Warehouse

Management
May 2013 Manila

Section 1
Introduction

Name
Company
Warehouse experience
What are your expectations?

What is a warehouse?
Warehouses are typically viewed as a temporary
place to store inventory and as a buffer in supply
chains.
They serve as static units matching product
availability to consumer demand and as such
have a primary aim which is to facilitate the
movement of goods from suppliers to
customers, meeting demand in a timely and cost
effective manner.
Primarily a warehouse should be a transshipment area where all goods received are
despatched as effectively and efficiently as
possible.
3

Terminology

ABC
ABC
AIDC
AS/RS
CMI
CPFR
EDI
EPOS
ERP
FLT
JIT
OTIF
PPT
RFID
SAP
SKU
VMI
WMS

Activity based costing

Method of prioritising items
Automatic Identification and Data Collection
Automated storage and retrieval system
Co-managed inventory
Collaborative Planning, Forecasting and
Replenishment
Electronic Data Interchange
Electronic Point of Sale
Enterprise Resource Planning e.g. SAP, Oracle
Fork lift truck
Just in Time
On time in Full
Powered pallet truck
Radio Frequency Identification
A well-known ERP system
Stock keeping unit
Vendor Managed Inventory
Warehouse Management System
6

The Objectives of Warehousing

The primary objective of warehousing is to

maximize the effective use of the operational
resources while satisfying customer
requirements.

FIVE BASIC TENETS

Accuracy
Safety,

and Efficiency

Security, Cleanliness

Warehouse management issues

I need to get the product to the customer:

On time (OT)
In Full (IF)
To the right place
In the right condition
With the right paperwork
At the right cost

Discussion

What are the challenges facing your companies

today in terms of warehousing?

Warehouse Challenges (Adapted from Dematic)

Challenge

Operational Requirements

Cost reduction

Increase productivity, improve utilisation of space, staff and

equipment

Achieve the Perfect Order

Improve productivity, increase accuracy, improve handling and

invest in systems

Shorter order lead times

Improve processes and increase productivity

Sales via multiple channels and

increase in smaller orders

Improved picking strategies such as bulk picking and greater

use of technology

Fluctuations in demand

Flexible working hours and improved forecasting

Proliferation of SKU

Improved use of equipment such as carousels, A Frames and

flow racks

Labour cost and availability

Staff retention through excellent working conditions, flexible

hours, training and improved productivity

Increasing cost of energy and

environmental challenges

Manage energy more efficiently, better use of waste

Data accuracy and speed of

transfer

Introduce Warehouse management system and real time data

transfer

10

Role of the
Warehouse in todays
Supply Chain
Section 2

Warehouses in the supply chain

Raw materials

Disposal

Component manufacture

Re-process

D
i
r
e
c
t

Product assembly /manufacture

R
e
t
u
r
n
s

c
e
n
t
r
e
s

Wholesalers/Dealerships

Retailers

s
a
l
e
s

Consumers

- Warehouse requirement
12

How many warehouses?

MANY WAREHOUSES
Inbound transport is
expensive (to supply
warehouses)
Outbound transport is
cheaper (to deliver to
customers)
Cost of maintaining many
warehouses is expensive
Cost of keeping many
buffer stocks is expensive

13

How many warehouses?

FEW WAREHOUSES
Inbound transport is
cheaper
Outbound transport is
more expensive
Less cost to maintain
warehouses
Less cost of buffer
stock

14

Cost

Major Cost Relationships

Total logistics cost

Primary transport cost

Inventory holding cost
Storage cost
Systems cost
Local delivery cost

Number of DCs / depots

Rushton, Croucher and Baker (2010)

15

Cost versus Service

Business
Profit

Cost to
Serve

Perfect service =
High cost

Customer
Satisfaction

Service
quality

Low cost = Lower service

Evans & Castek in Gattorna (1998)

16

Maisters Rule

Reducing the number of warehouses

from y to x, reduces the total amount of
safety stock in the system by:

1 - [ x ]
[ y ]
Multiply the result by 100 to find the
percentage reduction

17

Maisters rule - grid

Inventory for "n" warehouses = Inventory for one warehouse x square root of number of
warehouses "n"
Start
number of
warehouses

Percentage extra stock or reduced stock for change in number of warehouses

New number of warehouses

10

15

20

0%

41%

73%

100%

124%

216%

287%

347%

-29%

0%

22%

41%

58%

124%

174%

216%

-42%

-18%

0%

15%

29%

83%

124%

158%

-50%

-29%

-13%

0%

12%

58%

94%

124%

-55%

-37%

-23%

-11%

0%

41%

73%

100%

10

-68%

-55%

-45%

-37%

-29%

0%

22%

41%

15

-74%

-63%

-55%

-48%

-42%

-18%

0%

15%

20

-78%

-68%

-61%

-55%

-50%

-29%

-13%

0%
18

Types of Warehouse
Operation
Section 3

Functions of a warehouse

Inventory holding point

Stock is held to fulfil orders / demand.

Provide a buffer stock, preparation for a new
product launch, facilitate long production runs
Storage of Customs and excise goods under bond

Sequencing centre

Just in time related techniques

Consolidation centre

Product lines from various locations are

consolidated into complete customer orders.

Cross-dock centre

Goods are received and shipped onwards without

storage.

Sortation centre

Goods are sorted by customer or region.

Assembly facility

Final assembly of goods prior to

distribution e.g. postponement or labelling.

Trans-shipment point

Goods are sorted into smaller vehicle loads for

delivery to the customer break-bulk centre.

Fulfilment centre

e-commerce and catalogue sales

Returned goods centre

To handle returned / faulty goods.

29

Cross dock operation

Hazardous Goods storage

Photo - EDIE

Photo Transmare - chemie

22

Classification of Dangerous Goods

In order to promote the safe storage and transportation of dangerous

goods, an International System of Classification has been introduced.
(The UN Classification System).

The system divides the different types of dangerous goods into classified
groups, each group identified by a code marking.

The CLASS Number

The code marking, which is part of the UN Classification System is
made up of 2 numbers followed by a letter which appear, printed in
black on an orange coloured label. The system places all potentially
dangerous goods into 9 specific classes according to the degree of
danger they present.

23

There are nine classes, some with divisions, as follows:

UN Class

Dangerous Goods

Division(s)

Classification

Explosives

1.1 - 1.6

Explosive

Gases

2.1

Flammable gas

2.2

Non-flammable, non-toxic
gas
Toxic gas

2.3
3

Flammable liquid

Flammable solids

Flammable liquid
4.1

Flammable solid

4.2

5.1

Spontaneously
combustible substance
Substance which in contact
with water emits flammable
gas
Oxidising substance

5.2

Organic peroxide

6.1

Toxic substance

6.2

Infectious substance

4.3

Oxidising substances

Toxic substances

Radioactive material

Radioactive material

Corrosive substances

Corrosive substance

Miscellaneous dangerous
goods

Miscellaneous dangerous
goods
24

Storage of dangerous or hazardous materials

Under the Control of Substances Hazardous to Health
(COSHH) Regulations 2002:

You must ensure chemicals and dangerous

substances are stored and handled so that people's
exposure to them is minimised.
You need to assess the risks of storing and handling
dangerous substances - including the possibility of
environmental damage caused by leaks and
spillages
You should then implement any precautions needed
to control risks.
25

These include:

storing chemicals according to the manufacturer's instructions

on the safety data sheet

keeping the minimum quantity of hazardous substances

necessary

storing incompatible substances separately

taking steps to prevent release or leakage of dangerous

substances

cleaning up any leaks or spills that occur

26

These include (contd):

using appropriate precautions when handling substances wearing protective clothing or ensuring adequate ventilation,
for example
ensuring employees who store and handle dangerous
substances are properly trained
checking containers used for short-term storage are properly
labelled
If you store chemicals or dangerous substances that could
create a fire or explosion, you must also comply with
the Dangerous Substances and Explosive Atmospheres
Regulations 2002. (DSEAR)

27

Packaging and Labelling

The consignor is responsible for ensuring that the packaging conforms to the
regulations for the product. The packaging can be as simple as a cardboard box
or paper bag for low risk powders in small quantities to very sophisticated
double skinned stainless steel packages for more complex high risk products.
In general the package needs to be UN approved and compatible with the
product but for every UN number there is a list of packaging options available to
the packer.
Having packed the product the package has to be labelled, this is not about the
product labelling or CHIP labelling which has health and safety advice for the
user, but a rather simple class warning symbol. On small packages a 100 mm
square coloured diamond with a symbol, these can be larger on IBCs and road
tankers. I have illustrated a couple of examples below:

28

Haz chem codes

29

Temperature controlled storage

Photo by fordsproduce.com

Photo by Texas ice house

30

Fulfilment Centres

Photo by BBC News - Amazon

31

Outsourced warehouses

Contract warehouses
Shared use/multi-user/public warehouse

Fulfilment centres
Reverse logistics centres
Re-work
Repair
Disposal

32

Customs warehousing

Customs warehousing is a procedure that enables

the suspension of Import Duty and/or VAT, for
imported non-EU goods
Delay paying import duty and/or VAT and excise duty
on your stocks of imported goods.
If you want to re-export goods
If you do not know the ultimate destination of the
imported goods and want to delay having to declare
imported goods to another customs procedure, for
example release for free circulation
46

Revenue and Customs requirements

The warehouse will be used primarily for the storage

of goods
There is a genuine economic need
Your stock records are adequate to verify the receipt,
storage, handling and disposal of the goods and they
must be able to show at all times the current stock of
goods that are held under the customs warehouse
procedure.
You must be solvent and have a compliant revenue
record

34

Just in Time (JIT) and Lean

JIT warehouses or sequencing centres attempt to
process orders on a daily basis through improved
information transfer
Timely and accurate data is required about products,
resources and processes
Lean warehouse operations look to reduce waste
idle time, idle space etc
Japanese methodolgy used in warehousing today
Kanban replenish/produce only when you need to
Kaizen continuous improvement

35

Lean Warehousing
The 6S concept which underpins lean thinking
can be easily applied to the warehouse as follows:
Sortation separates required or fast moving stock from stock
that is slow moving or obsolete.
Straightening is organising items in the warehouse to make it
easier to locate
Shining is ensuring the warehouse is clean and obstruction free
at all times. Excellent housekeeping is a sign of a well run
warehouse.
Standardization is all about having the correct procedures and
systems in place to operate efficiently
Sustaining is ensuring that processes are constantly reviewed
and improved
Safety is ensuring that all staff and equipment are safe from
injury and damage in the warehouse

36

Warehouse
Processes
Section 4

Warehouse processes and flow

Reserve storage
and full pallet pick

Item
picking
Replenishment

Case picking

Replenishment

Direct movement
To pick faces

Sortation, Consolidation and packing

Direct put-away
to reserve stock

Receiving

Despatch
Cross-docking
Adapted from Schmidt & Follert 2011

38

Warehouse functions

Goods inward/receipt
Inward sortation and Cross-docking
Storage
Replenishment
Order picking
Secondary sortation
Collation
Postponement
Value adding services
Despatch
Housekeeping
Stock counting
Returns processing

Cranfield University

39

Pre-receipt

Agree specifications with supplier

Inform supplier of requirements regarding:

Size and type of vehicle
Size and type of pallets
Size of cartons
Labelling requirements
Delivery documentation
Pre-notification
Delivery procedures
Unloading requirements
Role of the driver
40

Pallets

Pallet rental companies

Charged

on a pence per day basis

E.g. Chep, IPP, LPR
Pallets are normally in good condition
Does require both suppliers and buyers to be part
of the rental scheme

Packaging

Be involved when initially discussing new products

Its not all about the product!! think about the packaging!
Nature of the product size, selling quantities, hazard, cost
Arrival packaging, returnable plastic pallets, stillages etc
Labeling
Nature of storage medium
Despatch quantities
Recycled packaging

The protective packaging company

42

Unit loads many different types

43

Receiving

Booking in procedure
Allocate the supplier a time for delivery
Estimate time to unload, check and put-away
Allocate sufficient labour and MHE for unloading
Check if load requires special handling

44

Receiving contd
Receiving procedure
Inform security re. unloading dock number
Provide safety instructions to the driver
Ensure vehicle cannot be moved until unloading is completed
Check for any special handling instructions (Hazardous, fragility etc)
Unload and check quantities and quality of delivery
Record variances possible quarantine
Check status of goods
Quarantine, cross dock, pick face, reserve storage
Label or ID tag
Record quantities
Clear dock area and ensure goods are on system and available to pick
dock to stock time is crucial!
45

Returns
Non-used products, packaging, waste.

Raw material

Manufacturing

Distribution

Test

Used
products

Repair

Consumer

Refurbishment
Service

Disassembly

Remanufacturing
Recycling

Disposal

46

Importance of returns

A greater environmental awareness by customers (Waste

Electrical & Electronic Equipment (WEEE) directive)

Increasing legislation on the disposal of hazardous materials

More stringent packaging waste directives

Increasing awareness of the economic value of re-using

products

The development of catalogue retailing and e-commerce

THEY COST MONEY!!

47

In-handling equipment

48

Labelling

Ensure supplier has labelled products correctly

Produce own labels although not as efficient

Scan labels

System determined put-away

49

Put away

Location allocation by system or manual

Take into account size, weight, velocity, compatibility
Quarantine areas
Fixed or random locations?
Check stock rotation policy
Consolidate stock if FIFO rules allow
Record stock against the location
Task interleaving or dual cycling put-away and retrieve in
same movement

50

Inbound and put away processes

Inbound check
Location verification

WMS

51

Fixed v Random storage

Fixed locations total = 453

Code

Jan

Feb

Mar

Apr

May

June

July

Aug

Sept

Oct

Nov

Dec

100

155

100

140

100

120

120

100

100

120

150

150

50

20

51

30

30

30

40

50

50

40

40

50

10

12

17

10

10

10

10

10

90

80

80

75

75

75

80

80

95

90

80

90

40

40

50

50

135

130

130

130

50

40

40

40

290

300

293

312

350

365

375

370

305

295

315

340

SUM

Random locations
52

Location I.D.
4 E 14 B 1 or
04.05.14.02.01
Where
4 (04) = zone
E (05) = Aisle
14
= Bay
B (02) = Level
1 = Shelf or bin location

53

Rack labels

Picking systems

Picking is paramount to any warehouse operation

It is the most labour intensive
It is fundamental to customer service
There are often extensive floor space requirements
There may be limited scope for automation

On average 65% of the warehouse operating expenses

can be attributed to the Picking function.
On average travel time accounts for 50% of the total picking
time (Petersen C.G. 2002).

55

The Importance of Order Fulfilment

Error
Correction

Replenish
ment

Paperwork
Travel
Check

Picking
Storage

Pack

Receiving

Despatch
Pick

Accuracy issues

Quantity
misread
Miscount

Wrong
Item

Item
omitted

56

Pareto or the 80/20 rule

SKU - sales pareto
100%
90%
80%
70%

% of sales

60%
50%
40%
30%
20%
10%
0%
0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% of SKU
Courtesy of VanDerLande Industries

cum % lines

cum % eaches

cum % weight

cum % cube

57

ABC/Pareto Analysis
Ranking (by
throughput)

Throughput in
period

Cumulative
throughput

Cumulative % of
total throughput

Cumulative % of
number of stock
lines

Category

300

300

30

225

525

52.5

10

150

675

67.5

15

80

20

4*

125 *

800 *

40

840

84

25

30

870

87

30

25

895

89.5

35

25

920

92

40

15

935

93.5

45

10

15

950

95

50

11

10

960

96

55

12

968

96.8

60

13

974

97.4

65

14

979

97.9

70

15

984

98.4

75

16

988

98.8

80

17

992

99.2

85

18

995

99.5

90

19

998

99.8

95

20

1,000

100

100

58

Exercise ABC categorisation

See sheet

59

ABC picking
Receiving
C Zone
Slow movers
45% SKU,
5% volume

B Zone
Medium movers,
35% SKU,
15% of volume
A Zone
Fast movers,
20% SKU,
80% of volume

Despatch

60

ABC layout

C Zone
Slow movers
45% SKU,
5% volume
B Zone
Medium movers,
35% SKU,
15% of volume
A Zone
Fast movers,
20% SKU,
80% of volume

Despatch
61

What to do with SLOB slow and obsolete

Recognise and start to write down
then
Redistribution internally,
Rework,
Return to Vendor,
Sales incentive,
Sell to a global user (jobbers) with an active market,
Sell online through a 'media e.g. e-bay
Salvage the usable sub assemblies,
Sell for scrap,
Donate to a recognised charity (a business expense), and
Write off by burning or burying.
62

80/20 rule - other uses in the warehouse

Suppliers (80% of volume from 20% of suppliers)

Value of product (20% of product lines 80% of value)

Cost of servicing clients (20% of clients 80% of

problems)

Labour (20% of staff 80% of problems)

Labour (80% of efficiency from 20% of staff)

Stock counting cycle counts based on ABC

63

Product location tool - Slotting

Slotting Optimization scientifically determines the best picking
profile for your warehouse, and enables you to make timely,
intelligent decisions as ordering trends change.
Are fast-moving items in the most accessible locations?
Are slots allocated in the most efficient manner according to
product size and weight?
Are risks to your employees reduced or eliminated?
Is your storage capacity optimized for your current stock?
Are items that sell together close to each other

As input data changes, such as seasonal ordering trends or

new or discontinued products, Slotting Optimization can revise
its recommendations incrementally, to keep your warehouse at
maximum efficiency without costly overhauls.
64

Picking methods
Method
Picker to goods

Pick faces
in aisles

Picker to goods
Picker to goods

Method

Bulk
pre-pick

Pallet to picker
followed by
Picker to pallet

Equipment
Low level with hand pallet
truck or roll cage
Low level with powered
pallet truck
High level with operator
riser picking truck
Equipment

Med.

Large

200

Fast

Large

100

Slow

Small

Picks per
hour

*By PPT, CBT or FLT

Open floor, ground level

Speed

Approx.
Picks per
hour
150

Speed

Order size
(lines)

Order size
(lines)

Med.
150 - 250

to

Various

HPT, PPT or roll cage

Fast
* PPT = Powered Pallet Truck; CBT = Counter-balanced fork lift truck, FLT = Fork lift
truck; HPT = Hand Pallet Truck

Mainly
automated

Method

Equipment

Goods to picker

Carousel station picking

100300

Fast

Large

Picker to
or goods
picker
Picker to
or goods
picker

goods
to

Conveyor/sorter

300500

Fast

Large

goods
to

Sorter e.g. Parcels

5001,000

Fast

Large

Picks per
hour

Speed

Order size
(lines)

65

Picking procedures

Pick by orders

All lines are collected for a specific customer order

Pick by label

All lines are collected for a specific customer order and labels attached to each item

Take several individual orders out at the same time

Pick by batches

Products collected for a large number of orders with the same product lines

Fewer runs but increased handling and sortation, mainly smaller orders

Pick by zones

Products are categorised into specific groups and picked from defined areas

Minimal handling, order sizes are typically high.

Cluster picking

Minimal handling, order sizes are typically high.

Reduced walking distance, increased sortation

Pick to belt

Pick by waves

Large batches of orders are collected for defined time periods

66

Pick face examples

Copyright John J. BARTHOLDI, III. All Rights Reserved

67

Order picking individual and cluster

Area picking / U path picking
C

Courtesy of VanDerLande Industries

Order Release
Point

Dispatch Area
68

Advance cluster pick

Photo courtesy of LPC

69

Pick by label
Each operator is given a
batch of labels detailing location,
quantity etc - once attached to
the products and placed in a carton
or onto a pallet the individual
pick is complete

70

Zone picking
Can be simultaneous or sequential
Dispatch Area

Products
Products

Order Release
Point

orders

Products
Courtesy of VanDerLande Industries
71

Batch Picking
Multiple orders consolidated
Order No: 100023
Picker I.D. Bulk

Customer
:JJ retail
Desp loc: A33

Order No: 100027

Picker I.D. Bulk

Customer :ACME retail

Desp loc: A33

Item code

Desc

Location

Quantity

Item
code

Desc

Location

Quantity

32345

AA battery

A100201

500

32345

AA battery

A100201

1500

32465

AAA battery

A 100601

1000

32465

AAA battery

A 100601

300

47001

Watch battery

B 111101

200

62101

Remote
control LG

C 150101

500

53007

Calculator
battery

B 171301

100

71202

RC holder
universal

C 150501

300

Pick ref:: AS177791

Picker I.D. James 101

Customer :Bulk
Desp loc: A33

Item code

Desc

Location

Quantity

32345

AA battery

A100201

2000

32465

AAA battery

A 100601

1300

47001

Watch battery

B 111101

200

53007

Calculator
battery

B 171301

100

62101

Remote
control LG

C 150101

500

71202

RC holder
universal

C 150501

500

Pick to Zero
Or
Pick and return
to stock
72

Wave picking

There are two basic planning elements and benefits of wave

picking.
To organize the sequence of orders and assignment to waves,
consistent with routing, loading and planned departure times
of shipping vehicles or production requirements, etc., to
reduce the space required for shipping dock handling to
assemble orders and load; and
To assign staff to each wave and function within a wave, with
the expectation that all the work assigned to each wave will be
completed within the wave period and more thus effectively
utilize the staffing throughout the shift.

73

Order Distribution System (ODS)

Order distribution System (ODS) is a dynamic goods-to-man

solution. It is especially strong in business processes where a
large numbers of order lines are fulfilled from relatively low
numbers of articles. Totes or cartons are transported by a conveyor
system to operators who distribute goods into order totes
controlled by put-to-light displays.
Courtesy of VanDerLande Industries

74

Random picking
Zone 1

Zone 2

Zone 3

Zone 4

75

Pick rate comparison

Velocity in order lines selected per paid person hour
SKU
velocity
Category

100

200

300

400

500

700

800

900

1000

1100

1200

Automated/semi-automated pick technologies

A
Movement category

600

Horizontal carousels

A&B

Pick to light

ABC

Voice picking

ABC

Visual
picking

C&D

RF picking

C&D

Paper pick
0

100

200

Rack and static

shelving

300

400

500

Pick to belt carton

and pallet flow

600

700

800

900

1000

1100

1200

Carousels and semi-automated systems

76

The human factor

Safety first
Ergonomic design of storage system and equipment
Light loads (max 25 kgs men, 15 kgs women)
Adequate lighting
Comfortable temperature
Clear instructions
Clear labelling
Adequate breaks
Good communication with team
77

What affects picking performance?

Pick location
identification
Product
identification

Replenishment
processes

Operating
processes
Warehouse
management
software

Order
release
strategy

Stock
availability

Picking
technology

Pick location
appropriate to
product size
and dynamics
Product
and/or
pack size
and weight

Walk
distances

Pick face
quantity
and stock
cover

Handling
unit (pallets,
totes, etc.)

Picker
training

Courtesy of The Logistics Business

78

Replenishment
When using pick or forward locations
Replenishment

is the replacement of goods picked from the

forward locations
Goods are transferred from bulk or reserve locations
This can be done overnight, at the beginning or end of a shift or
during the picking process depending on the urgency

79

Value Adding Services

Labelling
Kitting

Assembly
Packing
Tagging
Kimballing
Promotional

work (e.g. BOGOF)

80

Despatch

Random quality checks depending on product value

Pack products securely and safely
Weigh product
Recording of batch numbers, serial numbers etc.
Load manifest compilation
Loading in sequence
Load optimisation (e.g. Cubiscan)
Smooth the flow of despatches
Vehicle sealed and recorded
81

Load optimisation

Courtesy of Able Plastics

Pallet configuration no overhang

- Optimum number of cartons

Courtesy of MaxLoad pro

Vehicle load configuration

Optimum number of
pallets/cartons

82

Packing on despatch

Stretch-wrap by hand

Pallet straps (courtesy of Velcro)

Stretch-wrap machine

Shrink-wrap tunnel
(Courtesy logismarket)

Automatic carton erector and sealer

Packing station, (courtesy Cisco Eagle)

83

Housekeeping

Provision, allocation and maintenance of equipment

Replenishment of fast moving items
Dealing promptly with non-conforming, lost or found stock
Security of high value or hazardous stock
Identification of non-moving stock
Ensuring efficient space utilisation
Work flow and congestion
Cleanliness of warehouse
Review of procedures

84

Minimising Theft

Staff training and awareness

Staff vigilance
Use of CCTV
Use of lockable cages or Carousels for high value goods
Parking of cars away from the warehouse
Random searches
Regular cycle counts

Especially in dark, less accessible areas of the warehouse. These are prime areas from
which product will disappear. Same goes for inventory near exit doors. Staging areas for
both incoming and outgoing shipments may be too close to the dock doors. If no one is
around to keep an eye out, it would be easy to take something and put it in a truck.

Conduct security surveys/audits (Independent)

Use security tags for vehicles leaving the warehouse
85

Stock counting

Perpetual inventory or cycle counting

Use ABC analysis to determine how many and how often
you count which items of stock e.g. 8% of A, 4% of B and
2% of C items
Monthly, quarterly, annual stock checks
Depends on what you agree with your auditors

N.B. You need to be organised:

Whos counting, are they trained and motivated, what are you counting,
when do you count, what tools do you need.
86

Stock turn

How often stock turns over in a warehouse

How to calculate:
Divide the total throughput of items by the average number
of items in stock
Or
Divide the total cost of sales by the total average cost of
goods stored at a particular time

Examples of stock turn

100-500: Japanese manufacturing company
30-100: Good European manufacturing or distribution
10-30: Typical European manufacturing
<10: Poor European manufacturing
<2: Maintenance stores

87

Warehouse Costs
Section 5

Logistics Cost factors

16%

38%
6%
Transport
Warehouse operation
Order processing
Administration
Cost of inventory holding

8%

32%
Holding cost includes loss, obsolescence, interest, insurance and depreciation
89

Warehouse costs
UK Chartered Institute of Logistics and Transport
Survey stated that between 24% and 35% of Logistics
costs relate to warehouse activity and can be between
2% and 5% of the cost of sales
EQUIPMENT 10 - 15%

LABOUR 48-60%

SPACE 25 - 42%

90

Cost of service ()

Cost of Service improvement

60

70

80

90

100

Level of Service (%)

The cost of providing a given service is markedly higher

the nearer it reaches the perfect service (100%).
Rushton, Croucher and Baker (2010)
91

Warehouse Cost tree

Rent/Lease costs
Rates, building insurance
Electricity, Gas, Water
Building and racking depreciation
Repair and maintenance
Cleaning, security, other equipment depreciation
Wages, on costs, Safety wear, welfare
*Overtime, bonuses
Handling equipment depreciation/rental
*Running costs e.g. Fuel, tyres etc

Salary, on costs
Company cars
Salary, on costs
Company cars
Advertising

Space 25%

STORAGE

Labour 60%

HANDLING
Equipment 15%

TOTAL COST

Management and administration

Sales and marketing

Telephone
Postage
Bank charges
Insurance
Miscellaneous
Legal and professional fees
Office equipment and furniture depreciation
Information Technology (hardware & software) Office costs

OVERHEAD

* Variable costs
92

Methods of allocating costs

Traditional
Overhead

allocation by %

Activity Based Costing

93

Traditional costing methods

Traditional costing models tend to allocate overhead costs
arbitrarily.
The following table shows a typical warehouse cost structure.
Space Costs
Space as a % of total warehouse cost
Direct Labour costs
Labour as a % of total warehouse cost
Equipment costs
Equipment as a % of total warehouse
cost
Total Direct costs
Overheads costs
TOTAL COST
Overhead as a % of direct cost

1,677,000
54%
1,200,000
39%
215,000
7%
3,092,000
742,000
3,834,000
24.00%
94

Activity based costing in the warehouse

In activity-based costing, systems are designed so that any costs that

cannot be attributed directly to a product, flow into the activities that make
them necessary. The cost of each activity then flows to the product(s) that
make the activity necessary based on their respective consumption of that
activity.

Activity Based Costing looks to allocate indirect costs to processes which

accurately reflect the way the costs are actually incurred. This is in contrast
to traditional costing methods.

When looking to introduce an ABC model you need to have a

comprehensive knowledge of the company, its operations and the roles of
each of the staff members. This is normally carried out by observing the
operation for a period of time and recording how long it takes for each
activity.

95

Return on Investment
Calculation
Gain from investment (or savings made) cost of investment /
Cost of investment x 100
A similar calculation is the payback period. This basically
measures how long an investment takes to pay for itself. It does
have drawbacks however as it does not properly take into
account finance costs and opportunity costs. Opportunity cost
being what must be given up (the next best alternative) as a
result of the decision.

96

Payback period example

During a recent voice picking trial a client calculated that their ROI, by replacing
barcode scan picking was approximately 25.4% in the first year with a payback period
of nine and a half months.
The figures were as follows:
Pick productivity savings
- 52,800
Increased accuracy
- 33,600
Total savings
(TS)
- 86,400
Investment in voice (I)
- 68,900
Therefore (86,400 - 68,900)/68,900% = 25.4%
Payback period = 68,900/86,400 x 12 months = 9.6 months.
This isnt a totally accurate picture as no account was taken of the extra training costs,
effect on the business during the early stages of implementation etc.
However this does give the company a reasonably accurate picture of the potential
ROI for other similar investments.

97

Warehouse
Technology
Section 6

Warehouse Technology

Warehouse Management Systems

Automatic Identification and Data Capture (AIDC)
RFID Radio Frequency Identification
Voice technology
Pick to/by light technology

N.B. Dont automate a mess you just get to the mess quicker!!

99

Results of effective I.T. systems

Quality of
Information

Reduced Lead
Times

Reduced Errors

Minimise
Unproductive
Labour

Improved
Customer
Service

Improved
Space
Utilisation

Improved
Equipment
Utilisation

Reduced
Operating
Costs
Increased
Sales
Courtesy of Tompkins inc

Increased
profitability

100

101

Warehouse Management System (WMS)

Optimum stock location and control

Order processing
Directed put away
Slotting
Routeing and planning of pick operations
Replenishment
Task interleaving/dual cycling
Tracking and location of products from source to end user
Stock rotation
Productivity reporting
Control multi-site operations

102

Typical Warehouse Management System

Receipt Advice (manual or EDI)

Receipt

Automatic Receipt Handling

Inbound Area Stock Monitoring

Handling of standardised or client

defined Logistical Unit (LU) identifiers:

SSCC (EAN 128), Sequential ID, etc.

Tracking of LU id.

Generation of new LU ids

Product/Stock Statuses

Package Variants

Tracking of several properties (Lot, Batch,

etc.)

Interface to automated material handling

equipment (conveyors, cranes, etc.)

Automatic block/time block for

Quality Control

Quarantine

Etc.

Serial numbers handling

Vendor Managed Inventory

103

Stock visibility via Internet

104

Types of WMS Jacobs (1997)

Three levels of WMS

BASIC

ADVANCED

COMPLEX

Stock

Additional

Optimisation

only

facility to plan
resources and activity

Storing

and picking
instructions

Enables

Full

Simple

Focus

and location control

information
focussing on throughput
Possible

links to RF

synchronisation of

of warehouse or
group of warehouses
product tracking

activities
on throughput, stock
and capacity analysis

Complex

storage
replenishment, picking and
cycle counting strategies
Interfaces

with other systems

(Route planning, RFID, Freight
systems, Customs and Excise
Value

added logistics support

105

Choosing a WMS
Criteria

Weight

Vendor 1

Vendor 2

Vendor 3

Vendor 4

Rate

Score

Rate

Score

Rate

Score

Rate

Score

Software standard
function

25

75

50

125

75

Software Custom
function

20

80

60

80

80

Ability to interface

15

60

30

60

60

Hardware also supplied

15

30

45

45

60

RF System

10

30

20

50

40

Development/
Implementation service

15

10

20

15

Annual support/
Maintenance

15

10

20

15

Multi-site cost

10

10

15

10

Total

100

3.15

2.35

4.15

3.55

1 = Does not meet minimum requirements; 2 = Does not meet performance requirements by one or more factors
3 = Expected performance; 4 = Exceeds one or more requirements; 5 = Significantly exceeds performance
Tomkins Associates

106

Automatic identification (AIDC) methods

TECHNOLOGY

DESCRIPTION

Optical Character Recognition (OCR)

Readers

Use optics to scan characters that are

also readable by man

Bar code readers and scanners

Use optical methods to read reflected light

from a barcode label

Radio Frequency Identification

Use radio transmission to collect data.

The radio waves can travel through most
mediums except metal. Dont require line
of sight

Voice recognition systems

Instruction relayed direct to operative thus

allowing hands free picking

Vision systems

Use camera images to identify

characteristics. Able to compare items as
well as codes and numbers

107

Bar code and reader

2D image
108

Advances in scanning

Finger scanners

109

Radio Frequency IDentification

Transponder chip holds data

Tag antenna used to power and transmit/receive data

High frequency ID tags

110

RFID tag readers

Hand Held
Portal
Flatbed
Portable
Industrial

111

RFID Applications
Closed Loop

Inventory Management
Asset Management
Any object that has
value and needs to be
tracked to ensure
operational uptime.

EPCglobal Compliance
RFID with Trading partners
outside 4 walls. Slap n Ship
for Suppliers.

112

Use of RFID tags

113

RFID - Popular beliefs

Tags cost pence each

Tags cost 0.15 minimum (Cheaper tags are in experimental stage but wont
be available for an estimated 3 years minimum.)
Multiple tags will read in any orientation
Tags need to matched to an aerial and generally square to the aerial for best
results
RFID will replace barcodes in the next few years
RFID will only replace 10% barcodes by 2015 (Source AIM Intl. 2003)
All tags can be read from any distance
Most tags read from 5mm 2 Metres unless you are paying over 5 per tag.
Tags can be applied to most items
Most tags have difficulty reading when attached or in the proximity of liquids
or metals - A tin of beans is the worst case scenario!

114

Comparison RFID v Barcodes

25 trays per dolly

36 dollies per vehicle

Portal

Barcode Scanning = 36 x 29 secs = 1044secs =

Portal Scan

= 36 x 5 secs

= 180secs =

17.4 mins
3 mins

Reduction in data recording time = 83%

115

Voice recognition
At start
of a new
task
Warehouse
Management
System

Main
applications
Voice interface
programs
Application
Database

Voice Server
FTP server
Voice tasks and
Voice profiles
Orders,
Substitutions,
Stock
updates, etc.

Stateless
Socket task

Intermediate database

116

Voice demonstration

Vocollect

117

Why Voice Outperforms Scanning

Elapsed Time

Read Next
Location

Hear Next
Location;
Travel

Travel
to Location

Scan
Location

Speak Check
Digits, Hear
Instructions,
Perform Task

Read Qty
on Screen

Free
Hands
Place
Device
Elsewhere

Perform
Task

Locate
Device

Press
Buttons
to
Confirm

Hear Next
Location,
Travel

No manual entry, no extra steps,

no wasted time =
better productivity + improved accuracy
118

Know the Benefits

Benefit

Business Impact

Improves Accuracy

Can increase accuracy up to

99.99%

Reduces

order fulfillment errors

Increases customer satisfaction
Reduces cost of resolving issues & processing returns

Improves Productivity
Can increase productivity by 10-25%

Reduces

Reduces Training Time

Cut Training Time by 50%

Time

Reduce Operating Costs

Reduction

Improves Safety

Eases

Reduced Administrative Support and Auditing

Functions

Need

labour required to accomplish new levels of

throughput. Helps accommodate seasonal increases without
increasing headcount.
to full productivity for a new worker for scanning is
typically 2-3 weeks; voice is 3-4 days.

in annual cost of scanner equipment, maintenance

of systems, (e.g. pick to light), paper/labels/printer costs.
worker compensation claims leading to reduced
insurance costs, etc.
for secondary audits are eliminated

119

KNAPP Picking Solutions - Pick To Light

120

Put to light - Dematic

121

Comparing technologies
Pick-To-Light

Voice Picking

Cost

per Location

Cost

per Picker

Low

number of Products

High

Number of Products

Fast

Movers

Slow

& Medium Movers

100-350+

Limited
High

picks per hour

flexibility

accuracy

Simultaneous

100

200 picks per hour

Highly
High

Flexible

accuracy

and sequential picking

Possible 2 stage operation

122

Contingency Planning

Equipment down time

Labour problems
Significant changes in demand
Supply problems
Information Technology down time
Other emergencies

Managers must formulate a plan of action to avoid crisis management and

significantly reduce the time taken to employ some form of corrective action

123

Contingency Planning

Assess the main issues to be covered in a

contingency plan for a critical failure of the
information technology in a warehouse
operation

124

Warehouse
Automation
Section 7

Warehouse automation
Bar code/
scanning

Carousels/
A Frames

Inventory control
Terminals
WAREHOUSE
AUTOMATION
Warehouse
Management
systems

Radio data
Terminals
Voice terminals

Support systems

Pick by Light
Put to light

Semi-Automated picking
systems

STORAGE
High stackers
Cranes

RETRIEVAL
Automated storage
& retrieval systems
REPLENISHMENT
Conveyors
Automated guided
vehicles

ROBOTICS

Automated systems
126

Warehouse automation
Case study Tele Danmark site
Introduction of very narrow aisle miniload crane system.
Consolidated stock from 3 distribution centres and 60 small local sites into a
Single warehouse of 7,200 square metres. This handling system supported
13,500 lines and an annual throughput of 7,000,000 items.
Other benefits included:Handling costs reduced by 75%
Order accuracy improved from 62% to 96%
Duplicate stock was almost eliminated
Flexibility improved same day order despatches
Reduced labour costs
Warehouse of the month Modern Materials Handling Online

127

Advantages of Automated systems

Increased Space Utilisation

High bay narrow aisle systems (up to 30 metres high)
Random storage
Improved Control
Pallet tracking through enhanced warehouse management system
Labour and Energy Savings
No heat and light requirement
Minimum supervision required
Continuity
24 hour, 7 days per week operation
Product Security
High bay areas, Use of First in First out principles, less human intervention
Safety
Elimination of manual handling
Reduction in accidents
Can cope with hazardous/harsh environments
Integration
Coordination of product flows, avoiding bottle necks
Constant performance levels
Continuous review

128

Disadvantages of Automated systems

High investment costs

Building, equipment, Information technology
System failure, operations are entirely reliant on technology
High opportunity cost
Require standardised unit loads
Anomalies not accepted and need to be handled
separately
More quality control required
High cost of disposal of equipment
Lack of flexibility

129

AUTOMATED GUIDED VEHICLES (AGVs)

COMPUTER CONTROL OR BY HAND

MORE DURABLE THAN PEOPLE

LONG DISTANCE &/OR HIGH DENSITY TRAFFIC

SECURITY-SENSORS & GUARDS

LIMITED POTENTIAL FOR DAMAGE

RELIABLE

INDUCTION WIRE, INFRA RED & ULTRA SONIC

130

Automated guided vehicle

131

A Frame automatic pick

Courtesy of Knapp and SSI Schaeffer

132

Conveyors

Power or gravity
Single or multi-floor
Provide continuous goods flow
Buffer for loading bays or for work in progress

Example applications:
Order pick, assembly, parcel sortation
Problems:
Barriers, Detours, Bridging, Requires fixed floor space

133

Mechanical
Handling Equipment
Section 8

Influencers on the selection of MHE

Functions to be performed
Health and Safety requirements
Type of product stored and unit load to be handled
Store layout and height, including aisle width
Travel distance and speed relationship
Building constraints and environmental issues
Equipment flexibility and cost
Reliability, efficiency and ergonomics
Security
Product value
Vendors and costs
135

Choice of pallet movers

Degree of use shift length, work patterns, pallets per shift, seasonality,
peaks and troughs, special handling requirements
Travel distances and lift height, inside and/or outside the warehouse,
private/public roads, working conditions (freezer, chill, ambient,
hazardous).
Type of fuel, diesel, LPG, Electric. Available ventilation, noise level, space
for re-charging and storing batteries
Floor condition
Aisle gangway space at front and between racks can the truck turn 90
degrees. Also needs additional 200mm to its normal turning circle
Delivery and collection vehicles
Access doors, bays, overhead pipes (sprinklers)
Rack heights
Method of acquisition and maintenance
Budget
136

Vertical movement

(Courtesy of Atlet, Toyota, Central Training and Flexi),

137

Horizontal movement

Courtesy of Demag, Linde, AS Conveyor Systems and Seegrid),

138

Pallet movers
Type of truck

Minimum
Aisle width
(millimetres)

Aisle Space v
Storage space

Reach Truck

2,700

Counter Balance
(Electric)

3,200

Counter Balance
(ICE)

3,800

60%/40%

6800mm

1000kg

18

Yes

Pedestrian or Stand
on Stacker

2,400

56%/44%

6000mm

1000kg

18

Very Narrow Aisle

1,600

43%/57%

12500mm

1250kg

Articulated fork lift

2,000

48%/52%

10000mm

Double deep
racking with Reach
truck

2,900

36%/64%

10000mm

53%/47%

Maximum
Lift height

Maximum
weight at
maximum
lift height

Put-away
rate
Pallets
per hour

Flexibility internal
and
external
usage

Additional
feed truck
required

No

12250mm

1000kg

26

No

6800mm

1000kg

18

Yes

Purchase
cost

Approx.
total
pallets
stored

25,000

10,080

19,000

6,048

No

19,000

5,376

No

No

7,000 to
12,000

6,720

23

No

Yes

60,000

12,096

800kg

20

Yes

No

35,000

11,088

1100kg

24

No

No

30,000

12,600

60%/40%

No

139

Special equipment - Slip sheets

140

141

Truck attachments

Courtesy of Linde

Courtesy of Bridgestone

Courtesy of easy rack

Courtesy of Bluewater Forklift

142

Automation in handling equipment

Jungheinrich Narrow aisle truck navigation

143

Warehouse Layout and

storage equipment
Section 9

Warehouse layout
Five fundamental process objectives
Warehouse designs should be based on throughput not storage

1.
i.

ii.
iii.
iv.

Look at forecasted growth over the next five years

Evaluate the number type and physical features of the products
Understand the potential changes in product profiles over the period
Evaluate type and variability of demand and order profiles

Emphasis is placed on eliminating time, space and movement

Material and information flow should be properly integrated to avoid
delays and uncertainty
All issues should be linked to wider business issues

2.

3.
4.
i.

Understand long term market strategy

Solutions should be aligned to customer requirements

5.
i.

Potential use of warehouse as postponement centre

Ballard 1994

145

Warehouse layout - considerations

The efficient utilisation of space, equipment and

labour
Accessibility to all inventories
Protection of all items from shrinkage
Health and safety considerations
Possible need for segregation

146

Space consumption in the Facility

Dock Doors

Storage Mediums

Personnel Support areas

Cafeteria

Restrooms

Shipping and staging areas

Pre-process and handling areas

Battery charging, packaging and pallet storage

147

Calculating Dock Requirements

Using heuristics

Space =
{ Roundup (Number of loads x Hours/load) } X (size of Load x space/pallet)
time of shift
= receiving 20 loads per day
- each load is 26 pallets
- each pallet is 1m x 1.2 m
-45 minutes per load to unload vehicle
- 30 minutes per load to stage prior to put-away
- 8 hours per day work shift

Additionally

Office space required

Empty pallet and sundry space requirements
148

Calculating Dock Space Requirement

{Roundup (20 x 1.25)/8} x (26 x (1.2 x 1.0))

= 3.125 (4) x 31.2 = 124.8 square metres
Dock space = 124.80 sq. metres

Add double space for working and travel area = 249.60

Total space = 374.40 square metres

149

Warehouse layouts
Inverted T Warehouse Flow
Low usage
Items

Bulk
Storage

Medium usage
Items
High usage
items

Pick area

Goods inwards

Despatches

Advantages
Better utilisation of loading docks
Reduction in total area required
Increased flexibility
Unified management of
merchandise flow
Better security control
Ability to extend warehouse
Improve employee comfort and
reduce heat loss

Disadvantages
Congested central area
Potential friction between inbound
and outbound teams

150

Warehouse layouts
Cross flow or U flow Warehouse
Low usage items
C
Medium usage items
B
High usage items
A

Goods inwards

Advantages
Better utilisation of loading docks
Reduction in total area required
Integration of bulk and picking
stocks
Unified management of
merchandise flow
Better security control
Disadvantages
Congested aisle areas
Potential friction between inbound
and outbound teams
Grouped product may not be
stored in the same area

Despatches
151

Warehouse layouts
Corner Warehouse
Low usage items

Medium usage items

Advantages
Less disruption at the loading bays
Disadvantages
More difficult to expand without major
changes internally
Increase security required

High usage items

Despatches

Goods inwards
152

Warehouse layouts

Goods inwards

Through Flow Warehouse

Low usage items

Medium usage items

Advantages
Less disruption at the loading bays
Natural flow of goods
Disadvantages
More difficult to expand without
major changes internally
Increase security required
Possibility of requiring 2 exits from
the yard

High usage items

Medium usage items

Despatches

Low usage items

153

Battery
charging

C
C

C
Item picking

Short cut through racking with reserve storage above

B
A
Packing area

Empty pallet Full carton pick at floor level, reserve storage above
storage

A
Flow rack with reserve storage above

154

Warehouse layout diagrams

1

MHE Charging Area

Office & Mezz Floor

Despatch Overspill

Despatch Area

Damages

66 m

115 m

Goods Receipt
8

10

The Right Answer?

Typically there is
no one definitive
answer for your
warehouse
Design is a trade
off between
travel, handling
and Storage

Travel
Handling
Storage

Finally dont forget about the outside of the building!

156

External areas

N.B. At large DCs over 60% of the site area can be allocated
to roadways, parking, and external activities.

Make sure that:

The site has a secure perimeter

Employee car parking is secure and separated from the warehouse
Proper routes are defined and marked for commercial vehicles
Adequate parking is provided for commercial vehicles and cars
All access and egress is security controlled
Pallets, cages, waste items are stored neatly in a designated area
Pedestrian routes are properly defined with safety in mind
Ensure there is enough room to manoeuvre all the vehicles without
causing congestion
Courtesy of LPC

157

Calculating Storage Space Requirement

Determine the type of storage medium and the sq.m./pallet configuration

Determine the Height of the storage chamber and the max lift height of the
MHE

Include Aisle spacing and work space requirement for the end of the aisle

H2

H1

W1

W2

H = H1 + H2 + ..... + Hn + (n-1) * Z

W = W1 + W2

158

Pallet quantity calculations - width

Module Width = width of aisle + 2 pallet length (short side) + 100
mm
Aisle = 2,500mm (variable with type of MHE used)
Two pallets = 2,000mm (2 x 1,000mm)
Clearance = 100mm between back to back pallets
Aisle

Aisle

Aisle

Therefore:
Width of module = 4,600 mm (the sequence is pallet aisle
pallet - clearance)
159

Pallet quantity calculations - length

Module Length = width of upright + clearance +2 pallets (long
side)
Rack upright plus clearance = 420 mm (120 mm + 3 x 100 mm)
Two pallets (long side) = 2,400 mm (2 x 1,200mm)

Therefore:
Length of module = 2,820 mm
(the sequence is
upright/clearance/pallet/clearance/pallet/clearance)

160

Pallet quantity calculations - height

Module Height = Height of goods on pallet (e.g. 1.20 metres)
+ 150 mm (pallet height)
Total Pallet height = 1,350 mm
Clearance above pallet = 150 mm
APR beam width of 140 mm
Therefore:
Height of module = 1,640 mm

161

Pallet calculation
Total pallets stored within cubic capacity of a
warehouse section, excluding receiving and
despatch areas, gangways and other areas
(No. of width modules x pallets in module width) x (No. of length modules
x pallets in module length) x (No. of height modules) = No. of pallets into
cube volume of warehouse.
So for a warehouse section with a width of 48 metres, a length of 120
metres and a height of 10 metres.
Width = 48/4.6
= 10
Length = 120/2.82
= 42
Height = 10/1.64
=6

Therefore total = (10 x 2) x (42 x 2) x (6) = 10,080 pallet locations in this

warehouse storage space
162

Pallet storage

Long-side handling, (where the longest side of the pallet is picked up by

the forklift truck) helps to prevent pyramid picking from the pallet.
The picker has to reach in only up to a maximum of 1 metre (instead of 1.2
metres if short-side handling is used).
Short-side handling, however, allows more pallets to be fitted into a given
run of racking. For example, a run length will hold 30 pallets if short-side
handling is used but only 25 pallets if long-side handling is used.
Short side handling of UK pallets also means that Euro pallets can also be
stored in the same locations.
Introduce an access tunnel for long runs of racking

163

H = H1 + H2 + ..... + Hn + (n-1) * Z

Space calculation

H2

H1

W2

T
Y3

Y2

Y1

W = W1 + W2

Y = Y1 + (2*Y2) + Y3

W1

164

Capacity utilisation

Warehouse managers are tasked with making use of the

whole cubic volume of the warehouse taking into account
accessibility, practical utilisation limits, cost and accountability
Consider introduction of mezzanine floors for example e.g.
space above dock doors

Courtesy of AWS Ltd and Cisco Eagle

165

Main types of storage systems

Block stacking
Wide aisle racking
Cantilever racking
Narrow aisle racking

Automated
Manual

Drive-through/ Drive-in racking

Sliding or Mobile racking
Double deep racking
Flow or Live racking
Mezzanine
Carousels

166

Storage Equipment
Bulk Storage/Block Stack
High density storage on the warehouse floor.
Unit loads stacked on top of each other
Best for large quantities of a single SKU (stock keeping unit)
Allowable stack heights (3 or 4)
Low utilization threshold

167

Storage Equipment
Adjustable Pallet Rack APR
Consists of uprights, beams and back supports
Anchored to floor with adjustable beams
Must know weight capacity, width of rack opening and the distance
between load bearing beams
Flexible and easily reconfigurable

168

Storage Equipment
Cantilever Rack

Storage of long materials such as piping or wood products

High capital cost per square foot
Higher density for multiple SKUs

169

Warehouse storage methods

Narrow aisle racking
Consists of uprights, beams and back supports
Anchored to floor with adjustable beams
Requires less space than APR
Must know weight capacity, width of rack opening and the distance
between load bearing beams

170

Storage Equipment
Automated Storage/ Retrieval Systems
High capacity
Great for high value items

171

Storage Equipment
Drive-in/Drive Through Rack
Similar to pallet racking but the forklift can drive into the rack
High density storage medium for large quantities of single
SKUs
Need good quality pallets
LIFO - Drive In
FIFO - Drive Out

Courtesy of LPC

172

Storage Equipment
Sliding Rack or Shelving
Mounted on guides or rails
Highly space efficient
Very effective for small parts and high SKU
Strong medium for slow moving parts

173

Storage Equipment
Double Deep Rack
High Density Storage medium
Must use reach truck only
Use of longer forks
Requires multiple pallets of Single SKUs

174

Storage Equipment
Flow or Live Rack
Great for carton flow and piece pick
Many SKUs in small footprint
Supports high speed and slow moving product
Needs same product in the line
Designed for High speed picking

175

Gravity flow versus static shelving

Courtesy of Cisco Eagle

176

Storage Equipment
Satellite/Shuttle racking
No aisles
Many pallets in small footprint
Supports high speed and slow moving product
Good utilisation of space at the loading bay
Continuous flow

177

Automation in storage

Proctor and Gamble pallet sequencer

178

Warehouse Capacity Planning Graph UK Pallet

1200 mm Entry x 1000 mm Deep

Note: This chart includes an allowance for marshalling areas and cross aisles.

179

Mezzanine

Utilises the cube of the building

Spare parts storage
Value adding services
Position above loading doors
or internal offices where feasible

180

Storage Equipment
Carousel
High capacity storage for pick and pack
Brings parts to operator
High speed picking solution if multiple carousels used
Reduction of travel by SKU

181

Decision table
Wide
aisle

Narrow
aisle

VNA

Drive
in

Double
deep

Live
storage

Mobile
racking

Floor space utilisation

4.5

4.5

Cubic space utilisation

3.5

3.5

Access to each pallet load

3.5

Speed of access

2.5

Stock rotation

Stock control and mgt.

Specialised mhe (in terms

of cost)

No
5

Yes
2

Yes
1

No
5

Yes
3

No
5

No
4

Ease of re-location

Speed of installation

Beam adjustments

Total

42

37

31

27

30

37

29

Advantages/disadvantages marks out of 5

182

Sequence of simulation activities

Planning

Realisation

Experimentation

WHY

Collect Data

Define scenarios

WHAT

Perform flow analysis

Run scenarios

WHEN

Specify model

Analyse outcomes

WHO

Create (simulation) model

Document results

HOW

Verify and validate model

183

Performance
Management
Section 10

Performance and Productivity Standards

Why do we need performance and productivity

standards?
Discuss.

185

Performance monitoring
You cannot manage what you cannot measure.

You need to monitor performance against the criteria that are

important to your customers

You need to monitor performance against the criteria that are

important to you (costs).

186

Operational Approach to Performance Monitoring

1. Determine the scope of logistics activities.
2. Identify the organisation and departmental
objectives.
3. Determine operating principles and methods.
4. Set productivity and performance goals.
5. Measure and monitor performance.
6. Benchmark if possible
7. Take corrective action if necessary.
Rushton, Croucher and Baker (2010)

187

What to measure against?

Historical data
Budget
Engineered standards
External standards and benchmarking

Rushton, Croucher and Baker (2010)

188

Good practice in Performance Monitoring

Accuracy of data
Validity / completeness
Hierarchy of needs / targeting of correct
audience
User ownership
Reactivity to changes in business activity
Timeliness
Ease of maintenance
Cost-effectiveness
Rushton, Croucher and Baker (2010)
189

SMART

A performance monitoring system needs to be

SMART

S Specific
M Measurable
A Achievable
R Relevant
T Timely

190

Traditional warehouse productivity measures

MEASURE

CALCULATION

Man hours

Labour hours used

Labour hours available

x100

Space used
Space available

x 100

MHE hours used

MHE hours available

x 100

Warehouse floor area

MHE utilisation
Picker utilisation

Actual case picks achieved

Expected case picks per picker x 100

Cost per activity

Actual cost
Expected (budgeted cost)

x 100

Need to be as close to 100% as possible with one exception.

191

Traditional warehouse benchmarks

MEASURE

CALCULATION

Orders per hour

Orders picked and packed

Total warehouse labour hours

Lines per hour

Lines picked and packed

Total warehouse labour hours

Items per hour

Items picked and packed

Total warehouse labour hours

Cost as a % of sales

Total warehousing costs

Total revenue

Cost per order

Total warehouse Cost

Total orders shipped

192

Direct Labour Cost per Item

0.50

0.45

0.43
0.41

0.40
0.37

- 42%

0.35
0.31
0.30
0.27

0.25

0.25

0.25

Jan-02

Jul-02

Mar-03

0.25

0.20

0.15

0.10

0.05

0.00
Jul-99

Jan-00

Jul-00

Jan-01

Jul-01

193

Productivity Examples
Items per man hour
90

80

79

80

Jan-02

Jul-02

82

75
71

70

63
59

60

55
50

40

30

20

10

0
Jul-99

Jan-00

Jul-00

Jan-01

Jul-01

Mar-03

194

The perfect order

On time in full, damage free and all the correct paperwork

Example:
On time
In full
Damage free
Correct paperwork

98%
97%
99.5%
91%

Perfect order % =

86.1%

195

Integrated Performance Models

Category

Target rating

Weight

Target
Score

Rating

Actual score

Customer service

40

200

12345

120

Safety

40

200

12345

200

Inventory accuracy

30

150

12345

150

Space utilisation

20

100

12345

60

Labour productivity

20

100

12345

80

IT Downtime

20

100

12345

100

Equipment maintenance

10

50

12345

30

Equipment utilisation

10

50

12345

40

Building facilities

25

12345

25

Housekeeping

25

12345

20

TOTAL
Performance Index

1000

825
82.5%

Adapted from Tomkins Associates 2002

196

Order Fulfilment Measures

MEASURE

DEFINITION

CALCULATION

On-time delivery

Orders delivered as per customers

requests

Total orders shipped on time

Total orders shipped

Order fill rate

Orders filled completely on first

shipment

Orders filled completely

Total orders shipped

Order accuracy

Orders picked, packed and shipped

perfectly

Orders shipped without

errors
Total orders shipped

Line accuracy

Lines picked, packed and shipped

perfectly

Lines shipped without errors

Total lines shipped

Order cycle time

Time from order placement to

customer shipment

Actual ship date customer

order date

Perfect order
completion

Orders delivered without changes,

damages or invoice errors

Perfect delivery orders

Total orders

197

Inventory Management Measures

MEASURE

DEFINITION

CALCULATION

Inventory Accuracy

Inventory quantity compared to systemreported quantity

Actual quantity by SKU

Reported quantity by SKU

Damaged Inventory

Damage measured as a % of inventory

value/throughput

Total damage ($)

Total inventory or sales value

Days on Hand

Average sales days of inventory on

hand based on historical sales

Average inventory value

Average daily sales (past
month)

Storage Utilisation

Occupied locations as a % of total

available locations

Average no. locations occupied

Total available locations

Dock to stock time

Average time from carrier arrival to

available for picking

Average dock to stock hours per

receipt

Inventory Visibility

Time from physical receipt to customer

service notice of availability

Time of host system receipt data

entry time of physical receipt

198

Warehouse best practice WERC metrics

Measures

Best in class

Median

Typical

Opportunity

On time
shipments

99.8%

98.5%

98 and <99.1

<95.7%

Order cycle
time

<5.4 hours

33.5 hours

22.9 and <48 > 72 hours

Dock to stock
time

<2 hours

6 hours

4 and < 8

>18.1 hours

Lines pick and

shipped per
hour

81 lines

29.9 lines

25 and <43

<14 lines

Order pick
accuracy

99.5%

98%

99.1 and
< 99.7

<98.3%

98.8%

97.5 and
< 99.1

<93.4%

Inventory
99.8%
count accuracy

WERC Watch Spring 2012

199

Measures that matter to Senior Management

Measures

Best in class

Median

Typical

Opportunity

Cost as a % of
sales

1.6%

3.7%

2.9 and <4.7

>8.9%

Workforce
turnover

<1%

5%

4.2 and <8.7

>15.1%

Inventory days
of supply

<21.2 days

37.4 days

32.8 and
<50.7

>100.4

Perfect order
completion

99%

95.3%

94.8 and
<97.3

<83.6%

WERC Watch Spring 2012

200

Average Days of Sales held in inventory- USA

DIO means how many days of sales a company is holding in inventory, and which REL defines as:
End of Year Inventory Level/[total revenue/365] Data compiled by Supply Chain Digest from info received from REL.

201

Exercise

What are the consequences of poor service in

terms of sending the either the wrong product
or wrong quantity of product to a customer?

202

Effects of sub-standard service

Finance department is affected by delayed payments and possible

penalties
Inventory department has to provide extra stock cover
Sales department has to handle complaints and authorise returns
Transport department has to effect extra deliveries and collections
Warehouse has to re-pick, re-pack and duplicate activities
Returns procedure has to take place
Possible product disposal/write-off
Review of processes needs to take place
Potential additional training required
Loss of product if client retains over delivery of product
Potential loss of customer

203

Cost of a warehouse error

Volume

Occurrence

Approx. cost
per occurrence

Despatch
errors (96%
accuracy)

50,000 orders

4.0% error rate

$45

$90,000

Shrinkage/loss

$7,000,000 in stock 1.0%

0.1% x $7m
in inventory

$70,000

Data entry
error

100,000
transactions

4%

$10 per entry

$40,000

Miss-placed
product in
warehouse

50,000 orders x 5
lines per order

2%

$2.50
Based on 10
minutes
searching at $15
per hour

$12,500

Total

Total cost

$212,500

(Adapted from Red Prairie 2010)

204

Customer service

Ensure KPI are aligned customers perception

could be totally different to yours

E.g. 100% despatch of whats available from the warehouse

doesnt mean its what the customer ordered.
Despatch within 24 hours of the warehouse receiving the
order from sales may not been 24 hour despatch to the
customer!

205

Performance management

Regular operational meetings

Weekly, monthly, quarterly
Post results on Notice Boards
Team targets and achievements
Bonus schemes
Internal and external, team and individual
Penalties
Gain share if outsourcing

206

Health and Safety

and Legislation
Section 11

Fork truck accidents

Call for regular maintenance following near-fatal accident
Directors fined after worker loses leg in forklift accident
Easilift loading bay management system prevents accidental
drive-offs
Global storage firm fined for forklift accident
Lidl fined for forklift accident
Major retailers fined over flt accidents
Serious fork lift truck accidents on the rise says FLTA
Serious forklift accidents on the rise says Mentor
Thorworld safety aids help prevent loading bay accidents
UPDATE: Forklift driver killed in town centre accident
UPDATE: Forklift mechanics death was accidental
UPDATED: Man dies in forklift accident
Vinyard loses third of production in forklift accident

208

HASWA responsibility for Health & Safety

Manufacturers duty

Ensure product is safe to use and

fit for purpose

Employer duties:
Provide:
Safe plant & systems of work
Safe handling, storage, etc.
Information, instruction & training
Safe place of work
Safe environment & welfare

Employee duties:
Look after their own H&S
Not endanger others
Co-operate with employers on H&S
Not interfere with or misuse items supplied
for H&S purposes

Remember that individuals can be prosecuted

under this legislation as well as companies
209

MHE Mechanical handling equipment

Select responsible staff to be trained

Ensure staff are trained by a competent trainer
Follow the manufacturers handbook
Undertake pre-operational checks as per the handbook
Undertake daily and weekly checks and record any defects
ensure supervisor countersigns the check list
Only allow suitably trained staff to operate the equipment

210

Fork truck maintenance

Daily check or pre-shift commencement

Weekly checks or after 50 hours operation
Six monthly check or after 1,000 hours operation
Tyre pressures and condition, brakes, lights and audible
signals, fluid levels, batteries, lifting and tilting systems
Steering, lifting gear, condition of mast, fork, attachments,
hydraulic pipes
All working parts

211

Racking maintenance
Is the equipment on sound, level flooring?
Is it still installed correctly?
Are double sided runs connected properly?
Are the aisles wide enough?
Are the beam connector locks securely fastened?
Are the racks aligned properly?
Are the correct pallets being used?
Are the pallets in good condition?
Is there any visible damage?
When were they last inspected?
Are there signs on the end detailing weight
capacities?
Are staff trained properly?
Are there any receptacles for rubbish e.g. Shrinkwrap, packaging, broken bit of pallet.

212

H & S accident pyramid

The Accident Pyramid

1 fatal accident
10 serious
injuries
30 property
accidents
600 near misses

Record, Investigate, Action, Train, Review

www.hse.gov.uk
Continually undertake Risk Assessments!!!
213

Risk assessment and duty of care

50%
45%
40%
35%
30%
25%
Causes of major injury

20%

Causes of 3+ days absence from work

15%
10%
5%
0%

Slip or trip Manual Falls from Hit by

handling height moving,
falling
object

Hit by
Hit
Other
moving something kinds of
vehicle fixed or accident
stationary

N.B. More litigation than ever before

214

The principles of risk assessment

Any company with 5 plus staff needs to carry out
risk assessments under the Management of Health &
Safety at Work Regulations 1999
These Regulations are law under the Health & Safety
At Work Act 1974
Risk assessments are designed to measure the risk of a
hazard causing harm (its likelihood and severity)
weighed against the cost of the measures necessary to
avoid that risk (including money, time, trouble, effort &
sacrifice)
They must be suitable and sufficient and carried
out by a competent person

215

Risk assessments explained

Hazards things with the potential to cause harm

Risks the harm that the hazard could cause
Those affected people who could be harmed
Existing controls things already in place to prevent harm
occurring
Likelihood score out of five relating to the chance of the harm
occurring (1 very unlikely, 5 very likely)
Severity score out of five relating to the worst possible outcome (1
is minor injury, 5 is death)
Risk factor the 2 scores multiplied together to get a score out of 25
Risk levels High risk 16-25, Medium risk 5-15, low risk 1-4
Remedial actions things which can be done to avoid the risk (NB
avoiding the risk is the best remedial action; physical
barriers/segregation are next then lastly providing information and
training and protective equipment).
Action plan This identifies who has to do what, by when, in order
to reduce the risks to an acceptable level
216

Risk assessments
You are working in areas of vehicle movement
including LGVs and Fork Lift Trucks.

Seventy people a year are killed in workplace

transport accidents.
Avoid staying in these areas longer than is necessary.
Always ensure staff wear high visibility jacket and
safety boots

Take dangers seriously

217

Resource Planning &

Labour Management
Section 12

Organisation Chart
General Manager

Warehouse Manager

Early Controller
Goods-In
Foreman

Operatives

Picking
Foreman

Operatives

Late Controller
Outbound
Foreman

Stock Controller

Inventory
Clerks

Administration

Operatives

219

Resource Planning

Balance warehouse throughputs between days

Maximise the utilisation of resources and avoid idle
time or additional costs through overtime
Normally daily or weekly planning

220

Controlling labour productivity

Time and motion studies

Determine time period
Determine number of pallets/cases/units handled
during the period
Determine total hours worked in the period for all
activities
Divide total number of cases by total number of
minutes to determine case per minute throughput

221

Establishing timings
Manual operations

Time taken

Pick up and put down small pallet

Pick up and put down carton
Walking empty handed
Walking with hand pallet truck

Fork truck operations

Pick up and put down pallet (PU/PD)

Hoist up and down (HU/HD)
Travelling

10 seconds
20 seconds
61 metres per minute
30.5 metres per minute

65 seconds
20 seconds per metre
120 metres per minute

Also need to take into account

1. preparation (collecting, equipment, pallet, paperwork)
2. Human factors (Skills, motivation, fatigue)
3. Mechanical factors (battery changing, attachment changes, re-fuelling)
4. Operational factors (location system, product placement, congestion)
Can be up to 75% of total time
222

Timed events

Daily volume (Average)

Activity Description

Put-away
Collect pallets, putaway in wide aisle
racking
Collect pallets, put
away in drive-in racking
Collect pallets, putaway in pick locations

Productivity
standard
(units per hour)

Hours
required

MHE
type

Other
equipment

RFS

Activity
(units)

Unit of
measure

198

Pallets

24

8.25

FLT

300

Pallets

16

18.75

FLT

Pallets

0.4

PTE

RFS

223

Activity profiling
Main Warehouse: Daily Activity Profile
25%
20%
15%

10%
5%
0%

Ave

Peak

Intake - Plts
Day 1

Ave

Peak

Intake - Loose
Day 2

Day 3

Ave

Peak

Ave

Despatch
Day 4

Day 5

Peak
Other

Day 6

224

Staff management hours of work

The classic shift pattern is as follows:
Shift 1
Shift 2
Shift 3
Shift 4

0600 1400 hrs

1400 2200 hrs
2200 0600 hrs
0900 1700 hrs

Monday wk 1
Tuesday
Wednesday
Thursday
Friday
Saturday
Sunday
Monday wk 2
Tuesday wk 2

Team 1
0600 1800
0600 1800
0600 1800
0600 1800

0600 1800

Disadvantage no shift overlaps

Team 2
1800 - 0600
1800 - 0600
1800 - 0600
1800 - 0600

Team 3

Team 4

0600 1800
0600 1800
0600 1800
0600 1800

1800 - 0600
1800 - 0600
1800 - 0600
1800 - 0600

1800 - 0600

Others: School hours, twilight shifts

Match available hours to demand!!

225

Staff management - supervision

A recent survey carried out by Cranfield University showed
the average number of operators per supervisor were as
follows:
Small warehouse (<10,000 square metres) 1 supervisor per 8 operators
Large warehouses (>10,000 square metres) 1 supervisor per 15 operators
Todays supervisor should have eight critical attributes:
Excellent communication skills
Ability to delegate effectively
Motivational
Problem solving skills
Comprehensive knowledge of company processes and procedures
Be customer oriented
Teamwork skills
Flexibility
226

Management skills - teamwork

Team-working skills and capabilities include:
Ability to work in a group
Ability to build relationships
Emotional intelligence
Ability to cope under pressure
Negotiating skills
Ability to cooperate
Coordination and allocation of tasks
Influencing skills
Ability to compromise where necessary
Ability to make decisions

227

How to engage warehouse staff

Invest in training for all parts of the workforce - full time and temporary.
Produce worker instruction manuals in user-friendly formats and multiple
languages if the workforce mix justifies it

Provide a simple process flow map to show the end-to-end supply chain and
how each step impacts the final customer so you engage your warehouse staff
and make them feel part of the bigger process
Where possible, give your staff an opportunity to see and work through the
whole delivery centre process right up to the point of the retail store
Providing clear guidance on what you expect from your staff through visible
KPIs

Providing corporate branded items such as clothing creates a sense of

belonging, especially for third-party logistics providers
Give third-party logistics provider staff the same staff discount

Ensure communication is simple, clear and concise

228

Staff management
"Managing and motivating our distribution colleagues is a key
priority and something we are always trying to do better. Effective
two-way communication is an important enabler for this. "We aim to
have regular discussions with colleagues on their own and their
team's performance as well as business information on Argos as a
whole. We have communication champions at each site who help
link the sites to the centre," she says.
"Walk & Talk" - where a senior manager swaps roles with an
operative - regularly. "Any improvement to the operation is
highlighted and implemented if it's felt it would help. This is an
effective way for warehouse operatives to feel that senior
management recognise what they do,"
"If you get the culture right and the atmosphere, structure and
progression right, it's not that difficult to get a motivated team,"
229

Exercise Resource Planning

(See separate sheet)

230

Outsourcing
Section 13

What is Outsourcing?

Outsourcing is about taking something that isnt

your organisations core competence and getting
a specialist to run it more efficiently.
Richards (2011)

232

High

Partnership outsourcing
approach

Core activity.
Do not outsource!

Transactional outsourcing

Decision based on financial

considerations

Low

Potential value to the

organisation

The outsourcing decision

Low

High
Organisational Expertise
Vitasek (2010)

233

Advantages & Disadvantages

Advantages

Focus on core competence

Access to wider knowledge
Capital cost / investment reduction
Fixed costs converted to variable costs
Economies of scale
Operating cost savings
Improved service
Greater flexibility
Value added services
Ease industrial relations problems

Adapted from Rushton and Walker (2007)

234

Advantages & Disadvantages

Disadvantages

Lack of appropriate experience with client products

Cultural incompatibility
Loss of control
Loss of expertise
Loss of direct customer contact at delivery
Confidentiality issues
Changeover costs
Potential overall cost increases

Adapted from Rushton and Walker (2007)

235

Process to Outsource
2A. Produce
baseline and
benchmark

3. Identify
Potential Service
Providers

2. Identify Type
of Service
Required

1. Review Scope
for Outsourcing

10. Manage
Ongoing
Relationship

9. Mobilize and
Implement

4. Produce RFI
and Shortlist

Key Steps of the

Contractor Selection
Process

8. Contract
Determination

5. Prepare and
Issue RFP

6. Tender
Evaluation and
Comparison
7. Contractor
Selection and
Risk Assessment

Adapted from Rushton, Croucher & Baker (2010)

The Environment
and the future of
warehousing
Section 14

Environmental issues

The Environment Act 1995

Noise, vibration and visual intrusion
Exhaust emission and waste management
Waste management (WEEE- Waste Electrical & Electronic Equipment)
ISO 14000- Environmental Management
Health and Safety
Hazardous product handling
Ergonomics
Absenteeism
Fatigue
High error rates

238

Environmental Initiatives

Roof lights optimise natural daylight into the warehouse, minimise night time light
pollution and generate power for use in the building
Naturally heated air used for internal heating
Solar thermal hot water system pre heats water for use in the offices
Roof mounted photovoltaic panels supplement the buildings electrical power
supply
Under floor heating to warehouse
Energy efficient lighting in the offices linked to movement detectors
Air tightness
Utilisation of thermal mass within the offices providing heating and cooling savings
Natural ventilation within offices
Rainwater collection for re-use in offices
Low water use sanitary appliances, leak detection and enhanced water metering
Kinetic energy plates provision in the access road produce power when driven over
by vehicles entering or leaving the site

239

John Lewis at Magna Park Milton Keynes - 2007

CO2 Emissions Saving 40% CO2 pa (1,100,000 kg)
Energy Usage Saving 18% pa (2,500,000 kwh)
Water Usage Saving 45% pa (1,500,000 litres)
Operating Cost Saving 250,000 pa

240

Environmental improvements for all warehousing

Energy efficient lighting systems

Zonale lighting
Clean skylights and clerestory windows
Underfloor heating
Area for onsite recycling
Water conservation measures
Low-emitting sealants, adhesives and carpet
systems
Bicycle, hybrid and carpool vehicle parking
Using zoned or time-controlled thermostats Prologis 2011
241

Warehouse energy usage

12%

Warehouse lighting

3% 2%
1%
1%
3%

Office lighting
Battery charging
Vending machines

7%

6%

Fans and pumps

65%

IT
Space heating (kerosene)
Domestic hot water - gas oil

Space heating - gas oil

Source: http://www.ukwa.org.uk/_files/23-carbon-trust-23.pdf

242

Checklist for Potential Energy Savings

Initiative

Potential Saving

Switch off all non-essential lighting out of business hours. Install timers.

10% of lighting costs

Install photocell controls to switch off some lighting on brighter days .

20% of lighting costs

Replace traditional tungsten lamps with energy efficient, compact

fluorescent lamps (CFLs) to reduce operating and maintenance costs

75% of tungsten lighting costs

Experiment with switch-on times for heating and air conditioning and
switch off well before closing

20% of heating and cooling costs

Ensure thermostats are set correctly increase temperature set-point

for cooling and reduce set-point for heating

A 1C reduction in temperature
during the heating season can
cut costs by 8%

Install time controls so that equipment (such as escalators and vending

machines) and only run during business hours

15% of power costs

Set a gap or dead-band between heating and air conditioning control

temperatures of about 5C to avoid them operating at the same time

10% of heating costs

Turn off unnecessary equipment during the day and especially out of
hours to reduce heat build-up

5% of energy costs

Check insulation levels and increase wherever practical to reduce

heating requirements

5% of energy costs

Walk around your site at different times of the day and during different
seasons to see how and when heaters and coolers are working. Check
time and temperature settings

5% of heating costs

Source: http://www.ukwa.org.uk/_files/23-carbon-trust-23.pdf244

The future

An acknowledgement that reducing warehousing and storage costs is

essential
Automated stores and computerised systems make it possible to better
manage these facilities
Trade-offs between higher customer service levels, low inventory and
low operating costs need to be balanced
Changes in business practices through the implementation of JIT, Lean,
Kanban and Kaizen concepts
Better logistics systems, improved supply chain integration, visibility
and collaboration
Time compression reducing time consumed in business processes.
Elimination of non-value-added time.
Shortage of good quality staff at all levels
Ageing population
Robotics
Increasing cost of fuel
The Green agenda

245

Mega-warehouses?

Quinn Glass Liverpool - 180 x 290 x 35 metres high

250,000 pallet capacity
(Courtesy of Stocklin)

246

Vision picking by Knapp

247

Robotics

248

Robo pick by Kiva

249

Automated warehouses

250

Will we need warehouses?

3D copying

251

Course review