WAREHOUSE
OPERATIONS
7.1 INTRODUCTION
‘At the mercy of myriad business, logistics, and government initiatives—including
just-in-time (JIT) production, quick response, efficient consumer response, continu-
flow distribution, enhanced customer satisfaction, operator safety, and envi-
ronmental protection—warehouse operations have been and are continuously
being revolutionized.
With the passing of time come more complex and complicated problems.
Supply chains are shorter and, hopefully, more integrated, the world is smaller, cus~
tomers are more demanding, and technology changes occur rapidly.
In addition to the complexity of these problem statements, consider the
breadth of the following problems, which further impact the challenge of exceed-
ing client expectations:
© Company A has had an explosion of stock-keeping units (SKUs), resulting in
a major shortage of warehouse space. A disagreement exists as to whether this
problem should be solved by the manufacturing group's producing in smaller
lot sizes or by the warehousing group’s adding square footage.
© Company B has a capacity problem on a new, hot-selling item. A disagree:
ment exists as to whether this problem should be resolved by the manufac-
turing group's adding capacity, by the quality group's increasing yield, or by
the maintenance group’s increasing uptime.
* Company C has a customer satisfaction problem, A disagreement exists as to
whether the problem should be resolved by the logistics group's reconfigur
ing the distribution network, by the information technology group’s installing
a new warchouse management system (WMS), or by the organizational excel-
lence group's implementing a continuous improvement process.
4ot 402
FACILITY DESIGN FOR
Part Three VARIOUS FACILITIES FUNCTIONS
A renewed emphasis on the supply chain and cusfomer satisfaction has
increased the number and variety of value-added services in the warehouse, The
extra services may include kitting, special packaging, or label application, For
example, a large fine-paper distributor counts and packages individual sheets of
paper for overnight shipment. A large discount retailer requires vendors to provide
slipsheets between each layer of cases on a pallet to facilitate internal distribution.
Increased emphasis on customer satisfaction and evolving patterns of con-
sumer demand in the United States have increased the number of unique items in
a typical warehouse or distribution center (DC)—the result is SKU proliferation.
Each item stored is assigned a numeric identifier, or SKU, associated with its unique
qualities, such as size, color, or packaging. SKU proliferation is perhaps best illus-
trated by the beverage industry. Not many years ago, the beverage aisle in a typi-
cal grocery store was populated with two or three flavors of 12-ounce bottles in six
packs, Toclay, the typical beverage aisle is populated with colas (regular and diet,
e-free), clear drinks, water, and fruit-flavored drinks in 6+,
with caffeine, and caffe
12, and 24-pack plastic bottles and cans, and 1-, 2-, and 3-liter bottles.
Finally, increased concern about the preservation of the environment, the con-
servation of natural resources, and human safety has brought more stringent gov-
ernment regulitions into the design and management of warehousing operations.
The traditional response to increasing demands is to acquire additional
resources. In the warehouse, those resources include people, equipment, and
space, Unfortunately, those resources have been difficult to obtain and maintain
During the recent economic expansion, finding and maintaining qualified labor
was difficult and costly. As the economy slows, this will become easier for a period
of time, but the next expansion will likely be more challenging, as more demand
for service and responsiveness will be placed on operations. In addition, we will
have to adjust to a workforce characterized by advancing age, minority and non-
English-speaking demographics, «and declining techni Is. New standards for
workforce safety and composition through OSHA's lifting standards and the
Americans With Disabilities Act also makes it difficult to rely on an increased work-
force as a way to address the increased demands on warchousing operations.
When labor is not the answer, we typically turn to mechanization and automa
tion to address increasing demands. Unfortunately, our history of applying technology
as a substitute for labor in warehousing operations has not been distinguished, In
many cases, we have over-relied on technology as a substitute for labor, We must bal-
ance the appropriate levels of technology and systems to make sure the logical labor
ings today do not interfere with future business requirements,
In the face of rapidly increasing demands on warehouse operations and with-
out a reliable pool of additional resources to turn to, the planning and management
of today’s warehousing operations are very difficult. To cope, we must turn to sim-
plification and process improvement as a means of managing warehouses and DCs.
‘Toward that end, this chapter is meant to serve as a guide for warehouse operations
improvement through the application of best-practice procedures and available mate-
rial handling systems for warehousing operations. We begin with an introduction to
the missions of the warehouse. We then turn our attention to individual functions and
activities within the warehouse. ‘Then, each function is described in detail and best
practice principles and systems for executing each function are defined. One way to
reengineer w
rehou
ing operations is to justify each warehouse function and handling 403
7 WAREHOU
‘OPERATIONS
step relative to the mission of the supply chain. Ifa function is not clearly serving the
supply chain mission, it should be eliminated. Likewise, one or more functions may
need to be added to bring the warehouse operations more closely in line with the
mission of the supply chain. For example, to improve response time within the ware-
house, a cross-docking function may need to be included,
7.2. MISSIONS OF A WAREHOUSE
‘The warehouse plays a critical role in supporting « company’s supply chain success
‘The mission of a warehouse is to effectively ship product in any configuration to the
next step in the supply chain without damaging or altering the product's basic form,
Numerous steps must be accomplished and hence there are key warchousing oppor
tunities to address. Doing that will optimize the methods used to achieve the mission.
If the warehouse cannot process orders quickly, effectively, and accurately, then
4 company’s supply chain optimization efforts will suffer. Information technology and
physical distribution play a significant role in making warehousing operations more
effective, but the best information system will be of litle use if the physical systems
necessary to get the products out the door are constraining, misapplied, or outdated.
All warehousing opportunities, including order picking, cross-docking, productivity,
space utilization, and value-added services, allow the warehouse to process and ship
orders more effectively. In more detail, these opportunities are:
1. Improving order picking operations. Traditionally, order picking is the opera-
tion where a company spends or misspends most of its time and money to
improve productivity, Successful order picking is critical to a warehouse’s suc-
cess, and supply chain requirements today are driving warehousing opera-
tions to develop better order picking solutions,
Utilizing cross-docking. Cross-docking can occur at the manufacturer, distrib-
utor, retailer, and transportation carrier levels. Each participant has different
requirements, depending on whether they are shipping the goods to be cross-
docked or preparing to receive cross-docked goods. The receiver typically
requiests that the cross-docked goods be sorted and prelabeled. The shipper,
+ requirements, must perform a more detailed picking process.
For example, if 100 items are ordered, the warehouse must pick the 100 items:
and also separate those items for the different store orders.
Increasing productivity. In the past, productivity has meant “to do it faster with
fewer people.” The first objective of warehousing has always been to ni
the effective use of space, equipment, and labor. This objective implies that pro
ductivity is not just labor performance but also includes space and equipment
and a combination of Factors that all contribute to increased productivity.
4. Uiilizing space. The old rule of thumb has always been that when a warehouse
is more than 80% full, more space is needed, ‘This rule is based on the fact that
when a warehouse reaches this capacity, it takes longer to put something away.
As the time to find a storage location increases, the proper slotting of product
starts 10 disappear. Slow-moving items are stored in fast-moving locations, so
then fast-moving items must be stored in slow-moving locations, The end result
ximize 404.
Pant Three FACILITY DESIGN FOR VARIOUS FACILITH
ES FUNCTIONS
YY
Manufacturer
a7 SAP
warehouse
Figure 7.1. Warehousing opportunities within a logistics network.
isa decline in productivity and an increase in damage and mispicks, all due to
poor space utilization,
Increasing value-added services. Warehouses are no longer just picking and
shipping locations. Their role has extended to include services that facilitate
more efficient operations in the receiving warehouse and therefore benefit the
customer. Whether it is presorting and prelabeling goods for eventual cro:
docking or the actual customization of the outbound product, customers’
demands are becoming more strenuous.
Any one of the above warehousing opportunities or a combination of them
can be found within most warehouses today. The old definition of a warehouse as
a place to store, reconfigure, and shorten lead times has become much more com-
plex and technology driven. (See Figure 7.1.)
7.3 FUNCTIONS IN THE WAREHOUSE
Although it is easy to think of a warehouse as being dominated by product storage,
there are many activities that occur as part of the process of getting material into
and out of the warehouse. The following list includes the activities found in most
warehouses. These tasks, or functions, are also indicated on a flow line in Figure 7.2
to make it easier to visualize them in actual operation.
‘The warehouse functions—roughly in the order in which they are performed—
are defined briefly
as follows’ 405
1.
7 oa OO
ce init >
Reserve se roken
straze pecking =
and icing
pallet aia
} j
¢ uy I
32 ‘Rcumulation
% See
= ‘and tization
Figure 7.2. Typical warehouse functions and flows.
Receiving is the collection of activities involved in (a) the orderly receipt of all
materials coming into the warehouse, (b) assuring that the quantity and qual-
ity of such materials are as ordered, and (c) disbursing materials to storage or
to other organizational functions that need them
Inspection and quality control are an extension of the receiving process and
are done when suppliers are inconsistent in quality or the product being pur-
chased is heavily regulated and must be inspected at all steps in the process.
Inspections may be as simple as a visual check or as complex as lab testing,
Repackaging is performed in a warehouse when products are received in bulk
from a supplier and subsequently packaged singly, in merchandisable quantities
or in combina h other parts to form kits or assortments. An entire receipt
of merchandise may be processed at once, or a portion may be held in bulk form
to be processed later. The latter may be done when packaging greatly increases
the storagecube requirements or when a part is common to several kits or assort-
ments, Relabeling is done when product is received without markings that are
readable by systems or humans for identification purposes.
in storage. It includes material han-
ns
Putaway is the act of placing merchand
dling and placement.
Storage is the physical containment of merchandise while it is awaiting a
demand. The form of storage will depend on the size and quantity of the items
in inventory and the handling characteristics of the product or its container,
Order picking is the process of removing items from storage to meet a specific
demand. It represents the basic service that the warehouse provides for the cus-
tomer and is the function around which most warehouse designs are based.
Postponement may be done as an optional step after the picking process. As in
the repackaging function, individual items or assortments are boxed for more
convenient use. Waiting until after picking to perform these functions has the
advantage of providing more flexibility in the use of on-hand inventory.
Individual items are available for use in any of the packaging configurations
right up to the time of need. Pricing is current at the time of sale, Prepricing at 406,
Part Three FACILITY DESIGN FOR VARIOUS FACILITIES FUNCTIONS
manufacture or at receipt imo the warehouse inevitably leads to some repricing
activity as price lists are changed while merchandise sits in inventory. Picking
tickets and price stickers are sometimes combined into a single document
8. Sontation of batch picks into individual orders and accumulation of distrib
uted picks into orders must be done when an order has more than one item
and the accumulation is not done as the picks are made
9. Packing and shipping may include the follow:
* Checking orders for completeness
© Packaging merchandise in an appropriate shipping container
© Preparing shipping documents, including packing list, address label, and.
bill of lading
© Weighing orders to determine shipping ¢
Accumulating orders by outhound carrier
Loading trucks (in many instances, this is a earrier’s responsibility)
10. Cross-docking inbound receipts from the receiving dock directly to the shipping
dock.
11. Replenishing primary picking locations from reserve storage locations
1 tasks:
marges
In this chapter, receiving includes those activities described above as receiving
prepackaging, and putaway; order picking includes those activities described above
as order picking, packaging, and sortation/accumulition; and shipping includes those
activities described as packing and shipping. The activities, best-practice operating
principles, and space planning methodologies for each of the functional areas are
described in subsequent sections.
7.4 RECEIVING AND SHIPPING OPERATIONS
Problems can occur in planning receiving and shipping facilities if the carriers that inter-
face with receiving and shipping activities are not properly considered. Positioning of
the carriers and their characteristics are important to receiving and shipping operations.
Itis useful to think of the carriers that interface with the receiving and shipping func-
tions as a portion of the receiving and shipping facility. Hence, all carrier activities on
the site are included in receiving and shipping facility pkinning, Receiving and ship-
ping functions will be defined to begin and end when carriers cross the property Ii
‘The activities required to receive goods include;
Inbound tucker phones the warehouse to get a delivery appointment and
provides information about the cargo.
* Warchouse receiving person verifies the advance shipping notice (ASN) and
confirms it with information received by phone from inbound trucker.
© Trucker arrives and is assigned to a specific receiving door (similar dock location
is selected for boxcar receipts).
* Vehicle is safely secured at the dock.
* Seal is inspected and broken in presence of cartier representative. 407
7 WARELIOUSE OPERATIONS
© Load is inspected and either accepted or refused.
° Unitized merchandise is unloaded.
. Floc
© All unloaded material is staged for count and final inspection
© Proper disposal is made of carrier damage.
© Load is stored in an assigned location.
‘The fa
© Sufficient area to stage and spot
© Dock le unloading
© Sufficient staging area to palletize or containerize goods
© Sufficient area to place goods prior to dispatching
ise orders to allow for report
Joaded or loose merchandise is unloaded.
cility requirements to perform these receiving activ
Jers and locks to facilita
¢ A host information system for ASN)
generation
‘The activities required to ship goods include:
* Accumulate and pack the order.
Stage and check the order.
* Reconcile shipping rel
and customer order.
© Spot and secure the carrier at the dock.
cure dock levelers and locks.
© Position and s
© Load the carrier,
© Dispatch the carrie
‘The fa
hipping activities include:
cility requirements to perform these s
© Sufficient area to stage orders
© An in-house host information system for shipping releases and customer order
© Sufficient area to stage and spot carriers
© Dock levelers to facilitate carrier loading
Some desirable attributes of receiving and shipping facilities plans include:
and s
© Directed flow paths among carriers, buffer or staging are:
© A-continuous flow without excessive congestion or idlent
© Aconcemtrated area of operition that minimizes material handling and increases
the effectiveness of supervision
© Efficient material handling
storage areas
* Safe operation
© Minimizing damage
© Good house
keeping
Requirements for people, equipment, and space in receiving and_ shipping
depend on the effectiveness of programs to incorporate prereceiving and postshipping
considerations, For example, by working with vendors and suppliers, peak loads at
receiving can be reduced, Scheduling inbound shipments is one method of reducing
the impact of randomness on the receiving workload. 408.
Part Three FACILITY DESIGN FOR VARIOUS FACILITI
PUNCTIONS
Another reason for being concerned with prereceiving activities is the opportu-
nity to influence the unit load configurations of inbound material, If, for example, cases
are hand:-stacked in the trailer by the vendor, they will probably have to be unloaded
by hand. Likewise, if either slipsheets or camp trucks were used by the vendor to load
the carrier and receiving does not have similar material handling equipment, the ship-
ment probably will have to be unloaded by hand. Finally, if materials are received in
unit loads not compatible with the material handling system, then additional loading,
unloading, or both might be necessary
A third reason for trying to influence prereceiving activities is to provide a
smooth interface between the vendor and receiver's information systems. Where
automatic identification systems are in use in receiving, some firms supply their ven-
dors with the appropriate labels to be placed on inbound material to facilitate the
receiving, activity. The faster and more accurately receiving is performed, the more
both vendor and buyer benefit, Information is provided to accounting and payments
are made sooner and materials are available for use sooner, rather than sitting idle.
Just as the receiver wishes to influence the vendor, the customer wishes to
influence the shipper. Hence, post-shipping activities must be considered. In addi-
tion to the reasons cited for considering prereceiving activities, the following are
able containers, returned goods, returning, carriers,
issues in postshipping: retur
nd shipping schedules.
If goods are shipped to customers in returnable containers, @ system must be
developed to keep track of the containers and to ensure they are returned.
Additionally, whether or not the shipping container or support is returnable, there
will be @ natural attrition for which replacements must be planned.
Goods are returned because the goods failed to meet the customer's quality
specifications, mistakes were made in the type and amount of material shipped, or
the customer just simply decided not to accept the material. Regardless of the rea-
son, returned goods must be handled and an appropriate system for handling the
material must be designed.
If supplier-owned equipment is used to deliver materials to customers, con-
sideration should be given to utilizing the carrier's capacity on the return trip. The
“backhaul” of the carrier could be used for returning the returnable conta
for other transportation purposes.
Schedules can have a significant impact on the resource requirements for ship-
ation is required between the shipper and the shipping
's carrier, the shipper's carrier, a con-
tivities are to be planned, then
ers OF
ping. Hence, close coordi
department. The carrier might be the custome
tract hauler, or a commercial carrier. If shipping a
ipping schedules must be accurate and reliable.
Shipping systems have taken on an increasingly important role in the oper-
tion of the supply chain, Customer initiatives such as justin-time (JIT) and Efficient
Consumer Response (ECR) have resulted in expanded responsibilities for the ware-
house/traffic manager. No longer is it acceptable to simply ensure that the product
is shipped on time; now the warchouse/traffic manager often assumes responsibil
ity for when the product arrives at the customer's location. Fueled primarily by gov-
emment deregulation, customer requirements have increased, changes in shipping
modes have occurred, use of nextday and second-cay delivery services. has
increased, and business has become global.
In addition to the need for closely coordinating vendor and receiving activi-
and shipping and customer activities, it is equally important to coordinate the 409
7 WAREHOUSE OPERATIONS
activities of receiving and production, production and shipping, and receiving and
shipping.
‘The natural sequence for the flow of materials is: vendor, receiving, storage,
production, warehousing, shipping, customer. However, in some cases, materials
might go directly from receiving to production and from production to shipping.
Hence, such possibilities should be included in the system design.
Why should receiving and shipping be coordinated? Common space, equip-
ment, and/or personnel might be used to perform receiving and shipping.
Additionally, when skive pallets are used in a manufacturing or warehousing activ
ity, empty pallets will accumulate at shipping and must be returned to the loading
point at either receiving or production.
A key decision in designing the receiving and shipping functions is whether
to centralize the two functions. As depicted in Figure 7.3, the location of receiving
and shipping depends on access to transportation facilities.
Highway or rairaod
kr] ——[s Rg s R[s
ee ——
———- —
— od
(a)
—____] ———___! |
RIS R
—_—
— —
— —-
ot —
s|>
o
—_
—
—
You might also like
