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Warehouse Activity Profiling for Operational Efficiency

©CII Institute of Logistics

Logistics Performance Index (LPI)
WORLD BANK 2010
4.11
4.09 3.88 3.86 3.84 3.63
World Bank ranks India 47th in logistics efficiency

3.49 3.12

Performance Indicators
 Customs  Infrastructure  International Shipments  Logistics Competence  Tracking and Tracing  Timeliness

©CII Institute of Logistics

Logistics : Evolving Landscape in India
• India spends around 13% of its GDP on logistics, compared to a global average of 10-11 %. Globally better supply chain management has reduced logistics costs by nearly 1% over last 10 years. However Supply Chain Management still remains a very new concept for Indian industries which are increasingly looking to gain competitive edge by adopting logistics and Supply Chain Management concepts and practice. • Key trend in the industry is towards outsourcing logistics requirements to Third Party Logistics (3PL) players. The demand is specially driven by the entry of MNCs and increasing export focus of Indian companies .The estimated market for 3PL players in 2003 was US$ 250 mn and is likely to grow at a CAGR of more than 20% during next five years. • Consistent good performance of the economy (over 8% growth rate), is the key force, driving the growth in the logistics sector. Vibrant economic scenario of the country has ignited the activities in manufacturing/infrastructure sector.
Estimated Cost Saving by Reducing Logistics Cost by 1%
Functions At 13% of GDP (US$ bn) At 12% of GDP (US$ bn 29.95 21.40 9.41 Amount Saved (US$ bn 2.50 1.78 0.78

Indian companies can save substantial cost by adopting modern supply chain and logistics solutions

Transportation Inventory Packaging Handling and Warehousing

32.45 23.18 10.20

8.34
18.54 92.72

7.70
17.12 85.58

0.64
1.43 7.13

Others Total Logistics Costs

©CII Institute of Logistics
*(source: Credit Analysis & Research Limited)

Current Indian Scenario
• The Indian warehousing sector is expected to grow at the rate of 35-40 % every year
• 45 million sq ft warehousing space is expected to be developed in the country in next five years supplemented by around 110 logistics parks. • Warehousing activities account for about 20 per cent of the total Indian logistics industry and offer tremendous growth potential • The entry of global third party logistics players is fast changing the face of the logistics industry

• From a mere combination of transportation and storage services, logistics is fast emerging as a strategic function that involves end-to-end solutions that improves efficiencies
• The total share of organized warehousing space is less than 8% of the total warehousing space in India • The industry is fragmented and largely unorganized and is dominated by small players with small capacities
©CII Institute of Logistics

Source – Cushman & Wakefield

The Changing Landscape

In view of the quantum increase in logistics and warehousing requirements in the country, the way these needs are addressed has to be different…

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To summarize 10 -15% reduction in net logistics cost is definitely achievable with greater efficiencies in the changing landscape of warehousing in India… ©CII Institute of Logistics .

Understand the Role of your Warehouse C1 Yard C2 Stores W/h DC / RDC / Depots C3 C4 Godown C5 C6 VENDOR INBOUND PLANTS TRANSPORTATION DISTRIBUTION INTERFACILITY TRANSPORTATION CENTERS OUTBOUND TRANSPORTATI ON CUSTOMERS • Supply chain Management(SCM) is the management of network of organizations that are involved through upstream and downstream linkages. in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer. ©CII Institute of Logistics .

Distribution Centre Vs Warehouse • a distribution center (DC / RDC) is a "facility from which wholesale and retail orders are filled”.“ • DCs evolved from warehousing and share much of the same DNA ©CII Institute of Logistics . adding that "the term is used to describe a high-velocity operation as opposed to a static storage warehouse.

Challenges of Warehouse  Execute more. smaller transactions  Handle and store more items  Provide more product and service customization  Offer more value-added services  Process more returns  Receive and ship more international orders ©CII Institute of Logistics Centre of Excellence .Supply Chain Management Institute of Logistics .

Supply Chain Management Institute of Logistics . skilled.Challenges of Warehouse    Less time to process an order Less margin for error Less young. English speaking personnel  Less WMS Capability ©CII Institute of Logistics Centre of Excellence .

No 1 Planning & Design Issues Receiving and Put Away Process Design Key Questions Receiving Mode Disposition Put away batch sizing Put away tour construction Required Profile Purchase Order Profile Profile Components Order Mix Distributions Lines per receipt distribution Lines and cubes per receipt distribution 2 Storing Zone Defining Storage Mode selection /sizing Pick face sizing Item location assignment Item activity profile Popularity profile Cube Movement volume profile Order completion profile Demand correlation profile Demand Variable profile Order Mix Distributions Lines per order distribution Line & cube per order distribution 3 Order Picking & Shipping Design Process Order Batch Size Pick wave Picking Picking Tour Construction Shipping Mode Disposition Customer Order Profile ©CII Institute of Logistics Centre of Excellence .Supply Chain Management Institute of Logistics .Design & Related Issues Sl.

No 4 Planning & Design Issues Material Transport Systems Engineering Key Questions Material handling Systems selection & sizing Required Profile Calendar Clock profile Profile Components Seasonality Profile Daily Activity Profile 5 Warehouse layout & Material Flow Design Overall warehouse flow design :U. I or L Relative Functions Locations Building Configuration Overall Warehouse space requirement Activity Relationship Profile Order Mix Distributions Lines per receipt distribution Lines and cubes per receipt distribution Item family inventory distribution Handling Unit inventory distribution Economic factor distribution 6 Warehouse Sizing Inventory profile 7 Level of Automation & Staffing Staffing Requirements Capital Labor Substitution Level of Mechanization Automation Profile ©CII Institute of Logistics Centre of Excellence .Supply Chain Management Institute of Logistics . S.Design & Related Issues Sl.

Suggested methodology to improve Warehouse Operational Efficiency in 3 stages … Longer term – next 2 years Needs both Capital and facility changes Short term changes Next 3 to 6 months Savings Quick Fixes This week or next Savings ©CII Institute of Logistics .

Factors that impede the WH efficiency • • • • • • • • Cluttered In bound docks Trucks waiting in parking lot Over flow warehouses Difficulty in locating empty slots / Pick Locs Check Congested Aisles Goods IN inventory & Storage Partially Executed orders Pick errors. ‘look like errors’ Goods OUT Order Processing Time efficiency Increase the Velocity of “FLOW” ©CII Institute of Logistics Transportation Delivery ..

• No capital required • Do it this week (or the next) ©CII Institute of Logistics .Quick Fixes – This week • Procedural changes • No change to layout or the warehouse facility.

Seasonality. UOM SKU Number Description Item Cube Pieces Per Case Cases Per Pallet Product Group Item Weight ©CII Institute of Logistics 16 . Orders ( Customer & Purchase Indents ). Average Inventory Levels. Processes INV.. MASTER ORDER MASTER ITEM MASTER Inventory Snapshots Maximum. UOM. Service levels Order Detail Customers’ ordering pattern.Understand : Products. Receiving frequency.

) Customer Service Line replenishment request Delivery & confirmation billing of material Material and Inventory Management ©CII Institute of Logistics .Mapping the Processes LSPs Suppli (Carriers)er Materials ready Shipment Pre-advise booking creation Cargo flow updates Receive Payment Transportation Process Transportation Custom LSP (Warehousing) er Receiving Picking Put-away Deliver y Inventory Management (cycle counting. stock reconciliation etc.

Low traceability resulting in High Stock Discrepancy Creating transfer instruction Low traceability resulting in High Stock Discrepancy Dynamic Storage Location Changing storage bin for SKUs depending on availability Very low flexibility resulting in more area ©CII Institute of Logistics . The GE stickers (with barcodes) printed and travels along with the truck to the receipt dock. System-directed put away into the Goods Inward locations.Understanding of processes is necessary Process Functionality Impact if not done properly Gate Entry ASN based gate entry. Put away slips in different colors for single / multiple inventory locations. On completion of primary packing. systemdirected creation of transfer instruction (transfer order) indicating the completion of primary packing and instructing the putaway location into the stock Need manual entry. Simultaneous updation of system stock accordingly. Immediate updation in the master System-directed picking . longer truck turn around time Putaway into Receipt bins Low Flexibility and High Stock Discrepancy Picking process Longer lead time or more pickers.online updation of picking confirmation by scanning the pick location and the part being picked.

the portion of the storage aid between uprights Aisle TRAVEL Picklist Stage. counting from the floor Section. counting from left to right between rack supports Level or shelf. or bay.ship ©CII Institute of Logistics PICKING .Location Numbering…(with Logic) • XX XX X XX Position on a Level.Pack.

Row. Aisle. Bin numbers & signages ©CII Institute of Logistics .

” C B C B C B C B A ©CII Institute of Logistics A A A .Smart Slotting thru’ Item Popularity Distributions • Principle: • A place for Every thing and Every thing in its Place “Assign the most popular items to the most accessible locations.

800 1.000 0.000 0.400 0.400 0.500 0.300 0.000 % of picks % of items ©CII Institute of Logistics .600 0.900 0.Slotting based on Item Popularity Popularity Profile 1.700 0.200 0.600 0.000 0.200 0.100 0.800 0.

Slotting based on Item Popularity Medium Popular Slow Movers Highly Popular ©CII Institute of Logistics .

Multi Dimensional Pareto Analysis STOCK TURNOVER ©CII Institute of Logistics V LU O ABC based on Volume ABC based on Frequency ABC based on Turnover M E FREQUENCY .

Share of Consumer Care Division sales ©CII Institute of Logistics .

. 4 ft 4 ft At 100 orders/day.. Wasted ©CII Institute of Logistics is Rs. At 200ft/min. 250 are NM.Non-Moving ? After the Item Popularity calculation. move them to remote area. 2500 pallets. 500 mins/day. 2499 hrs/yr. some items are found to be ‘non moving’.137500/yr . alternatively. Rs55/hr. 4feet per pallet. >> ideally dispose them immediately. extra dist=100000ft/day.

although it must be periodically revised in accordance to turnover A1 C3 D4 ©CII Institute of Logistics D4 B2 A1 B2 D4 C3 A1 C3 B2 A1 A1 A1 B2 B2 B2 C3 C3 C3 D4 D4 D4 .One storage location only per part number • • • • One product (part number) must be stored in only one location (i. these will be grouped together and managed as one This location shall be kept stable in order to create work habits.e. no separate locations for the same part) The location will obviously be dimensioned according to the quantity stored In case the quantity demands more than one location.

5 8 Cubic Feet of Storage Needed 40 320 ©CII Institute of Logistics .to assign items to storage modes based on their cube movement.125 1.• Cube – Movement / Volume distribution . Inventory Container Graph Drawers 25000 20000 # of SKUs 15000 10000 5000 0 0.

Cube movement Popularity .Cube-movement Distribution Flow rack Storage Bin shelving drawers Carousels ©CII Institute of Logistics Popularity .

Volume Vs Storage Medium ©CII Institute of Logistics .

Once the storage mode assignments have been made. the preference regions for each storage mode are determined Cube movement Bronze zone Silver zone Golden zone Popularity ©CII Institute of Logistics .

Slotting based on Item Family affinity 70 60 50 40 30 20 10 0 Month 1 ©CII Institute of Logistics Item A Item B Month 2 Month 3 .

of different products having similar weights.. within the same zone.. within the same zone. of different products of the same type. Storage.Storage by family • • Storage. of different products that are usually sold together as: • Paint and paint brushes • Seeds and gardening tools • Storage. within the same zone. dimensions and shapes The aim here is also to create work habits that improve the productivity of operations ©CII Institute of Logistics . as: • Exhaust systems of different models or different spirit drinks.

Deciding on a Picking Approach Order 3 Order 2 Order 1 Single Order Picking Multi-Order Picking Batch Picking Single Line Orders ©CII Institute of Logistics .

Changes over Short Term ©CII Institute of Logistics .

Material Flow in a Warehouse RECEIVING pallets pallets cases overpacks mul (items totes) cases PALLET RESERVE pallets (items cases) pallets pallets CASE PICK cases cases cases Breakdown function totes (cases) ITEM PICK items (items cases) totes (items cases) totes SORTING A totes totes SORTING B totes cases overpacks UNITIZING totes mul cases pallets overpacks ©CII Institute of Logistics Consolidation Function SHIPPING .

Understanding Customer ordering pattern • It is a good idea to establish separate areas for pallet and case picking. especially if mixed orders are a small % of all orders >> “Warehouses inside Warehouse” 70 60 50 40 30 20 10 0 Loose carton ©CII Institute of Logistics % of orders % of lines Full pallet Mixed .

GLUCOSE D DABUR 80 x 200 gm.) DABUR HONEY ( SHELF LIFE 18 MONTHS) 120 x 50 gm. (2.5 Oz.5 Oz.) DABUR HONEY 9 x 1 Kg. (2.) DABUR HONEY 16 x 500 Gm.) DABUR PUDIN HARA 200 x 30 Ml.SKUs… • • • • • • • • • DABUR CHAWANPRASH (Regular) 24 x 500 gm. (17. (3. (7 Oz.2 Lbs. (1.75 Oz.2 Lbs.5 Oz.) DABUR HONEY 32 x 250 gm.75 Oz. (17.) DABUR CHAYWANPRASH (Regular) 12 x 1 Kg.) ©CII Institute of Logistics .) DABUR HONEY 72 x 100 gm. (8.

20-30 Millions ©CII Institute of Logistics .Distribution hierarchy Depots ( 50 ~ 60 ) CFA ( 3000 ~ 4000 ) Distributors / Stockists (50 k ~ 60 k ) Large Retailers (Hyper markets) Medium Retailers (Super markets) Small Retailers (Grocery shops) 1.5 ~ 2 Million Consumers .

Sortation & Packing Direct Direct putaway putaway to reserve to primary Receiving Shipping Cross-docking ©CII Institute of Logistics .A schematic representation of the warehouse material flow Replenishment Replenishment Reserve Storage and Pallet Picking Case Picking Broken Case Picking Accumulation.

Organizing Principle • Tasks correspond to flow in a functional network Inspection Receiving Bulk storage Order picking Shipping Carton storage and picking Order sort/ accumulate • Handling unit conversions • Processing options • Total workload Material flow Function-to-department mapping ©CII Institute of Logistics .

reduced stock loss and reduced accidents • Inbound / replenishment flow Outbound / picking flow ©CII Institute of Logistics .Separate inbound and outbound flows • • Warehouse layout must be designed in order to separate inbound and outbound flows This means providing physically different spaces and aisles for replenishment and for picking or operating inbound and outbound at different times The result will be increased productivity.

Elimination of wasted transport and movement • The warehouse layout must ensure there is no wasted transport or movement • • Long journeys Empty returns Cross Aisle Dist Travelled = 74 ft (4 ft pallet & 9ft aisle) Dist Travelled = 118 ft (4 ft pallet & 9ft aisle) ©CII Institute of Logistics .

©CII Institute of Logistics .Number of Docks Number of Docks Needed : Daily demand of orders (T) * Time for load/unload a truck Truck capacity (T) * Daily time available to load/unload = 360 * 30 / 16 * 420 = 10800/6720 ~ 1.6 = 2 docks > 3 docks would be good.

Storage Subsystem – Capacity • Dedicated space – each product is stored in a specific area – assign storage location to products md   max I j (t ) j 1 t n • Random space: products can be stored anywhere – the products are randomly distributed over the m  max I (t )  r j t warehouse j 1 product 1 2 3 4 5 6 7 ©CII Institute of Logistics total space: batch size safety stock 1000 200 2500 400 11600 1250 850 300 1750 500 4500 1000 2600 950 space dedicated random 1200 700 2900 1650 12850 7050 1150 725 2250 1375 5500 3250 3550 2250 29400 17000 n .

can make use of additional doors from the other function – Minimizes truck apron and roadway ©CII Institute of Logistics .If one experiences surge of activity.Location of shipping and receiving • U shaped or cross docking configuration – Receiving and shipping on the same side of the warehouse – Provides dock flexibility.

Location of shipping and receiving • Flow through configuration – Receiving and shipping on opposite side of the warehouses – Makes many storage locations of equal convenience – More appropriate for extremely high volume – Preferable when building is long and narrow ©CII Institute of Logistics .

Example Layout 1 ©CII Institute of Logistics .

Example Layout 2 ©CII Institute of Logistics .

©CII Institute of Logistics .Angled aisles can enable more direct travel between receiving / shipping and storage locations.

• For Long Term… ©CII Institute of Logistics .

Storage and handling equipment… ©CII Institute of Logistics .

Material Handling equipments Selection Typical Storage Facility • Load – – – – 1000 kg / 1500 kg 1200mm deep x 1000mm x 1000mm 1200mm deep x 800mm x 1000mm Stable Load • Product – 2400 Pallet Locations ©CII Institute of Logistics .

20% Lift 76% Aisle 60% Travel. LPG or Electric Trucks Clear aisle 4200mm Stack 4 high (1 on the ground. 3 in the air) The truck loads & unloads trailers.Material Handling equipments Selection. 50% Lift† 59% Aisle † Travel & Lift are simultaneous ©CII Institute of Logistics . CONVENTIONAL SYSTEM NARROW AISLE SYSTEM VERY NARROW AISLE SYSTEM Electric Very Narrow Aisle Trucks Clear aisle 1650mm Stack 4 high (1 on the ground. 3 in the air) The truck pick up & deposits loads from staging and pick & deposits loads in the rack systems 80% Travel... loads & unloads rack plus pick up & deliver to manufacturing Electric Reach Trucks Clear aisle 2700mm Stack 4 high (1 on the ground. 40% Lift 71% Aisle 50% Travel. 3 in the air) The truck pick up & deposits loads from staging and pick & deposits loads in the rack systems Gas.

Material Handling equipments Selection...xxx per annum ©CII Institute of Logistics . 1 2 Counter Balance System vs Very Narrow Aisle 2980 sq meters – 1730 sq meters = 1250 sq meters 1250 sq meters x ### per sq meter per month = Total Savings: Rs.xx.xx. Xx.xxx per annum Narrow Aisle Reach Truck vs Very Narrow Aisle 2147 sq meters – 1730 sq meters = 417 sq meters 417 sq meters x ### per sq meter per month = Total Savings: Rs. Xx.

©CII Institute of Logistics .Material Handling equipments Selection. with projects and installed facilities on most continents.. • 17..000mm lift height • Very high bay warehousing further leverages property footprint potential • Global trend.

Automated Monorail & AGV ©CII Institute of Logistics .

Pallet Storage Case Picking Broken Case Picking Packing & Unitizing. Staging Cross Docking Warehouse Offices – Front Office. Dining Hall Customizing (VAS) Consumables Storage area Material Handling Equipments Parking / Maintenance Returned or Rejections storage Future expansion Detail ©CII Institute of Logistics . Support Services Rest Rooms.Warehouse Space Requirements Worksheet • • • • • • • • • • • • • Receiving. Shipping.