Continued from Ideas for improving warehouse performance (3)
Slotting (ABC Analysis)
Slotting or
Profiling in a warehouse is defined as: “The process of identifying the most
efficient placement for each item in a warehouse. Since each warehouse is different,
proper slotting depends on a facility’s unique product, movement, and storage
characteristics. An optimal profile allows workers to pick items more quickly
and accurately and reduces the risk of injuries.”
Paying attention to the fastest selling items to make sure they are located in the most advantageous picking position will generate significant labor cost savings. If available space is a concern, slotting will also help improve storage utilization by focusing on the slowest movers to see if their assigned bin space can be reduced. Slotting uses ABC profiling, 80/20 analysis, and cube movement data to keep high moving product in the Golden or Strike zones.
Benefits of
a slotting exercise include:
The Ideal Shape of a Warehouse
Q: With the ABC slotting design theory in mind, what
is the best shape of a warehouse?
A: To keep all product equally distributed around the
shipping dock, the warehouse would be a circle with shipping in the centre and
product slotted in a bulls eye.
Of course,
the under-ground tunnels required to get trucks to the shipping dock might be
cost prohibitive.
Vertical Slotting
Slotting
can also be applied at the micro level. You can increase picking productivity
and improve order picker ergonomics by slotting your fastest-moving A items in
the waist-to-shoulder or “Strike/Golden Zone” area of your storage media.
Looking at
slotting from a vertical perspective, product is again located based on whether
it is a fast (A), medium (B) or slow (C) moving item. Fast movers (A items) are
the most popular products and should be the easiest to get to and
retrieve.
Slower movers (B and C items) are slotted overhead or on the bottom shelves.
The Golden Zone refers to the area between the knees and shoulders where
handling items is the easiest and requires the least amount of
bending/stretching.
Utilizing
The Golden Zone will help make sure fast moving SKUs are accessible and require
minimal effort for the operator to pick. This minimizes the operator reaching,
bending, and lifting that leads to worker fatigue. Picking from the Golden Zone
not only increases a workers picking speed, but with less fatigue, pick
accuracy will also improve. In general, picking an item from the Golden Zone
takes 15 to 40% less time than picking from other tiers of bin shelving or flow
rack.
Keep in
mind, the Golden Zone can be a different range for different people. When
planning Golden Zone picking also consider a 6 feet tall operator will have a
different Golden Zone from that of someone 5 feet tall. If you setup a Golden
Zone for the 6 feet tall operator, you may make it more difficult for the 5
feet person to pick. Like most other things there are trade-offs. You need to
understand the height profile of your operators to effectively determine and
implement a Golden Zone strategy.
KNOWLEDGE NUGGET…
When
planning storage and picking in the warehouse, base the ABC analysis on the
number of times the product is ordered vs. the traditional financial value of
the items. While ABC value is relevant, the number of times the order is picked
(touched) will have a more direct impact on labour productivity.
KNOW YOUR ORDER PROFILE
A basic principle to optimizing warehouse space is evaluating and selecting the most space efficient storage equipment. Using more dense storage equipment is a key factor to reduce space requirements. An analysis of your products inventory levels and cubic order activity should be performed to accurately define the storage requirements in reserve and the forward picking area. With the requirements clearly defined, the right decisions can be made on selecting from the various single-deep to deep-storage equipment options.
In most
warehouses, there should be at least two to three different storage types used
in the reserve and forward picking areas. If your warehouse has all single-deep
pallet racks, then chances are you can utilize your space more effectively with
the addition of different storage equipment.
If you get
nothing else out of this article I encourage you to understand your order
profiles by analysing 6 to 12 months’ worth of order history and develop a
lines per order distribution graph. Once you know your order profiles, you can
next perform a cube movement distribution analysis to help assess appropriate
storage modes and space requirements.
KNOWLEDGE NUGGET…
Consider
Storing the Same Item in Multiple Pick Bins There is no rule saying an item can
only be picked from one bin. Many reasons exist that might support picking
inventory from multiple bins. For example, if an item generates enough pick
tasks, operator congestion might result if multiple people go to pick from the
same bin. Another example is proximity. Think about your home, if you live in a
two story house with a basement, would it save you time to store the same type
of light bulbs in both the basement and on the second floor versus keeping them
in a central bin?
Cube Movement Analysis
The most
revealing analysis for determining storage mode and space allocation decisions
is the cube movement distribution. Cube movement is calculated by multiplying
the number of times an item is picked, over a specific time period, times the storage
cube of one item (or case). To make the use of cube movement distribution more
efficient, it helps to group item cubes into specified ranges.
Done
properly, cube movement distribution slotting takes into account both cube
movement and item popularity. Combined, these distributions can be used to
define the types of storage medium to use to balance labour productivity,
through-put and space utilization.
For
example, items exceeding a certain cube-movement threshold can be assigned to
carton-flow rack. Items with high cube-movement popularity often need to be re-stocked
frequently, and require a larger storage bin as compared to items with medium
and low cube-movement which might be assigned to drawers, bin shelving or
carousels.
Placing
slow-moving, low-cube items in bin shelving and fast-moving items in
carton/pallet flow — or other appropriate storage options — improves storage
density and picker productivity.
WAREHOUSE
WITHIN A WAREHOUSE
A concept
closely aligned with cube movement distribution is Forward Pick and Reserve
Storage. Using a Forward
Pick
strategy helps keep a smaller volume of inventory in easily accessible bins
(Forward Pick) with the excess stock in remote bins (Reserve Storage). The
Forward Pick zone in a warehouse functions as a “warehouse within a warehouse”:
many of the most popular SKUs are stored there in small amounts, typically measured
in “days” on hand, so order picking can be concentrated within a relatively
small area. This reduces unproductive travel by order pickers and enables
closer supervision. The trade-off is the Forward Pick zone must be replenished
from a bulk storage or reserve storage zone elsewhere in the warehouse where
inventory levels are measured in “weeks” or “months” on hand.
A typical
Forward Pick zone for small parts is an aisle (or more) of carton ?ow rack(s)
easily replenished. Because it is relatively inexpensive to pick from a Forward
Pick zone, the space is particularly valuable. During the planning horizon Forward
Pick bins are dedicated, with each SKU allocated a carefully determined volume.
When creating a Forward Pick zone consider this space may become congested with
picking operators as more picks are centred in this space. You might counter
this effect by putting the highest moving SKUS in multiple bins within the
zone.
With a
Forward Pick strategy, proper replenishment placement and timing is critical to
the efficiency of the strategy. The product must be located in the Forward Pick
bin when an operator reaches the pick face. Waiting for restocks causes
unwanted downtime or incorrect order fulfillment. However the replenishment
process can be rather time consuming. It needs to be properly managed to
balance picking efficiency gains and the additional replenishment labour.
Replenishment
A
productivity drain in the warehouse results when an operator goes to a bin to
perform a pick and there is not enough product in the bin to complete the task.
Pre-posting, the process of validating inventory, is available in the pick bin
and in the required quantity before the operator is dispatched to pick the
order. If, there is not enough inventory, a replenishment needs to be made to
the bin. This helps avoid the wasted trip of going to an empty or short bin for
a pick.
Studies
have shown it takes up to four times as long to pick inventory that is not in a
bin than it does to pick available inventory. Think about it. When an operator
goes to a bin for a pick and there is not enough inventory, what happens?
And finally move on to the next task. All of this is wasted time. Bottom-line; make sure you have up to date and accurate inventory record accuracy else you cannot have an easily managed replenishment strategy.
Optimize Pick UOM
When
developing your cube movement analysis, you will begin to better understand
your order profiles and typical picking units of measure. For example, many of
our customers sell through multiple channels including e-commerce and to major
retailers. These different order types require different picking units of
measure. For example e-commerce orders are typically each picks while retail store
orders are cases and/or pallet picks. Setting up your warehouse to support
these different pick types will improve throughput, reduce pick errors, and
improve overall labour productivity. You may also hear this concept referred to
as a “warehouse within a warehouse”.
CLUSTER PICK WHEN POSSIBLE
A straight
forward way to improve pick labour productivity is to eliminate the travel back
and forth to the office and the shipping/packaging areas between order picks.
One way to accomplish this is to have one operator pick multiple orders at the
same time, or Cluster Pick, if possible. Cluster Picking is a pick method where
an operator picks to cartons/totes for multiple orders during one pick tour.
Cluster Picking is especially successful when the same item or items are
frequently included in multiple orders AND the total cube of multiple orders
can be easily handled. For example, if your orders typically result in pallet
loads, the benefits of moving and managing multiple pallets will be negligible,
but possible. If however, your orders typically fit into a small standard
carton size, handling 4 to 6 cartons during the pick tour is quite possible. Cluster
Picking can significantly reduce pick labour requirements but may require
additional administrative management if not support by an automated picking
system.
When designing a cluster pick process, consideration needs to be given to the tradeoffs between reduced travel time and excess handling requirements. At some point there will be diminishing marginal return on cluster size.
KNOWLEDGE NUGGET… DESIGNATE ONLY A FEW STANDARD SHIPPING CARTONS.
With only a
few boxes to choose from — plus a few custom sizes if necessary — pickers will
put orders together faster. Standardizing on carton sizes optimizes freight expenses
and reduces corrugated spend. It also makes it easier to support a cluster pick
workflow. This will increase picking efficiencies, improve storage utilization,
and reduce procurement costs.
Pre-routing
Pre-routing
is the process of mapping out the pick travel path to reduce wasted motion and
travel during the pick. The sequence of items on a standard customer order may
not reflect the bin of the material in the warehouse. Consequently, using a
standard customer order as the picking document usually results in an
inefficient picking process. The ratio of time spent traveling to time spent
actually picking material is extremely high because there is no logical
sequence to the pick route. An excess amount of backtracking might be required
to pick an item that was already passed in the process if the items are stored
randomly and there is no pre-routed sequence logic applied to the pick tour.
To
demonstrate the benefits of pre-routing an order, let’s use an example of a
grocery shopping list. You might have items on the shopping list in random
order (milk, soda, bread, eggs, bacon, and apples). Sometimes the list is
developed based off which item you remembered to add first. There is no rationale.
At this point, the list serves the purpose of a memory jogger to remind you
what to buy on the next trip to the store.
If you go
to the store with the list you originally made, the travel through the store would
take three times as long. If, however, the order was pre-routed based on bin
sequence the travel path would be considerably more efficient.
You might want
to tweak the most efficient route if you want to keep the milk and bacon
refrigerated as long as possible or if you are going to buy a lot of soda you
might want to get this last to keep from having to move the heavy load around
the store. On the other hand, you probably don’t want to stack the soda on top
of the bread and eggs.
These same
principles and considerations apply when planning your warehouse picking
strategies.
STORE PRODUCT PICKED TOGETHER, TOGETHER
When
reviewing your ABC profiles and cube movement distribution you should be able
to determine if products are frequently ordered together. If you do see a
significant correlation, consider storing the product together to help reduce
overall travel time per pick tour. Alternatively, you should be cautious when
storing like product together. In most cases you should be confirming the pick
by a bin address and/or product bar code scan. However, storing similar products
next to each other could cause miss-picks if operators do a visual pick by
product. This could be challenging when pickers are tired and/or rushed. For
example, the untrained eye may find it difficult to tell the difference between
a two way and three way light switch.
IMPLEMENT A VENDOR COMPLIANCE PROGRAM
When you
consider the average warehouse receives, counts, and inspects thousands of
items of varying shapes and sizes from hundreds of vendors whose picking,
packing, and shipping practices are all different, it is not surprising
receiving can be one of the most complicated functions in the warehouse.
Errors in
receiving, unlike most other errors in your warehouse, have a ripple effect. If
you can’t get your receiving process working smoothly, you’ll quickly run into
scenarios where product will be sitting on your receiving dock, or on pallets
in a corner while your pickers waste time searching for the inventory.
While there
are many ways to help streamline the receiving process, I suggest you first
attempt to collaborate with your vendors and map out a plan for efficiency and
success. How your vendors ship product to you strongly affects the fate of your
receiving operation and even the profit of your company. For example, when a
shipment arrives requiring extra handling, the receiving process is slowed.
Your profit decreases while the chance of a receiving errors increases.
Vendors’ shipping decisions/actions can really impact your business. Consider
the following examples:
Too many
incorrect answers to these questions and you’ll find your gross margins
shrinking and your profitability drying up.
LEVEL LOAD
Load levelling
has historically been a production planning philosophy in manufacturing.
However, the same principles can be applied in the warehouse, where the work
load is typically driven by order volumes. And order volumes can vary dramatically
throughout the day especially if your customers order individually on a random
basis, for example, via e-commerce. In this instance you can either release
orders as they are received or batch them over a period of time to later submit
to the warehouse for picking. Which strategy you select should incorporate
process constraints, bottle necks, and pick labour productivity. Orders are
generally managed through customer service and sent
to the warehouse.
Once in the
warehouse the orders can be held and distributed as needed. If printing pick tickets,
the order can be printed then sorted and batched to pickers. Ideally, you will
be able to manage the sort and manage orders electronically. Being able to
level load the warehouse will help schedule consistent labour and provide
reliable customer service (order deliveries).
KNOWLEDGE NUGGET…
CONSIDER VENDOR MANAGED INVENTORY FOR PACKAGING.
Many
companies I work with take advantage of a vendor managed inventory (VMI)
program for packaging supplies and cartons. Rather than purchasing large
volumes of flat cartons and having them consume valuable pallet storage bins,
you can provide a carton forecast to your vendor and have them deliver the
required quantities weekly
or even daily.
PASS THE WHITE GLOVE TEST
You can randomly
look around for inventory that looks like it may have been around for a while.
If the inventory has excess dust on the boxes chances are it has been there too
long. Alternatively, if you plan to come back to the warehouse, you can mark
one of the cases then when you return (maybe a month or two later) you can
easily see if the marked case is still in stock and if it has even moved.
If your
facility is squeezed for space, don’t overlook the obvious. There are many
reasons for keeping excess inventory (customer satisfaction, having complete
product lines, lead time uncertainty, etc.), but these reasons should be
compared to the cost of storing these items. Housing excess or obsolete inventory
results in poor utilization of your space and can be a costly mistake.
The first
step to removing excess inventory is to calculate the economic amount of
inventory you should have on-hand. Then, compare this amount to the actual
inventory on-hand. The difference is the amount of potential excess inventory
that can be removed. By properly managing your inventory, you can remove excess
items and reallocate the space for fast-moving and high-volume products.
The same
principle applies to reviewing non-stock inventory. For example, are holiday
decorations consuming storage space? Why? What about office supplies? Why are
those old computer
CRT screens taking up pallet storage bins? And look at the packing cartons used for shipping? Why are they even there? Can
you set up daily deliveries from your carton supplier to free up this space?
Here is
another interesting practice I saw at a customer. They are working in a
non-automated environment and want more granular tracking of inventory. They
decided to use different colour shrink wrap to represent different receipt date
ranges and easily get an idea, from a quick view of the warehouse, when product
was received and more importantly, how long it has been in the warehouse.
GET INVOLVED
While there are many more low hanging fruit process improvement ideas we could discuss for consideration in your facility, the final item on our list is Get Involved. More specifically, get involved with learning and observing. In today’s business environment seldom can anyone afford to live in isolation and not share ideas. Regardless of where you work, there should be many ways for you to get out and see how other people operate. I encourage you to routinely invest time touring other operations and/or attending networking events where you can learn about industry trends and pick up best/neat practices.
Following
is a brief list of places you can seek for learning opportunities:
CONCLUSION
Although
much attention is placed on techniques for improving the largest warehouse
operations using advanced technology, you can generate significant improvements
by focusing on the basics for your operation in the warehouse. This effort can reduce
costs and improve service without large expenditures.
The key is
to find appropriate recommendations and changes that fit your type and size of
operation. It can be done.
Contributed by: HighJump Software Inc & iWMS Supply Chain
Software (the SA channel partner for HighJump)
