Why Flexibility in Material Handling Systems is Important in the DC

October 13th, 2009

More than ever companies are reducing costs to remain competitive, while keeping an eye on further improving their responsiveness to customer demand.  Supply chain improvement is a way for companies to keep increasing efficiency, making it one of the last frontiers on which companies can compete to reduce cost and improve customer service levels.

Flexibility in design is critical to ongoing operational success. By accurately projecting volume growth and product variability, with an eye to ‘keeping all options open’ while providing the optimum workable solution for today’s needs means that flexibility must be built into the material handling system.

Supply chain execution demands a design that best facilitates speedy, timely, accurate delivery with an emphasis on the ‘perfect order.’  This results in distribution centers designed for velocity, with higher volume items located at the beginning of the order picking path.

For maximum efficiency such a warehouse is re-slotted on an ongoing basis. Some operations may even look at the movement, cube, and velocity of items and rearrange items on almost a weekly basis cutting travel time and keeping productivity high.

Order picking is one of the most important activities to optimize since it is the most labor intensive activity that goes on in a DC.  It’s where you have the greatest opportunity for bottlenecks and pickpack slowdowns.

By re-slotting your inventory at regular intervals -locating stock items to reduce travel time and increase velocity - you can go a long way toward improving facility efficiency.  If you compare an efficiently slotted warehouse with an inefficient one, you could see a 25% to 30% difference in labor productivity.

When it comes to efforts to derive further efficiencies from automated and mechanical equipment there are important considerations to be made, one of the most important considerations is building flexibility into the system.

Before forging ahead the current physical distribution infrastructure and operations must be assessed.  This includes examining the existing operations as well as buildings and sites to identify constraints, capacities and opportunities.  Very often an operations audit conducted prior to implementation of any new initiatives will result in significant cost savings and productivity increases.

When KOM conducts an audit 52 weeks of order flow history are analyzed to get a sense of inventory item movement over time.  Information is captured on sales of units, pieces, cases and pallets in order to identify the volume and item peaks and valleys.  This provides an irrefutable portrait of what kind of pressures a facility experiences during the year. 

In addition to order history KOM looks at the company’s individual customer order files to see whether orders typically comprise one line item, 100 line items or 1000 line items.  Most warehouses are a hybrid of two order types - large and small.  You attack them differently.  Large orders get picked conventionally while smaller items might get picked to totes.

Today the real gains have been made in the area of the capture, transfer and processing of information; not only in the quantity and availability, but the incredible speed at which it can be handled and responded to.

The physical materials handling equipment has had to evolve to keep pace with the speed of information capture and demand for faster order fulfillment response times.

With electronic information transfer, and particularly the accessibility offered by the internet, the consumer and business now expect total transparency regarding product availability and deliver schedules.

Business now faces orders arriving from many different sources, all electronically.  Strategies have been implemented to process and re-direct these orders almost immediately to the most effective location for fulfillment.

Not only has the physical materials handling equipment evolved to keep pace with the speed of information capture and demand for faster order fulfillment cycles, but so has the communication with these devices and steps taken to integrate them into a complete system providing as much flexibility as possible.

Today, many companies are taking a second look at automated methods of receiving and selecting as a way of improving efficiencies.

If systems are designed properly and are thought through based on a thorough analysis of sound historical data then there will be flexibility built into them because flexibility is an important quality of an effective and successful design.

Most systems, however, do not have enough flexibility built into them.  This is because many companies are dealing with the requirements of the day-to-day, and don’t have the time to look to the future when solving the problems of today.  Not to mention that uncertainty in the direction or growth of most businesses may make it difficult to come up with firm projections. Markets, technology, competition are always changing leading some planners to argue that - “the future.. it ain’t what it used to be.”

Regardless of the reasons against built-in flexibility it’s one of the most effective ways to address changing requirements as they emerge, and emerge they will for the only real constant is change.

Flexibility can be built into your material handling system from the ground up in a number of ways by making a commitment to ensure that it is prevalent throughout the design.

For the Building: choose the right site,

• build in the column bays to provide for multiple layout options,
• build to a clear height.

For the Racking -  design a structure that allows for flexibility so that you can move from single deep to double deep without changing the structure.

For the Shelving - allow for future levels of shelving units to be added to the original design.

For the Numbering System - this can be designed to accommodate item proliferation if considered up front in the design of this element of the system.

For the IT Systems - there can be an eye to growth that provides for flexibility in the design.

If the original design is done well, then a retrofit down the road is of course much easier.

A good source for companies looking to learn more about flexible material handling is The Material Handling Handbook, sponsored by the American Society of Mechanical Engineers and the International Material Management Society, published by John Wiley & Sons.

Entry Filed under: Design & Layout, Distribution Operations, General, Material Handling, Supply Chain Technology