Warehouse Activity

Profiling for Operational

Efficiency

©CII Institute of Logistics

 Logistics Performance Index (LPI)
WORLD BANK 2010
World Bank ranks
4.11 4.09 India 47th in
3.88 3.86 3.84
3.63 logistics efficiency
3.49
3.12

Performance Indicators
 Customs  Logistics Competence
 Infrastructure  Tracking and Tracing
 International Shipments  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 At 12% of GDP Amount Saved

(US$ bn) (US$ bn (US$ bn

Indian companies can Transportation 32.45 29.95 2.50

save substantial cost by Inventory 23.18 21.40 1.78

adopting modern supply Packaging 10.20 9.41 0.78
chain and logistics
Handling and Warehousing
solutions 8.34 7.70 0.64
Others 18.54 17.12 1.43

Total Logistics Costs 92.72 85.58 7.13

©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…

©CII Institute of Logistics

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

DC /
Stores RDC /
Depots C3
W/h

C4
Godown

C5

C6

DISTRIBUTION OUTBOUND
VENDOR INBOUND PLANTS INTERFACILITY TRANSPORTATI CUSTOMERS
TRANSPORTATION TRANSPORTATION CENTERS ON

• 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”, adding that "the term is
used to describe a high-velocity operation
as opposed to a static storage warehouse.“
• DCs evolved from warehousing and share
much of the same DNA

©CII Institute of Logistics

 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
 Challenges of Warehouse

 Less time to process an order

 Less margin for error

 Less young, skilled, English speaking personnel

 Less WMS Capability

©CII Institute of Logistics Centre of Excellence - Supply Chain Management Institute

of Logistics
 Design & Related Issues
Planning & Required
Sl. No Key Questions Profile Components
Design Issues Profile

1 Receiving and Put Receiving Mode Disposition Purchase Order Mix Distributions
Away Process Put away batch sizing Order Lines per receipt distribution
Design Put away tour construction Profile Lines and cubes per receipt
distribution

2 Storing Zone Defining Item Popularity profile

Storage Mode selection /sizing activity Cube Movement volume profile
Pick face sizing profile Order completion profile
Item location assignment Demand correlation profile
Demand Variable profile

3 Order Picking & Order Batch Size Customer Order Mix Distributions
Shipping Design Pick wave Picking Order Lines per order distribution
Process Picking Tour Construction Profile Line & cube per order
Shipping Mode Disposition distribution

©CII Institute of Logistics Centre of Excellence - Supply Chain Management Institute

of Logistics
 Design & Related Issues
Sl. Planning & Required
Key Questions Profile Components
No Design Issues Profile
4 Material Transport Material handling Systems Calendar Seasonality Profile
Systems selection & sizing Clock profile Daily Activity Profile
Engineering

5 Warehouse layout & Overall warehouse flow design Activity Order Mix Distributions
Material Flow :U, S, I or L Relationship Lines per receipt distribution
Design Relative Functions Locations Profile Lines and cubes per receipt
Building Configuration distribution

6 Warehouse Sizing Overall Warehouse space Inventory Item family inventory

requirement profile distribution
Handling Unit inventory
distribution

7 Level of Automation Staffing Requirements Automation Economic factor distribution

& Staffing Capital Labor Substitution Profile
Level of Mechanization

©CII Institute of Logistics Centre of Excellence - Supply Chain Management Institute

of Logistics
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
• Congested Aisles Goods IN
Check
inventory &
Storage
• Partially Executed orders
• Pick errors., ‘look like errors’ Goods OUT Order
Processing

• Time efficiency
Increase the Velocity of Transportation Delivery
“FLOW”
©CII Institute of Logistics
 Quick Fixes – This week

• Procedural changes

• No change to layout or the warehouse facility.

• No capital required

• Do it this week (or the next)

©CII Institute of Logistics

Understand : Products, Orders ( Customer &
Purchase Indents ), Processes

INV. ORDER ITEM

MASTER MASTER MASTER

Inventory Snapshots Order Detail SKU Number

Description
Maximum, Average Customers’ ordering
Item Cube
Inventory Levels, pattern, Seasonality,
Pieces Per Case
Service levels UOM.,
Cases Per Pallet
Receiving frequency,
Product Group
UOM
Item Weight

©CII Institute of Logistics 16

 Mapping the Processes
Materials
LSPs Suppli

ready
Shipment Receive
Pre-advise
booking Payment
creation
(Carriers)er

Cargo flow
Transportation Process
updates Transportation
(Warehousing)

Receiving
Picking Deliver
y
Put-away
Custom LSP

Inventory Management
(cycle counting, stock reconciliation etc.)
Customer Service

Line replenishment Delivery & billing of

request confirmation material
er

Material and Inventory Management

©CII Institute of Logistics

 Understanding of processes is necessary
Process Functionality Impact if not done properly

ASN based gate entry. The GE stickers

Gate Entry (with barcodes) printed and travels along Need manual entry, longer truck turn around time
with the truck to the receipt dock.

System-directed put away into the Goods

Putaway into Receipt Inward locations. Put away slips in different
Low Flexibility and High Stock Discrepancy
bins colors for single / multiple inventory
locations. Immediate updation in the master

System-directed picking - online updation of

picking confirmation by scanning the pick
Longer lead time or more pickers, Low traceability
Picking process location and the part being picked.
resulting in High Stock Discrepancy
Simultaneous updation of system stock
accordingly.

On completion of primary packing, system-

directed creation of transfer instruction
Creating transfer Low traceability resulting in High Stock
(transfer order) indicating the completion of
instruction Discrepancy
primary packing and instructing the putaway
location into the stock

Dynamic Storage Changing storage bin for SKUs depending

Very low flexibility resulting in more area
Location on availability

©CII Institute of Logistics

 Location Numbering…(with Logic)

• XX XX X XX
Position on a Level, counting from left
to right between rack supports

Level or shelf, counting from the floor

Section, or bay, the portion of the storage aid

between uprights

Aisle
TRAVEL
Picklist Stage,Pack,ship

PICKING
©CII Institute of Logistics
 Row, Aisle, Bin numbers & signages

©CII Institute of Logistics

 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.”

C C C C
B B B B
A A A A
©CII Institute of Logistics
 Slotting based on Item Popularity

Popularity Profile

1.000
0.900
0.800
0.700
% of picks

0.600
0.500
0.400
0.300
0.200
0.100
0.000
0.000 0.200 0.400 0.600 0.800 1.000
% of items

©CII Institute of Logistics

 Slotting based on Item Popularity

Medium Popular

Slow Movers

Highly Popular

©CII Institute of Logistics

 Multi Dimensional Pareto Analysis

STOCK TURNOVER

V
O
LU
M
E

FREQUENCY

ABC based on Volume

ABC based on Frequency
ABC based on Turnover
©CII Institute of Logistics
 Share of Consumer Care Division
sales

©CII Institute of Logistics

 Non-Moving ?
After the Item Popularity calculation, some items are found to
be ‘non moving’.,
>> ideally dispose them immediately, alternatively,
move them to remote area.

2500
pallets,
250 are
NM.,

4 ft 4 ft
At 100 orders/day, 4feet per pallet, extra dist=100000ft/day. At 200ft/min, 500
mins/day, 2499 hrs/yr, Rs55/hr, Wasted is Rs.137500/yr
©CII Institute of Logistics
 One storage location only per part number

• One product (part number) must be stored in only one location (i.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, these will be grouped
together and managed as one
• This location shall be kept stable in order to create work habits, although it
must be periodically revised in accordance to turnover

A1 D4 B2 A1 A1 B2 C3 D4

C3 B2 D4 C3 A1 B2 C3 D4

D4 A1 C3 B2 A1 B2 C3 D4
©CII Institute of Logistics
• Cube – Movement / Volume distribution
- to assign items to storage modes based on their cube
movement.
Inventory Container Graph
Drawers
25000

20000
# of SKUs

15000

10000

5000

0
0.125 1.5 8 40 320
Cubic Feet of Storage Needed

©CII Institute of Logistics

 Popularity - Cube-movement
Distribution
Cube
movement

Flow rack

Storage Bin shelving Carousels

drawers

©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
Item A
30 Item B
20
10
0
Month 1 Month 2 Month 3
©CII Institute of Logistics
 Storage by family

• Storage, within the same zone, of different products of the same type, as:
• Exhaust systems of different models or different spirit drinks...
• Storage, within the same zone, of different products that are usually sold together as:
• Paint and paint brushes
• Seeds and gardening tools
• Storage, within the same zone, of different products having similar weights,
dimensions and shapes

The aim here is also to create work habits that improve

the productivity of operations

©CII Institute of Logistics

 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 cases (items
pallets totes)
overpacks
mul cases
PALLET RESERVE
pallets
Breakdown
pallets function
CASE PICK
(items
cases) cases
pallets cases cases
ITEM PICK
totes
(cases) items
(items
SORTING A cases)
totes
totes totes
(items Consolidation
SORTING B
totes cases) Function
cases totes
overpacks
UNITIZING
totes
mul cases
pallets overpacks
©CII Institute of Logistics
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 % of orders
% of lines
20
10
0
Loose Full pallet Mixed
carton
©CII Institute of Logistics
 SKUs…
• DABUR CHAWANPRASH (Regular) 24 x 500 gm. (17.5 Oz.)
• DABUR CHAYWANPRASH (Regular) 12 x 1 Kg. (2.2 Lbs.)
• DABUR HONEY ( SHELF LIFE 18 MONTHS) 120 x 50 gm. (1.75 Oz.)
• DABUR HONEY 72 x 100 gm. (3.5 Oz.)
• DABUR HONEY 32 x 250 gm. (8.75 Oz.)
• DABUR HONEY 16 x 500 Gm. (17.5 Oz.)
• DABUR HONEY 9 x 1 Kg. (2.2 Lbs.)
• DABUR PUDIN HARA 200 x 30 Ml.
• GLUCOSE D DABUR 80 x 200 gm. (7 Oz.)

©CII Institute of Logistics

 Distribution hierarchy
Depots ( 50 ~ 60 )

CFA ( 3000 ~ 4000 )

Distributors / Stockists (50 k ~ 60 k )

Large Retailers (Hyper Medium Retailers (Super Small Retailers (Grocery 1.5 ~ 2 Million
markets) markets) shops)

Consumers - 20-30 Millions

©CII Institute of Logistics

 A schematic representation of the
warehouse material flow
Replenishment Replenishment
Broken
Case
Reserve Storage Case
Picking
and Picking
Pallet Picking

Accumulation, Sortation & Packing

Direct Direct
putaway putaway
to reserve to primary
Receiving Shipping
Cross-docking

©CII Institute of Logistics

 Organizing Principle

• Tasks correspond to flow in a functional network

Inspection

Receiving Order picking

Bulk storage Shipping

• Handling unit conversions

Carton storage
and picking Order sort/
accumulate

• Processing options
• Total workload

Material flow Function-to-department mapping

©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, reduced stock

loss and reduced accidents

Inbound / replenishment flow

Outbound / picking flow

©CII Institute of Logistics

 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 = 118 ft Dist Travelled = 74 ft
(4 ft pallet & 9ft aisle) (4 ft pallet & 9ft aisle)

©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,

©CII Institute of Logistics

 Storage Subsystem – Capacity
• Dedicated space
– each product is stored in a specific area n
md   max I j (t )
– assign storage location to products j 1
t

• Random space: products can be stored anywhere

n
– the products are randomly distributed over the m  max I (t )
warehouse
r
t

j 1
j

space
product batch size safety stock dedicated random
1 1000 200 1200 700
2 2500 400 2900 1650
3 11600 1250 12850 7050
4 850 300 1150 725
5 1750 500 2250 1375
6 4500 1000 5500 3250
7 2600 950 3550 2250
©CII Institute of Logistics
total space: 29400 17000
 Location of shipping and
receiving
• U shaped or cross docking configuration
– Receiving and shipping on the same side of the
warehouse
– Provides dock flexibility.If one experiences
surge of activity, can make use of additional
doors from the other function
– Minimizes truck apron and roadway

©CII Institute of Logistics

 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

Angled aisles can enable more direct travel between
receiving / shipping and storage locations.

©CII Institute of Logistics

• 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

Material Handling equipments Selection...
VERY NARROW AISLE
CONVENTIONAL SYSTEM NARROW AISLE SYSTEM
SYSTEM

Electric Very Narrow Aisle

Gas, LPG or Electric Trucks Electric Reach Trucks
Trucks

Clear aisle 4200mm Clear aisle 2700mm Clear aisle 1650mm

Stack 4 high (1 on the Stack 4 high (1 on the Stack 4 high (1 on the

ground; 3 in the air) ground; 3 in the air) ground; 3 in the air)

The truck loads & unloads The truck pick up & deposits The truck pick up & deposits
trailers, loads & unloads rack loads from staging and pick & loads from staging and pick &
plus pick up & deliver to deposits loads in the rack deposits loads in the rack
manufacturing systems systems

80% Travel. 20% Lift 60% Travel. 40% Lift 50% Travel. 50% Lift†

76% Aisle 71% Aisle 59% Aisle

† Travel & Lift are simultaneous

©CII Institute of Logistics
Material Handling equipments Selection...
Counter Balance System vs Very Narrow Aisle
1 2980 sq meters – 1730 sq meters = 1250 sq meters
1250 sq meters x ### per sq meter per month =

Total Savings: Rs. Xx,xx,xxx per annum

Narrow Aisle Reach Truck vs Very Narrow Aisle

2 2147 sq meters – 1730 sq meters = 417 sq meters
417 sq meters x ### per sq meter per month =

Total Savings: Rs. Xx,xx,xxx per annum

©CII Institute of Logistics

Material Handling equipments Selection...

• 17,000mm lift height

• Very high bay warehousing further
leverages property footprint potential
• Global trend, with projects and installed
facilities on most continents.

©CII Institute of Logistics

 Automated Monorail & AGV

©CII Institute of Logistics

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