Posts filed under 'Material Handling'
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.
October 13th, 2009
As the supply chain moves to a leaner, demand driven model, the trend is towards less inventory in the system, in general. This is a change from the traditional model which was essentially an inventory driven supply chain. With fewer inventories in the system, we see that product assortment and the need to handle individual products in the most efficient manner possible is driving DC design. That is, the slotting requirement is now as important as inventory storage and in many cases drives the DC sizing requirement.When designing a warehouse facility for efficiency, several factors need to be considered. The goal should always be to minimize costs, both capital costs used to construct a new facility or expand an existing location, as well as on-going operating costs associated with handling product and maintaining the physical structure.
Thus “Efficient DC Design” implies the design of a warehouse to minimize annual operating costs while maintaining desired service levels. Service levels are often affected by efficiency within a warehouse operation, and thereby impacted by the design of the layout.
Assuming a conventional, case pick operation there are 3 Main factors driving efficient design: Pick Slots, Net Working Capacity (Cubic Storage), and Dock Operations. Each is examined below in more detail.
Pick slots / Rack Bay requirements: How many rack bays are needed to satisfy the types of slots required to efficiently select product for shipping?
Determining the pick slot requirements is an analytical process involving detailed data mining and evaluation. The correct application of slotting logic to the data results in an efficient DC design. The basic data needs include volume or sales history, physical product characteristics (including packaging types and case & pallet dimensions), and inventory requirements.
Assigning an efficient slot type to each unique item in the distribution center should be based on weekly shipping volumes and desired replenishment activity. The trade off in productivity is pick line length versus replenishment or restocking activity. In many distribution centers, picking productivity accounts for up to 60% of all direct labour and thus commands the greatest attention.
A pick slot can vary in size from a single carton location to a multiple pallet location, all accessible from floor level.
Once the number and type of pick slots is determined, this number is translated into the equivalent number of rack bays required. The height of the rack bays will depend greatly on the inventory levels to be held in the distribution center.
Cubic Inventory Storage: How many rack bays are needed to satisfy the cubic (ft3) inventory storage requirements, on average and at a peak? What height of building is required to efficiently store the required inventory?
The necessary storage volume is often expressed in terms of cube (ft3). The ability of a distribution center to efficiently store cube is defined as Net Working Capacity (NWC). Once pick slot requirements have been determined and converted into rack bays, the cubic inventory on hand will determine the required height of the bays, and thus the entire building size. The NWC is then calculated at varying building heights to ensure that inventory will fit overhead of the pick slots. In some designs, where inventory levels are very high, special dense storage sections may be added to the DC layout in order to minimize stacking height requirements.
It is always vital to hold inventory for a given item as close as possible to its designated pick location(s). This minimizes the amount of putaway and replenishment labour required to stock the pick slot.
The travel aisle spacing between rack bays is dictated by the mobile equipment meant to operate within a given aisle. Generally, fork lift equipment outrigger dimensions will vary with the required lift height at which product is placed in overhead reserve locations. The allowance for operators to pass easily in an aisle will determine the final aisle width. Passing is a requirement for efficiency as it prevents an operator being impeded by another from performing their function. A typical, conventional facility with a clear height range from 28′ to 35′ will have a minimum 10′6″ aisle width for single-deep pallet racking.
Dock & Dock Door Requirements: What size dock should I have? What is my optimal receiving dock depth and width? Of my shipping dock? Should the facility have separate receiving and shipping docks? How many dock doors?
Not to be underestimated is the amount of dock space required for efficient receiving, flow and shipping of product. The dock is the heart of any operation and ultimately creates needed efficiencies or, if inadequate, hazardous bottlenecks.
Again, the trade off is in building size vs. operating efficiency. The dock and dock door requirements are driven primarily by shipping or service levels, the hours of operation, and the number of days per week of operation. The more balanced the workload, the more efficient the design will be. Dock sizes can range from 50′ to 120′ in depth, depending on the amount of crossdock or product flow-through on a given operating shift, or for any required equipment such as pallet wrapping machines.
Other factors to consider in Efficient DC Design:
Location of auxillary functions such as location of building columns, battery charging, returns handling, clerical offices, etc. These items do not drive the design, but should be considered such that they integrate well and don’t interfere with the main functions of the warehouse.
Last but not least, one must consider flexibility in DC design. Given the changing landscape of supply chain management, a flexible operation is a must. Therefore, thinking ahead to consider expansion planning and ‘what if’ scenarios will enhance your DC plan. Flexibility in the equipment chosen, sizing of dock and storage areas, will allow easier transition to new operating realities as required.
The factors outlined above address a conventional warehouse operation where orders are selected onto pallet jacks and putaway and replenishment functions are performed by fork lift trucks. The principles however, are similar in non-conventional solutions. Obtaining and evaluating the right data will allow one to follow the basic steps above, and gain an understanding of the footprint required for an efficient DC design.
September 29th, 2009
Manufacturers’ warehouse requirements for finished goods are far different from warehousing requirements of retailers and wholesalers found downstream in the supply chain. Characteristically manufacturers stock fewer items and more of them. The result: large inventories per item create the need for high-density storage systems. There is an implicit danger in investing in a storage system that simply provides the greatest number of pallet positions per square foot. The danger being that the gross pallet positions available are not necessarily the net positions that can readily be used. Therefore without careful consideration, the workable capacity provided by a given storage system may be dangerously over-estimated.
Consider a bulk storage lane on the floor. Suppose it accommodates 4 pallets deep and, by stacking two pallets high, yields a capacity of 8 pallets in total. Keep in mind however, that before replenishing that lane it must be filled and subsequently picked clean prior to put away of new product or another lot of the same product. So although the lane begins full only when it’s empty can it be filled again. This means at any point in time, on average this lane is only ever half full.
What looks like a capacity of 8 pallets is, in effect, a capacity of 4 pallets. In an entire warehouse if every bulk storage lane followed this trend, 50% of the gross capacity of the building would remain unused. Unless, to make increased use of the gross capacity, operators mix items or lots in a single lane and re-handle pallets to maintain utilization rates closer to the gross capacity. The drawbacks of such an approach are that it puts inventory control at risk and greatly impacts operator productivity.
The general principle outlined above describing the danger high density storage poses also applies to drive-in and drive-through racking - however it does not mean that these storage systems are always poor choices for your warehousing needs.
Returning to the example of bulk storage lanes, consider the utilization of gross capacity when an item occupies two lanes. One lane has a 50% capacity but the other, which serves purely as a storage lane until the former is picked clean, has 100% capacity used. This brings the net utilization up to 75%. If an item can occupy three lanes, that utilization jumps to 83%.
What this second bulk storage example illustrates is that maximizing the gross capacity of a warehouse depends on matching a storage system to the inventory profile of the items stored in that system. Without a careful consideration of the inventory profiles held in the warehouse and a realistic appraisal of the net utilization achievable, the wrong storage system will be employed.
Another example of matching a storage system to the inventory profile of product stored in that system comes in the form of “end of run” pallets. Production runs never yield full pallets of finished goods: there is always a balance of product that makes for a small or partial pallet. Fitting these partial pallets into a uniform storage system conceived for full pallets will always result in lost storage capacity. Consider storage openings of 56″ which are optimal for pallet heights of 52″. Let’s say however, that an end of run pallet is only 28″ high - this leaves 24″ of unused capacity or a 56% net capacity utilization applicable to each end of run pallet stored.
The number of end of run pallets in a warehouse, while small in total, can lead to significant losses in available storage capacity unless the storage system design incorporates considerations for these pallets. Options available include smaller pallet openings within the larger system or, perhaps, a separate section of the warehouse dedicated to smaller pallet storage.
In conclusion, operations managers can make significant gains by keeping a few things in mind when looking at the best way to store finished goods.
- 1) Gross capacity of a storage system is not the same as the net capacity.
- 2) Net capacity is a function of the inventory profile of products stored in the system.
- 3) “End of run” pallets complicate the effort to yield the highest net storage capacity of a given system.
- 4) When a storage system is mis-matched to the inventory requirements, capacity drops and/or warehouse productivity suffers.
Careful, thorough storage system design decisions upfront will avoid years of headaches and burdensome costs in the future.
August 25th, 2009
Whether striving to finance business expansions or day-to-day operations, these have been difficult times. For this reason, many companies are increasingly acknowledging the strategic need to unlock large amounts of cash tied up in inventories, sales and purchases.
The working capital of a company, that is, the difference between its current assets and short-term liabilities is an indicator of two things: first, the financial health of the company and its ability to meet its immediate obligations; and second, the company’s operational efficiency.
The importance of optimizing and managing working capital resides in the fact that companies need cash to finance growth and ongoing operations alike - as it’s just not possible to pay suppliers and employees with inventory.
A common shortcoming many companies encounter when implementing cash-driven initiatives is: failing to understand the relationship between supply chain activities and financial performance. For example, the way orders are selected in the warehouse can affect Days-Sales-Outstanding (DSO) in addition vendor delivery performance can be leveraged when negotiating payment terms.
The following are a few examples of factors sometimes considered “soft” issues that can, in fact, provide a quantifiable return when improved:
Perfect Order Rate
The collection of invoices with erroneous deliveries (i.e. undetected mispicks, scratches) will cause not only deductions and charge-backs but also delays due to customers’ payment cycles.
Safety Stock Levels
There are several factors affecting inventory, however, when launching an inventory optimization initiative, the first step is to determine what the level of safety stock should be, and although inventory levels will fluctuate due to legitimate business reasons, there should be a set target. For example, the total inventory of a product shouldn’t be greater than its safety stock if the product is received and shipped every day in full truck loads.
Fast moving material handling systems
Introducing cross-docking, reverse line picking and flow-through programs for those items and vendors that meet the volume, quality, service level and cost requirements will impact inventory reduction capability.
Order fulfillment cycle time
Once the company has a firm order from a customer, the time it takes to fulfill that order is incorporated into the cash conversion cycle. Given this, the ability to respond to demand faster and while maintaining or lowering cost should drive transportation and warehouse initiatives.
Vendor Collaboration
Working with Vendors can make a big difference. For example, moving inventory off the balance sheet through the pursuit of Vendor Managed Inventory initiatives can reduce a company’s investment in inventory.
There are many other factors rooted in supply chain activities that impact working capital performance and should be incorporated into the supply chain performance metrics. These include:
- Vendor lead times
- Supply chain visibility
- Real-time proof of deliveries
- Forecasting accuracy
- Vendor performance linked to payment terms
- Minimum order quantity
The extent to which each of these factors influence the financial results vary from company-to-company, however, in order to implement an effective working capital optimization initiative the following steps should not be overlooked:
Analyse end-to-end supply chain processes - to identify opportunities based on depth of research and data analysis from vendors to customers.
Define performance metrics - to measure not only results but also leading indicators (e.g. input variables that impact results).
Set goals - at tactical and operational levels to ensure execution effectiveness.
Align cross-functional accountability - create cross-functional teams to drive improvement initiatives across the supply chain.
By increasing overall awareness and the attention given to the relationship between the supply chain and financial performance, companies can strive to link their activities in this area to their Working Capital Optimization initiatives. The above most specifically suggests how to do so in regard to warehouse operations and material handling systems, and stresses the importance of the related Supply Chain metrics used to support this effort.
August 11th, 2009
Pallet racking systems have traditionally been made from either structural steel or roll formed components. Structural steel is thicker and far more abuse resistant, which is an important aspect in a very busy, high traffic department like dry grocery for example. Structural steel is typically more expensive than the roll formed racking components created from sheet metal bent into different sections to produce upright frames, beams and safety bars.
Key to any racking layout is preparing for properly sized aisles in the planning stages to minimize the risk of damage occurring during regular operation. Regardless, the possibility for damage remains. For example, lift truck damage to the storage racks typically occurs at the front post of the rack upright as careless or hurried operators swing into a slot to deposit or remove a pallet, accidentally connecting with the front or side of the upright post.
We attempt to minimize such damage by specifying angled deflector shoes be welded at the base of those posts, but “accidents” can still occur. Another location where abuse frequently takes place is at the lower beam levels, and typically, directly behind the operator. As he backs out of the slot with the pallet ahead as his main focus, damages occasionally occur to the lower beams across the aisle.
Some rack companies have recently suggested a “Hybrid” scenario that combines the strength and durability of structural steel and the economics of roll formed equipment as a cost efficient option.
With the lift truck as the main culprit causing damages, we suggest only the beam levels higher than 100″ above the floor be roll formed. The very narrow aisle (VNA) environment, where the mobile equipment is either turret trucks or man up order pickers, is another prime candidate for roll formed components as these machines are guided down the center of the aisle and do not come in contact with the racking.
The one true constant in the business world is change, and a company’s rack layout today may not reflect its requirements for the future. Flexibility and compatibility must rate as important criteria in the long term planning process of any project. If you start out with a mix of components there is a greater potential you’ll have problems with compatibility and thereby limit your flexibility for future changes down the road.
Typically, the greater the mix the greater the number of components to be manufactured, shipped and installed. Depending on the extent of the mix of between structural and roll formed, there could be double the number of components on site for any given project. Overall, this logically implies that the resources required to keep track of all of these items may outweigh the initial cost savings expected for the project.
A prudent approach to the “hybrid” option is to keep the mixture confined to areas such as Conventional and VNA, as an example, to keep project costs to an acceptable level in relation to the potential benefits to be derived.
June 23rd, 2009
Technological advancements in RFID and sensor technology have created an opportunity for distribution managers in managing their mobile equipment fleets. Equipment suppliers, like Hyster and Crown, are now offering “pay by the hour” programs which track equipment usage and charge hourly rates for that usage.
This option has merit for companies that struggle to size their fleet for operations that undergo periodic peaks in volume due to seasonality, intra-week imbalances and opportunity purchasing. A truck might sit idle 75% of the time making it an underutilized asset or, a truck might be overused during peak periods causing excessive wear & tear and maintenance costs. A “pay by the hour” program allows managers to right-size their fleet and mitigate those fleet management challenges. Currently, not many operators are asking for quotes on this option - but expect this to change as soon as folks become more aware that the option is available.
April 29th, 2008