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Applying Lean Concepts in a Warehouse Operation

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Applying Lean Concepts in a
   Warehouse Operation


         Frank Garcia
            Partner
 ADVENT DESIGN CORPORATION
What We’ll Cover
Basic Lean Concepts for Warehouse
Improvement

Using Value Stream Maps:
Current & Future State

Implementing Process Improvements

Case Study Using and Ongoing
Application (Pork Producer)
WHAT TO DO ABOUT THE
    WAREHOUSE?




          •   Too many people
          •   Excessive material handling
          •   Inventory inaccuracies
          •   Don’t ship the pounds
          •   No space!!!! Need to Expand!
WAREHOUSE CHALLENGES
Focus on Manufacturing.
Warehouse is a box on the
VSM                        Office & Info Flow   Customer Demands
Product pushed into
warehouse & pulled by
customers
                                              Warehouse
Application of Lean
Principles to an area that
exists because of waste in
the value stream or customer
                                  Production            Suppliers
demand/lead time
Warehouse is the crossroads
of conflicting requirements
How Do We Use Lean Techniques
  for Warehouse Improvement?
Assess the operation using a Value Stream
Map and/or PFDs (Product families & Warehouse data)
Involve the operators & supervisors
Identify lean improvements & kaizens
   Question every activity!
   Treat the warehouse like a large staging area
Develop justification
Implement lean improvements using VSM
plan
Start the cycle again!
Lean Manufacturing
Fundamental Principle of Lean Manufacturing

    Any activity or action which does
    not add value to the product is a
      form of waste and must be
        eliminated or minimized.

In the Warehouse Customer Pays for Shipping
     Everything Else Must Be Minimized !
What Do We Need to Know?
  Demand
  Material Flow & Handling
  Information Flow to the
   Warehouse
  How Material is Stored
  Order Picking & Staging
  How Shipped


VALUE STREAM MAPPING!
Why Use VSM?



Road map for lean improvements

Train team members in use of lean
concepts

Integrated lean implementation plan

Long term planning - Many Future States
product family          Current State Map
                          Understanding how the warehouse
current state drawing     currently operates.

                        Material and information flows
    Future state        Start with the “door to door” flow
      drawing           Walk the flow and get real data
                        * no standard times
                        * draw by hand

     plan and           Get operators & supervisors involved
   implementation       Basis for the Future State
Warehouse Current State
                                                                                             Value Stream Map
                                                                            Blanket Orders with Daily
                                                                           Releases; Supplemented with
                                                                             Open Market Purchases




                                                                             Blanket Orders                      Production
                           Spices and             Packaging                                                                                                           Randomly Placed                                         Various
   Hogs                                                                      with Weekly or                 and Inventory Control
                          Smokehouse              Materials                                                                                                          Orders (Various Sizes)                                  Customers
                                                                           Bi-Weekly Releases                (Computer System)
                            Materials



                                                                                                                                                                                                                       Demand:
                                                                                   Daily
                                                                                                                                                                                                                       131 to 242 orders per
                                                                                 Productio
                                                                                                                                                                                                                       day
                                                                                     n
                                                                                                                                                                                                                       Avg: 167/day
                                                                                 Schedule
     Daily                  Weekly                 Weekly                                                                                                                                                              1 to 2 pallets/order
                            or Bi-                 or Bi-                                                                                                                       Aging                                  15 to 17 orders per
    (about                                                                                                                                     Daily Shipping Orders
                            Weekly                 Weekly                                                                                                                       Report                                 truck
     400)                                                                                                                                       & Freezer Release
                                                                                                                                                      (5PM)                                                            12 to 13 trucks per
                                                                                                                                                                                                                       day
                                                                                                                                                                                                                       1 route per truck
                                                                   Smokehouse
                                                                   Operations
                                                                 Smoke                  Wrap & Pack
                                                                                                                                Off-Site Freezer Storage                                                                           Daily
                                                                                                                                                                                                                               Shipments
                                                                                         Smoked                                                                                                                              (12 to 13 routes)
                                                                                         Products
                                                                                                            I                                 I
                                                               Multiple                  Multiple
                                                                                                                                         1, 578K lbs
                                                               Operators                 Operators      Conveyor
                                                                                                         Staging

             Kill & Cut          Wrap & Pack                  Metal Detection             Strapping                    Palletizing                       Order Picking                         Order                             Shipping
                                                                                                                       & Storage                                                            Checking
                                                                                                                                                            1 to 2                          & Scanning
                                                                                                                                                                                                                                 1 to 2
                                                                                                                         1 to 2                            pallets                             1 to 2
             Cut Products          Cut Products                                                                                                                                                                                  pallets
                                                                                                                                                             per
                                                       I         1 to 2                    1 to 2           I            pallets              I             order
                                                                                                                                                                                 I             pallets             I              per
                                                                 Pallets                   Pallet                                                                                                                                order
             Multiple              Multiple                                                                                                                6 to 8
             Operators             Operators       Conveyor                                            Conveyor                             Rack                               Staging                         Staging
                                                                                                                            3                              People                                 2                                 2
                                                    Staging                                             Staging                            Storage                           Palletizing                      for Trucks
                                                                                                                         People                                                                People                            People
                                                   10 cases                                            10 to 15                              775                               & Dock                          2 orders
                                                                                                                      C/T = 7 sec                        C/T = 10 - 35                      C/T = 15 min                      C/T = 4 hours
                                                               C/T =2 sec                C/T = 2 sec     cases                            positions;                           6 orders                       (4 pallets)
                                                                                                                      per case or 10                            minutes                     C/O = 0 min                       C/O = 0 min
                                                               C/O =2 min                C/O = 1 min                                      7 reefers;                         (12 pallets)
                                                                                                                      min per pallet                     C/O = 0 min                        Rel. = 85%                        Rel. = 85%
                                                               Rel. = 95%                Rel. = 80%
Order Lead Time 3.7 to 6.1 Days                                                                                       C/O = 0 min         610K lbs       Rel. = 85%                         Avail. = 16.5 hrs                 Avail. = 16.5 hrs
                                                                                                                      Rel. = 85%                         Avail. = 49.5 to
Order Processing Time: 6 Hrs                                                                                          Avail. = 24.8                      66 hrs (2 shifts)
                                                                                                                      hrs (2 shifts)
Takt Time: 3 to 4 minutes
                                                   30                           5 sec                  6 minutes                       2.9 to 5.3 days                        20                                15 minutes
                                                   seconds                                                                                (Freezer                            minutes
                                                                                                                                          storage:
                                                                                                                                                          35                                  10
                                                                                                                                                                                              minutes
                                                                40 seconds               40                           20
                                                                                                                                         6.7 to 14.5
                                                                                                                                                         minutes                                                               4 hours
                                                                                         seconds                      minutes
Important Warehouse Data
                                                                                                                           60mm pounds per year
                                                     2002 Product Picks (All)
                                                                                                                           6.8 turns per month
                          700


                                                                                                                           Seasonal production.
                                609
Number of Product Items




                          600

                          500

                          400                                                                                              Production exceeds
                          300

                          200                                                                                              shipments by 20% Easter
                                                                                                                           & Xmas
                          100
                                        31      16      8      5       1      1       0      0       0      0       1
                           0
                                1 to 1001 to 2001 to 3001 to 4001 to 5001 to 6001 to 7001 to 8001 to 9001 to 10000 11001
                                1000  2000 3000 4000 5000 6000 7000 8000 9000 10000


                                                  Number of Line Item Picks
                                                                                                               to    to
                                                                                                             11000 12000   Average 1.2 pallets per
                                                                                                                           order. Average 167
                                                                                                                           orders/day
                     10% products = 66% of picks
                     20% products = 84% of picks                                                                           95% of picks are for less
                                                                                                                           than a pallet
                                                                                                                           Returns 1.9% of lbs
                                                                                                                           shipped
Opportunity: Material Flow & Layout
           Many crossed flows !
Opportunity: Walking and Lifting in
            Palletizing

                    Little case
                    accumulation
                    Case lifting and
                    walking
                    Pallet cycle time too
                    long
                    Cases missing straps
                    Area used for order
                    staging
                    No visual controls
Opportunity: Rack Storage and
         Utilization

                Daily Product Aging
                Counts
                Insufficient pallet storage
                for peak months
                No rack locator system
                Reefers used for overflow
                storage
                Product gets lost
                Rely on operator
                memories or supervisor
                expediting
Opportunity: Order Picking & Shipping


                    Order picking too slow
                    Must pick before final
                    order confirmation
                    Few operators
                    understand warehouse
                    Dock staging too small
                    Inventory updated at
                    scanning
                    Not enough dock doors
ORDER PICKING FLOW
             FRESH             SMOKED                      FROZEN



                               GET PICK                             GET LOAD
                                 LIST                               PATTERN



                            LOCATE PALLET
                            IN WAREHOUSE                                       LOCATE PALLET
                                                                               IN DOCK RACKS
          • MOVE PALLET

                                 PICK
• CASES 95% OF TIME        CASES OR PALLETS                      REPEAT
                                                                  UNTIL
           • MOVE PALLET                                         ORDER
                                                                COMPLETE

                               STORE
                               PALLET




           • PALLETIZING       STAGE
             AREA              ORDER
           • DOCK
                                         • MOVE TO INSPECTION

                                CHECK
                                ORDER


                                SCAN
                              BAR CODES

                                         • MOVE TO TRUCK

                                LOAD
                               TRAILER
Why is Order Picking Slow?
                     computer-looking
                           2%           interference
                                             2%
                      Walking
reorganizing product-  8%
       dates
        11%
                                                                 computer-looking
                                                Looking
                                                                 interference
                                                  34%
                                                                 Looking
                                                                 outside interruption
                                                                 Picking
                                                                 reorganizing product-dates
                                                                 Walking

              Picking                     outside interruption
                38%                                5%
Opportunity: Case Flow Through Metal
       Detection & Strapping




                   • No gap between cases
                   • Cases jam at metal detector
                   • Maintenance adjusts metal
                     detector
                   • Run out of strap
                   • No system status display
Opportunity: Production Scheduling Not in
Sync With Shipments or Warehouse Capacity

                       Pallet storage in aisles
                       Insufficient pallet
                       storage for peak
                       months
                       Outside Freezer
                       Warehouse Used used
                       for overflow storage
How Do We Fix It?


    Look at Application of Lean
    Concepts

    Future State Using Value
    Stream Maps With &
    Without Expansion
Future State Questions
  What is the takt time?
  Will we build to shipping or to a supermarket?
  Where can we use continuous flow? How do we level the
  pacemaker process?

SUPPORTING IMPROVEMENTS
  What process improvements will be necessary to eliminate
  waste?
TAKT Time



Synchronizes pace of production
     to match pace of sales

 Rate for assembling an order
  based on shipping schedule




          TAKT = Effective Working Time per Shift
                 Customer Requirement per Shift
Look for No Flow &Wastes
   They are in the warehouse too!
Inventory (too much)
Overproduction (more or sooner than needed)
Correction (inspection and rework)
Material Movement
Waiting
Extra Motion
Non-Value Added Processing
Lean Manufacturing
Concepts & Techniques in the Warehouse

  Flow: Visual Workplace, Layout
  Improvement, Lean Automation

  Materials: Kanban Systems, Supply Chain
  Management, Point of Use

  Perfection: Quality Systems, Training

  Information: Just in Time, Lean Office
Warehouse Assessment
                                                    Value Stream Map (Future State) Without Expansion
                                                                              Blanket Orders with Daily
                                                                             Releases; Supplemented with
                                                                               Open Market Purchases




                                                                               Blanket Orders                 Leidy’s Production
                             Spices and             Packaging                                                                                                           Randomly Placed                                    Various
     Hogs                                                                      with Weekly or                and Inventory Control
                            Smokehouse              Materials                                                                                                          Orders (Various Sizes)                             Customers
                                                                             Bi-Weekly Releases                  (CSB System)
                              Materials                                                                                               • Aging Data


                                                                                                                                                                                                                    Demand:
                                                                                     Daily                                                                                                                          131 to 242 orders per day
                                                                                   Productio                                                                                                                        Avg: 167/day
                                                                                       n                                                                                                                            1 to 2 pallets/order
                                                                                   Schedule                                                                                                                         15 to 17 orders per truck
       Daily                  Weekly                 Weekly
                                                                                                                  Bar Code Scan                                                 Bar Code Scan                       12 to 13 trucks per day
                              or Bi-                 or Bi-                                                                                   Daily Shipping Orders
      (about                                                                                                      Warehouse Input                                                 Inventory                         1 route per truck
                              Weekly                 Weekly                                                                                    & Freezer Release
       400)                                                                                                                                                                        Updates
                                                                                                                                                     (5PM)


                                                                     Smokehouse
                                                                     Operations
                                                                   Smoke                  Wrap & Pack
                                                                                                                                Off-Site Freezer Storage                                                                        Daily
                                                                                                                                                                                                                            Shipments
                                                                                           Smoked                                                                                                                         (12 to 13 routes)
                                                                                           Products
                                                                                                              I                               I
                                                                 Multiple                  Multiple
                                                                                                                                        1, 578K lbs
                                                                 Operators                 Operators     Conveyor
                                                                                                          Staging

               Kill & Cut          Wrap & Pack                  Metal Detection             Strapping                   Palletizing                        Order Picking                        Order                         Shipping
                                                                                                                        & Storage                                                            Verification
                                                                                                                                                              1 to 2
                                                                                                                                                                                                                              1 to 2
                                                                                                                          1 to 2                             pallets                             1 to 2
               Cut Products          Cut Products                                                                                                                                                                             pallets
                                                                                                                                                               per
                                                         I         1 to 2                    1 to 2          I            pallets             I               order
                                                                                                                                                                                   I             pallets
                                                                                                                                                                                                                 FIFO
                                                                                                                                                                                                                              per order
                                                                   Pallets                   Pallet                         3                                                                      2
               Multiple              Multiple                                                                                                                6 to 8
                                                     Conveyor                                                             People             Rack                                                People                          2
               Operators             Operators                                                           Conveyor                                            People             Staging
                                                      Staging                                                                               Storage                                                                            People
                                                                                                          Staging                                                                 Dock
                                                     10 cases                                                                           883 positions;
                                                                                                         30 to 50      C/T = 7 sec Locator system,         C/T = 10 to 15       2 orders     C/T = 10 min                  C/T = 2 hours
                                                    Gap cases    C/T =2 sec                C/T = 2 sec     cases                                                               (4 pallets)
                                                                                                                       per case or 6.8 A items on first           minutes                    C/O = 0 min                   C/O = 0 min
                                                                 C/O =2 min                C/O = 1 min 3 separate
                                                                                                                       min per pallet tier, additional     C/O = 0 min                       Rel. = 85%                    Rel. = 85%
                                                                 Rel. = 95%                Rel. = 90%     Zones        C/O = 0 min       rack above        Rel. = 85%                        Avail. = 16.5 hrs             Avail. = 16.5 hrs
Order Lead Time: 3 to 4.9 Days                                                                         Bar code scan   Rel. = 85%         palletizing      Avail. = 49.5 to
                                                                                                                       Avail. = 24.8       610K lbs        66 hrs (2 shifts)
Order Processing Time: 3 Hrs                                                                                           hrs (2 shifts)                      Scan bar codes
                                                                                                                                         2.6 to 4.5 days
Takt Time: 3 to 4 minutes      30 seconds                                         5 sec                 6 minutes                     (Freezer storage:                         15 minutes

                                                                                                                                      6.7 to 14.5 days)     20
                                                                  40 seconds               40seconds                    13 minutes                          minutes                             8 minutes                   2 hours
What Happened in the Future State
   VSM Without Expansion?
Implemented rack locator system & organized
storage based on product turns

Revised order picking methods

Implemented WMS

Improved palletizing system

Reduced job classifications & cross trained
operators

Established operational metrics

     Closer to Takt Time….but not there yet!
FUTURE STATE PALLETIZING FLOW
                                                                                                                  FRESH
                                               Production Cases
                    WMS TEMP                                                             PRINT
                   WAREHOUSE                                                            LABELS                    SMOKED


                                                                                        SCAN
            Transfer                                  Count Cases
                                                                                        CASES

                      WMS
                   WAREHOUSE                                                        GET CASE FROM
Location           MANAGEMENT                                                         CONVEYOR                                    WALK TO
                                                      Pallet Number                                          • MOVE CASE          CONVEYOR
                                                                                        PLACE ON
                                                                                         PALLET
           Yes         SPACE TO FIT   No                                                                     • MOVE PALLET

                                                                                                                                        Visual Display
                        ALL PALLETS
                                                                                 PRINT & APPLY PALLET
                                                                                         LABEL

    Zone
                       Location
                       • FRESH             Random
                                                          Pallet Number
                                                                                          STAGE
                                                                                                              • MOVE PALLET
                                                                                                                                          of System
                       • SMOKED
                                                                                                                                            Status
                                                                                          PALLET

                       LOCATE EMPTY
                         STORAGE
                         POSITION                                                        STRETCH
                                                                                          WRAP              • GET STRETCH WRAP

                                                                                                            • MOVE PALLET
                         SCAN         • MOVE PALLET
                       LOCATION                                                           STAGE             •IN TUNNEL
                                                                                          PALLET             FOR FORKLIFT
                                                                                                             PICKUP
                 ADD PRODUCT TO RACK,
                 RETURN TO PALLETIZING
                         LINE                                                           SCAN
                                                                                    PALLET LABEL



                                                                                        PUT AWAY
                                                            • MOVE PALLET


                                                                                                 • FRESH
                                                                                                 • SMOKED
                                                                                                                                • MOVE
                                                                            • MOVE
                                                                                                                                 TO TRUCK
                                                                             TO TRUCK

                                                                                            LOAD                       LOAD
                                                                                           FRESH                      FROZEN
                                                                                          TRAILER                     TRAILER
FUTURE STATE ORDER PICKING FLOW


            FRESH                  SMOKED                 FROZEN

                                GET PICK LIST                    GET LOAD
          WMS
                                                                 PATTERN
   Truck Route Wave Pick
                                LOCATE PALLET
                                IN WAREHOUSE
                                                                                      LOCATE PALLET
                                          • MOVE PALLET        REPEAT                 IN DOCK RACKS
                                   SCAN                         UNTIL
         WMS                     LOCATION
                                                               ORDER
                                                              COMPLETE
                             PICK CASES OR
• CASES 95% OF TIME             PALLETS                                 WMS
                                                                      Next location
                                          • MOVE PALLET

          WMS                  SCAN CASES


                                 STORE
                                 PALLET



                                    STAGE
             • PALLETIZING          ORDER
               AREA
                                                 • MOVE TO INSPECTION
             • DOCK                CHECK
                                   ORDER

                                 VERIFICATION
           WMS                      SCAN              • TRUCK ROUTE
            Truck Route
                                    LOAD              • MOVE TO TRUCK
                                   TRAILER
PROPOSED PALLETIZING & STORAGE
        IMPROVEMENTS
PROPOSED PALLETIZING IMPROVEMENTS
Future State Benefits
       Step 1: Without Expansion
Improved order picking and material flow
  Reduced cycle time 15% in 3 months. Going to
  30%
Reduced material handling
Saved rack space (10% reduction in 2
weeks)
Reduced lead time 50%
Handle peak periods with less congestion
(108 positions)
Better trained and flexible workforce
Capital Payback of 1.8 years
How Do We Implement the Future State
              VSM?
 Don’t Wait Until It’s Perfect!
 Use future state VSM to highlight changes
 Break up the future state into sections
 Develop a VSM implementation plan
 Tie plan to business objectives & show
 savings
 Assign projects to team members to
implement
Organizing the Lean Solutions
 Process                              Problem                                                               Solution


Metal       M1. Cases not metered into machines causing jams and             M1. Create space between cases with metering device increases
Detection       backup of product                                                reliability of strapper and metal detector
&
Strapping   M2. Metal detector setting has to be changed manually            M2. Scan product to set metal detection setting increases reliability of
                                                                                 metal detector

            P1.   Product is handled twice, once to palletize then once to   P1.   Rearrange high moving product to allow case stacking in flow
                  pick                                                             racks
Palletiz-
            P2.   Operator walking several feet to obtain correct case of    P2.   Shorten walking distance by separating product onto shorter
ing
                  product to palletize                                             conveyors

            P3.   Product is moved to be shrink wrapped prior to put         P3.   *Automate the shrink wrapping process with conveyor and
                  away                                                             automatic wrapper

            ST1. Searching for open position for putaway                     ST1. Implement W arehouse Management System for putaway
Storage     ST2. Product must be rotated from top to bottom resulting in     ST2. Rearrange racking for whole pallet flow racks on high moving
Racks and        several pallet moves                                             product
Staging     ST3. Need forklift to put bottom row away. Need ladder to        ST3. Remove lower rail on certain aisles to allow pallet jack putaway
                 pick from second tier.                                           instead of forklift. Lower second tier to pick height without
                                                                                  ladder.

            O1.   Pickers searching for product due to no location system    O1.   Put pick locations on pick ticket after W arehouse Management
Order       O2.   W alking from aisle to aisle with no logical sequence of         System is installed
Picking           picks                                                      O2.   Sort products by frequency of pick then by weight in warehouse
            O3.   Rotating stock to bring oldest date to front                     to minimize walking
                                                                             O3.   *Use pallet flow racks to automatically rotate stock
Shipping
            SH1. Insufficient space to stage multiple pallets leads to       SH1. *Increase floor space for dock staging. Long term plan would be
                 double moves of product                                          to reorganize when building is expanded
            SH2. Operator is dedicated to verifying picked pallet prior to   SH2. Improve picking operation through training and scanning at pick
                 scan                                                             location with bar code scanners.
            SH3. Occasionally additional product gets shipped to             SH3. Confirmation check by scanning once prior to loading truck
                 customer
PROPOSED IMPROVEMENTS: Costs & Savings
                                                                                                                                                                                                                 C y c le T im e         A nnual              C o s t to
P rocess                                             P r o b le m                                                                                   S o l u ti o n                                               (R e d u c e d )       S a v in g s $     I m p le m e n t

M eta l            M 1.     C a s es n o t m et er e d in t o m a c h in es c a u s in g ja m s          M 1.     C r ea te s p a c e b etw e e n c a s es w it h m et er in g d e v ic e in c r ea s es                                    3 ,5 0 3             2 ,0 0 0
                                                                                                                                                                                                                     .3 3 m in /p a l
D et e c tio n              a nd b a cku p o f product                                                            r elia b ility o f s tra p p er a n d m eta l d et e c to r
&                                                                                                                                                                                                                                           3 ,5 0 3            2 0 ,0 0 0
S tr a p p in g    M 2.     M eta l d e t e c t o r s ettin g h a s to b e c h a n g e d                 M 2.     S c a n p r o d u c t to s et m eta l d et ec t io n s ettin g in c r ea s es                      .3 3 m in /p a l
                            m a n u a lly                                                                         r elia b ility o f m eta l d et e c t o r

                   P1.      P r o d u c t is h a n d le d tw ic e, o n c e to p a lle tiz e th e n       P1.      * R ea r r a n g e h ig h m o v in g p r o d u c t to a llo w c a s e s ta c k in g in         1 o p e r /y e a r         *TBD                *TBD
                            o n c e t o p ic k                                                                    flo w r a c k s

P a lletiz -       P2.      O p e r a to r w a lk in g s ev er a l f e et to o b ta in c o r r ec t      P2.      S h o r t e n w a lk in g d is ta n c e b y s o r tin g p r o d u c t b y b a r c o d e        1 .3 3 m in /p a l        1 4 ,0 2 4           9 5 ,0 0 0
in g                        c a s e o f p r o d u c t to p a llet iz e                                            in to c o n v e y o r z o n e s o r u s in g a v er tic a l r ec ir c u la tin g
                                                                                                                  con vey or
                                                                                                                                                                                                                                                               ( v e r t ic a l
                   P3.      P r o d u c t is m o v e d to b e s tr e tc h w r a p p ed p r io r to                                                                                                                                                           c o nve yo rs)
                            put away                                                                     P3.      * A u to m a te th e s tr e tc h w r a p p in g p r o c e s s w ith c o n v e y o r            2 m in /p a l            * 2 1 ,0 4 2        * 6 2 5 ,0 0 0
                                                                                                                  a n d a u to m a tic p a lle tizin g

                   S T 1 . S ea r c h in g f o r o p e n p o s itio n fo r p u ta w a y                  S T 1 . I m p le m e n t W a r eh o u s e M a n a g e m e n t S y s t e m f o r p u ta w a y            .7 5 m in /p a l          7 ,8 9 1 ^        S e e b e lo w
                   S T 2 . P r o d u c t m u s t b e r o ta te d fr o m to p to b o tt o m               S T 2 . R ea r ra n g e r a c k i n g f o r w h o le p a llet flo w r a c k s o n h ig h                5 m in /p a l
S to r a g e               r es u lt in g in s e v er a l p a lle t m o v es                                     m o v in g p r o d u c t
R a cks a nd                                                                                                                                                                                                                               2 6 ,3 0 3           4 0 ,0 0 0
                   S T 3 . N e e d f o r k lift to p u t b o tto m r o w a w a y . N e e d               S T 3 . L o w er s e c o n d tier to p ic k h e ig h t w ith o u t la d d er .
S ta g in g                                                                                                                                                                                                      0 .3 3 m in /p a l
                           la d d er to p ic k fr o m s ec o n d tier .                                          R e o r g a n iz e s h e lv in g h e ig h t to a llo w s e v er a l S K U ’s to fit in
                   S T 4 . N e e d a d d it io n a l r a c k s p a c e f o r p r o d u c t                       o n e p a llet lo c a tio n .
                                                                                                                                                                                                                                            3 ,4 7 9             3 ,0 0 0
                                                                                                         S T 4 . A d d r a c k in g o v e r h e a d o n p a lletiz in g lin e                                    0 m in /p a l
                                                                                                                                                                                                                                                0               3 0 ,0 0 0

                   O 1.     P ic k er s s ea r c h in g f o r p r o d u c t d u e to n o lo c a tio n    O 1.     P u t p ic k lo c a tio n s o n p ic k tic k et a fter W a r eh o u s e                        1 0 m in /p a l          1 0 5 ,2 1 0 ^     S e e b e lo w
O r d er                      system                                                                              M a n a g e m e n t S y s t e m is in s ta lle d
P ic k in g        O 2.     W a lk in g fr o m a is le t o a is le w ith n o lo g ic a l                 O 2.     S o r t p r o d u c ts b y fr e q u e n c y o f p ic k th e n b y w e ig h t in                5 m in /p a l            5 2 ,6 0 5 ^       S e e b e lo w
                            s e q u e n c e o f p ic k s                                                          w a r e h o u s e to m in im iz e w a lk in g
                   O 3.     R o ta tin g s to c k to b r in g o ld e s t d a te to fr o n t              O 3.     * U s e c a s e flo w r a c k s to a u to m a tic a l ly r o ta te s to c k
                                                                                                                                                                                                                 1 m in /p a l            * 1 0 ,5 2 1            TBD

                   S H 1 . In s u ff ic ie n t s p a c e t o s ta g e m u ltip le p a llets lea d s      S H 1 . * I n c r e a s e flo o r s p a c e fo r d o c k s ta g in g . L o n g te r m p la n            3 m in /p a l            * 3 4 ,7 2 0            TBD
                           to d o u b le m o v e s o f p r o d u c t                                             w o u ld b e to r e o r g a n iz e w h e n b u ild in g is e x p a n d e d
 S h ip p in g     S H 2 . O p e r a to r is d ed ic a te d to v er if y in g p ic k e d p a llet        S H 2 . I m p r o v e p ic k in g o p er a tio n th r o u g h tra in in g a n d s c a n n in g a t      2 m in /p a l            2 1 ,0 4 2 ^       S e e b e lo w
                           p r io r to s c a n                                                                   p ic k lo c a tio n w it h b a r c o d e s c a n n er s .
                   S H 3 . O c c a s io n a lly a d d itio n a l p r o d u c t g ets s h ip p e d to     S H 3 . C o n fir m a tio n c h ec k b y s c a n n in g o n c e p r io r to lo a d in g tr u c k
                           c u s to m er
                                                                                                                                                                                                                 Increase

                   U t iliz e s p r o b le m S T 1 + O 1 + O 2 + S H 2 s a v in g s d a ta                D es ig n s o ft w a r e, p u r c h a s e h a r d w a r e , in t e g r a te s y s t e m s a n d        1 7 .8 m in /p a l       1 8 6 ,7 4 8         2 4 0 ,0 0 0
                                                                                                         in s ta ll o n w a r e h o u s e flo o r .
    WMS
                   O r g a n iz a tio n a l h ier a r c h y to o s p e c ia liz e d . C a n ’t tra c k   C r o s s tra in o p er a to r s to fill m u ltip le r o le s d u r in g o n e s h ift. P o o l                  TBD                TBD
                   h o u r s c o r r ec tly d u e t o c la s s if ic a tio n o f w o r k er s .          a ll la b o r a n d r e d u c e a s n e e d e d . T ra c k la b o r b y g r o u p p r o d u c tiv ity
                                                                                                         v e r s es in d iv id u a l p r o d u c tiv ity .


                   T o t a l o f a ll p r o je c ts w i t o u t e x p a n s i o n                                                                                                                                                        $ 2 3 4 ,0 8 1      $ 4 3 0 ,0 0 0
                  ( U s in g p r o b le m M 1 , M 2 , P 2 , S T 3 , S T 4 , a n d W M S
                  d ata)
PROPOSED IMPLEMENTATION PLAN
Without Expansion

    Phase 1. Simple modifications

        1. Remove bottom rail to allow pallet jack access. (Target date
             May 2003)
        2. Lower second tier to remove the need for ladder access. (May
             2003)
        3. Match shelf size with average pallet height to increase the
             number of
           pick locations. (May 2003)
        4. Change speed of conveyor in metal detection room to space
           product cases properly or implement as part of palletizing
           relocation. (May 2003)
        5. Balance flow of orders transferring from the order pickers to
           verifiers during the entire shift. This can be accomplished by
           training more utility operators as outlined in the
           organizational restructuring matrix shown in Section 4. (May
           2003)
        6. Label all pallet rack storage locations to begin transition to
           warehouse management system(May 2003)
        7. Place 135 high moving SKU’s on first or second tier of the
           pallet rack. (May 2003)
PROPOSED IMPLEMENTATION PLAN
Without Expansion

     Phase 2. Moderate improvements to computer system and
     operations

       1. Implement warehouse wide standards on order accuracy, line
          items shipped on time, orders shipped complete. Post the
          results weekly to begin continuous improvement philosophy in
          warehouse activity.(June 2003)
       2. Install static racking above the existing palletizing area, leaving
          sufficient head room for the palletizing operation. (September
          2003)
       3. Install new vertical recirculation conveyor palletizing station
          and lift tables. (September 2003)
       4. Consider implementation of CSB locator screen using move
          tickets if automated scanning will be delayed. (September
          2003)
       5. Install flow through pallet rack on bottom tiers of existing racks
          to eliminate top-down pallet rotation on high movers. (October
          2003)
       6. Change configuration of metal detection conveyor to scan
          labels prior to entering metal detection equipment. Use barcode
          scan to change settings on the metal detector. (2004)

     Phase 3. Major improvements to computer system and operations

       1. Upgrade CSB system to include Warehouse Management
          System for locating product and install equipment to bar code
          scan case labels. (1 st quarter 2004)
Warehouse Assessment
                                                      Value Stream Map (Future State) With Expansion
                                                                              Blanket Orders with Daily
                                                                             Releases; Supplemented with
                                                                               Open Market Purchases




                                                                               Blanket Orders                 Leidy’s Production
                            Spices and              Packaging                                                                                                          Randomly Placed                                   Various
    Hogs                                                                       with Weekly or                and Inventory Control
                           Smokehouse               Materials                                                                                                         Orders (Various Sizes)                            Customers
                                                                             Bi-Weekly Releases                  (CSB System)
                             Materials                                                                                                • Aging Data


                                                                                                                                                                                                                  Demand:
                                                                                     Daily                                                                                                                        131 to 242 orders per day
                                                                                   Productio                                                                                                                      Avg: 167/day
                                                                                       n                                                                                                                          1 to 2 pallets/order
                                                                                   Schedule                                                                                                                       15 to 17 orders per truck
      Daily                  Weekly                  Weekly
                                                                                                                  Bar Code Scan                                               Bar Code Scan                       12 to 13 trucks per day
                             or Bi-                  or Bi-                                                                                   Daily Shipping Orders
     (about                                                                                                       Warehouse Input                                               Inventory                         1 route per truck
                             Weekly                  Weekly                                                                                    & Freezer Release
      400)                                                                                                                                                                       Updates
                                                                                                                                                     (5PM)


                                                                     Smokehouse
                                                                     Operations
                                                                   Smoke                  Wrap & Pack
                                                                                                                                Off-Site Freezer Storage                                                                      Daily
                                                                                                                                                                                                                          Shipments
                                                                                           Smoked                                                                                                                       (12 to 13 routes)
                                                                                           Products
                                                                                                              I                              I
                                                                 Multiple                  Multiple
                                                                                                                                        1, 578K lbs
                                                                 Operators                 Operators     Conveyor
                                                                                                          Staging

              Kill & Cut          Wrap & Pack                   Metal Detection             Strapping                   Palletizing                       Order Picking                      Order                          Shipping
                                                                                                                        & Storage                                                         Verification
                                                                                                                                                             1 to 2
                                                                                                                                                                                                                            1 to 2
                                                                                                                          1 to 2                            pallets                             1 to 2
              Cut Products          Cut Products                                                                                                                                                                            pallets
                                                                                                                                                              per
                                                         I         1 to 2                    1 to 2          I            pallets            I               order
                                                                                                                                                                                 I              pallets
                                                                                                                                                                                                               FIFO
                                                                                                                                                                                                                             per
                                                                   Pallets                   Pallet                                                                                                                         order
              Multiple              Multiple                                                                                                                6 to 8
                                                     Conveyor                                                                                Rack
              Operators             Operators                                                            Conveyor            3                              People          Staging              2                             2
                                                      Staging                                                                               Storage
                                                                                                          Staging         People                                             Dock             People                        People
                                                     10 cases                                                                          1100 positions;
                                                                                                         30 to 50      C/T = 7 sec Locator system,        C/T = 10 to 15 5 orders          C/T = 5 min                   C/T = 1. 5 hours
                                                    Gap cases    C/T =2 sec                C/T = 2 sec     cases       per case or 6.8 A items on first          minutes (10 pallets)      C/O = 0 min                   C/O = 0 min
                                                                 C/O =2 min                C/O = 1 min 3 separate
                                                                                                                       min per pallet tier, additional    C/O = 0 min                      Rel. = 95%                    Rel. = 95%
                                                                 Rel. = 95%                Rel. = 90%     Zones
Order Lead Time: 2.5 to 4.4 Days                                                                       Bar code scan
                                                                                                                       C/O = 0 min
                                                                                                                       Rel. = 85%
                                                                                                                                         rack above       Rel. = 85%
                                                                                                                                                          Avail. = 49.5 to
                                                                                                                                                                                           Avail. = 16.5 hrs             Avail. = 16.5 hrs
                                                                                                                                         palletizing
Order Processing Time: 2.5 Hrs                                                                                         Avail. = 24.8       610K lbs       66 hrs (2 shifts)
                                                                                                                       hrs (2 shifts)                     Scan bar codes
Takt Time: 3 to 4 minutes
                                                   30 seconds                     5 sec                 6 minutes                     2.6 to 3.5 days                         8 minutes
                                                                                                                                         (Freezer
                                                                                                                                         storage:
                                                                  40 seconds               40                           13 minutes                         10 minutes                          8 minutes                  1.5 hours
                                                                                           seconds                                      6.7 to 14.5
What Happens in the Future State VSM
         With Expansion?
 Expand warehouse to provide staging areas

 Most pallets are staged on floor not in racks

 Revised order picking methods…Pick from
 pallets not racks

 Robotic palletizing system based on previously
 upgraded system

 Improved production scheduling & planning

 New markets for frozen products to increase
 turns
PROPOSED PALLETIZING & STORAGE IMPROVEMENTS




                    expansion1.wmf
PROPOSED PALLETIZING & STAGING
       IMPROVEMENTS
The Warehouse Improvement Cycle



 Assessment   Recommended      Methods
   (VSM)        Solutions      Layout
                               Material Handling
                               Visual Controls
Continuous
Improvement
                                 Automation

              Implementation    Information
  DO IT!
                   Plan           Systems

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Applying Lean Concepts in a Warehouse Operation

  • 1. Applying Lean Concepts in a Warehouse Operation Frank Garcia Partner ADVENT DESIGN CORPORATION
  • 2. What We’ll Cover Basic Lean Concepts for Warehouse Improvement Using Value Stream Maps: Current & Future State Implementing Process Improvements Case Study Using and Ongoing Application (Pork Producer)
  • 3. WHAT TO DO ABOUT THE WAREHOUSE? • Too many people • Excessive material handling • Inventory inaccuracies • Don’t ship the pounds • No space!!!! Need to Expand!
  • 4. WAREHOUSE CHALLENGES Focus on Manufacturing. Warehouse is a box on the VSM Office & Info Flow Customer Demands Product pushed into warehouse & pulled by customers Warehouse Application of Lean Principles to an area that exists because of waste in the value stream or customer Production Suppliers demand/lead time Warehouse is the crossroads of conflicting requirements
  • 5. How Do We Use Lean Techniques for Warehouse Improvement? Assess the operation using a Value Stream Map and/or PFDs (Product families & Warehouse data) Involve the operators & supervisors Identify lean improvements & kaizens Question every activity! Treat the warehouse like a large staging area Develop justification Implement lean improvements using VSM plan Start the cycle again!
  • 6. Lean Manufacturing Fundamental Principle of Lean Manufacturing Any activity or action which does not add value to the product is a form of waste and must be eliminated or minimized. In the Warehouse Customer Pays for Shipping Everything Else Must Be Minimized !
  • 7. What Do We Need to Know? Demand Material Flow & Handling Information Flow to the Warehouse How Material is Stored Order Picking & Staging How Shipped VALUE STREAM MAPPING!
  • 8. Why Use VSM? Road map for lean improvements Train team members in use of lean concepts Integrated lean implementation plan Long term planning - Many Future States
  • 9. product family Current State Map Understanding how the warehouse current state drawing currently operates. Material and information flows Future state Start with the “door to door” flow drawing Walk the flow and get real data * no standard times * draw by hand plan and Get operators & supervisors involved implementation Basis for the Future State
  • 10. Warehouse Current State Value Stream Map Blanket Orders with Daily Releases; Supplemented with Open Market Purchases Blanket Orders Production Spices and Packaging Randomly Placed Various Hogs with Weekly or and Inventory Control Smokehouse Materials Orders (Various Sizes) Customers Bi-Weekly Releases (Computer System) Materials Demand: Daily 131 to 242 orders per Productio day n Avg: 167/day Schedule Daily Weekly Weekly 1 to 2 pallets/order or Bi- or Bi- Aging 15 to 17 orders per (about Daily Shipping Orders Weekly Weekly Report truck 400) & Freezer Release (5PM) 12 to 13 trucks per day 1 route per truck Smokehouse Operations Smoke Wrap & Pack Off-Site Freezer Storage Daily Shipments Smoked (12 to 13 routes) Products I I Multiple Multiple 1, 578K lbs Operators Operators Conveyor Staging Kill & Cut Wrap & Pack Metal Detection Strapping Palletizing Order Picking Order Shipping & Storage Checking 1 to 2 & Scanning 1 to 2 1 to 2 pallets 1 to 2 Cut Products Cut Products pallets per I 1 to 2 1 to 2 I pallets I order I pallets I per Pallets Pallet order Multiple Multiple 6 to 8 Operators Operators Conveyor Conveyor Rack Staging Staging 3 People 2 2 Staging Staging Storage Palletizing for Trucks People People People 10 cases 10 to 15 775 & Dock 2 orders C/T = 7 sec C/T = 10 - 35 C/T = 15 min C/T = 4 hours C/T =2 sec C/T = 2 sec cases positions; 6 orders (4 pallets) per case or 10 minutes C/O = 0 min C/O = 0 min C/O =2 min C/O = 1 min 7 reefers; (12 pallets) min per pallet C/O = 0 min Rel. = 85% Rel. = 85% Rel. = 95% Rel. = 80% Order Lead Time 3.7 to 6.1 Days C/O = 0 min 610K lbs Rel. = 85% Avail. = 16.5 hrs Avail. = 16.5 hrs Rel. = 85% Avail. = 49.5 to Order Processing Time: 6 Hrs Avail. = 24.8 66 hrs (2 shifts) hrs (2 shifts) Takt Time: 3 to 4 minutes 30 5 sec 6 minutes 2.9 to 5.3 days 20 15 minutes seconds (Freezer minutes storage: 35 10 minutes 40 seconds 40 20 6.7 to 14.5 minutes 4 hours seconds minutes
  • 11. Important Warehouse Data 60mm pounds per year 2002 Product Picks (All) 6.8 turns per month 700 Seasonal production. 609 Number of Product Items 600 500 400 Production exceeds 300 200 shipments by 20% Easter & Xmas 100 31 16 8 5 1 1 0 0 0 0 1 0 1 to 1001 to 2001 to 3001 to 4001 to 5001 to 6001 to 7001 to 8001 to 9001 to 10000 11001 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 Number of Line Item Picks to to 11000 12000 Average 1.2 pallets per order. Average 167 orders/day 10% products = 66% of picks 20% products = 84% of picks 95% of picks are for less than a pallet Returns 1.9% of lbs shipped
  • 12. Opportunity: Material Flow & Layout Many crossed flows !
  • 13. Opportunity: Walking and Lifting in Palletizing Little case accumulation Case lifting and walking Pallet cycle time too long Cases missing straps Area used for order staging No visual controls
  • 14. Opportunity: Rack Storage and Utilization Daily Product Aging Counts Insufficient pallet storage for peak months No rack locator system Reefers used for overflow storage Product gets lost Rely on operator memories or supervisor expediting
  • 15. Opportunity: Order Picking & Shipping Order picking too slow Must pick before final order confirmation Few operators understand warehouse Dock staging too small Inventory updated at scanning Not enough dock doors
  • 16. ORDER PICKING FLOW FRESH SMOKED FROZEN GET PICK GET LOAD LIST PATTERN LOCATE PALLET IN WAREHOUSE LOCATE PALLET IN DOCK RACKS • MOVE PALLET PICK • CASES 95% OF TIME CASES OR PALLETS REPEAT UNTIL • MOVE PALLET ORDER COMPLETE STORE PALLET • PALLETIZING STAGE AREA ORDER • DOCK • MOVE TO INSPECTION CHECK ORDER SCAN BAR CODES • MOVE TO TRUCK LOAD TRAILER
  • 17. Why is Order Picking Slow? computer-looking 2% interference 2% Walking reorganizing product- 8% dates 11% computer-looking Looking interference 34% Looking outside interruption Picking reorganizing product-dates Walking Picking outside interruption 38% 5%
  • 18. Opportunity: Case Flow Through Metal Detection & Strapping • No gap between cases • Cases jam at metal detector • Maintenance adjusts metal detector • Run out of strap • No system status display
  • 19. Opportunity: Production Scheduling Not in Sync With Shipments or Warehouse Capacity Pallet storage in aisles Insufficient pallet storage for peak months Outside Freezer Warehouse Used used for overflow storage
  • 20. How Do We Fix It? Look at Application of Lean Concepts Future State Using Value Stream Maps With & Without Expansion
  • 21. Future State Questions What is the takt time? Will we build to shipping or to a supermarket? Where can we use continuous flow? How do we level the pacemaker process? SUPPORTING IMPROVEMENTS What process improvements will be necessary to eliminate waste?
  • 22. TAKT Time Synchronizes pace of production to match pace of sales Rate for assembling an order based on shipping schedule TAKT = Effective Working Time per Shift Customer Requirement per Shift
  • 23. Look for No Flow &Wastes They are in the warehouse too! Inventory (too much) Overproduction (more or sooner than needed) Correction (inspection and rework) Material Movement Waiting Extra Motion Non-Value Added Processing
  • 24. Lean Manufacturing Concepts & Techniques in the Warehouse Flow: Visual Workplace, Layout Improvement, Lean Automation Materials: Kanban Systems, Supply Chain Management, Point of Use Perfection: Quality Systems, Training Information: Just in Time, Lean Office
  • 25. Warehouse Assessment Value Stream Map (Future State) Without Expansion Blanket Orders with Daily Releases; Supplemented with Open Market Purchases Blanket Orders Leidy’s Production Spices and Packaging Randomly Placed Various Hogs with Weekly or and Inventory Control Smokehouse Materials Orders (Various Sizes) Customers Bi-Weekly Releases (CSB System) Materials • Aging Data Demand: Daily 131 to 242 orders per day Productio Avg: 167/day n 1 to 2 pallets/order Schedule 15 to 17 orders per truck Daily Weekly Weekly Bar Code Scan Bar Code Scan 12 to 13 trucks per day or Bi- or Bi- Daily Shipping Orders (about Warehouse Input Inventory 1 route per truck Weekly Weekly & Freezer Release 400) Updates (5PM) Smokehouse Operations Smoke Wrap & Pack Off-Site Freezer Storage Daily Shipments Smoked (12 to 13 routes) Products I I Multiple Multiple 1, 578K lbs Operators Operators Conveyor Staging Kill & Cut Wrap & Pack Metal Detection Strapping Palletizing Order Picking Order Shipping & Storage Verification 1 to 2 1 to 2 1 to 2 pallets 1 to 2 Cut Products Cut Products pallets per I 1 to 2 1 to 2 I pallets I order I pallets FIFO per order Pallets Pallet 3 2 Multiple Multiple 6 to 8 Conveyor People Rack People 2 Operators Operators Conveyor People Staging Staging Storage People Staging Dock 10 cases 883 positions; 30 to 50 C/T = 7 sec Locator system, C/T = 10 to 15 2 orders C/T = 10 min C/T = 2 hours Gap cases C/T =2 sec C/T = 2 sec cases (4 pallets) per case or 6.8 A items on first minutes C/O = 0 min C/O = 0 min C/O =2 min C/O = 1 min 3 separate min per pallet tier, additional C/O = 0 min Rel. = 85% Rel. = 85% Rel. = 95% Rel. = 90% Zones C/O = 0 min rack above Rel. = 85% Avail. = 16.5 hrs Avail. = 16.5 hrs Order Lead Time: 3 to 4.9 Days Bar code scan Rel. = 85% palletizing Avail. = 49.5 to Avail. = 24.8 610K lbs 66 hrs (2 shifts) Order Processing Time: 3 Hrs hrs (2 shifts) Scan bar codes 2.6 to 4.5 days Takt Time: 3 to 4 minutes 30 seconds 5 sec 6 minutes (Freezer storage: 15 minutes 6.7 to 14.5 days) 20 40 seconds 40seconds 13 minutes minutes 8 minutes 2 hours
  • 26. What Happened in the Future State VSM Without Expansion? Implemented rack locator system & organized storage based on product turns Revised order picking methods Implemented WMS Improved palletizing system Reduced job classifications & cross trained operators Established operational metrics Closer to Takt Time….but not there yet!
  • 27. FUTURE STATE PALLETIZING FLOW FRESH Production Cases WMS TEMP PRINT WAREHOUSE LABELS SMOKED SCAN Transfer Count Cases CASES WMS WAREHOUSE GET CASE FROM Location MANAGEMENT CONVEYOR WALK TO Pallet Number • MOVE CASE CONVEYOR PLACE ON PALLET Yes SPACE TO FIT No • MOVE PALLET Visual Display ALL PALLETS PRINT & APPLY PALLET LABEL Zone Location • FRESH Random Pallet Number STAGE • MOVE PALLET of System • SMOKED Status PALLET LOCATE EMPTY STORAGE POSITION STRETCH WRAP • GET STRETCH WRAP • MOVE PALLET SCAN • MOVE PALLET LOCATION STAGE •IN TUNNEL PALLET FOR FORKLIFT PICKUP ADD PRODUCT TO RACK, RETURN TO PALLETIZING LINE SCAN PALLET LABEL PUT AWAY • MOVE PALLET • FRESH • SMOKED • MOVE • MOVE TO TRUCK TO TRUCK LOAD LOAD FRESH FROZEN TRAILER TRAILER
  • 28. FUTURE STATE ORDER PICKING FLOW FRESH SMOKED FROZEN GET PICK LIST GET LOAD WMS PATTERN Truck Route Wave Pick LOCATE PALLET IN WAREHOUSE LOCATE PALLET • MOVE PALLET REPEAT IN DOCK RACKS SCAN UNTIL WMS LOCATION ORDER COMPLETE PICK CASES OR • CASES 95% OF TIME PALLETS WMS Next location • MOVE PALLET WMS SCAN CASES STORE PALLET STAGE • PALLETIZING ORDER AREA • MOVE TO INSPECTION • DOCK CHECK ORDER VERIFICATION WMS SCAN • TRUCK ROUTE Truck Route LOAD • MOVE TO TRUCK TRAILER
  • 29. PROPOSED PALLETIZING & STORAGE IMPROVEMENTS
  • 31. Future State Benefits Step 1: Without Expansion Improved order picking and material flow Reduced cycle time 15% in 3 months. Going to 30% Reduced material handling Saved rack space (10% reduction in 2 weeks) Reduced lead time 50% Handle peak periods with less congestion (108 positions) Better trained and flexible workforce Capital Payback of 1.8 years
  • 32. How Do We Implement the Future State VSM? Don’t Wait Until It’s Perfect! Use future state VSM to highlight changes Break up the future state into sections Develop a VSM implementation plan Tie plan to business objectives & show savings Assign projects to team members to implement
  • 33. Organizing the Lean Solutions Process Problem Solution Metal M1. Cases not metered into machines causing jams and M1. Create space between cases with metering device increases Detection backup of product reliability of strapper and metal detector & Strapping M2. Metal detector setting has to be changed manually M2. Scan product to set metal detection setting increases reliability of metal detector P1. Product is handled twice, once to palletize then once to P1. Rearrange high moving product to allow case stacking in flow pick racks Palletiz- P2. Operator walking several feet to obtain correct case of P2. Shorten walking distance by separating product onto shorter ing product to palletize conveyors P3. Product is moved to be shrink wrapped prior to put P3. *Automate the shrink wrapping process with conveyor and away automatic wrapper ST1. Searching for open position for putaway ST1. Implement W arehouse Management System for putaway Storage ST2. Product must be rotated from top to bottom resulting in ST2. Rearrange racking for whole pallet flow racks on high moving Racks and several pallet moves product Staging ST3. Need forklift to put bottom row away. Need ladder to ST3. Remove lower rail on certain aisles to allow pallet jack putaway pick from second tier. instead of forklift. Lower second tier to pick height without ladder. O1. Pickers searching for product due to no location system O1. Put pick locations on pick ticket after W arehouse Management Order O2. W alking from aisle to aisle with no logical sequence of System is installed Picking picks O2. Sort products by frequency of pick then by weight in warehouse O3. Rotating stock to bring oldest date to front to minimize walking O3. *Use pallet flow racks to automatically rotate stock Shipping SH1. Insufficient space to stage multiple pallets leads to SH1. *Increase floor space for dock staging. Long term plan would be double moves of product to reorganize when building is expanded SH2. Operator is dedicated to verifying picked pallet prior to SH2. Improve picking operation through training and scanning at pick scan location with bar code scanners. SH3. Occasionally additional product gets shipped to SH3. Confirmation check by scanning once prior to loading truck customer
  • 34. PROPOSED IMPROVEMENTS: Costs & Savings C y c le T im e A nnual C o s t to P rocess P r o b le m S o l u ti o n (R e d u c e d ) S a v in g s $ I m p le m e n t M eta l M 1. C a s es n o t m et er e d in t o m a c h in es c a u s in g ja m s M 1. C r ea te s p a c e b etw e e n c a s es w it h m et er in g d e v ic e in c r ea s es 3 ,5 0 3 2 ,0 0 0 .3 3 m in /p a l D et e c tio n a nd b a cku p o f product r elia b ility o f s tra p p er a n d m eta l d et e c to r & 3 ,5 0 3 2 0 ,0 0 0 S tr a p p in g M 2. M eta l d e t e c t o r s ettin g h a s to b e c h a n g e d M 2. S c a n p r o d u c t to s et m eta l d et ec t io n s ettin g in c r ea s es .3 3 m in /p a l m a n u a lly r elia b ility o f m eta l d et e c t o r P1. P r o d u c t is h a n d le d tw ic e, o n c e to p a lle tiz e th e n P1. * R ea r r a n g e h ig h m o v in g p r o d u c t to a llo w c a s e s ta c k in g in 1 o p e r /y e a r *TBD *TBD o n c e t o p ic k flo w r a c k s P a lletiz - P2. O p e r a to r w a lk in g s ev er a l f e et to o b ta in c o r r ec t P2. S h o r t e n w a lk in g d is ta n c e b y s o r tin g p r o d u c t b y b a r c o d e 1 .3 3 m in /p a l 1 4 ,0 2 4 9 5 ,0 0 0 in g c a s e o f p r o d u c t to p a llet iz e in to c o n v e y o r z o n e s o r u s in g a v er tic a l r ec ir c u la tin g con vey or ( v e r t ic a l P3. P r o d u c t is m o v e d to b e s tr e tc h w r a p p ed p r io r to c o nve yo rs) put away P3. * A u to m a te th e s tr e tc h w r a p p in g p r o c e s s w ith c o n v e y o r 2 m in /p a l * 2 1 ,0 4 2 * 6 2 5 ,0 0 0 a n d a u to m a tic p a lle tizin g S T 1 . S ea r c h in g f o r o p e n p o s itio n fo r p u ta w a y S T 1 . I m p le m e n t W a r eh o u s e M a n a g e m e n t S y s t e m f o r p u ta w a y .7 5 m in /p a l 7 ,8 9 1 ^ S e e b e lo w S T 2 . P r o d u c t m u s t b e r o ta te d fr o m to p to b o tt o m S T 2 . R ea r ra n g e r a c k i n g f o r w h o le p a llet flo w r a c k s o n h ig h 5 m in /p a l S to r a g e r es u lt in g in s e v er a l p a lle t m o v es m o v in g p r o d u c t R a cks a nd 2 6 ,3 0 3 4 0 ,0 0 0 S T 3 . N e e d f o r k lift to p u t b o tto m r o w a w a y . N e e d S T 3 . L o w er s e c o n d tier to p ic k h e ig h t w ith o u t la d d er . S ta g in g 0 .3 3 m in /p a l la d d er to p ic k fr o m s ec o n d tier . R e o r g a n iz e s h e lv in g h e ig h t to a llo w s e v er a l S K U ’s to fit in S T 4 . N e e d a d d it io n a l r a c k s p a c e f o r p r o d u c t o n e p a llet lo c a tio n . 3 ,4 7 9 3 ,0 0 0 S T 4 . A d d r a c k in g o v e r h e a d o n p a lletiz in g lin e 0 m in /p a l 0 3 0 ,0 0 0 O 1. P ic k er s s ea r c h in g f o r p r o d u c t d u e to n o lo c a tio n O 1. P u t p ic k lo c a tio n s o n p ic k tic k et a fter W a r eh o u s e 1 0 m in /p a l 1 0 5 ,2 1 0 ^ S e e b e lo w O r d er system M a n a g e m e n t S y s t e m is in s ta lle d P ic k in g O 2. W a lk in g fr o m a is le t o a is le w ith n o lo g ic a l O 2. S o r t p r o d u c ts b y fr e q u e n c y o f p ic k th e n b y w e ig h t in 5 m in /p a l 5 2 ,6 0 5 ^ S e e b e lo w s e q u e n c e o f p ic k s w a r e h o u s e to m in im iz e w a lk in g O 3. R o ta tin g s to c k to b r in g o ld e s t d a te to fr o n t O 3. * U s e c a s e flo w r a c k s to a u to m a tic a l ly r o ta te s to c k 1 m in /p a l * 1 0 ,5 2 1 TBD S H 1 . In s u ff ic ie n t s p a c e t o s ta g e m u ltip le p a llets lea d s S H 1 . * I n c r e a s e flo o r s p a c e fo r d o c k s ta g in g . L o n g te r m p la n 3 m in /p a l * 3 4 ,7 2 0 TBD to d o u b le m o v e s o f p r o d u c t w o u ld b e to r e o r g a n iz e w h e n b u ild in g is e x p a n d e d S h ip p in g S H 2 . O p e r a to r is d ed ic a te d to v er if y in g p ic k e d p a llet S H 2 . I m p r o v e p ic k in g o p er a tio n th r o u g h tra in in g a n d s c a n n in g a t 2 m in /p a l 2 1 ,0 4 2 ^ S e e b e lo w p r io r to s c a n p ic k lo c a tio n w it h b a r c o d e s c a n n er s . S H 3 . O c c a s io n a lly a d d itio n a l p r o d u c t g ets s h ip p e d to S H 3 . C o n fir m a tio n c h ec k b y s c a n n in g o n c e p r io r to lo a d in g tr u c k c u s to m er Increase U t iliz e s p r o b le m S T 1 + O 1 + O 2 + S H 2 s a v in g s d a ta D es ig n s o ft w a r e, p u r c h a s e h a r d w a r e , in t e g r a te s y s t e m s a n d 1 7 .8 m in /p a l 1 8 6 ,7 4 8 2 4 0 ,0 0 0 in s ta ll o n w a r e h o u s e flo o r . WMS O r g a n iz a tio n a l h ier a r c h y to o s p e c ia liz e d . C a n ’t tra c k C r o s s tra in o p er a to r s to fill m u ltip le r o le s d u r in g o n e s h ift. P o o l TBD TBD h o u r s c o r r ec tly d u e t o c la s s if ic a tio n o f w o r k er s . a ll la b o r a n d r e d u c e a s n e e d e d . T ra c k la b o r b y g r o u p p r o d u c tiv ity v e r s es in d iv id u a l p r o d u c tiv ity . T o t a l o f a ll p r o je c ts w i t o u t e x p a n s i o n $ 2 3 4 ,0 8 1 $ 4 3 0 ,0 0 0 ( U s in g p r o b le m M 1 , M 2 , P 2 , S T 3 , S T 4 , a n d W M S d ata)
  • 35. PROPOSED IMPLEMENTATION PLAN Without Expansion Phase 1. Simple modifications 1. Remove bottom rail to allow pallet jack access. (Target date May 2003) 2. Lower second tier to remove the need for ladder access. (May 2003) 3. Match shelf size with average pallet height to increase the number of pick locations. (May 2003) 4. Change speed of conveyor in metal detection room to space product cases properly or implement as part of palletizing relocation. (May 2003) 5. Balance flow of orders transferring from the order pickers to verifiers during the entire shift. This can be accomplished by training more utility operators as outlined in the organizational restructuring matrix shown in Section 4. (May 2003) 6. Label all pallet rack storage locations to begin transition to warehouse management system(May 2003) 7. Place 135 high moving SKU’s on first or second tier of the pallet rack. (May 2003)
  • 36. PROPOSED IMPLEMENTATION PLAN Without Expansion Phase 2. Moderate improvements to computer system and operations 1. Implement warehouse wide standards on order accuracy, line items shipped on time, orders shipped complete. Post the results weekly to begin continuous improvement philosophy in warehouse activity.(June 2003) 2. Install static racking above the existing palletizing area, leaving sufficient head room for the palletizing operation. (September 2003) 3. Install new vertical recirculation conveyor palletizing station and lift tables. (September 2003) 4. Consider implementation of CSB locator screen using move tickets if automated scanning will be delayed. (September 2003) 5. Install flow through pallet rack on bottom tiers of existing racks to eliminate top-down pallet rotation on high movers. (October 2003) 6. Change configuration of metal detection conveyor to scan labels prior to entering metal detection equipment. Use barcode scan to change settings on the metal detector. (2004) Phase 3. Major improvements to computer system and operations 1. Upgrade CSB system to include Warehouse Management System for locating product and install equipment to bar code scan case labels. (1 st quarter 2004)
  • 37. Warehouse Assessment Value Stream Map (Future State) With Expansion Blanket Orders with Daily Releases; Supplemented with Open Market Purchases Blanket Orders Leidy’s Production Spices and Packaging Randomly Placed Various Hogs with Weekly or and Inventory Control Smokehouse Materials Orders (Various Sizes) Customers Bi-Weekly Releases (CSB System) Materials • Aging Data Demand: Daily 131 to 242 orders per day Productio Avg: 167/day n 1 to 2 pallets/order Schedule 15 to 17 orders per truck Daily Weekly Weekly Bar Code Scan Bar Code Scan 12 to 13 trucks per day or Bi- or Bi- Daily Shipping Orders (about Warehouse Input Inventory 1 route per truck Weekly Weekly & Freezer Release 400) Updates (5PM) Smokehouse Operations Smoke Wrap & Pack Off-Site Freezer Storage Daily Shipments Smoked (12 to 13 routes) Products I I Multiple Multiple 1, 578K lbs Operators Operators Conveyor Staging Kill & Cut Wrap & Pack Metal Detection Strapping Palletizing Order Picking Order Shipping & Storage Verification 1 to 2 1 to 2 1 to 2 pallets 1 to 2 Cut Products Cut Products pallets per I 1 to 2 1 to 2 I pallets I order I pallets FIFO per Pallets Pallet order Multiple Multiple 6 to 8 Conveyor Rack Operators Operators Conveyor 3 People Staging 2 2 Staging Storage Staging People Dock People People 10 cases 1100 positions; 30 to 50 C/T = 7 sec Locator system, C/T = 10 to 15 5 orders C/T = 5 min C/T = 1. 5 hours Gap cases C/T =2 sec C/T = 2 sec cases per case or 6.8 A items on first minutes (10 pallets) C/O = 0 min C/O = 0 min C/O =2 min C/O = 1 min 3 separate min per pallet tier, additional C/O = 0 min Rel. = 95% Rel. = 95% Rel. = 95% Rel. = 90% Zones Order Lead Time: 2.5 to 4.4 Days Bar code scan C/O = 0 min Rel. = 85% rack above Rel. = 85% Avail. = 49.5 to Avail. = 16.5 hrs Avail. = 16.5 hrs palletizing Order Processing Time: 2.5 Hrs Avail. = 24.8 610K lbs 66 hrs (2 shifts) hrs (2 shifts) Scan bar codes Takt Time: 3 to 4 minutes 30 seconds 5 sec 6 minutes 2.6 to 3.5 days 8 minutes (Freezer storage: 40 seconds 40 13 minutes 10 minutes 8 minutes 1.5 hours seconds 6.7 to 14.5
  • 38. What Happens in the Future State VSM With Expansion? Expand warehouse to provide staging areas Most pallets are staged on floor not in racks Revised order picking methods…Pick from pallets not racks Robotic palletizing system based on previously upgraded system Improved production scheduling & planning New markets for frozen products to increase turns
  • 39. PROPOSED PALLETIZING & STORAGE IMPROVEMENTS expansion1.wmf
  • 40. PROPOSED PALLETIZING & STAGING IMPROVEMENTS
  • 41. The Warehouse Improvement Cycle Assessment Recommended Methods (VSM) Solutions Layout Material Handling Visual Controls Continuous Improvement Automation Implementation Information DO IT! Plan Systems