Redesigning the replenishment model for warehouse space optimization of Mulund Plant

Sourav Bhattacharya Pinaki Ghosh Soumya Mukherjee NITIE, Mumbai

Johnson & Johnson, Mulund Plant

Plant Description Raw material & packing requirements Sourcing of raw materials
3 manufacturing set-ups : Powder, sanitary napkins and band-aid Main warehouse stores the raw material , packaging material and finished products Sanitary Napkins : Wood pulp,, sheet rolls, soft tissue papers , gum etc. Baby powder : Powder cases , Chemical products , fragrance and others Band Aid : ETS, glue and others Items are sourced from local suppliers of Maharashtra as well as suppliers across India (like Rajasthan and others) The lead time & days of Inventory in hand is more for materials which are sourced from far-away suppliers and for items which are critical in nature (from production point-of-view) Items are kept on pallets and stored on racks. Heavy & high-volume items (mostly the finished products stored in large cartons as per the SKUs) are loaded/unloaded using fork lifters. Light & low-volume items (mostly raw materials and packing materials ) are loaded/unloaded manually. Baby powder and band-aid : finished products are transferred from the plant warehouse -> Central Distribution Centers ( 2 in nos. located at Ghaziabad and Bhiwandi) -> CFAs (22 in nos. across India) -> Local Distributors -> Retailers Sanitary Napkins : Finished products are directly transferred to the CFAs (since they are high volume and less-expensive items with good roundthe-year demand)
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Storage / Warehousing

Selling & Distribution

Current Replenishment Model

Production Planning & Control Team Prepares the daily and weekly production schedule Raw material Procurement Team Orders for the material based on their lead times and criticality Warehouse Management Team Stores RM and packing materials. Finished goods are stored for a short time & then sent to CDCs and CFAs -

Marketing Team Finds out the demand for the product

Products have different demand seasonality and fluctuations Production of Johnsons baby and sanitary napkins have risen resulting in additional manufacturing capabilities A robust method of inventory forecasting & management technique is essential to avoid problems of excess inventories , increased raw material costs and increased shipping costs

Characteristics of Demand Driven Supply Chain Model of J & J

Demand is generated at the customer end and the entire supply chain is aligned accordingly using a SCM system

This customer-pull is based on inventory planning triggers & requires the marketing, procurement , production and distribution teams to work in a more synchronized manner

Vendor-development and training is followed to develop more than one vendor for a particular raw material.

Best in class Warehousing practices

Warehouse for FMCG requires:
Real-time, prompt and precise information about demand No discrepancies between production and shipping, improvement of production planning Accurate and in-time picking Decreasing errors in warehouse operations such as product mis-pulls Inventory Modelling by way of push allocation , constraint-supply allocation , and inventory layering (which provides a snapshot of the amounts spend on different kinds of inventory)

To fulfil above requirements the following are used:

Setup demand driven supply chain to get live status of the demand
SAP solutions for demand management, collaborative response management

Implementing Kanban system for easy ordering and replenishments Adopt proper layout strategy to facilitate faster handling of SKUs
Classification of SKUs into A,B.C classes based on movement velocity

Use of RFID technology to reduce labor and logistics cost

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Benchmarking of warehouse practices

Benchmarking: The benchmark scope typically includes productivity, quality,
time and cost. The objective of this activity is to improve from learning the performance measurement in order to execute things better, faster, and cheaper. Industry Standard
The graph gives information about the total number of warehouses v/s their sq ft area covered for all FMCG Companies in India Typical warehouse cost distributionOrder picking(50%), Storage (20%), Receiving (15%) and Storing (15%)

The different activities and the corresponding KPIs are listed below : Receiving : Cost of Receiving per receiving line, Volume received per man-hour, Receiving Dock door utilization %, Accurate receipts %, Time taken to process a receipt Put Away : Cost per put-away line, Put-away per man-hour, Utilization % of labour and equipment, Perfect put-away %, Time taken for each put-away Storage : Storage cost per item, Inventory per sq.ft, % Location and cube occupied, % Location without inventory discrepancies, Inventory days on hand Shipping : Cost of shipping per order, Order process for shipping per man hour, Utilization of shipping docks in %, Perfect shipping %, Shipping time (from the time order picked to physically movement of the truck) per order
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Warehouse Operations , Mulund Plant

Warehouse Practices (As-Is)
The warehouse receives the raw materials and packing items from the suppliers & updates the inventory in the SCM system

Warehouse Practices (To-be)

New items should be produced only when the previous goods have been dispatched. This would minimize waste and increase productivity

The raw materials and packing items are kept on pallets and stored on racks (static storage system is prevalent).

JIT should be adopted. Order of raw materials should be done only to replace the consumed items.

Each item has got an unique identification code

Each rack is numbered with code-range of the products that it contains to facilitate easy tracking

Kanban cards can be put in the racks whenever an item is removed. These cards can then be passed on to the procurement department for ordering of materials

Color coding of the racks and pallets can be done based on A , B and C class items to facilitate their easy storage and retrieval

Fork lifters are used to move heavy and large volume items while smaller items are moved manually

Kanban cards , FIFO method and marked pathways are currently not employed in the warehouses

Compact , space-saving Fast-in-fast-out method with pallet flow storage system can be.

Pathways can be marked using paint to guide the exact ways of movement of the A , B and C class of goods to optimize floor space usage
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Suggestions for warehouse space optimization

MOQ reduction projects to be deployed The MOQ should be demand driven and should not result in piling up of inventories. JIT
techniques should be employed across the supply chain to reduce wastage. The planning triggers for each class of item , A B & C should depend on their individual demands.

Double deep racking System

Pallets can be stored in two-stacks deep but can be accessed from one side. This results in reduction in the number of aisles in the warehouse.

Pallet flow racks

The pallet flow rack operates in a way that the load is moved from one end of the rack on a conveyor and allows the pallets to be removed in a FIFO manner.

Very Narrow Aisle Warehousing Concepts

This is a modern concept which makes better use of the space in warehouse premises. A typical aisle width in a narrow-aisle store is approx. 1.6 metres. Storage heights are from approx. 6 metres to 15 metres.

Selective Pallet Racking

Selective Pallet Racking is one of the simplest & most economical racking system which allows 100% accessibility to each pallet. This racking is suitable for warehouses storing large variety of SKU's irrespective of quantity.
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Other warehouse management solutions

Implementing latest Warehouse Management System:
It will improve traceability, visibility, accuracy, improved throughput with integration, improved labor productivity

Using Automated Material Storage Retrieval System:

ASRS can be used as there is constraint of storage space in Mulund plant. Some of them like Vertical Lift Module can be used which will increase the storage capacity of the plant keeping the total footprint same. It also increases the speed of storing and retrieval and lowers labour cost.

RFID implementation
RFID implementation and integration with WMS and SAP leads to higher efficiency & reduction in material handling cost through labor pacing, automation of manual processes, material tracking with high accuracy; thereby it increase customer service level

Implementation of Kanban
Kanban system helps to remove delay in different procedures like production, QA delay and dispatch delays. Kanban system can be implemented in following steps identification of materials by ABC analysis, calculating procurement lead time, understanding the generation of triggers, implementation and getting regular feedback and improving the system.

Some other new technologies

Pick to Light- This technology is very cost effective and has high ROI. It has high-speed sort capability, less requirement of floor area Mobile devices (both handheld and vehicle mounted) and RF Scanners speeds up retrieval and storage process
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