Blue Ridge Apparel Group 2007-2008 Material Handling Student Design Competition Sponsored by College Industry Council on Material Handling Education (CICMHE) Modern Materials Handling Bastian Material Handling LLC
The Blue Ridge Apparel Group has engaged your services to develop and propose modifications and improvements to their existing warehousing and distribution infrastructure with a goal of accommodating the forecast growth for five (5) years. The deliverable will be a master plan for change that can be monitored and adjusted as the future unfolds.
The Blue Ridge Apparel Group (BRAG) distributes sport clothing and footwear to their customers through (1) traditional retail outlets located in retail malls and pro-shops, and direct to consumer through their on-line internet portal.
The existing warehouse and distribution infrastructure includes a BRAG owned 158,000 sq ft facility from which orders are shipped.
3 rd party logistics providers manage the reserve stock of full pallet load inventory and provide replenishment logistics to the BRAG owned distribution facility.
The existing facility was originally a ‘spec’ building constructed and sold to BRAG approximately 6 years ago. It is based on a 45’ grid, with 12” wide-flange building columns supporting a 20’ clear height roof structure in the low bay and 32’ clear height in the high bay. The existing structure is equipped with ESFR sprinklers in the warehouse area.
Additional land is owned by BRAG on which the distribution center could be expanded. With consideration of local zoning issues, approximately 32,000 sq ft could be constructed as an addition to the North end of the facility. Building codes allow structure height up to 35’ above grade
The distribution facility uses a combination of bulk storage on floor, pallet rack, flow rack, and shelving to manage the inventory that has been positioned for order fulfillment. A simple conveyor systems is used to transport totes full of picked materials to the value adding room and shipping. No computerized warehouse control system is used to control either the conveyor or the order fulfillment process.
While new retail outlets are being added and old ones are leaving, or reducing their use of BRAG product, there is still an observed net growth in retail outlet fulfillment of about 8% per year. It is felt that faster order fulfillment will reduce the rate at which the retail outlet customers leave or reduce their order levels.
Direct to Consumer fulfillment has been growing at about 22% per year, but is largely attributed to the addition of new lines of footwear. Forecasts for growth of this segment are expected to be 15%.
85% of apparel items arrive from overseas in floor loaded shipping containers. The balance as palletized LTL shipments.
LTL shipments are delivered to the BRAG facility and directly stored in pallet rack
Shipping containers are delivered to the 3 rd party logistics center where they are unloaded, sorted and placed on 40” x 48” pallets stacked no more than 52” high and stretch-wrapped – single SKU per pallet.
There are 5 carton sizes of inbound shipments:
A-Size 14” x 10” x 5”” Tall
B-Size 14” x 10” x 10.5” tall
C-Size 21.75” x 14” x 9” tall
D-Size 21.75” x 14” x 15” tall
E-Size 21.75” x 23.75” x 14” tall
The BRAG facility is predominantly stocked with the inventory needed to fulfill the next 72 hours of orders that plan to be released. Reserve stock directly shipped to the BRAG distribution facility is limited to the top 10% (activity wise) of the currently active SKU’s, and the storage of partial cartons of SKU’s not yet fully consumed by the forward picking process
The system inventory is controlled by a internally developed software solution (WMS) operating on an IBM AS400 system. It is old, difficult to change, and difficult to expand. Management understands that the system will someday need to be replaced with a commercial package, but needs help with selection and justification – financially and operationally – because the existing system does work for the current process.
The WMS does not support waving of orders, batch picking methodologies, or slotting analysis. Its primary use is to generate reorder instructions, keep track of “on-hand” and “available to allocate” inventory and locations, and sequences orders for release based on due dates, and keep track of shipments and notify the accounting system of order completions
The database is DB2.
The shipping process uses software (and carrier provided workstations) from UPS and FEDEX to prepare the manifest and shipping label paperwork via those carriers.
A separate commercial package operates on a PC based server to provide TMS services – specifically, rate shopping - to perform the final shipping selection.
There is a growing interest to add DHL to the list of shippers, and some retail outlets have large enough orders that they request LTL shipments via common carriers – a service provided when specifically requested in the order.
Retail orders consist of two types – New product surges, and daily fulfillment.
New product surges occur twice yearly and represent the bulk orders that are placed to seasonally replenish the storefronts. Special ordering incentives are used to generate this surge in business during a period of normally slow daily fulfillment
New product surges are typically full carton shipments
New product surge shipments are often accumulated and shipped to the customer’s distribution center prior to breakdown and delivery to the retail store. This enables the customer to take advantage of better discounts on larger order quantities
Daily fulfillment is basically the order from a retail outlet to replenish a unit that has been sold. These orders tend to be small, but need to be shipped quickly.
Daily fulfillment orders are mostly broken case picking based shipments
The retailer has the right to cancel any outstanding order that has not yet been shipped from the BRAG facility. Once shipped, there is a 60 day return policy that includes a restocking fee. During that 60 days period, the retailer may return unsold merchandise, but will pay for shipping and a 10% restock fee. For this reason, it is the goal of fulfillment to ship the order as quickly after receipt as possible to avoid the cancellation of orders by the retail outlets.
Direct fulfillment orders taken from the WEB portal are likewise shipped quickly to avoid cancellations through “buyer’s remorse”.
Direct fulfillment orders carry a 30 day unconditional return policy with the buyer paying only the return freight or postage, and no restocking fee.
Direct fulfillment orders are frequently bracketed. This means that the customer may not be confident as to what size to order so will order the expected size and one or two additional items of a size larger and smaller, then return all but the best fitting item(s).
This bracketing occurs for approximately 30% of garment items and 45% of footwear items
All orders are processed automatically by the order entry department where availability is checked and confirmed (at least through the WMS) before an order is released for picking and shipment. Unless a retail store order has requested partial shipment, all orders are held until inventory is available within the BRAG facility.
The most popular 10% of SKU’s are slotted for picking in a carton flow module.
The balance of SKU’s for picking are placed on shelving units, narrow aisle rack bins, or on pallets for bulk picking.
Operators move through the facility with laundry carts to perform the picking, gathering the items needed for up to 5 individual orders, sorting the items into each order after all picks are complete. When the pick is complete, the operator brings the picked items to one of 7 workstations on the North wall of the picking area, sorts the orders into individual totes and then sends them on the conveyor to the finishing and shipping room.
With the exception of orders that contain both full case and broken case pick line items, the process of picking includes the “single threading” concept of order management. This is where the picker begins and ends the process of picking an order – ostensibly to insure that quality is added to the process by one person taking “ownership” of the picking process. In other words, not passing partially completed orders from one picker to the next. A small tag is included with each order with the picker’s name to personalize the shipment for the receiver.
Replenishment of the picking system is performed by a separate crew of workers that begin operations about 4 hours after the start of the first shift picking operators begin work.
The BRAG WMS System does a net inventory requirements analysis once a day and places orders with the 3 rd party logistics provider for delivery of inventory that will be needed to support picking for 72 hours into the future
There are 3 loading operators – 2 on first shift and 1 on second that work to load the trailers that are bulk loaded for UPS and FEDEX. LTL orders are process exclusively on 1 st shift – explaining the imbalance of operators over the two shifts.
There are 11 operators and a single supervisor on the replenishment crew. This includes 2 operators that are assigned to the receiving dock to unload deliveries
Receiving and put-away are only performed on 1 st shift
There are 2 auditors – one per shift that perform cycle counting, randomly check shipments for order compliance and accuracy, and support the fulfillment workers when expediting special orders
Each shift affords a paid 30 minute lunch break. Picking is currently completed in about 11 hours. The normal replenishment crew leaves about halfway through the 2 nd shift, so the 2 nd shift pickers transition to replenishment duties and housekeeping for the balance of their shift.
Average labor cost with load is $14.70/hr. Supervisors average $21.10/hr
Workforce stability is good. Plant is located in a small community, and 60% of the workforce are immediate residents of this community. Benefits and social camaraderie are attractive elements contributing to a low (<5%) annual turnover. However, the workforce is aging, and ergonomic issues are becoming a concern – especially as the array of products being picked requires more visual acuity to select the correct item.
Customer orders arrive in the distribution center on a central laser printer in the DC manager’s office. Hot orders are printed on colored paper, and normal orders are on plain white paper.
Orders printed on this printer are released, and have been checked by the BRAG WMS for the probable availability of inventory. They are also released in order of priority – with all due date considerations being managed by the WMS logic prior to releasing the order for fulfillment.
Order picking supervisors hand sort the released orders into work groups to be assigned to individual operators. Using experience only, the workgroup sort is based on what a picker can reasonably be expected to pick and transport in a single laundry cart back to a workstation where the orders are broken down, placed in shipping cartons and sent on the conveyor to shipping
When an order picker has finished a previous order group, he will walk to the supervisor’s station and select a new order group for picking. The operator, again, using experience, will look through the paperwork and then begin the process of walking – pushing the laundry cart – to each pick location and performing the batch pick for any and all lines in the orders begin fulfilled.
If the order list includes full carton items that are not staged in a forward pick area, the order group will be assigned to a picker that operates the picking trucks in the rack area. These orders will have preprinted shipping labels attached to the picking lists, and will be applied to the cartons as they are picked. These cartons are then placed on a conveyor and transported to shipping for completion. Broken case line items are then processed and shipped as a separate carton.
When all broke case pick items have been picked into the laundry cart, (or accumulated at the pickers workstation), the picker will return to a workstation where each item is sorted from the cart into a shipping carton for each specific order. Packing lists are preprinted and attached to each order group for each order, and are placed in the appropriate carton after the sort is complete.
A portion of the expected work at this point is a quick inspection of the items being placed in the carton for quality. If, for any reason, the picker feels the outgoing quantity of the item being shipped is less than acceptable, that item is asided, and the picker walks to and picks a replacement item.
If a replacement item is picked, the operator then notes the action on the original pick ticket that is returned to the supervisor upon completion of the order.
The last activity for the picking operator is to place the completed order in its open carton on a conveyor for transport to the finishing and shipping area, and then to sign the pick ticket with notations of any changes, short picks, or modifications and return it to the picking supervisor.
The carton travels to the shipping area. The operator there will scan the bar code on the packing list. Then void fill is added if required, and the operator hand closes and tapes the carton, weighs it, and then applies a shipping label will be printed from UPS or FEDEX printer located at that station. If the order is to go LTL, a generic shipping label is printed for use in consolidating the carton with the rest of the order and applied to the carton.
After the shipping label has been applied to the carton, the carton is sent to either the UPS or FEDEX output conveyors via a simple takeaway to a manual sort done by one of the shipping operators.
LTL cartons are asided to a pallet where they are simply accumulated until the LTL shipping operator moves the pallet and sorts its contents to the orders being staged for pickup.
The process of printing the shipping label is used to notify the host system that the order (or carton of an LTL order) has been shipped.
The picking paperwork that includes any notations about short picks, replacement picks or compliant picks is given to the front office where anomalies to expected picks are loaded into the system so that billing for the order can be completed. It is at this point that over picks or replacement picks are used to adjust the WMS system’s available to commit inventory levels, thus helping avoid the release of an order against an inventory that is short the required items for a complete pick.
It is required that all entries relative to inventory adjustments must be completed by the end of the workday so that replenishment orders can be correctly processed for release on the next morning
UPS and FEDEX both spot trailers for use during the day and replace the trailers between 5:30PM and 6:00PM each night.
LTL loads are released 48 hours before an expected pickup is scheduled – allowing two full days to assemble the order and prepare it for shipment. LTL pickups are generally done in the afternoon between 3:00pm and 5:00 pm.
Inbound inventory is ordered by sales planning and arrives in regular deliveries approximately twice weekly.
The top 10% of the active SKU base has a primary and secondary (reserve) preferred storage location of the BRAG facility. All other SKU’s have a the #rd Party Logistics facility as the default reserve storage location
The BRAG WMS inventory requirements analysis will look through 72 hours of orders and forecast consumption statistics to develop a net requirement for inventory that must be transferred to the BRAG facility from the 3PL facility. 72 hours is used as a cushion factor. Typically orders placed in the morning for replenishment are delivered the next morning, 24 hours after placing the order.
Upon receipt at BRAG, the orders are broken down and placed in their appropriate storage locations until used for fulfillment. Single SKU pallets represent approximately 25% of the arrivals from 3PL, the rest are mixed SKU pallets with cartons needed to replenish the forward pick locations of these SKU’s
The 3PL provider handles all pallet assembly transport and inventory coordination from the suppliers to the BRAG dock. BRAG personnel perform the unload and receipt of all materials being delivered. When each item is received, it is scanned, and the WMS inventory records updated with each receipt.
Upon receipt, the item is immediately scanned for visual damage, and entered into the BRAG Host system as a “Return Pending”
Policy is to process returns within 48 hours, either accepting the return and applying the appropriate credit, or rejecting the return.
Accepted returns are consolidated with the same SKU in the forward pick location. Plan is to have the item available to pick within 48 hours of its return to the facility
Accepted returns that are SKU’s that have been retired are accumulated and donated to various benevolent organizations on a monthly basis
Rejected returns are held in a location for designation by sales. Rejections may occur due to shipping damage, or damage of the product to the point that it cannot be returned to inventory for fulfillment. When released by sales, the products are either disposed of, or added to the charitable donation pool.
When the WMS system releases an order for picking and shipment, it allocates inventory needed to complete the order, decrementing the total “available to commit” balance in the BRAG facility.
Order picking is paper driven, with the only “data” collected on the process is a time stamp that indicates when the order was printed (released) and another time stamp that indicates when the shipping label was applied to the shipping carton
Adjustments to the inventory may include a short pick to the order, or an overpick if the first item(s) picked to a line are of unacceptable quality and the picking operator elects to replace them with other items from the same SKU.
Adjustments made are hand noted on the picking slip that is returned to the warehouse office after completion of the pick. In practice, these slips are accumulated and usually returned during break periods or at the end of a shift.
Adjustments are hand entered by a inventory clerk to adjust WMS invnetory data.
Cycle counting is performed continuously over both shifts. New receipts are given priority, and are randomly and systematically sampled and checked for count and quality. Additionally, random cycle count lists are generated and the inventory auditor works to perform counts and updates to the extent possibly during a shift
By the end of an auditor’s shift, unchecked items on the generated list are noted to WMS, and added back to the pool of SKU’s that are eligible for cycle count selection
A phased master plan that will allow BRAG to incorporate change in ways that minimize possible disruption of ongoing operations, and will include “trigger points” at which change phases need to be started to keep pace with forecast growth patterns
Explanation of the sequence of change where some steps sequenced or needed as enabling steps for other recommended changes. (i.e. picking assist technologies such as Light or voice directed picking may require an information technology upgrade before they could be deployed)
Budget Pricing for all phases with justification and recommendations for the next step(s)
Data is provided in a combination of Microsoft Excel Spreadsheets and Microsoft Access Databases.
Elements of Data provided include:
BRAG Item Master – Access Table
Annual Sales as of end of 2006
Qty On hand at 12/30/2006 Physical Inventory
Primary Location Assignment
Minimum Order Qty policy
Part Weight (lbs)
Part Volume (ft 3 )
Pack Qty (if items sold in packs i.e. socks in bundle of 3 pair)
Pieces per carton/case (receiving)
Receipt Carton Weight
Receiving Case volume (ft 3 )
The Primary Location Assignment is decoded as follows: The first character in the zone is 1 thru 9 denoting zone 1 through 9. The next 2 denote the row, the next the bay within the row. Ad-Hoc locations within a zone are shown with the word SIDE or END in the zone notation, and are not specific to the physical location within the zone.