Warehousing, Shipping

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Warehousing, Shipping Receiving

• New Technology Evaluation

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Problem Statement

• What needs to be done
• Research and implement new technologies to reduce
  costs and increase timeliness and accuracy of
  inventory reporting.
• Why
• To help PetPro become more competitive.
• To help PetPro continue to be a highly
  contributing member of the Nestle group of
  companies.

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Technologies Under Consideration

• Manual Inventory Method
• (system currently in use)
• Option 1 Barcode Scanners
• Option 2 RFID Tags

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Evaluation Template

• System - how the system works
• Disadvantages and Issues
• Advantages and Benefits
• Cost of Implementation
• Physical Resource Requirements (including total
  cost of operating)

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Manual Inventory Method
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Manual Inventory Method

• Taking Inventory
• Computer prints list of items expected to be in
  stock.
• Employee compares actual stock with expected
  stock records discrepancies.
• Employee manually enters discrepancies into
  computer to update inventory records.

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Manual Inventory Method

• Sending a Shipment
• Computer prints list of items to be shipped.
• Employee prepares shipment and records list of
  items actually shipped.
• Employee manually enters list of items shipped
  into computer to update inventory records.

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Manual Inventory Method

• Receiving a Shipment
• Employee makes a list of items in the received
  shipment.
• Employee manually enters list into computer.
• Computer reports discrepancies between actually
  received items, and items expected to be
  received.
• Computer updates inventory records.

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Manual Inventory Method

• Disadvantages and Issues
• Many points of manual data entry mean much
  potential for error entering data.
• When taking inventory, items must be individually
  inspected time consuming and inaccurate and
  labour intensive.
• Accounting department must make allowances for
  discrepancies between expected and actual
  inventory.

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Manual Inventory Method

• Advantages and Benefits
• Few direct costs requires no special technology
  to operate beyond computer and printer and Excel
  software.
• Little or no system downtime system can rely
  entirely on paper lists and no power for short
  time periods.

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Manual Inventory Method

• Projected Cost of Implementation
• Not applicable because system is already in place
  and operating.

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Manual Inventory Method

• Physical Resource Requirements
• Need dedicated warehouse inventory employees
  extra load on management.
• Inventory can only be taken on a periodic basis
  due to the time required to take complete stock
  not good for JIT model.
• Expenses incurred for large volume of paper used
  daily.

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Option 1 Barcode Scanners
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Barcode Scanners

• Different brands manufacturing various models and
  systems of barcode scanner were studied
• Transformations, Inc
• Price to implement 25000 to 100000 depending
  on options
• Innovative Business Systems, Inc.
• Price to implement 1 to Infinite

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Barcode/UPC Scanners

• Taking Inventory
• Employee uses barcode scanner to scan every
  single item in stock.
• List of scanned barcodes is electronically
  transferred into computer.
• Computer calculates actual inventory on hand, and
  reports discrepancies between expected and actual.

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Barcode/UPC Scanners

• Sending Shipments
• Employee receives list of items to be shipped,
  and scans barcode on each and prepares items to
  be shipped.
• List of shipped items is loaded into computer, to
  update inventory on hand

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Barcode/UPC Scanners

• Receiving Shipments
• Employee scans each item that was received.
• List of items received is loaded into computer.
• List of items expected is compared to list of
  items actually received, and any discrepancies
  are reported.

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Barcode/UPC Scanners

• Disadvantages and Issues
• Person scanning items might miss a few.
• Scanner may not pick up barcode properly (as
  happens in super market sometimes)
• Inventory can only be taken on periodic basis
  (e.g. weekly) because of length of time required.

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Barcode/UPC Scanners

• Benefits and Advantages
• Increased reliability, because inventory system
  is simplified.
• Time savings in inventory checking. Complete
  warehouse inventory can be taken at shorter
  intervals, which yields more precise and timely
  information about warehouse assets.
• Savings in paper costs.
• Technology tested by other large companies (The
  Bay, Wal-Mart, Loblaws)

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Barcode/UPC Scanners

• Cost of Implementation
• Barcode scanners, hardware to interface scanners
  with computers, new software all must be
  purchased.
• Employees must be trained to use new technology.

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Barcode/UPC Scanners

• Physical Resources
• A smaller group of employees required.
• Repairs on scanning equipment.
• Increased IT costs.
• Storage space required for hardware.

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Option 2 - RFID Tags
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Radio Frequency Identification (RFID) Tags

• System
• Each item in the warehouse is fixed with a tiny
  electronic tag, which is encoded with a unique
  number. Sensors mounted at all warehouse entry
  points detect when a tag enters and leaves the
  warehouse. In this way, it is possible to keep
  track of items in the warehouse with extreme
  precision with little or no human intervention.

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Radio Frequency Identification (RFID) Tags

• Taking Inventory
• No special process is required to take
  inventory. In special cases employees have the
  option of touring the warehouse with an RFID
  scanner to detect exactly what is inside the
  warehouse.

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Radio Frequency Identification (RFID) Tags

• Sending a Shipment
• Employee prepares shipment from a work order.
• System detects items passing out of warehouse,
  and immediately updates database.

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Radio Frequency Identification (RFID) Tags

• Receiving a Shipment
• System detects items entering the warehouse, and
  immediately updates database.
• System compares the list of items received with
  the list of items that was expected, and reports
  any discrepancies.

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Radio Frequency Identification (RFID) Tags

• Disadvantages and Issues
• All warehouse issues depend on the system, which
  means the system must be 100 dependable,
  otherwise the entire supply chain can be stopped.
• Expensive hardware required to operate (high
  startup cost).
• Radio frequency interference.

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Radio Frequency Identification (RFID) Tags

• Advantages and Benefits
• Increased reliability, because nothing can enter
  or leave the warehouse without being noticed by
  the system.
• Little or no direct human involvement in day to
  day warehouse operation. Significant reduction in
  error.
• Strongly backed by Wal-Mart, a large purchaser of
  PetPro goods, and other companies with huge
  buying power.
• .

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Radio Frequency Identification (RFID) Tags

• Projected Cost of Implementation
• Tags, sensor equipment must be purchased.
  Purchasing new tags becomes another operating
  expense.
• Employee training in use of new system.
• Significant changes in IT architecture.
• Installation of equipment.
• 10,000 to 500,000 to implement

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Radio Frequency Identification (RFID) Tags

• Physical Resource Requirements
• Increased server space.
• Increased IT spending.
• Continuous purchase of new tags.
• Repairs on equipment.
• No employees dedicated to inventory tracking are
  required.

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Recommendation
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Recommendation

• We recommend further researching RFID tags for
  possible implementation.
• RFID has more upfront costs than barcode
  scanners, but the long-term benefits will be well
  worth it.