Ensuring efficient warehouse operations

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SAP Asia’s DEREK MAGGS outlines what needs to be considered when planning warehouse operations to ensure the efficient operation of distribution and storage processes.

Planning is the key to gaining efficiencies in the operation of today’s warehouse facilities and requires the consideration of a large number of factors. This goes for both existing facilities and greenfield facilities. I have outlined what needs to be considered when conducting this planning below. This is, however, by no means an exhaustive list of the items that need consideration in the planning of an efficient warehouse operation.

Depending on the mix of products and the storage units of measure expected to be handled, the type and mix of the warehouse storage equipment could be anywhere from simple to complex.
The complexity increases if the products are stored in one unit of measure and shipped in different units of measure; for example, stored on pallets, but shipped in eaches and/or cases. Adding to this is whether the units of measure can be shipped as is or if they need to be packed into shipping containers.
Increasing the complexity further is the mix of product sizing. For example, auto parts will have a range of product sizes from small nuts, bolts and washers to large body panels and gearboxes. Further complexity is added if there are products that require specific storage and handling, such as hazardous materials and temperature-controlled goods.
In addition, from a handling perspective, there may be goods that can only be handled using special equipment, such as drum clamps, or may require operators to wear protective clothing when handling them, such as freezers or chillers. Having a good understanding of the types of products and the way they are expected to be handled is essential to building the first part of the efficiency picture.

Having determined the product mix expected to be handled, the next step is to gain an understanding of the expected throughput of the products down to the unit of measure level for both inbound and outbound activity.
This throughput is rarely linear, so understanding and planning for high and low seasonality, promotional activities and product life cycle is essential. For example:

  • Apparel is extremely seasonal, but the seasons are well-defined and repeated. This typically requires a complete relay of the warehouse for each season.
  • Some food and beverage products are also seasonal, but the seasons often vary according to the weather, so planning is more difficult. In grocery, there is usually a seasonal relay for the seasonal products in anticipation of their usual selling season.
  • Books and DVDs typically have very high throughput at release, but slow to steady volumes quickly. This scenario typically requires short-term, dynamic, high-volume forward pick locations with the products falling back to low-volume pick locations soon after the initial release.
  • Auto parts are a little more difficult. After a new vehicle is released to the market, there is usually a surge of buying of the new vehicle followed some time later by a surge in spare parts requirements as the vehicles age. This can be predicted to a degree, but with limited accuracy. There is also a requirement to keep parts in stock for many years after the end of the vehicle’s sales. This scenario usually requires higher volume pick locations for a time and then low to very low volume pick locations later in the vehicle’s life cycle.

Having determined the nature of the products expected in the warehouse and their expected volume, it is now possible to make some decisions on how the products need to be handled. Typically, products will go through a fairly standard set of processes, such as receipt, putaway, replenishment, pick, pack, stage and ship.
There are almost always variations on this, however, often at the product or unit of measure (UOM) level. These variations could include such things as:

  • Quality assurance: do any of the products require a quality assurance process on receipt, during their life cycle in the warehouse or during the shipping process? If so, what are the quality assurance criteria and how are exceptions to be handled?
  • Repacking: do any products require repacking on inbound, during their life cycle or on outbound? If so, how is this to be incorporated in the process?
  • Attribute capture: do any products require the capture of certain attributes, such as lot/batch numbers, best before dates, serials and temperatures? If so, how is this to be done? Are the products appropriately labelled to enable the capture of this information?
  • Crossdocking: is crossdocking enabled in the warehouse or for certain products? If so, how is this to be managed?
  • Hazardous goods: do hazardous goods need to be stored in a controlled environment? Is any special equipment required in their handling?

Having built the knowledge around products, throughput and processes some decisions can now be made about the type of storage and handling equipment to be used and the layout of the warehouse. For existing warehouses, there may be no option except to use the existing layout; however, based on the knowledge gained above, it is possible to dramatically increase the efficiency even in existing facilities.
Some of the items that need to be considered include:

  • Zones: typically warehouses are divided into a number of zones, which usually comprise groups of locations with similar characteristics, such as pickfaces, bulk storage, selective racking, freezer and chiller. These are usually further refined by logical product groupings, such as hazardous class, pet food and slow moving.
  • Operational areas: overlaying and often overlapping the zones in a warehouse are the operational areas. These are usually defined around the type of equipment and operators that can operate in these areas. The main use for these is the assignment of directed tasks to the operators in the area with the appropriate equipment to execute the task.
  • Hazardous materials storage areas: if hazardous materials are handled, it is often a requirement that they be stored in specific parts of a warehouse where there may be appropriate equipment for managing spills, and appropriately equipped operators and handling equipment, as well as ensuring effective separation from other goods.
  • Freezer, chiller and ambient storage areas: these are usually required in grocery, food service or other food and beverage warehouses. Operators usually need protective clothing in the chillers and freezers and, typically, transactions are effected using voice technology to eliminate operators needing to remove their gloves.
  • Other storage equipment: selective racks, drive-in racking, block stacks, carton flow, shelving and bins can be used for the different types of storage and handling requirements. The use of these can be determined by the expected throughput.
  • Workflow: the warehouse layout can often prescribe the workflow within the warehouse. For example, the width of the aisles and the height of the racks in a racking area will determine the type of forklift that can access the aisle and whether the aisle is one-way or two. The layout of the aisles will affect the direction that operators must travel along the aisles for picking and putaway activities. Determining these travel paths is crucial in improving warehouse efficiency.
  • Labour management: using labour management functionality, especially configurable task assignment strategies will greatly improve efficiency, especially when combined with task interleaving. Task management will give accurate real-time task status. In addition, determining labour standards will help determine the most effective travel paths and the number of operators normally required for each task type in each area, and allow effective monitoring of the effectiveness of the warehouse operators. Labour planning uses labour standards to provide demand-based labour requirements for daily activities.
  • Slotting: a good slotting solution can help with a lot of these decisions, especially with pick slot assignment, travel path definition, storage equipment type recommendations and move chain creation for seasonal relays, to name a few.

Derek Maggs is vice president of services industries (industry business solutions) at SAP Asia. Maggs came to SAP with extensive knowledge as an industry veteran in the logistics industry with a career that spans both the EMEA and the APJ markets. Prior to joining SAP in early 2010, he served as a supply chain consulting expert for IBM’s global business services. Having spent almost 15 years in Asia, he has also served in sales and marketing roles and as an industry management consultant in the Greater China and south-east Asia regions using his deep knowledge in shipping, freight forwarding, ports, logistics, terminals and express courier businesses.

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