Inleiding tot de logistiek (3542)

Prof. dr. Kris Braekers

Course overview
Inventory Quality Warehouse
SC strategy + Production
Introduction managemen managemen managemen
Inv. Mgmt. strategy
t t t

HC 1 HC2 HC 3 HC 4 HC 5 HC 6

WZ 2: WZ 4:
WZ 1: WZ 3:
/ / case case
exercises exercises
study study

Ch.1+7 Ch.2+12 Ch.12 Ch.16 Ch.5+6 /

Responsiecolleges

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Warehouse management
Warehouse management
 Course material
 Slides

 Background material
 de Koster, Le-Duc, Roodbergen (2007) Design and control of warehouse
order picking: A literature review. European Journal of Operational
Research 182, 481-501.
 Gu, Goetschalckx, McGinnis (2007) Research on warehouse operation: A
comprehensive review. European Journal of Operational Research 177, 1-
21.

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Outline
 Introduction
 A warehouse: what, why?
 Challenges & opportunities

 Main warehousing activities

 Warehouse design
 Types of warehouses
 Key decisions

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Warehouse management
 Warehouse or distribution center
 Location to temporarily store items
 SKU (stock keeping unit): a specific item that is stored (in a certain quantity)

 Essential component of any supply chain

 May be outsourced to logistic service providers (3PL)

 Important roles:
 Buffering (storage)
 Consolidation
 Value-added services
 Reverse logistics

Supplier Manufacturer Distributor Retailer Customers

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Warehouse management
 Consolidation/bundling

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Warehouse management
 “Blue Banana” (European Megalopolis, Manchester–Milan Axis)

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Warehouse management
 Limburg/Flanders/Belgium as logistics hotspot
 Many large international companies have their European Distribution Center
(EDC) in our region

 Some background (“Locate in Limburg”):

 https://www.youtube.com/watch?v=vGcjCguPHGY

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Warehouse management
 Limburg/Flanders/Belgium as logistics hotspot
 But: not for e-commerce

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Warehouse management
 Limburg/Flanders/Belgium as logistics hotspot
 But: not for e-commerce

 https://www.tijd.be/ondernemen/retail/belgie-mist-kansen-in-e-commerce/9681627.html
 https://vrtnws.be/p.GvvVqO3oY
 https://www.supplychainmagazine.nl/belgie-mist-de-boot-met-e-fulfilment/

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Warehouse management

Inventory
management Warehouse
management

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Warehouse management
 Challenges
 Tighter inventory control
 Shorter response times
 Greater product variety (#SKUs increases)
 Smaller orders

 Opportunities
 Improvements in IT
 E.g., bar code scanning, radio frequency identification (RFID), warehouse
management systems (WMS)
 Improvements in robotics
 Leads to opportunities for real-time control, easy communication,
automation

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Outline
 Introduction
 A warehouse: what, why?
 Challenges & opportunities

 Main warehousing activities

 Warehouse design
 Types of warehouses
 Key decisions

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Warehouse management

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Warehouse management

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Receiving & shipping
 Goods arriving from suppliers or leaving to customers
 Typically by truck (also by van, train or ship)
 (Un)loading at receiving/loading docks
 Administrative actions
 Updating inventory records
 Often inspection (quality and quantity)

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Receiving & shipping

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Warehouse management

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Storage: transfer & put away
 Goods are placed in storage
 Pallets, cases and/or broken cases (items)

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Warehouse management

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Order picking: retrieval
 Customer order:
 Contains one or more order lines
 Order line: specific SKU in specific quantity

Order Order lines SKU Quantity

Order line 1 103 5
Order 1
Order line 2 204 1
Order 2 Order line 1 728 3

 Order picking:
 Retrieve goods from storage locations
 Upon receiving customer order
 Most labor-intensive warehouse operation (unless automation)
 Many different strategies possible

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Warehouse management

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Order picking: prepare for shipping
 Accumulate and sort the picked items per customer order (if
required)
 Value-added services
 Pricing
 Labeling
 Customization
 Packing

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Warehouse management

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Outline
 Introduction
 A warehouse: what, why?
 Challenges & opportunities

 Main warehousing activities

 Warehouse design
 Types of warehouses
 Key decisions

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Warehouses: different types
 Different ways to categorize warehouses
 The way products are stored
 Pallets vs. cases vs. broken cases (B2B vs. B2C)
 Type of storage racks

 Organization of order picking process

 Fully automated
 Human-dependent
 Picker-to-parts
 Parts-to-picker

 The level of robotization/automation

 Many alternatives, rapidly changing possibilities

 …

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Azadeh, de Koster, Roy (2019) Robotized and Automated Warehouse Systems:
Review and Recent Developments, Transportation Science 53(4), 917-945.
Warehouses: different types
 Some automation examples
 Fully automated
 Meijer (Wisconsin, US): https://www.youtube.com/watch?v=bn5jjVKhFUs
 Vinamilk (Vietnam): https://www.youtube.com/watch?v=4HWppMe06WQ

 Human-dependent
 Parts-to-picker
 Movable racks (robotic mobile fulfillment systems)
 DB Schenker/Lekmer.com (Stockholm): https://www.youtube.com/watch?v=udr0OOxmPbc
 Amazon (Florida, US): https://www.youtube.com/watch?v=Y-lBvI6u_hw
 Alibaba (Huiyang, China): https://www.youtube.com/watch?v=FBl4Y55V2Z4
 Grid-based systems
 AutoStore: https://www.youtube.com/watch?v=b3X3r5UVtEM
 AS/RS
 …

 Picker-to-parts
 Often less automated
 Pick support AGVs
 https://www.youtube.com/watch?v=2_I9j-1QJKU
 Marleylilly (South Carolina, US): https://www.youtube.com/watch?v=cqi6GIblJso

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Warehouses: different types
 Some automation examples
 Fully automated
 Meijer (Wisconsin, US): https://www.youtube.com/watch?v=bn5jjVKhFUs
 Vinamilk (Vietnam): https://www.youtube.com/watch?v=4HWppMe06WQ

 Human-dependent
 Parts-to-picker
 Movable racks (robotic mobile fulfillment systems)
 DB Schenker/Lekmer.com (Stockholm): https://www.youtube.com/watch?v=udr0OOxmPbc
 Amazon (Florida, US): https://www.youtube.com/watch?v=Y-lBvI6u_hw
 Alibaba (Huiyang, China): https://www.youtube.com/watch?v=FBl4Y55V2Z4
 Grid-based systems
 AutoStore: https://www.youtube.com/watch?v=b3X3r5UVtEM
 AS/RS
 …

 Picker-to-parts
 Often less automated
 Pick support AGVs
 https://www.youtube.com/watch?v=2_I9j-1QJKU
 Marleylilly (South Carolina, US): https://www.youtube.com/watch?v=cqi6GIblJso

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Outline
 Introduction
 A warehouse: what, why?
 Challenges & opportunities

 Main warehousing activities

 Warehouse design
 Types of warehouses
 Key decisions
 Overall structure, sizing and dimensioning
 Departmental layout
 Equipment selection
 Operation strategy
 Storage strategy
 Order picking strategy

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Overall structure, sizing and dimensioning
= facility layout problem

 Overall structure
 Material flow
 Different departments for different types of products?
 Forward-reserve configuration?
 Relative location of
 Different departments
 Main activities (receiving, storage, accumulation, shipping)

 Sizing and dimensioning

 Complete warehouse & individual departments

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Department layout
= internal layout design, aisle configuration problem
 Traditional - fishbone – flying-V layout

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Department layout
= internal layout design, aisle configuration problem
 Traditional - fishbone – flying-V layout
 Number, width, length, height of aisles
 Number of blocks
 Location of depot

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Equipment selection
 Types of racks and shelves

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Equipment selection
 Handling equipment

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Equipment selection
 Level of automation

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Operation strategy
 Decisions
 Related to day-to-day operations
 Not likely to be changed frequently

 Two aspects
 Storage strategy:
 Where to store each SKU
 Order picking strategy
 How to retrieve an SKU when ordered

 Main objective
 Maximize service level subject to resource constraints (labor, machines,…)
 Service level:
 Average order delivery time (and variation on this)
 Order is picked faster  earlier available for shipping (or customers may order later in time)
 Respect shipping due dates of orders
 Order integrity
 Accuracy

 Other objectives
 Max. use of space, max. use of equipment, min. labor cost

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Operation strategy

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Operation strategy
 Decisions
 Related to day-to-day operations
 Not likely to be changed frequently

 Two aspects
 Storage strategy:
 Where to store each SKU
 Order picking strategy
 How to retrieve an SKU when ordered

 Main objective
 Maximize service level subject to resource constraints (labor, machines,…)
 Service level:
 Average order delivery time (and variation on this)
 Order is picked faster  earlier available for shipping (or customers may order later in time)
 Respect shipping due dates of orders
 Order integrity
 Accuracy

 Other objectives
 Max. use of space, max. use of equipment, min. labor cost

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Operation strategy
 Decisions
 Related to day-to-day operations
 Not likely to be changed frequently

 Two aspects
 Storage strategy:
 Where to store each SKU
 Order picking strategy
 How to retrieve an SKU when ordered

 Main objective
 Maximize service level subject to resource constraints (labor, machines,…)
 Service level:
 Average order delivery time (and variation on this)
 Order is picked faster  earlier available for shipping (or customers may order later in time)
 Respect shipping due dates of orders
 Order integrity
 Accuracy

 Other objectives
 Max. use of space, max. use of equipment, min. labor cost

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Operation strategy: Storage strategy
 Where to store what?

 2 aspects:
 Forward-reserve configuration
 Storage (location) assignment policies

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Operation strategy: Storage strategy
 Forward-reserve configuration
 Split storage space in two areas
 Reserve area
 Bulk stock
 Forward area
 Pick stock
 Limited in size

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Operation strategy: Storage strategy
 Forward-reserve configuration
B D F H J L N P R T
B D F H J L N P R T
B D F H J L N P R T
B D F H J L N P R T
B D F H J L N P R T
A C E G I K M O Q S
A C E G I K M O Q S
A C E G I K M O Q S
A C E G I K M O Q S
A C E G I K M O Q S

depot

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Operation strategy: Storage strategy
 Forward-reserve configuration
B D F H J L N P R T
B D F H J L N P R T
B D F H J L N P R T
B D F H J L N P R T
B D F H J L N P R T
A C E G I K M O Q S
A C E G I K M O Q S
A C E G I K M O Q S
A C E G I K M O Q S
A C E G I K M O Q S

depot
forward area reserve area
J T C C H H M M R R
I S C C H H M M R R
H R B D G I L N Q S
G Q B D G I L N Q S
F P B D G I L N Q S
E O B D G I L N Q S
D N A E F J K O P T
C M A E F J K O P T
B L A E F J K O P T
A K A E F J K O P T

depot

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Operation strategy: Storage strategy
 Forward-reserve configuration
 Split storage space in two areas
 Reserve area
 Bulk stock
 Forward area
 Pick stock
 Limited in size

 Tradeoff
 Picking efficiency (smaller distances)
 Replenishments from reserve to forward area

 Decisions:
 Size of forward area?
 All SKUs in forward area?
 How much units per SKU in forward area?

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Operation strategy: Storage strategy
 Storage (location) assignment policies
 A set of rules which can be used to assign SKUs to storage locations
 Different methods
 Random
 Dedicated
 Full-turnover storage
 Class-based storage

 Family grouping

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Operation strategy: Storage strategy
 Storage (location) assignment policies
 A set of rules which can be used to assign SKUs to storage locations
 Different methods
 Random
 High space utilization (low space requirements) vs. high travelled distances
 Only possible in computer-controlled environments

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Operation strategy: Storage strategy
 Storage (location) assignment policies
 A set of rules which can be used to assign SKUs to storage locations
 Different methods
 Random
 High space utilization (low space requirements) vs. high travelled distances
 Only possible in computer-controlled environments

 Dedicated
 Each SKU has a fixed location
 Low space utilization vs. order pickers become familiar with locations
 Good option if products have different weights and dimensions
 Dedicated in forward area, random in reserve?

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Operation strategy: Storage strategy
 Storage (location) assignment policies
 A set of rules which can be used to assign SKUs to storage locations
 Different methods
 Random
 Dedicated

 Full-turnover storage
 Distribute SKUs over area based on turnover
 Highest sales = best locations (near depot)
 Easiest to implement when combined with dedicated storage
 But: demand rates vary constantly & product assortment changes frequently
 Solution: redistribute products after some time
 Information-intensive approach

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Operation strategy: Storage strategy
 Storage (location) assignment policies
 A set of rules which can be used to assign SKUs to storage locations
 Different methods
 Random
 Dedicated

 Full-turnover storage
 Distribute SKUs over area based on turnover
 Highest sales = best locations (near depot)
 Easiest to implement when combined with dedicated storage
 But: demand rates vary constantly & product assortment changes frequently
 Solution: redistribute products after some time
 Information-intensive approach

 Class-based storage
 Combination of turnover and random
 Group SKUs in classes
 Pareto principle (A,B,C)
 Based on a measure of demand frequency
 Each class:
 Dedicated area
 Within each class:
 SKUs are assigned randomly to locations

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Operation strategy: Storage strategy
 Class-based storage
 Options for distribution of A, B and C items (dark to light grey)

Depot

Depot

Depot
Depot

Depot

Random Within-aisle Across-aisle Diagonal Perimeter

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Operation strategy: Storage strategy
 Storage (location) assignment policies
 A set of rules which can be used to assign SKUs to storage locations
 Different methods
 Random
 Dedicated
 Full-turnover storage
 Class-based storage

 Family grouping
 Take into account relations between SKUs
 Related SKUs (in terms of customer orders) are stored close to each other

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Operation strategy
 Decisions
 Related to day-to-day operations
 Not likely to be changed frequently

 Two aspects
 Storage strategy:
 Where to store each SKU
 Order picking strategy
 How to retrieve an SKU when ordered

 Main objective
 Maximize service level subject to resource constraints (labor, machines,…)
 Service level:
 Average order delivery time (and variation on this)
 Order is picked faster  earlier available for shipping (or customers may order later in time)
 Respect shipping due dates of orders
 Order integrity
 Accuracy

 Other objectives
 Max. use of space, max. use of equipment, min. labor cost

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Operation strategy: Order picking strategy
 Order picking methods
 How to retrieve an SKU when ordered

Order picking
methods

Human-dependent Fully automated

Picker-to-parts Parts-to-picker

See examples Meijer

& Vinamilk

Movable racks, grid-

Several decisions based systems, AS/RS
(batching, zoning, (see examples
routing, technology) Alibaba, Amazon,
AutoStore)

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Operation strategy: Order picking strategy
 Decisions
 Apply zoning?
 If yes, how?
 Apply batching?
 If yes, how?
 Which routing policy?
 Which technology?

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Operation strategy: Order picking strategy
 Zoning
 Zoning means:
 Dividing order picking area in zones
 Each order picker is assigned to a single zone (≠ 1 picker per zone)

depot

depot depot depot depot

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Operation strategy: Order picking strategy
 Zoning
 Zoning means:
 Dividing order picking area in zones
 Each order picker is assigned to a single zone (≠ 1 picker per zone)

 Advantage
 Order pickers travel smaller distances and become familiar with locations
 Disadvantage
 Orders are split and should be consolidated before shipping
(different SKUs of the same order may be stored in different zones)

 Consolidation strategies
 Progressive zoning (pick-and-pass)
 Pick zone by zone
 Order goes to the next zone when completed in previous zone
 Consolidation is easy, but it may take a long time to pick a complete order
 Synchronized zoning
 Pick in parallel
 Merge after picking has been done in all zones
 More complex, but generally more time-efficient

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Operation strategy: Order picking strategy
 (Order) batching
 Traditionally: no batching
 Single order picking / discrete picking / pick-by-order
 Picking a single order per picking tour
 Reasonable in case of large orders
 Many storage locations to visit
 Many products to pick (and carry)

 (Order) batching
 Picking a set/batch of orders in a single picking tour
 Allows to reduce travel time per order
 Especially efficient in case of small orders (few order lines per order)

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Operation strategy: Order picking strategy
 (Order) batching

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Operation strategy: Order picking strategy
 (Order) batching

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Operation strategy: Order picking strategy
 (Order) batching
 In case of batching:
 Which orders to combine in a batch?
 Can be based on:
 Proximity of storage locations to visit (how to measure this?)
 Timing of orders
 Account for order due times

 Sort-while-pick or pick-and-sort?

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Operation strategy: Order picking strategy
 (Order) batching

Sort-while-pick pick-and-sort
(e.g., https://www.youtube.com/watch?v=ZBn8_my5x2Q)

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Operation strategy: Order picking strategy
 Pick list
 List of SKUs (and their quantity) to be picked in a single order picking tour
 Assigned to a specific order picker
 As a result of zoning & batching decisions

 Picker routing
 Sequencing the items on the pick list to ensure a good route through the
warehouse for the order picker (i.e. minimize distance)
 Usually solved using simple heuristics

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Operation strategy: Order picking strategy
 Picker routing
 S-shape (traversal)
 Completely pass through every aisle in which you need to pick an item
 Return
 Enter and leave aisles from the same side

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Operation strategy: Order picking strategy
 Picker routing
 Mid-point
 Enter and leave aisle from the same side, but pick only items up to the middle of
the aisle
 Enter aisle from both sides if required
 Largest-gap
 Same as mid-point, except that “middle of aisle” is determined more dynamically

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Operation strategy: Order picking strategy
 Picker routing
 Optimal
 Solve an optimization problem to find the optimal route
 Clearly best result, but often more complex routes

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Operation strategy: Order picking strategy
 Picker routing
 Same approaches in a multi-block warehouse

Depot Depot

Largest Gap
Traversal Return

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Operation strategy: Order picking strategy
 Picker routing
 Same approaches in a multi-block warehouse

Depot Depot

Midpoint Largest
Traversal
Gap

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Operation strategy: Order picking strategy
 Technology for manual picking
 Capital investments vs. improvements in accuracy (and productivity)
 Examples
 Scanning
 Improves accuracy
 Voice picking
 Improves accuracy and productivity
 Pick-to-light
 Especially for small products/bins
 …

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Highly interrelated
tactical decisions
Volgende sessies
 Werkzitting
 Geen voorbereiding vereist

 Responsiecollege (9/12)
 Vragen insturen via kris.braekers@uhasselt.be ten laatste op
dinsdag 6/12

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