The document discusses improving warehouse productivity without expensive "Tier 1" technology. It outlines common warehouse challenges such as reducing labor costs and improving accuracy and space utilization. The document then presents a process-centric approach focusing on tactics like cluster picking and put-away by movable unit that can address these challenges with mid-tier WMS and sometimes enabling technologies. Vendors were surveyed about the capabilities of mid-tier WMS, and many tactics were found to be standard or configurable functionality, showing that major improvements can be achieved without large capital investments.

1. Improving Warehouse Productivity
Without Resorting to Tier 1 Technology

2. What is “Tier 1” Technology?
 The term “Tier 1” is frequently used, but is a
gross over-simplification
 Conjures up images of “expensive”
technology
 “Overkill”
 “The Cadillac”
 Often used in context of WMS vendors
Image source: General Motors
|2

3. Tier 1 Technology Isn’t Bad
 For many large, complex
operations, the only path to
supply chain improvement
involves making a large capital
investment
 Many of the technologies which
we consider “Tier 1” have been
the pioneers – developing cutting
edge technology that improves
efficiency
 This technology then get adapted
and trickles down to mid-tier
providers over time
|3

4. An Alternate Title for our Presentation…
"How can I improve my
warehousing problems
without a major capital
investment?“
|4

5. But how?
 Isn’t this asking to get
something for nothing?
No.
 There are two basic ideas
which are under-exploited by
many enterprises today:
1. Leveraging new advances in
technology which they may not
be aware of
2. Sharpening the saw – stepping
back and making fundamental
process changes to improve
the operation
|5

6. Common Challenges
 Whether their capital budget
is 5 figures or 8
figures, companies face the
same basic set of challenges:
– Reduce labor costs
– Improve accuracy
– Improve space utilization
 Secondary challenges:
– Meet regulatory compliance
mandates
– Meet retail compliance
mandates
|6

7. No Shortage of Solutions…
 There are countless solutions available to address these
challenges…
WMS Conveyor-based pick modules Pick-to-Light Systems Speech
Carousels AS/RS Robotic Handling Warehouse Control Software
(WCS)
Image sources, clockwise from top left: Intermec, Abel-Womack Integrated Handling Solutions, Lightning Pick,
Voxware, Remstar, Diamond Phoenix, TGW Ermanco, Kiva Systems, FORTE Industries |7

8. Process-Centric Approach
 Rather than jumping immediately to
technology, let’s look at several strategies to
address these challenges…
A. Pick more efficiently
B. Put-away more efficiently
C. Pack and ship more efficiently
D. Reduce walking
E. Improve labor productivity
F. Improve accuracy
G. Improve space utilization
|8

9. Process-Centric Approach
Each strategy has a set of execution tactics…
1. Cluster picking 16. Pick restriction
2. "Tandem" picking 17. Large quantity override
3. Receiving staging by zone 18. Min/max replenishment
4. Clustered put-away 19. Demand-based replenishment
5. Put-away by movable unit 20. Slot the warehouse more
6. Implement specialized packing effectively
processes 21. Basic productivity tracking
7. Pre-manifesting 22. Advanced productivity tracking
8. Dynamic label application 23. Task interleaving
9. Cartonization 24. Pick confirmation
10. Palletization 25. Cycle counting
11. Seal cases more quickly 26. Track product by lot #
12. Weight-based accuracy 27. Pick product by lot #
confirmation 28. Track serial numbers
13. Create a forward pick area 29. Track country of origin
14. Two-tier bin system 30. High density storage
15. SKU Mirroring
|9

10. Process-Centric Approach
 Some Tactics require enabling technology…
| 10

11. Focus on Mid-Tier WMS
 Mid-Tier WMS has been
in use for at least 15
years
 Generally, mid-tier
means a more limited
set of functionality for a
lower price
 Often, mid-tier WMS
systems had some key
gaps which made them
not practical for many
users with special
requirements
| 11

12. The SaaS Model
 In the last 5 years, the Software-as-
a-Service (SaaS) model has become
a popular means of deploying WMS
 With the SaaS model, the software
vendor hosts the WMS application
on their own server and deploys it
via a web connection
 True SaaS is multi-tenant: multiple
users are on the same instance of
the software
 Customers do not pay an up-front
license fee – just a monthly usage
fee
 Upgrading and remaining on the
current version of the software is
much easier
| 12

13. What are the TRUE Capabilities?
 Commonwealth Supply Chain
Advisors conducted a survey
of three of the top mid-Tier
WMs providers to assess the
extent to which functionality
gaps have been plugged in
recent years
 Two providers offer only SaaS-
based WMS
 The third offers both
traditional, licensed WMS and
a SaaS WMS
| 13

14. What are the TRUE Capabilities?
 We created a list of 30 functionality
Level of
support
Challenges Strategies Tactics Enabling Technology
from Mid-
Tier WMS
points which have traditionally been Cluster picking - pick multiple orders at the same time and put them in discrete containers
by order
WMS 3
challenging for mid-tier WMS providers
Pick more WMS 2
efficiently "Tandem" picking - when case picking, two different orders can be picked at the same Double-length electric pallet
n/a
time utilizing a double-length electric pallet jack jacks
Tugger vehicles n/a
to address Receiving staging by zone - at receiving, direct that inbound product be staged on a pre-
defined movable units based upon it’s destination zone
Put-away Clustered put-away - allow multiple SKUs to be put away in the same trip through the
WMS
WMS
1
2
 We asked each vendor to indicate
more warehouse in a logical pick path
efficiently Put-away by movable unit - allow multiple SKUs to be placed on a license plated movable
unit; allow the movable unit license plate to be scanned once at put-away, and direct put- WMS 2
away of all SKUs on that movable unit in a logical pick-path
whether this functionality was: Implement specialized packing process
Pre-manifesting - Calculate weight and quantity of all the multi-SKU pallets on an order
before picking
Dynamic label application: Apply a retail-compliuant label to cases at time of picking with
Process change
WMS
n/a
3
– Standard Functionality
WMS 2
scan confirmation
Pack and ship Cartonization - determine the optimal size shipping container based on the cube and
WMS 2
more longest dimension of the items which are to be picked for an order
– Configurable Functionality
efficiently Palletization - prior to case picking, determine the number of cases to be picked to each
WMS 1
pallet based on cube
Tape dispensers n/a
Seal cases more quickly
–
Case sealer n/a
Customization Required Reduce labor costs
Weight-based accuracy confirmation - weight a carton or a pallet and compare it to a
database of the actual weights - verify if the carton or pallet is within tolerance
Create a forward pick area
WMS 1
n/a
– Not Available Currently
Two-tier bin system - the same SKU can exist in two different bins in the distribution
WMS 3
center
SKU Mirroring - the same SKU can exist in two different bins in the same ZONE WMS 3
 We also asked about actual usage
Pick restriction - the system can limit picking only to bins designated as "forward pick
WMS 3
bins"
Large quantity override - if a single pick exceed x quantity and will drastically deplete the
Reduce WMS 2
forward pick area, the system will direct the pick to be made from the overstock bin
amongst their client base. Was the
walking
Min/max replenishment - replenish to a bin if the quantity falls below a pre-set
WMS 3
minimum level
Demand-based replenishment - proactively replenish to a bin if known demand for the
functionality: item will exceed the quantity in the bin, EVEN IF the bin is not currently below it’s
minimum stocking level
Slot the warehouse more effectively
WMS
Slotting software
1
n/a
– Currently in-use with referenceable clients
Slotting spreadsheet n/a
WMS 2
Basic Productivity Tracking: Track lines picked per hour by worker regardless of pick type
Labor management software n/a
– Available but not currently in use
Advanced Productivity Tracking: Track lines picked per hour by worker by pick type (i.e. WMS 2
Improve labor distinguish between piece picks, case picks, pallet picks)
Labor management software n/a
productivity
Task interleaving - combined put-away/picking cycles - when full pallet is put-away,
– Not available
WMS 1
search for full pallet picks which need to occur in proximity to the put-away bin and place
this pick as the next task in queue
Labor management software n/a
Pick confirmation - confirm that the correct product was picked based on a bar-code scan
 The vendors responded on the condition
WMS 3
of the item or bin
Cycle counting - allow incremental cycle counting in lieu of physical inventory WMS 3
Improve
Accuracy is poor Track product by lot # WMS 3
accuracy
that they not be identified by name in
Pick product by lot # WMS 3
Track serial numbers WMS 3
Track country of origin WMS 3
Push back rack n/a
this presentation The DC is out of space
Improve space
utilization
Improve storage density
Double deep rack
Very narrow aisle (VNA)
storage
n/a
n/a
Mobile storage rack n/a
| 14

15. The Rating System
Three levels…
Level: 3 Level: 2 Level: 1
 Generally available  Available but often  If available at
with minimal with some all, customization is
customization customization required
required required  Might not be
 In use by at least  Might not be currently in use by
some referenceable currently in use by any companies
companies any companies
| 15

16. The Tactics…
1. Cluster picking 16. Pick restriction
2. "Tandem" picking 17. Large quantity override
3. Receiving staging by zone 18. Min/max replenishment
4. Clustered put-away 19. Demand-based replenishment
5. Put-away by movable unit 20. Slot the warehouse more
6. Implement specialized packing effectively
processes 21. Basic productivity tracking
7. Pre-manifesting 22. Advanced productivity tracking
8. Dynamic label application 23. Task interleaving
9. Cartonization 24. Pick confirmation
10. Palletization 25. Cycle counting
11. Seal cases more quickly 26. Track product by lot #
12. Weight-based accuracy 27. Pick product by lot #
confirmation 28. Track serial numbers
13. Create a forward pick area 29. Track country of origin
14. Two-tier bin system 30. High density storage
15. SKU Mirroring
| 16

17. 1. Cluster picking
 Definition: pick multiple orders at the same WMS Availability
Assessment
time and put them in discrete containers by
order
Level: 3
 Generally available
with minimal
customization
required
 In use by at least
some referenceable
companies
| 17

18. 2. "Tandem" picking
 Definition: when case picking, two different WMS Availability
Assessment
orders can be picked at the same time
utilizing a double-length electric pallet jack
or tugger vehicle
Level: 2
 Available but often
with some
customization
required
 Might not be
currently in use by
any companies
| 18

19. Deep Dive: Pick Methodologies
 Which style of picking is best?
Discrete Order Picking Cluster Picking Batch Picking
Zone Pick: Pick & Pass Zone Pick: Pick & Consolidate
| 19

20. Deep Dive: Pick Methodologies
• Pro’s:
– Simple for operators
– Less error prone
Discrete Order – Little/no technology required
– May be the only practical method to
Picking pick very high-cube items
• Con’s
– Very high levels of walking
– Operators return to home-base after
each order is picked
– Each order requires a trip through
the entire warehouse

21. Deep Dive: Pick Methodologies
• Pro’s:
– Dramatically reduces walking
– Possible to do on a limited scale
without a high degree of technology
Cluster – Each order is only touched once
– Orders are ready-to-ship as soon as
picking is done
Picking • Con’s
– Hard to pick a large group of orders
without real-time instructions
– Orders may travel significant distances
without any picks being performed
– Travel distances are excessive in large
warehouses with many SKUs
– Increased likelihood of errors

22. Deep Dive: Pick Methodologies
• Pro’s:
– Reduces walking in larger distribution
centers
– Each order can only be routed to zones
where there are picks
Zone Pick: Pick – Orders are ready-to-ship as soon as
picking is done
& Pass • Con’s
– Almost impossible to manage without
real-time warehousing
– Zone routing can only be done with
complex conveyor systems
– All of the SKU’s in the order travel
through the entire DC

23. Deep Dive: Pick Methodologies
• Pro’s:
– Reduces overall travel distances for the
SKU’s in the order
– Well-suited for orders with diverse sizes
Zone Pick: Pick and shapes of SKU’s
& Consolidate – Well-suited for mixing case and piece
picking on the same order
• Con’s
– Very complex for software to manage
consolidation process
– Requires labor downstream to
consolidate orders
– Requires space to buffer product

24. Deep Dive: Pick Methodologies
• Pro’s:
– Well suited for instances where the
same SKU appears on a large number of
orders
– Well suited for single line, single piece
Batch Picking orders
• Con’s
– Only suits a limited order profile
– Requires additional downstream
handling
– Can be complex to execute

25. 3. Receiving staging by zone
 Definition: at receiving, direct that inbound WMS Availability
Assessment
product be staged on a pre-defined
movable unit based upon it’s destination
zone
Inbound
Zone 1 Zone 2 Zone 3 Level: 1
 If available at all,
customization is
required
 Might not be
currently in use by
any companies
| 25

26. 4. Clustered put-away
 Definition: allow multiple SKUs to be put WMS Availability
Assessment
away in the same trip through the
warehouse in a logical pick path
Level: 2
 Available but
often with some
customization
required
 Might not be
currently in use
by any companies
| 26

27. 5. Put-away by movable unit
 Definition: allow multiple SKUs to be placed WMS Availability
Assessment
on a license plated movable unit; allow the
movable unit license plate to be scanned
once at put-away, and direct put-away of all
SKUs on that movable unit in a logical pick-
path
MU #
T-745
Level: 2
 Available but often
with some
customization
required
 Might not be
currently in use by
Zone 1 any companies
| 27

28. 6. Implement specialized packing process
 Definition: separate the less skilled packing
functions from the more skilled manifesting
functions
 10-step process
| 28

29. 7. Pre-shipping
 Definition: Calculate weight and quantity of WMS Availability
Assessment
all the multi-SKU pallets on an order before
picking
Level: 3
 Generally available
with minimal
customization
required
 In use by at least
some referenceable
companies
| 29

30. 8. Dynamic label application
 Definition: Apply a retail-compliant (or WMS Availability
Assessment
other) label to cases at time of picking with
scan confirmation
Case label
Level: 2
 Available but often
with some
customization
required
 Might not be
currently in use by
any companies
| 30

31. 9. Cartonization
 Definition: determine the optimal size WMS Availability
Assessment
shipping container based on the cube and
longest dimension of the items which are to
be picked for an order
Level: 2
 Available but often
with some
customization
required
 Might not be
currently in use by
any companies
Image source: Tetris | 31

32. 10. Palletization
 Definition: prior to case picking, determine WMS Availability
Assessment
the number of cases to be picked to each
pallet based on cube
Level: 1
 If available at
all, customization is
required
 Might not be
currently in use by
any companies
| 32

33. 11. Seal cases more quickly
 Definition: speed up the case sealing
process without adding excess labor
Image sources: Betterpack, 3M
| 33

34. 12. Weight-based accuracy confirmation
 Definition: weigh a carton or a pallet and WMS Availability
Assessment
compare it to a database of the actual
weights - verify if the carton or pallet is
within tolerance
Level: 1
 If available at
all, customization is
required
 Might not be
currently in use by
any companies
| 34

35. 13. Create a forward pick area
 Definition: stock a smaller supply of many
SKUs in a high-density area of the
warehouse
8 SKUs stored on 8 pallets = 32 walking feet
vs.
Smaller supply of the same 8
SKUs stored in carton flow
rack
8 SKUS = 8 walking feet*
*(Can be increased to 32 SKUs per walking foot)
| 35

36. 13. Create a forward pick area
 Storage mediums include:
– carton flow
– static shelving
Image source: Borroughs Corporation, Frazier Industrial Company | 36

37. 14. Two-tier bin system
 Definition: the same SKU can exist in two WMS Availability
Assessment
different bins in the distribution center
Overstock
Level: 3
 Generally available
Forward pick with minimal
customization
required
 In use by at least
some referenceable
companies
| 37

38. 15. SKU Mirroring
 Definition: the same SKU can exist in two WMS Availability
Assessment
different bins in the same ZONE
Overstock
Level: 3
Forward pick  Generally available
with minimal
customization
required
 In use by at least
some referenceable
companies
| 38

39. 16. Pick restriction
 Definition: the system can limit picking only WMS Availability
Assessment
to bins designated as "forward pick bins"
Overstock
Level: 3
Forward pick  Generally available
with minimal
customization
required
 In use by at least
some referenceable
companies
| 39

40. 17. Large quantity override
WMS Availability
Assessment
 Definition: if a single pick exceeds x quantity
and will drastically deplete the forward pick
area, the system will direct the pick to be
made from the overstock bin
Level: 2
 Available but often
with some
customization
required
 Might not be
currently in use by
any companies
| 40

41. 18. Min/max replenishment
 Definition: replenish to a bin if the quantity WMS Availability
Assessment
falls below a pre-set minimum level
Level: 3
 Generally available
with minimal
customization
required
 In use by at least
some referenceable
companies
| 41

42. 19. Demand-based replenishment
 Definition: proactively replenish to a bin if WMS Availability
Assessment
known demand for the item will exceed the
quantity in the bin, EVEN IF the bin is not
currently below it’s minimum stocking level
Level: 1
 If available at
all, customization is
required
 Might not be
currently in use by
any companies
| 42

43. 20. Slot the warehouse more effectively
 3 Methods of Slotting:  Slotting Tools:
– Level 1: Determine the correct – Spreadsheet tools
STORAGE MEDIUM
– Level 2: Determine the correct BIN – Specialty slotting software
#
– Level 3: Dynamic slotting
 Factors influencing slotting
methodology:
– Demand volatility
– Product lifecycle
– # of new product introductions
per year
– Stackability requirements
– Segregation rules
– Family grouping rules
Image source: Rubic’s | 43

44. How to slot with a spreadsheet…
 Create Item Master
– SKU
– Description
– Length Item Master
– Width
– Height Qty. on
Hand,
–
Overall Non-
Overall cube SKU Description Current Location
Cube Conveyable? 2008
– Conveyabiility
– Pack size info
TG511A1000 THERMOSTAT GUARD -05050C0601
CLEAR COVER 176.83 N 189
 Determine Current Quantity on SC16124
HGM-SZ
AT150F1022
16X12X4 SCREW COVER ENCLOSURE
10040E0101
SINGLE ZONE REFRIGERANT MONITOR
08010D0202
50VA TRANS 120/208/240V C BRK
08010E0101
835.52
5,751.18
76.62
N
N
N
46
14
197
Hand 220B
RIB2401B
BRASS FLOW SENSOR 07010B0601
SPDT POWER RELAY 24VAC/DC,120V
03070B0601
444.35
73.32
N
N
47
306
UCP-422-43 MA/PSI XDUCER W/PSI07020E0601
IND. 193.69 N 124
 Determine rationalization T-PB202-0 24VAC POWER SOURCE,4A,PNL
03040B0601 161.76 N 180
strategy for current QOH
| 44

45. How to slot with a spreadsheet…
 Define variables:
– Velocity Variables
– Growth Rate Variables
– Bin Variables, Primary Pick Area
– Bin Variables, Overstock
– Tote Variables
– Current Storage Capacity
– Current Bin Box Used by Client
– Pallet Rack Bays Available
| 45

46. How to slot with a spreadsheet…
 Establish multiple
replenishment intervals…
| 46

47. How to slot with a spreadsheet…
 Create storage medium rules
 Calculate theoretical qty on hand
 Rationalize against actual qty on
hand
 Determine optimal storage
medium
 Summarize results:
– # of units of each storage medium
required
– “walk-back” bays required
– Impact of various replenishment
intervals
– Changes over time
| 47

48. 21. Basic Productivity Tracking
 Definition: Track lines picked per hour by WMS Availability
Assessment
worker regardless of pick type
Level: 2
 Available but often with
some customization
required
 Might not be currently in
use by any companies
| 48

49. 22. Advanced Productivity Tracking
 Definition: Track lines picked per hour by WMS Availability
Assessment
worker by pick type (i.e. distinguish
between piece picks, case picks, pallet picks)
Level: 2
 Available but often
with some
customization
required
 Might not be
currently in use by
any companies
| 49

50. 22. Advanced Productivity Tracking
 LMS on Demand?
YES.
| 50

51. 23. Task interleaving
 Definition: combined WMS Availability
put-away/picking
cycles - when full Assessment
pallet is put-away,
search for full pallet 2. Put-
3. Pick
picks which need to away
inbound outbound
occur in proximity to pallet pallet
the put-away bin and
place this pick as the
next task in queue
1. Pickup
inbound
pallet 4. Stage
Level: 1
outbound If available at
pallet all, customization is
required
 Might not be
currently in use by
any companies
| 51

52. 24. Pick confirmation
 Definition: using some form of automatic WMS Availability
Assessment
data capture technology to confirm that the
correct item was picked (at the time of pick)
Level: 3
 Generally available
with minimal
customization
required
 In use by at least
some referenceable
companies | 52

53. 25. Cycle counting
 Definition: counting portions of the WMS Availability
Assessment
inventory each day to ensure bin and item-
level accuracy
Level: 3
 Generally available
with minimal
customization
required
 In use by at least
some referenceable
companies
| 53

54. 26. Track product by lot #
WMS Availability
Assessment
Level: 3
 Generally available
with minimal
customization
required
 In use by at least
some referenceable
companies
| 54

55. 27. Pick product by lot
WMS Availability
Assessment
Level: 3
 Generally available
with minimal
customization
required
 In use by at least
some referenceable
companies
| 55

56. 28. Track serial numbers
WMS Availability
Assessment
Level: 3
 Generally available
with minimal
customization required
 In use by at least some
referenceable
companies
| 56

57. 29. Track country of origin
WMS Availability
Assessment
Level: 3
 Generally available
with minimal
customization
required
 In use by at least
some referenceable
companies
| 57

58. 30. Improve storage density
3 Under-Utilized Storage
Double-deep storage
Systems…
Mobile storage rack
Push-back rack
| 58

59. On-Demand WMS: What does it cost?
 Cost estimates…
– Vendor #1
• Ongoing monthly cost: Averages $3,000-$4,500 per month, but could be as
much as $6,000.
• Implementation cost estimate: $20,000 - $40,000
– Vendor #2
• Ongoing monthly cost: Averages $1,700 – 2,500per month
• Implementation cost estimate: $4,000 (editorial note: Commonwealth feels
this is a significant under-estimate)
– Vendor #3
• Ongoing monthly cost: $0
• Implementation cost estimate: Under $100,000 for license and
implementation for a moderate-complexity project
 Hardware: The above prices do not include:
• Installation of wireless network in the DC
• Handheld computers
• Bar-code printers
| 59

60. WMS: Keys to success
 Don’t rush it!
– Allow 12 – 18 months for selection and implementation
 Evaluate all the options (even Tier 1!)
 Document EVERYTHING about the current state
– Al normal processes
– All exceptions
 Test thoroughly
 Train
 Assign ownership
 Ensure visibility & reporting exist
 Conduct an honest readiness assessment
| 60

61. 18 Steps to Success
Strategy Solution Execution
Selection Management
Distribution WMS Vendor WMS
Optimization Selection Implementation
V Detailed Discovery
with Data Analysis
RFI: Determine
Vendor Pool
Functional
Alignment
i Define Current Round 1: RFP
Build
State (Written Bids)
s
Design Future Round 2: Scripted Test
i State Demos
Project Future Train
o Savings
Round 3: Site Visits
Estimate
n Implementation Costs
Negotiation &
Selection
Convert
Build Business Case Go-Live
Optimize
| 61

62. In Summary…
 Improved distribution efficiency IS within reach, providing a
company is willing to make at least SOME investment in
processes or technology
 Savvy companies who conduct a thorough evaluation of
technology can often find that improvement is not as
expensive as they thought
 Don’t rush the process – take the time required to design the
solution correctly the first time.
| 62

63. Thank You
20 Park Plaza, Suite 400 | Boston, Massachusetts 02116
(O) 617.948.2153 | (F) 617.507-6112
www.commonwealth-sca.com
Distribution Optimization | Transportation Optimization | Supply Chain Planning
| 63