvement opportunities
• It embodies our diagnostic methodology, which covers the
entire chain and its opportunities
Analytical Template Sample
68
Warehouse Designer
• This software was developed in-house and is used to optimally
design or reconfigure warehouse layouts by determining, on an
individual basis for each item, the most effective size for its
picking locations. It factors in product dimensions, shipping
volume, stock replenishment and the overall productivity of the
warehouse
I don’t know
how much
“detailed”
design we still
do at Deloitte –
my sense is that
a higher level
assessment is
more typically
what we bring
to the table…
69
AutoCAD
• AutoCAD is the first choice of architects and engineers in
professional computer-assisted design software and we use it in
most of our warehouse design projects. AutoCAD can be used
to design anything from simple block layouts for optimized
material flow to a detailed 3-D analysis of complex automated
storage equipment layouts
I don’t know
how much
“detailed”
design we still
do at Deloitte –
my sense is that
a higher level
assessment is
more typically
what we bring
to the table…
70
AutoMod
• AutoMod is a software simulator we use to study the behavior
of conveyors to optimize their design with respect to:
– Accumulation areas
– Effects of stoppages in different areas
– Bottlenecks during peak volume periods
I don’t know
how much
“detailed”
design we still
do at Deloitte –
my sense is that
a higher level
assessment is
more typically
what we bring
to the table…
71
MOST
• The MOST measurement system calculates standard times to
evaluate the productivity of future or existing processes. In a
MOST study, each movement of a task is part of a sequence
with a relative time and frequency. This system is used to
analyze most warehouse processes: order filling, packaging,
shipping, holding, etc.
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5
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9
10
11
12
13
14
Task Description
Step 1 Picking preparation
Walk to picking list folder
Take a picking list and return to pallet jack
Travel with pallet jack to empty pallets (included in travel)
Loading an empty pallet (26 secondes)
Step 2 Picking
Read the picking list (next product location)
Travel to next product location (included in travel)
Take product and put on pallet
Step 2a Put cardboard sheet on pallet
Put cardboard sheet on pallet
Return to front of pallet jack
Indicate quantity on pick list
Travel to trash compactor
MOST Sequence
A
A
3
3
B
B
0 G
0 G
0
3
A
A
0
1
B
B
0
0
P
P
0
0
A
A
0
3
A
0
B
0 G
0
A
0
B
0
P
0
T
3
A
3
B
3 G
3
A
3
B
3
P
6
A
3
A
A
A
3
3
1
B
B
B
3 G
0 G
0 G
3
0
1
A
A
A
3
0
1
B
B
B
3
0
0
P
P
P
3
0
3
A
A
R
3
0
3
A
0
B
0
P
0
A
A
1
B
0
P
1
A
Frequency
0
1
1
1
1
0
0
26
0
39
0
1
15,7
1
26
0
TMU
0
30
100
0
725
0
780
0
9360
0
210
471
3120
0
72