Executive Summary: Warehousing has become critical activity in Supply chain to outperformcompetitors. In order to provide C-4 warehouse a source of competitive advantage we haveattempted to develop layout that has several characteristics such as modularity, compactness,accessibility, flexibility and distribution of movement to enable to respond to changingconditions, improve space utilization and reduce congestion and movement. Also future roadmapfor SPEAR logistics is discussed in context of Indian logistics industry.Case: Activity Flow in the WarehousePerformance improvement at different levels of activity work flow: 1. Receipt Improvement by introduction of more segregated entry points, here segregation is done on the basis of type and the movement of product. In the layout we can see that we have provided separate input/output for the engineering, automation and chemical products because these products are generally heavy weight, bigger in size and have relatively slower movement while other product moves from the other entry point. Reverse logistics is explained in later part.
2. Inspection Since WMS is fully implemented at the warehouse, we can go a step further to leverage upon this facility. This can be done by setting up a wireless network and providing handheld/PDA to inspectors. Handheld can be connected to WMS in real-time through wireless N/W and hence all the data can be accessed on the basis of pre-packing barcode scanned on the spot of inspection. Thus inspection can be done in much efficient and both time and cost effective manner, because it will help in better utilization of inspector working hours. Also inspection can be done at the end of proposed packaging conveyor belt, all the packages can be weighed and their weight will checked against the expected weight(can be retrieved in real-time from WMS on the basis packaging barcode). Cycle count and physical count has to be done manually with the help of brute force method only.3. Picking & Kitting Picking in addition to sorting and kitting is an important activity, researchers have highlighted that costs related to it are more than a half of the total costs of a warehouse. As clear from the layout, we have segregated the storage of item into three different zones as follows: A. Light weight multi-variety pharmaceutical and Retail products B. Apparel and Telecom products C. Heavy engineering, automation and chemical products Number of varieties of product available in each one of the zone can be seen in the following pattern:
Varitey of Varitey of Category Category C B Varitey of Category A Algorithms for picking and sorting are function of number of order lines and number of items. As per the empirical study conducted for 42 similar warehouses in [reference 1] Italy, there were presence of both “sorting” system and “pick-to-box” system when both retrieval activity and number of managed items are high (number of order lines/day higher than 1,000 and number of managed items higher than 1,000). Since our requirement, working environment and client nature matches with the above case hence we can take cue from it in designing our system. In this model (for zone A & B products) similar item orders are batched together, thus different batches are formed for simultaneous retrieval of goods from the shelf. Clearly efficient batch formation is possible only when there are large numbers of order since only then probability of matching of items is relatively high. Batched items are then put on the forward shelf for further flow. Since “zone C” products are slow-to-medium moving and heavy goods it is better to go for “Picker-to-part” model. In this model, in picking activity, operators retrieve from picking locations the item to complete single order or bath of multiple orders.4. Put Away & Storage Model (Reserved Storage Area and Forward Area) Forward area also known as picking area contains the batched items collected from the storage area as demanded by the packaging facility. Here items are stored for small time period therefore we suggest to go for FIFO storage model i.e. first batch of item is put at the first collection point of the packing facility. Expedited/Rush orders are always kept at the start of the FIFO irrespective of length or order list. In Reserved storage Area mix of both dedicated and shared storage model should be used. Since dedicated storage has its shortcoming of inefficient space utilization (~50%) as shown in figure below but on other hand has advantage of faster and fixed access. This
storage model will be used by frequently ordered items under fast moving goods (retail,pharmaceuticals and telecom).Since shared storage provide flexibility of storing same type of items at 2/3 locationhence it can be used up for slow moving items (engineering, chemical, automation goods)as extra time and effort will be involved in locating the goods. This storage model can beexpedited by usage of WMS to track and store the goods.Since chemical (sacks or drums) and retail products require bulk storage hence for themwe should go for bulk storage model. Here each product type is to be stored in separaterows as show below.
5. Labeling/Bar-coding, Sorting, Packaging Pre-packing is done for the goods which has recently arrived and deconsolidated. Main objective is to pack good in-order to prevent wear-tear while storage. Also bar-coded labeling is done with entry in WMS, so that product could be tracked at later stage. Once the batched items are collected (picking) from the reserved storage area and put in the forward area, items can be picked up in FIFO fashion. These batched items then needs to be sorted out as per the given order, sorting can be done simply by scanning the barcode of product with the help of scanner and workstation (with WMS connectivity) at disposal. Once items are sorted out, separate post-packaging is done for each order and packed good is put on conveyor belt for delivery to “packed goods area”. Cross dock items (items for which there already exist an order, even before the item is available in reserve storage) when arrives for deconsolidation, it is labeled, updated in bar-coded, updated in WMS and then it is moved directly to cross dock packaging area for packaging, labeling and delivery.6. Reverse logistics Reverse logistics is the most challenging activity as it involves very high cost because each item has to be dealt separately and involves multiple steps: receiving goods (layout – gate 2), checking physical validity vis-à-vis barcode label, product condition and re- packaging/labeling and put-away. Most of the returned merchandise is generally in saleable condition and will be returned to the storage area. To streamline the subsequent put away process, saleable products should be staged on pallets in respective zones. If product is defective, entry should be made in integrated ERP system so that manufacturer knows about the defective inventory, further action depends on the manufacturer.7. Aisle, rack design considerations Aisle width and slotted angle rack height are directly dependent on the product type. For pharmaceutical and telecom products can be stored on multi-level slotted angle racks.
Width of the aisle should only be enough to allow only one truck to go through so thatsingle access can be used to pick up the goods on both sides of the aisle.For Heavy engineering, automation and chemical there should be wide aisle so that twofork-lift truck could pass through at one time, it is because these items are bulky in sizeand hence take lot of time while put-away and picking. Not recommended to must morethan 2 levels of rack (depends on weight of items)For retail and apparel, again we need to have wide aisle along with multi-level rackssince they are bulky but light weight in nature.
Performance analysis on expansion from 60,000 sq ft to 140,000 sq ft 1. Proposed person productivity. Present Proposed (After Expansion) Productivity Productivity Activity Person Employed SKU/person/day Person Employed SKU/person/day Put away 6 47 9 48 Pick 9 95 12 130 Pack 8 105 14 111 Sub Total 24 35 Other activities 41 65 Total 65 247 100 289 2. Supervisor distribution No of Supervisors Department Gate 1 Gate 2 Total Storage Area (zones) 8 6 14 Cross Dock 1 0 1 Pre Packaging 2 2 4 Packaging 2 2 4 Packaged Good 1 1 2 Reception 1 1 2 Delivery 1 1 2 Rev Logistic and Scrap 0 1 1 Total 16 14 30 Assistant Manager Proposed: 3 – One for each zone (current 2) No change in number of program manager
Inventory Control 1. Introduction of Cross Docking Cross docking not only reduces material handling, but also reduces the need to store the products in the warehouse. In most cases the products sent from the manufacturing area to the loading dock has been allocated for outbound deliveries Benefits Reduction in labor costs, as the products no longer requires picking and put-away in the warehouse. • Reduction in the need for warehouse space, as there is no requirement to storage the products. 2. Division of goods into fast moving and medium-slow moving goods It will help in keeping up the appropriate inventory levels (on basis of statistical analysis of past data).Fast moving goods can have relatively higher level of inventory.Future RoadmapWe can conclude from the client list of SPEAR Logistics that the company has strategicallyplaced itself as a major player in automation, engineering, retail and telecom segment. SinceIndian GDP is expected to grow at an average rate of 9-10% in coming years hence the demandfor other segments such as agro-cold storage and packing facility and export/import are bound toincrease.As per the report published by IL&FS, following areas would be key drivers in logisticwarehousing. 1. Free Trade Warehousing Zones (FTWZ): Since SPEAR logistics has level of expertise required for maintaining FTWZ, it can venture into this upcoming warehouse
management segment. Development of Delhi-Mumbai Industrial Corridor that is coming up alongside the Dedicated Freight provides the right opportunity to explore this option. Since FTWZ is allowed to have 100% FDI limit, so on the basis of fund availability SPEAR Logistics can go for foreign tie-ups in this segment.2. Air Cargo Centers: The growth rate of the aviation sector in the next 10 years is expected to be not less than 25 percent. According to the Planning Commission, India’s air cargo movements would grow at over a CAGR of 11.5% from 2007-08 to 2011-12. Currently 80% of international cargo is handled at Mumbai & Delhi airports. Since these areas are already very competitive and face relatively low margins hence entering into these airports would be very costly. Rather we can build upon Capex which can be invested later to develop facility at second grade destinations such as Bangalore, Hyderabad, Ranchi, Kolkata, Jammu and Varanasi. IL&FS anticipated that air cargo activity shall expand from metro airports to mini metro and non metro airports post development of necessary infrastructure. Air cargo growth from 2009-10 to 2012-133. Agro Warehouse: It can be divided into 2 parts, dry storage and cold storage. Demand is significant in both the areas because of high level of wastage. In India around 25%-40% of perishable food products never reach the consumer because of shortage of proper
storage facilities. Since SPEAR Logistics has not focused in this segment yet, they can start with setting up dry storage facility for grains like wheat, maize and rice and after gaining experience eventually go for setting up cold storage facilities especially for fruits as over 80 per cent of the existing cold storage facilities in India were designed to preserve potatoes, tamarind and chilies,. Since more and more retail houses are going into direct procurement from big farmers so demand for this type of facility is bound to increase. Strategic location of the facility can decided on basis of demand survey from the big retailers. 4. Cement Industry: Cement industry has the share of logistics cost in total sales. SPEAR Logistics can venture into this segment. Source – KPMG IndiaCompatibility of Layout for future expansionZone D along with operator at packaging/sorting area 2/3 (multi tasked for zone B and D) arekept for future expansion. It can be used for new segment of goods or it can add a expansion forzone A or B.References: Please refer “SAMIKSHA_NITIE_ActiveY_References.docx” in the Iect