Warehouse Management

The modern distribution center is very different from the storage warehouse of pre-1960 multilevel industrial practice. Today’s facility is large, high, and complex. A typical warehouse of the late 1990s may be 200,000 to 500,000 square feet in floor area, have stacking heights of 25 to 35 feet, have tens of millions of dollars of installed equipment, employ hundreds of people, and ship a daily throughput rate of several thousand tons of material.

These complex facilities are the direct result of the application of industrial engineering concepts and practice to the multi company, multi facility supply chains that move finished products from source to customer. This chapter describes the functions of the warehouse and the use of industrial engineering techniques in the design and operation of the facility. Special attention is focused on the new computerized warehouse management systems that have been developed in the 1990s to sharply improve productivity and accuracy in the warehouse and to aid in managing the flow of materials, both within the facility and in the transport system that delivers products to customers. Without bar code scanning, product identification, and warehouse management software, these new warehouses would not be viable in today’s low-inventory, highly competitive logistics environment.

The storage and handling of materials is an important function in manufacturing and distribution. Storage levels normally used in the industrial process are as follows:

• Raw material stores (chemicals, bar stock, component parts)
• Tool cribs (molds, dies, cutting tools)
• Maintenance supplies (paper, oils, electrical, and plumbing repair parts)
• In-process materials (items stored between manufacturing operations)
• Plant finished-goods warehouses
• Public distribution centers
• Private distribution centers
• Bonded warehouses (usually for imported goods held while awaiting the payment of customs charges or for transfer to another country; may be for products on which local or country taxes have not yet been paid)

In the general case, storage and warehousing occur in or near either the plant or the market. Seldom are warehouses located between plants and markets. Plant-located facilities either serve the plant operations (raw materials and tool cribs, for example) or are a major customer shipping point. The plant warehouse may also be the backup point to resupply a field distribution system. Market-located facilities are positioned to supply customers with the company’s products. These distribution centers may store the output from a number of plants. The customer can order products made by several plants and vendors and receive a single shipment from the distribution center. Proper location planning can result in fast, complete delivery of a customer’s order, which tends to increase satisfaction and future volume.

Most warehouses are operated privately by companies for their own materials and products. There are many public warehousing companies, however, that offer space and labor on a for hire basis. During the past three decades, the public warehouse industry has increased in size, complexity, and the range of services offered. The warehouse, for example, might contract to do price ticketing, assembly and repacking, labeling, inbound material consolidation, outbound customer freight consolidation, and order receipt and entry. Public facilities with a tie-in to transportation carriers can also offer product tracking and status reporting. These services, added to an already high level of warehouse productivity, have resulted in public warehousing growth rates higher than that of company-operated facilities.

WAREHOUSE DESIGN

The methods used to design the materials flow, handling, and storage activities and to control labor productivity in a modern distribution center are similar to industrial engineering practice in a manufacturing plant. There are a number of special conditions, however, in distribution facility design and operations that could be helpful to the industrial engineer in designing the facility.

Building Considerations

Many warehousing facilities are located inside manufacturing plants. In such cases, it is common to find that the building is constructed to meet manufacturing needs (stacking heights, floor storage arrangements, bay sizes, etc.). This practice results from the common use of space by both activities. Manufacturing frequently expands into the space occupied by warehousing.

In freestanding distribution centers and on a few plant sites, the warehousing facility is designed to fit the unique characteristics of the distribution system. For example, modern stacking equipment can economically operate at heights of 40 to 85 feet or more. Some equipment can right-angle stack in a 5-foot-wide aisle. Other equipment may be secured to the building structure or the storage racks. The need for such dense storage patterns results in the design and construction of special-purpose buildings that are not generally useful for manufacturing. In designing the modern distribution center, the industrial engineer must consider the following factors.

Material Flow. The building can have a straight-through flow with receiving on one end and shipping on the other. Another popular approach is a U-shaped flow with common receiving and shipping areas. This method concentrates most of the building employees and activities for better control. Both methods are effective; the best choice can be determined based on economic analysis and site configuration.

Levels. Older facilities—and some very modern distribution centers—are frequently multilevel. Storage, however, is most efficient when concentrated on one floor level with a high stack height. Receiving, shipping, and packing operations, on the other hand, seldom require high ceilings. Normally, horizontal travel is less costly than vertical, leading to the current interest in single-level warehouses. The industrial engineer must reconcile these factors in preparing the design.

Bay Dimensions. The storage pattern is a crucial factor in distribution center design. The buildup of storage spots and access aisles dictate the bay dimensions. Proper design can result in efficient or optimum bay dimensions. A bay is the floor area bounded by the building support columns. Forty years ago, it was not uncommon to work with 3-foot-diameter concrete columns on 20-foot centers. In this situation, storage patterns were relatively inefficient. Current construction allows about 8 to 12 inches for steel columns, spaced 30 to 60 feet on centers. Figure 1 is an example showing how pallets and pallet racks and the associated forklift access aisles are accumulated to determine bay dimensions. Note that the storage pattern is determined first. Then the column spacing is calculated to locate columns within the rack or storage structure. The final spacing may be any multiple that minimizes column space loss while providing a lower-cost, steel-frame roof structure. The final dimensions are decided by building cost calculations designed to balance the cost of lost space with that of extra-long steel members.

Ceiling Heights. The vertical distance between floor and lowest structural obstruction in a modern distribution center is determined by the storage stack height and the clearance needed for water dispersion from sprinkler heads. The storage area may contain storage racks on which pallet loads of material are placed. There may be bulk stacks where pallet loads are continuously stacked to the crushing limit. Pallet racks, however, normally are used in buildings with very high stack heights, because current lift equipment is capable of safely stacking much higher loads than product crushing limits or stability would permit. A typical ceiling height derivation is shown in Figure 2.

Mezzanines. Because most modern distribution centers are constructed on a single level, the use of temporary and/or permanent mezzanines is an important building option. Mezzanines may be constructed with steel grating supported by storage racks, special columns, or

building columns. They are used to more fully utilize the cubic space in a building. Typically, a warehouse may have storage covering 50 to 75 percent of the floor area. The other operations such as receiving, counting, marking, packing, and staging may total 50,000 square feet or more, but may not effectively utilize the warehouse height of 30 or more feet. Thus, two or three overhead levels might be constructed to house these activities more efficiently.

Number of Truck Doors. Doors are expensive, in both construction costs and energy loss. Determining the right number of truck and utility doors is complex, frequently requiring the use of simulation. Doors may be single-purpose (receiving, shipping, over-the-road trailer, etc.) or multipurpose to fill all needs. Most warehouses are built with the floor 48 inches above grade and pavement. This provides for forklift access to typical highway trailers. Special-purpose docks for vans (24 inches) and ground-level access for inside loading may be provided.

A method to accurately estimate the number of doors needed requires accumulating a record of truck arrivals (or unloading) and a separate record of outbound loads. The industrial engineer needs to measure the average loading or unloading time for a sample time period. Given the average arrival and departure frequency and the average load/unload service time, queuing theory can be employed to determine the appropriate number of docks. Queuing tables are available to simplify calculation.

Length-to-Width Ratios. In many cases the available land dictates the general configuration of the warehouse building. Given unlimited sites, however, the ratio of building length to width is a useful design element. The selection depends on the desired materials flow and the handling/storage method used.

U-Shaped Flow. The docks may be on one common wall to maximize control and cross utilization of personnel. Buildings tend to be constructed square or to a 3 : 2 length-width ratio in these circumstances to minimize internal movement. Expansion is usually on the back wall opposite the truck dock wall. This provides for low-cost additions since the expansion need only provide lighting and minimal support services. Everything else is in the original building section. It is also easy to expand on the other two walls if appropriate.

U-shaped flow has become the most popular building shape over the past 20 years. The reason is that it permits storing the most active products close to both the receiving and shipping docks. Thus, the industrial engineer can minimize travel distance on the items with the largest pallet movements. Also, it tends to group most employees in a small area, simplifying supervision. Overall staffing for the facility is thus minimized.

Increased use of computerized warehouse management systems has improved location and labor control, making U-shaped product paths easy to maintain.

Rectangular. Straight-through materials flow buildings have docks at opposite ends with storage rack aisles parallel to the flow so that an item can move in a straight line from receipt to storage, picking, and shipping. The building width is a function of the number of truck doors needed, which will be on about 12-foot centers. Thus, if 10 doors are needed for shipping, the building may be 120 to 150 feet wide. The long dimension is calculated to provide sufficient area for staging, storage, and operations. Typical ratios are from 1 : 2 up to 1 : 5. Expansion of straight-through-flow buildings is on the long side to provide for additions to all the operations roughly in proportion to the original space allocations. Straight-flow buildings have an inherent operating disadvantage: all material must traverse the entire long dimension.

Hybrid. Some warehouses have a large number of quite different activities dictated by product or corporate circumstances. Examples are cool and frozen material storage rooms, unit repacking or packaging functions, hazardous materials items, and so forth.These special circumstances result in buildings that do not meet the general types described. A common hybrid today occurs when the building storage area is designed for very high storage. Stacker cranes can store products 85 or more feet in height and typically require only very narrow aisles 5 feet or less in width.In these cases,unique building specifications may be used to control access and environmental conditions in the storage module.

Warehouse Equipment

Most warehouses use conventional-style equipment for the storage and movement activities. Some conventional items are as follows.

Pallet Racks. These are used to store pallet loads of product at multiple levels, making better use of floor space. Figure 2 shows a typical arrangement. Conceptually, racks are storage structures constructed of formed steel with uprights fitted with movable bars set at appropriate heights to accommodate pallet loads. Racks are usually strung in long lines with access aisles between them. A typical arrangement has a module consisting of a row of racks holding 4-foot deep pallets, an 8- to 12- foot access aisle, and another row of racks. Other types of pallet racks are for double-deep drive-through or storage to store pallets deeper. Finally, racks may be fitted with steel or plywood shelves to accommodate individual cases and small parts.

Storage Bins. Usually of steel,bins are short sections of shelving designed to hold small lots of material. Many configurations are used, including drawers, slotted dividers, differing shelf heights, and reinforcing bars for heavy materials.

Flow Racks. Picking of individual items and small cases from bins or pallet racks may become laborious. For some high-volume operations, flow racks are used. A flow rack is usually a rack 8 to 10 feet wide and as deep or deeper. Slide-or roller-equipped angle frames permit loading a case at the rear of the rack so that it will flow down the lane to the picking face. A few to a dozen cases may be contained in a flow lane. Each rack may be six or eight lanes wide and three to five high—a total capacity of perhaps 20 to 30 different items, each supported by a continuous feed of 10 cases or more. This gives a dense, usable storage pattern to support high-volume order-picking activities. In this arrangement, the picking face presents many more items to the picker per foot of access aisle compared to conventional bin or pallet rack storage. The industrial engineer, however, should observe that flow racks typically require that every case be handled twice: in and out. Thus, the highest-volume items are most often stored in pallet loads, not in case flow racks. The best use of case flow racks is for medium-usage items. A related common technique is to use pallet flow racks for items that are very high volume.

Conventional Forklifts. The oldest type of mobile pallet-moving equipment is the four wheel industrial truck equipped with an elevating mast. Drivers may either sit down, stand, or sometimes walk along, depending on the design. Power may be battery, propane, or gasoline. Conventional forklift equipment is used in a wide array of missions because they can travel great distances, carry loads of up to several tons, maneuver in 12 – to 15 – foot aisles, and enter highway trailers safely. They are used for large bulk-storage areas where pallet loads may be double- or triple-stacked and rows of pallets may be 10 to 15 deep. Thus, a conventional forklift might service blocks of many hundreds of pallet loads.

Narrow-Aisle Lift Trucks. The typical narrow-aisle truck has two outriggers to straddle a pallet, providing a noncounterbalanced base on which to operate. The driver usually stands to operate the vehicle. Narrow-aisle vehicles are in wide use, right-angle stacking in 7- to 10 – foot aisles, and stacking to heights of 30 feet or more. This gives dense storage patterns, usually based on concepts of random access to any pallet in the storage block. Narrow-aisle equipment usually cannot enter highway trailers, although some special designs with large front caster wheels are available.

Reach Trucks. An important variation of the narrow-aisle straddle truck is the use of special masts and forks that extend mechanically in the direction of travel. This allows the vehicle to stack materials closer together by eliminating the straddle outrigger. Other versions can reach out a full pallet depth to deposit loads in an inside rack. This double-deep storage increases storage density.

Very Narrow-Aisle Trucks. Special vehicles have been designed that can rotate their forks or forks and masts. They are called swing-reach, or turret trucks. Because they do not have to turn to right-angle stack into a rack, they can operate in aisles only a little wider than the pallet. Aisles of 60 to 72 inches are common. Another characteristic is that the vehicles have to be very large and heavy to accommodate the complex mast equipment. This results in a stable platform from which great pallet elevation heights can be achieved. These classes of equipment can store material safely at 40-foot elevations in aisles under 72 inches wide. The size and tight quarters usually require electronic or mechanical guidance to prevent contact and damage to the rack structure. The industrial engineer using very narrow-aisle trucks should note that these vehicles have long-radius turn requiring an aisle of 15 or more feet at both ends of the rack access aisle. As a result, typical installations have very long storage aisles; 300 or 400 feet with intersections are common.

Stacker Cranes. Stackers are manufactured in a wide range of configurations. Their basic purpose is to operate from the top of a storage stack on rails mounted to the building or rack structure. Heights are essentially limited only by economics, and stack heights of 100 feet or more are reasonably common. Stackers are usually operated by computers, fitting into highly mechanized or automated activities. In these cases, without operators, the building structures may have minimal lighting and heating—only enough to preserve the product’s life. Energy savings can be significant.

The industrial engineer who is designing facilities should note that all narrow-aisle equipment such as stackers and very narrow-aisle,swing-reach equipment lose time when changing aisles. Appropriate facility layout, then, usually requires fairly long aisles with few occasions to turn into adjacent aisles.The typical facility is long and narrow—ratios like 5 or 10 to 1 on length and width.

Floor Tractors. These units are used to pull trains of floor trailers over great distances in a warehouse. A frequently accepted rule is that elevating trucks should not travel more than 200 feet from their base. For greater distances, it is more efficient to load a pallet on a trailer and haul multiple loads to the destination. Floor tractors can pull trains of 10 to 12 trailers, each with two or more pallets aboard.

Automatic Guided Vehicles. Essentially, the electric floor tractor can be equipped with computer and sensing devices to permit the vehicle to deliver and pick up goods throughout a warehouse. Installations of 50 to 100 automated guided vehicles (AGVs) operating in multimillion-square-foot buildings are found today. The loading and unloading of the AGV is normally automated, and a master control computer directs the entire flow.

Conveyors. Warehouse conveyors are used to move product within and between operations. The conveyors may be belt, roller, roller with over- or under belt, skate-wheel powered, or free. Typical applications are combined with flow racks for picking operations or for long distance movement of pallets or cases from storage, docks, and ancillary operations. Very complex conveyor systems, combined with scanners and reading devices, flow gates and computers, can result in extremely efficient, modern distribution centers.

WORK STANDARDS, INCENTIVES, AND COST CONTROL

Control of productivity in a warehouse presents different problems to the industrial engineer than those encountered in the manufacturing activities. First, warehouse personnel are usually spread sparsely over hundreds of thousands of square feet of floor area. In manufacturing, there is normally a dense, concentrated population. Second, warehouse personnel are mobile—the essence of the operation is rapid physical movement in three dimensions. Finally, the work tends to be diverse and of long cycle, not paced by machinery.

Nevertheless, work standards have been applied in many distribution centers. Penetration is highest in warehouses closely allied with manufacturing facilities.

Standards

Standards are set using all of the same techniques as in manufacturing:

• Stopwatch studies of well-documented, short-cycle activities.
• Elemental standard time data developed within specific industries and for the materials handling function as a whole.
• Higher-level standard data for long-cycle operations have been developed to aid in staffing decisions. These are widely used in industries such as grocery products, in associations like public warehouse groupings, and in government.
• Ratio-delay-type studies to determine the total time spent in a warehouse divided to many functions are widely used as a starting point in developing which activities are large enough to warrant standards. Formal, engineered time standards are used in perhaps 50 percent of all warehouses today.

Incentives

Monetary incentives may be used to improve individual or group performance levels above standard output. Perhaps 25 percent of warehouses have some form of incentive compensation today.

Cost Control

Staffing requirements for warehouses frequently vary through the day, week, month, and season. Variable workloads are a vexing problem. Traditionally, most warehouses were staffed for a reasonably high level of activity—perhaps the 75th percentile. Overtime was used to reach the peaks, and layoffs, make-work, postponeable work, and the like were used to reset the workforce in low-volume periods. Recent expansion in the use of computer-based management control techniques and work standards has resulted in much better control of staff levels. Current methods use radio-frequency transmissions of work requirements, feedback loops, standards, and piece counts to control productivity. Part-time employees and interdepartmental transfers for temporary periods have facilitated productivity control.

COMPUTER WAREHOUSE MANAGEMENT SYSTEMS

The most significant improvements in warehouse management in the 1990s have been the development and implementation of product identification, tracking, and control systems; the accurate, rapid identification of products; and the use of this information in controlling the entire warehouse process. These have been key factors in improving productivity and service management. Computers have had the ability to track products and control machining processes for many years. Recent advances in automated identification techniques have improved accuracy. The combination of these three technologies has been a key factor in the development of today’s modern warehouse management systems.

The Two Key Elements

A warehouse management system consists of two elements, or subsystems. First, it is necessary to have a technology that can identify the product or entity to be controlled and to transfer it to the computer. This technology is typically purchased, and one can choose from a wide variety of equipment and methods. For the warehouse, scannable bar coding is the current method of choice. The bar code is read, decoded, and sent through a communications system to a computer or controller. In the warehouse, this communication is by radio-frequency (wireless) transmission. Second, the system requires a computer that will interpret the information, update records, and trigger suitable actions (i.e., the tracking and control system). It is very important to recognize that these two systems are quite separate. The industrial engineer can adopt any of a myriad of identification and communication technologies. These decisions are almost wholly distinct from the interrelated decision on the computer processing system that will act on the acquired identification data after it is acquired. The computer processing system can be modified many times in the future, but it will be much harder to change the basic identification technique.

Bar Code Scanning. This is the product identification method in widest use today. A bar code is a group of vertical solid lines that are printed together on a label. The width of the space between the lines can be varied to create a unique code; that is, the width of the spaces and their arrangement can be used to denote a letter, number, or symbol.

The bar code is read by a scanner that moves a beam of intense light across the label. The light is reflected back by the spaces between the bars, interpreted by decoders into useful information, and transmitted to a computer or controller for receiving and action.

There is a wide range of scanners available, from handheld to fixed. The scanning technology also is extensive, with at least three different methods in use today:

^● Infrared. Low power usage, low cost, and small size are important factors. Infrared can read labels through grease, dirt, and opaque coverings, making the technique particularly useful on the shop floor.

Scanning today can be done at distances as short as an inch to as much as 18 feet. The scanned information in the form of digital signals is transferred by wire or radio-frequency transmission to a decoder. The decoder senses the light intensity, differentiates between the spaces and bars, and assigns an alphanumeric character to the signal. The stream of signals is reduced and interpreted into a data set. This set can then be stored or transmitted, as required by the application.

In the modern distribution center, a range of identification technologies are used to determine the items received from vendors, to maintain accurate stock location systems, to direct order picking, packing, and assembly, and to manifest, route, and control outbound orders. While bar coding is in the widest use, there are many examples of voice recognition, escort memory, optical scanning, and other systems in use. A good example is shown in Figure 3.

A modern, automated, order-picking system starts with a scanner to identify the customer order at the workstation. The scanned information signals a computer transmission to turn on lights to direct the order picker’s attention to the correct item. A digital display notes the quantity and disposition of the pieces needed.

Product Tracking. Product tracking is a logical development that stems from the combining of product identification technology with the extensive record-keeping, analytical, and data processing capabilities of electronic computers. Basically, a product or a work order can be accurately identified when it arrives at a workstation. This information is then transferred automatically to a computer that records the arrival and adjusts related records to reflect the information. A product-tracking software program then can process and utilize this information for a wide range of applications. Of primary interest are tracking systems in manufacturing, distribution, and freight transportation.

Application in Warehousing and Transportation

Product identification, tracking, and control systems have been widely applied in warehousing and transportation systems. Modern warehouses typically store thousands of different items and deal with hundreds or thousands of individual receipts and shipments in the course of a business day. Keeping track of orders, materials, and personnel in the modern distribution center is a complex activity. Bar coding is the most-used identification technique. The information scanned is transmitted to a tracking software program that can transmit control information and instructions back to the data terminal. Figure 4 illustrates how product identification combined with a computer control system is used to control material flow in a modern distribution center.

Typically, materials shipped to a facility are labeled by their manufacturer with bar coded or other data. The data includes company, purchase or work order number, product name and number, quantity, and so forth. At the receiving dock, the label is read by a fixed or handheld scanner.

The scanned data is verified by a blind count entered by the receiving operator. Both sets of data are used to access the computer records of purchase orders and related information. After verification, the computer directs the disposition of the materials received. Normally, this is done by automatic printing of an internal routing and identification tag or label that is put on the material. The printing is controlled by the tracking computer. Typically, the palletized load with its label is then picked up either automatically by a computer-guided vehicle or by a manually operated forklift truck. Again, the vehicle will have been scheduled or controlled by the tracking program. Communication with the AGV or the forklift will be by RF transmission.

The computer will select the storage or assembly line location to which the material is to be delivered and direct the vehicle and its movement. When the product arrives at the designated location, the operator scans both the routing label and the identifying label at the destination storage location or workstation. This is verified by the computer, and the status information is adjusted in the computer file.

Following the completion of the storage or picking in the warehouse, the material, operator, and status are scanned and/or key-entered to continue the tracking process. Step by step, the computer can direct operations, select delivery locations, call and direct automatic and manually driven materials handling equipment, and record status. The final operations typically involve order picking, assembly, and loading of completed customer shipping orders onto transportation carriers. Figure 5 illustrates how a fixed vertical scanner identifies an outbound order, combines this information with automated weight data from in-line scales, prints truck manifests, and sets conveyor gates to direct the order into the right truck.

The materials are then handed off into the next tracking system. All of this depends on the existence of a product identification technology, RF and wire transmission, and a computer tracking and status software/hardware package. The assembly of these different technologies into a single coordinated flow and system are key elements in modern warehouse management systems.

To illustrate, a very large central distribution center uses bar codes, scanners, and process control computers to manage the entire materials handling and product flow in a 2-million-square-foot distribution center. The process will be described subsequently. Similar processes are operated by perhaps 25 percent of all distribution centers today. The industrial engineer needs to understand these applications.

Receiving. Materials are received in pallet loads containing one or more items. Each pallet or case of an item has a manufacturing ticket identifying the number of cases of each item, the quantity, the date, and the time. The pallet is removed from the delivery truck and deposited on an output conveyor after adjusting quantity, load size, and so on to make sure it fits the physical warehouse system. The manufacturing ticket is wanded, variable data entered, and a put-away ticket is automatically produced showing the assigned location and the quantity to be stored. The computer then calls an automatic guided vehicle to pick up the pallet load.

It automatically delivers the pallet (either full or part) to the storing location receiving conveyor. The warehouse management system next assigns a forklift truck to pull the pallet and deposit it in its designated location. The forklift operator wands the put-away ticket and a bar code label at the rack location. The computer receives and verifies the transaction and then updates the inventory record for the storage location.

Order Picking and Assembly. The warehouse process control computer receives shipping orders from the company mainframe computer. The processor then determines which items are needed from each storage zone in the warehouse. The local zone forklift truck operators receive information by radio frequency displaying the next location and item to pick. The operator selects the correct number of cases, wands their bar code, and moves the product to an outbound conveyor. The process controller can verify the picked item identification and quantity and can signal necessary corrections. The controller then calls an automated guided vehicle to pick up the pallet of material and move it to shipping.

Shipping. On arrival at the shipping dock, the AGV deposits the pallet on a feed conveyor. Dock handlers scan the item/pallet, the computer signals the appropriate truck line, and the handler removes the pallet from conveyor and drops it on the proper floor lane designated for the truck line. Priority, must-ship items are dropped close to the door. Multiple pallet orders are marshaled in the truck line drop spots, because part of an order can come from many locations in the distribution center. The shipping team leader calls in trailers and arranges for loading. The loader enters data into a computer at the dock face desk terminal, then wands each pallet as it is loaded into the truck. This relieves the dock area inventory in the warehouse computer.

Thus, the product is tracked at every stage of movement through the facility. At any time, management personnel can inquire to determine the status of any item or order. Exactly the same system can be used in each stage of the manufacture, warehousing, and delivery of materials. All depends on the product identification technology.

PLANNING THE DISTRIBUTION CENTER

Given that a company either has or intends to set up a distribution center, the design project will require a high level of detailed information and data. The following outlines the design process that is typically followed by the industrial engineer.

Determine Functions to Be Included

What functions will be contained in the warehouse? This can be a very long, complex list of activities:

• Receiving, counting, verifying, and accepting inbound materials and finished product
• Transporting and storing the products in appropriate storage locations and equipment
• Maintaining a control system to locate all materials and paperwork within the facility
• Receiving and handling shipping orders
• Picking, packing, and assembling outbound materials and marking them for accurate delivery
• Routing outbound goods by carrier, calling the carrier, and staging and loading onto the outbound vehicle
• Checking outbound materials for accuracy and adjusting internal stock records

Determine Initial Space Allocations

Preliminaryestimatesarefrequentlymadetodeterminethetotalspaceneededandtoallocateit to the listed functions. This is called a block layout. At this stage, provision is made for utilities and support services, offices, staging areas, and so forth to estimate the building dimensions to a reasonable accuracy level.

Develop Data on Volumes and Flows

There are five basic types of data needed:

Inventory

How many items will be stored

What quantities are expected for each item

The item dimensions and storage characteristics

Activity (receipts, picks, and turnover) by item

Forecast of growth of the items or item groups and of new items expected

Nature of the items (fragile, hazardous, liquid, etc.)

Number of cases, pounds, and pallets or other units to be stored

Normal ratios of items per case, cases per pallet, pallets per truck, weight per pallet

Receipts

Number per time period

Lot sizes

Need to segregate lots of an item Seasonality

Shipping Orders

Number by time period

Seasonality

Types of orders

Characteristics (items per order, lots per item, orders per shipment, etc.)

Order Analysis

Line items per order

Pieces

Cartons

Frequency distributions of pertinent data

Service Requirements

Timeliness in shipment

Accuracy requirements

Special markings

Promotional and regular materials

Observe Operations

The industrial engineer has to be knowledgeable about current warehouse methods in the existing facilities, aided by regular observation of each function performed, flowcharts, information about current work standards, and lists of questionable practices. The results of this work are normally discussed with operating managers to ensure a full understanding of the current operation—its performance and requirements, special conditions, and problem areas that need to be addressed.

Establish Alternative Methods and Equipment

In any warehousing function, there are a number of ways in which the work can be done. A new facility may have been accepted because more space is needed for expansion, or it may provide the room and the environment for major productivity or service improvement given the following conditions:

• That the job to be done has been described
• That the current problems and opportunities have been isolated
• That the current methods have been identified
• That objectives for improvement have been established

The industrial engineer then has to describe a number of feasible alternative plans. The different plans usually involve an increasing level of mechanization or automation. Higher levels frequently have a high capital expense, but they may have low operating labor cost. Higher stacking, for example, uses less floor space, but requires more-expensive equipment.

Create the Preliminary Design

The typical design study is done in two steps:

• Individual operations are examined—for example, how high to stack. General answers are reached for each activity (picking, order assembly, storage, etc.).
• These preliminary designs for each activity are aggregated to describe several feasible building layouts using one or more of the warehouse design methods described earlier in this chapter.

Evaluate the Alternative Designs

These are evaluated for the following:

• Feasibility and applicability to the facility mission
• Operating cost
• Investment requirement
• Maintenance
• Flexibility to suit changing needs in the future
• Risk involved in achieving the desired results and savings
• Implementation time

All of this information is then evaluated using traditional industrial engineering cost techniques, such as discounted cash flow and its variations. A decision can then be made regarding the best alternative for the circumstances evaluated.

Prepare Detail Designs

Following acceptance of the basic facility conceptual design, a much more detailed plan needs to be prepared. This plan usually involves the following:

• Contact with equipment vendors for additional ideas and constraints in the functional areas.
• More detailed data in some areas to support elements of the design. For example, how many packing stations are needed? What conveyor speeds are most effective? How are the various lines staffed at different volume levels?
• Simulation—modern computer simulation methods yield sound, operationally correct answers to many detail design questions. In particular, conveyor systems and staffing levels are sensitive to short-cycle volume and product mix shifts. A simulation of the system in operation is a sound investment in achieving a problem-free facility start-up. The simulation can later be used for operator and supervisory training.

Prepare Written Recommendations

At the conclusion of the design process, it is normal to prepare a complete written report on the project. The report may be needed to get internal or external financing. On another level, it should serve as an operating manual for the managers of the warehouse operation. The report typically includes the following:

Equipment specifications. Sketches, catalogs, prices, special requirements, numbers of units, and operating speeds and conditions.

Staffing. The number of people needed at each function for varying volume levels should be specified. This can include job descriptions and reporting relationships.

Operating narrative. A written description of how the facility functions. The narrative starts at receiving and traces the entire material flow, including storage and put-away, order picking, packing and assembly, and shipment loading.

Facility layout. The floor plan for fixed equipment showing all operating areas, staging, utilities, support functions, and offices.

Work standards. Each repetitive job should have a standard that can be applied to measure and control productivity and to establish the building’s staff requirement.

Economic feasibility. The initial budget level costs for construction, equipment, staffing, and implementation need to be refined. The final report should then present the economic and operational basis for approval of the warehouse investment.

CONCLUSIONS AND FUTURE TRENDS

The design of distribution centers has changed markedly during the last decade. The principal reason was a significant shift in the typical warehouse mission. Formerly, the major activities were the receipt and storage of finished goods and the filling of customer orders to replenish warehouses and retail stores.

Increasingly, customers demand that significant value-added services be provided by their manufacturing sources. Some of these added services may require reconfiguring, remarking, and repackaging of finished products. Because distribution centers are frequently far from the manufacturing plant, the new services often are assigned to the distribution system for completion. This trend has generated major new activities in the distribution center, resulting in somewhat higher warehousing costs and more-complex operations. The ability to cope with these customer

Literatures :

Herbert W. Davis – Maynard’s Industrial Engineering Handbook (1992).

Jenkins, C. H., Complete Guide to Modern Warehouse Management, Prentice-Hall, Old Tappan, NJ, 1990.
(book)
Mulcahy, David E., Warehouse Distribution and Operations Handbook, McGraw-Hill, New York, 1994.
(book)
Tompkins, J. A., and J. D. Smith, The Warehouse Management Handbook, Tompkins Associates, Inc.,
Raleigh, NC, 1988. (book)

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