Improving Warehouse Productivity Without Tier 1 Technology

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Read this presentation to answer the question, "How do I improve my warehouse problems without a large capital investment?” You will learn:
30 process-based distribution center execution tactics; What technologies are available to cost-effectively enable more efficient processes; What features and functionality you can expect to get from a Tier 2 or Tier 3 WMS

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Improving Warehouse Productivity Without Tier 1 Technology

  1. 1. Improving Warehouse ProductivityWithout Resorting to Tier 1 Technology
  2. 2. What is “Tier 1” Technology? The term “Tier 1” is frequently used, but is a gross over-simplification Conjures up images of “expensive” technology “Overkill” “The Cadillac” Often used in context of WMS vendors Image source: General Motors |2
  3. 3. Tier 1 Technology Isn’t Bad For many large, complex operations, the only path to supply chain improvement involves making a large capital investment Many of the technologies which we consider “Tier 1” have been the pioneers – developing cutting edge technology that improves efficiency This technology then get adapted and trickles down to mid-tier providers over time |3
  4. 4. An Alternate Title for our Presentation…"How can I improve my warehousing problems without a major capital investment?“ |4
  5. 5. But how? Isn’t this asking to get something for nothing? No. There are two basic ideas which are under-exploited by many enterprises today: 1. Leveraging new advances in technology which they may not be aware of 2. Sharpening the saw – stepping back and making fundamental process changes to improve the operation |5
  6. 6. Common Challenges Whether their capital budget is 5 figures or 8 figures, companies face the same basic set of challenges: – Reduce labor costs – Improve accuracy – Improve space utilization Secondary challenges: – Meet regulatory compliance mandates – Meet retail compliance mandates |6
  7. 7. No Shortage of Solutions… There are countless solutions available to address these challenges… WMS Conveyor-based pick modules Pick-to-Light Systems Speech Carousels AS/RS Robotic Handling Warehouse Control Software (WCS) Image sources, clockwise from top left: Intermec, Abel-Womack Integrated Handling Solutions, Lightning Pick, Voxware, Remstar, Diamond Phoenix, TGW Ermanco, Kiva Systems, FORTE Industries |7
  8. 8. Process-Centric Approach Rather than jumping immediately to technology, let’s look at several strategies to address these challenges… A. Pick more efficiently B. Put-away more efficiently C. Pack and ship more efficiently D. Reduce walking E. Improve labor productivity F. Improve accuracy G. Improve space utilization |8
  9. 9. Process-Centric ApproachEach strategy has a set of execution tactics…1. Cluster picking 16. Pick restriction2. "Tandem" picking 17. Large quantity override3. Receiving staging by zone 18. Min/max replenishment4. Clustered put-away 19. Demand-based replenishment5. Put-away by movable unit 20. Slot the warehouse more6. Implement specialized packing effectively processes 21. Basic productivity tracking7. Pre-manifesting 22. Advanced productivity tracking8. Dynamic label application 23. Task interleaving9. Cartonization 24. Pick confirmation10. Palletization 25. Cycle counting11. Seal cases more quickly 26. Track product by lot #12. Weight-based accuracy 27. Pick product by lot # confirmation 28. Track serial numbers13. Create a forward pick area 29. Track country of origin14. Two-tier bin system 30. High density storage15. SKU Mirroring |9
  10. 10. Process-Centric Approach Some Tactics require enabling technology… | 10
  11. 11. Focus on Mid-Tier WMS Mid-Tier WMS has been in use for at least 15 years Generally, mid-tier means a more limited set of functionality for a lower price Often, mid-tier WMS systems had some key gaps which made them not practical for many users with special requirements | 11
  12. 12. The SaaS Model In the last 5 years, the Software-as- a-Service (SaaS) model has become a popular means of deploying WMS With the SaaS model, the software vendor hosts the WMS application on their own server and deploys it via a web connection True SaaS is multi-tenant: multiple users are on the same instance of the software Customers do not pay an up-front license fee – just a monthly usage fee Upgrading and remaining on the current version of the software is much easier | 12
  13. 13. What are the TRUE Capabilities? Commonwealth Supply Chain Advisors conducted a survey of three of the top mid-Tier WMs providers to assess the extent to which functionality gaps have been plugged in recent years Two providers offer only SaaS- based WMS The third offers both traditional, licensed WMS and a SaaS WMS | 13
  14. 14. What are the TRUE Capabilities? We created a list of 30 functionality Level of support Challenges Strategies Tactics Enabling Technology from Mid- Tier WMS points which have traditionally been Cluster picking - pick multiple orders at the same time and put them in discrete containers by order WMS 3 challenging for mid-tier WMS providers Pick more WMS 2 efficiently "Tandem" picking - when case picking, two different orders can be picked at the same Double-length electric pallet n/a time utilizing a double-length electric pallet jack jacks Tugger vehicles n/a to address Receiving staging by zone - at receiving, direct that inbound product be staged on a pre- defined movable units based upon it’s destination zone Put-away Clustered put-away - allow multiple SKUs to be put away in the same trip through the WMS WMS 1 2 We asked each vendor to indicate more warehouse in a logical pick path efficiently Put-away by movable unit - allow multiple SKUs to be placed on a license plated movable unit; allow the movable unit license plate to be scanned once at put-away, and direct put- WMS 2 away of all SKUs on that movable unit in a logical pick-path whether this functionality was: Implement specialized packing process Pre-manifesting - Calculate weight and quantity of all the multi-SKU pallets on an order before picking Dynamic label application: Apply a retail-compliuant label to cases at time of picking with Process change WMS n/a 3 – Standard Functionality WMS 2 scan confirmation Pack and ship Cartonization - determine the optimal size shipping container based on the cube and WMS 2 more longest dimension of the items which are to be picked for an order – Configurable Functionality efficiently Palletization - prior to case picking, determine the number of cases to be picked to each WMS 1 pallet based on cube Tape dispensers n/a Seal cases more quickly – Case sealer n/a Customization Required Reduce labor costs Weight-based accuracy confirmation - weight a carton or a pallet and compare it to a database of the actual weights - verify if the carton or pallet is within tolerance Create a forward pick area WMS 1 n/a – Not Available Currently Two-tier bin system - the same SKU can exist in two different bins in the distribution WMS 3 center SKU Mirroring - the same SKU can exist in two different bins in the same ZONE WMS 3 We also asked about actual usage Pick restriction - the system can limit picking only to bins designated as "forward pick WMS 3 bins" Large quantity override - if a single pick exceed x quantity and will drastically deplete the Reduce WMS 2 forward pick area, the system will direct the pick to be made from the overstock bin amongst their client base. Was the walking Min/max replenishment - replenish to a bin if the quantity falls below a pre-set WMS 3 minimum level Demand-based replenishment - proactively replenish to a bin if known demand for the functionality: item will exceed the quantity in the bin, EVEN IF the bin is not currently below it’s minimum stocking level Slot the warehouse more effectively WMS Slotting software 1 n/a – Currently in-use with referenceable clients Slotting spreadsheet n/a WMS 2 Basic Productivity Tracking: Track lines picked per hour by worker regardless of pick type Labor management software n/a – Available but not currently in use Advanced Productivity Tracking: Track lines picked per hour by worker by pick type (i.e. WMS 2 Improve labor distinguish between piece picks, case picks, pallet picks) Labor management software n/a productivity Task interleaving - combined put-away/picking cycles - when full pallet is put-away, – Not available WMS 1 search for full pallet picks which need to occur in proximity to the put-away bin and place this pick as the next task in queue Labor management software n/a Pick confirmation - confirm that the correct product was picked based on a bar-code scan The vendors responded on the condition WMS 3 of the item or bin Cycle counting - allow incremental cycle counting in lieu of physical inventory WMS 3 Improve Accuracy is poor Track product by lot # WMS 3 accuracy that they not be identified by name in Pick product by lot # WMS 3 Track serial numbers WMS 3 Track country of origin WMS 3 Push back rack n/a this presentation The DC is out of space Improve space utilization Improve storage density Double deep rack Very narrow aisle (VNA) storage n/a n/a Mobile storage rack n/a | 14
  15. 15. The Rating SystemThree levels… Level: 3 Level: 2 Level: 1  Generally available  Available but often  If available at with minimal with some all, customization is customization customization required required required  Might not be  In use by at least  Might not be currently in use by some referenceable currently in use by any companies companies any companies | 15
  16. 16. The Tactics…1. Cluster picking 16. Pick restriction2. "Tandem" picking 17. Large quantity override3. Receiving staging by zone 18. Min/max replenishment4. Clustered put-away 19. Demand-based replenishment5. Put-away by movable unit 20. Slot the warehouse more6. Implement specialized packing effectively processes 21. Basic productivity tracking7. Pre-manifesting 22. Advanced productivity tracking8. Dynamic label application 23. Task interleaving9. Cartonization 24. Pick confirmation10. Palletization 25. Cycle counting11. Seal cases more quickly 26. Track product by lot #12. Weight-based accuracy 27. Pick product by lot # confirmation 28. Track serial numbers13. Create a forward pick area 29. Track country of origin14. Two-tier bin system 30. High density storage15. SKU Mirroring | 16
  17. 17. 1. Cluster picking Definition: pick multiple orders at the same WMS Availability Assessment time and put them in discrete containers by order Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 17
  18. 18. 2. "Tandem" picking Definition: when case picking, two different WMS Availability Assessment orders can be picked at the same time utilizing a double-length electric pallet jack or tugger vehicle Level: 2  Available but often with some customization required  Might not be currently in use by any companies | 18
  19. 19. Deep Dive: Pick Methodologies Which style of picking is best? Discrete Order Picking Cluster Picking Batch Picking Zone Pick: Pick & Pass Zone Pick: Pick & Consolidate | 19
  20. 20. Deep Dive: Pick Methodologies • Pro’s: – Simple for operators – Less error proneDiscrete Order – Little/no technology required – May be the only practical method to Picking pick very high-cube items • Con’s – Very high levels of walking – Operators return to home-base after each order is picked – Each order requires a trip through the entire warehouse
  21. 21. Deep Dive: Pick Methodologies • Pro’s: – Dramatically reduces walking – Possible to do on a limited scale without a high degree of technologyCluster – Each order is only touched once – Orders are ready-to-ship as soon as picking is donePicking • Con’s – Hard to pick a large group of orders without real-time instructions – Orders may travel significant distances without any picks being performed – Travel distances are excessive in large warehouses with many SKUs – Increased likelihood of errors
  22. 22. Deep Dive: Pick Methodologies • Pro’s: – Reduces walking in larger distribution centers – Each order can only be routed to zones where there are picksZone Pick: Pick – Orders are ready-to-ship as soon as picking is done & Pass • Con’s – Almost impossible to manage without real-time warehousing – Zone routing can only be done with complex conveyor systems – All of the SKU’s in the order travel through the entire DC
  23. 23. Deep Dive: Pick Methodologies • Pro’s: – Reduces overall travel distances for the SKU’s in the order – Well-suited for orders with diverse sizesZone Pick: Pick and shapes of SKU’s& Consolidate – Well-suited for mixing case and piece picking on the same order • Con’s – Very complex for software to manage consolidation process – Requires labor downstream to consolidate orders – Requires space to buffer product
  24. 24. Deep Dive: Pick Methodologies • Pro’s: – Well suited for instances where the same SKU appears on a large number of orders – Well suited for single line, single pieceBatch Picking orders • Con’s – Only suits a limited order profile – Requires additional downstream handling – Can be complex to execute
  25. 25. 3. Receiving staging by zone Definition: at receiving, direct that inbound WMS Availability Assessment product be staged on a pre-defined movable unit based upon it’s destination zone Inbound Zone 1 Zone 2 Zone 3 Level: 1  If available at all, customization is required  Might not be currently in use by any companies | 25
  26. 26. 4. Clustered put-away Definition: allow multiple SKUs to be put WMS Availability Assessment away in the same trip through the warehouse in a logical pick path Level: 2  Available but often with some customization required  Might not be currently in use by any companies | 26
  27. 27. 5. Put-away by movable unit Definition: allow multiple SKUs to be placed WMS Availability Assessment on a license plated movable unit; allow the movable unit license plate to be scanned once at put-away, and direct put-away of all SKUs on that movable unit in a logical pick- path MU # T-745 Level: 2  Available but often with some customization required  Might not be currently in use by Zone 1 any companies | 27
  28. 28. 6. Implement specialized packing process Definition: separate the less skilled packing functions from the more skilled manifesting functions 10-step process | 28
  29. 29. 7. Pre-shipping Definition: Calculate weight and quantity of WMS Availability Assessment all the multi-SKU pallets on an order before picking Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 29
  30. 30. 8. Dynamic label application Definition: Apply a retail-compliant (or WMS Availability Assessment other) label to cases at time of picking with scan confirmation Case label Level: 2  Available but often with some customization required  Might not be currently in use by any companies | 30
  31. 31. 9. Cartonization Definition: determine the optimal size WMS Availability Assessment shipping container based on the cube and longest dimension of the items which are to be picked for an order Level: 2  Available but often with some customization required  Might not be currently in use by any companies Image source: Tetris | 31
  32. 32. 10. Palletization Definition: prior to case picking, determine WMS Availability Assessment the number of cases to be picked to each pallet based on cube Level: 1  If available at all, customization is required  Might not be currently in use by any companies | 32
  33. 33. 11. Seal cases more quickly Definition: speed up the case sealing process without adding excess labor Image sources: Betterpack, 3M | 33
  34. 34. 12. Weight-based accuracy confirmation Definition: weigh a carton or a pallet and WMS Availability Assessment compare it to a database of the actual weights - verify if the carton or pallet is within tolerance Level: 1  If available at all, customization is required  Might not be currently in use by any companies | 34
  35. 35. 13. Create a forward pick area Definition: stock a smaller supply of many SKUs in a high-density area of the warehouse 8 SKUs stored on 8 pallets = 32 walking feet vs. Smaller supply of the same 8 SKUs stored in carton flow rack 8 SKUS = 8 walking feet* *(Can be increased to 32 SKUs per walking foot) | 35
  36. 36. 13. Create a forward pick area Storage mediums include: – carton flow – static shelvingImage source: Borroughs Corporation, Frazier Industrial Company | 36
  37. 37. 14. Two-tier bin system Definition: the same SKU can exist in two WMS Availability Assessment different bins in the distribution center Overstock Level: 3  Generally available Forward pick with minimal customization required  In use by at least some referenceable companies | 37
  38. 38. 15. SKU Mirroring Definition: the same SKU can exist in two WMS Availability Assessment different bins in the same ZONE Overstock Level: 3 Forward pick  Generally available with minimal customization required  In use by at least some referenceable companies | 38
  39. 39. 16. Pick restriction Definition: the system can limit picking only WMS Availability Assessment to bins designated as "forward pick bins" Overstock Level: 3 Forward pick  Generally available with minimal customization required  In use by at least some referenceable companies | 39
  40. 40. 17. Large quantity override WMS Availability Assessment Definition: if a single pick exceeds x quantity and will drastically deplete the forward pick area, the system will direct the pick to be made from the overstock bin Level: 2  Available but often with some customization required  Might not be currently in use by any companies | 40
  41. 41. 18. Min/max replenishment Definition: replenish to a bin if the quantity WMS Availability Assessment falls below a pre-set minimum level Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 41
  42. 42. 19. Demand-based replenishment Definition: proactively replenish to a bin if WMS Availability Assessment known demand for the item will exceed the quantity in the bin, EVEN IF the bin is not currently below it’s minimum stocking level Level: 1  If available at all, customization is required  Might not be currently in use by any companies | 42
  43. 43. 20. Slot the warehouse more effectively 3 Methods of Slotting:  Slotting Tools: – Level 1: Determine the correct – Spreadsheet tools STORAGE MEDIUM – Level 2: Determine the correct BIN – Specialty slotting software # – Level 3: Dynamic slotting Factors influencing slotting methodology: – Demand volatility – Product lifecycle – # of new product introductions per year – Stackability requirements – Segregation rules – Family grouping rules Image source: Rubic’s | 43
  44. 44. How to slot with a spreadsheet… Create Item Master – SKU – Description – Length Item Master – Width – Height Qty. on Hand, – Overall Non- Overall cube SKU Description Current Location Cube Conveyable? 2008 – Conveyabiility – Pack size info TG511A1000 THERMOSTAT GUARD -05050C0601 CLEAR COVER 176.83 N 189 Determine Current Quantity on SC16124 HGM-SZ AT150F1022 16X12X4 SCREW COVER ENCLOSURE 10040E0101 SINGLE ZONE REFRIGERANT MONITOR 08010D0202 50VA TRANS 120/208/240V C BRK 08010E0101 835.52 5,751.18 76.62 N N N 46 14 197 Hand 220B RIB2401B BRASS FLOW SENSOR 07010B0601 SPDT POWER RELAY 24VAC/DC,120V 03070B0601 444.35 73.32 N N 47 306 UCP-422-43 MA/PSI XDUCER W/PSI07020E0601 IND. 193.69 N 124 Determine rationalization T-PB202-0 24VAC POWER SOURCE,4A,PNL 03040B0601 161.76 N 180 strategy for current QOH | 44
  45. 45. How to slot with a spreadsheet… Define variables: – Velocity Variables – Growth Rate Variables – Bin Variables, Primary Pick Area – Bin Variables, Overstock – Tote Variables – Current Storage Capacity – Current Bin Box Used by Client – Pallet Rack Bays Available | 45
  46. 46. How to slot with a spreadsheet… Establish multiple replenishment intervals… | 46
  47. 47. How to slot with a spreadsheet… Create storage medium rules Calculate theoretical qty on hand Rationalize against actual qty on hand Determine optimal storage medium Summarize results: – # of units of each storage medium required – “walk-back” bays required – Impact of various replenishment intervals – Changes over time | 47
  48. 48. 21. Basic Productivity Tracking Definition: Track lines picked per hour by WMS Availability Assessment worker regardless of pick type Level: 2  Available but often with some customization required  Might not be currently in use by any companies | 48
  49. 49. 22. Advanced Productivity Tracking Definition: Track lines picked per hour by WMS Availability Assessment worker by pick type (i.e. distinguish between piece picks, case picks, pallet picks) Level: 2  Available but often with some customization required  Might not be currently in use by any companies | 49
  50. 50. 22. Advanced Productivity Tracking LMS on Demand? YES. | 50
  51. 51. 23. Task interleaving Definition: combined WMS Availability put-away/picking cycles - when full Assessment pallet is put-away, search for full pallet 2. Put- 3. Pick picks which need to away inbound outbound occur in proximity to pallet pallet the put-away bin and place this pick as the next task in queue 1. Pickup inbound pallet 4. Stage Level: 1 outbound If available at pallet all, customization is required  Might not be currently in use by any companies | 51
  52. 52. 24. Pick confirmation Definition: using some form of automatic WMS Availability Assessment data capture technology to confirm that the correct item was picked (at the time of pick) Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 52
  53. 53. 25. Cycle counting Definition: counting portions of the WMS Availability Assessment inventory each day to ensure bin and item- level accuracy Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 53
  54. 54. 26. Track product by lot # WMS Availability Assessment Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 54
  55. 55. 27. Pick product by lot WMS Availability Assessment Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 55
  56. 56. 28. Track serial numbers WMS Availability Assessment Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 56
  57. 57. 29. Track country of origin WMS Availability Assessment Level: 3  Generally available with minimal customization required  In use by at least some referenceable companies | 57
  58. 58. 30. Improve storage density 3 Under-Utilized Storage Double-deep storage Systems… Mobile storage rack Push-back rack | 58
  59. 59. On-Demand WMS: What does it cost? Cost estimates… – Vendor #1 • Ongoing monthly cost: Averages $3,000-$4,500 per month, but could be as much as $6,000. • Implementation cost estimate: $20,000 - $40,000 – Vendor #2 • Ongoing monthly cost: Averages $1,700 – 2,500per month • Implementation cost estimate: $4,000 (editorial note: Commonwealth feels this is a significant under-estimate) – Vendor #3 • Ongoing monthly cost: $0 • Implementation cost estimate: Under $100,000 for license and implementation for a moderate-complexity project Hardware: The above prices do not include: • Installation of wireless network in the DC • Handheld computers • Bar-code printers | 59
  60. 60. WMS: Keys to success Don’t rush it! – Allow 12 – 18 months for selection and implementation Evaluate all the options (even Tier 1!) Document EVERYTHING about the current state – Al normal processes – All exceptions Test thoroughly Train Assign ownership Ensure visibility & reporting exist Conduct an honest readiness assessment | 60
  61. 61. 18 Steps to Success Strategy Solution Execution Selection Management Distribution WMS Vendor WMS Optimization Selection ImplementationV Detailed Discovery with Data Analysis RFI: Determine Vendor Pool Functional Alignmenti Define Current Round 1: RFP Build State (Written Bids)s Design Future Round 2: Scripted Testi State Demos Project Future Traino Savings Round 3: Site Visits Estimaten Implementation Costs Negotiation & Selection Convert Build Business Case Go-Live Optimize | 61
  62. 62. In Summary… Improved distribution efficiency IS within reach, providing a company is willing to make at least SOME investment in processes or technology Savvy companies who conduct a thorough evaluation of technology can often find that improvement is not as expensive as they thought Don’t rush the process – take the time required to design the solution correctly the first time. | 62
  63. 63. Thank You20 Park Plaza, Suite 400 | Boston, Massachusetts 02116(O) 617.948.2153 | (F) 617.507-6112www.commonwealth-sca.comDistribution Optimization | Transportation Optimization | Supply Chain Planning | 63

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