Instructor: Spyros Reveliotis

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IE6202 Warehousing Systems

• Instructor Spyros Reveliotis
• Office Room 316, ISyE Bldng
• tel [phone]
• e-mail spyros_at_isye.gatech.edu
• homepage www.isye.gatech.edu/spyros

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Course Logistics

• Office Hours 130-230pm TuTh (also an open-door
  policy will be generally adopted, but an
  appointment arranged by e-mail is preferred)
• Grading policy
• Homework Projects 30
• Midterm 30 (Tent. Date Thursday, Oct. 17)
• Final 40 (Date Monday, Dec. 9)
• Exams closed-book, with 3 pages of notes per exam
• Make-up exams and Incompletes Only for very
  serious reasons, which are officially documented.

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Course Logistics (cont.)

• Course Reading Materials
• J. Bartholdi and S. Hackman, Warehouse and
  Distribution Science, Release 0.1.2,
  unpublished manuscript, 2000, URL
  http//www.isye.gatech.edu/spyros
• Lectures posted on the course Web-site accessed
  by my homepage
• Material posted on the Georgia Tech Library
  electronic reserves
• Books on reserve
• Tompkins et al., Facilities Planning, John
  Wiley Sons, 1996.
• Heragu, S., Facilites Design PWS Publishing
  Co., 1997.
• Francis et al. Facility Layout and Location An
  analytical approach, 2nd ed. Prentice Hall,
  1992.
• Askin and Standridge, Modeling and Analysis of
  Manufacturing Systems, John Wiley Sons, 1993.

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Course Objectives(What is this course all about?)

• An introduction to the fundamental concepts and
  issues and algorithms involved in the design and
  operation of contemporary warehouses and
  distribution centers
• In particular, a balanced development of the
  following issues
• A systematic exposition of the organization and
  operation of contemporary warehouses, and their
  role in the overall supply chain
• A systematic presentation of the equipment
  involved, its basic attributes and functionality,
  and its connection to the sought efficiencies
• A decomposition of the overall warehouse deisgn,
  operations planning and control problem to a
  series of sub-problems, and the development of
  analytical/quantitative methodologies for
  addressing these sub-problems
• Implementation of (some of) these methodologies
  on some basic computational tools used in
  practice (mainly through the project assignments)

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Next...

• Understanding the role of warehouses in
  contemporary distribution networks
• A description of the warehouse operations and
  equipment
• A (conceptual) description of the major design,
  planning and control problems arising in
  contemporary warehousing
• Key References
• J. Bartholdi and S. Hackman, Warehouse and
  Distribution Science, Release 0.1.2,
  unpublished manuscript, 2000, URL
  http//www.isye.gatech.edu/spyros/ Chpts 1-4
• G. Sharp, Warehouse Management, Chpt 81 in
  Handbook of Industrial Engineering, by G.
  Salvendy (ed.), John Wiley Sons, NY, 2000.
• Tompkins et al., Facilities Planning, John
  Wiley Sons, 1996 Chpt. 9
• B. Rouwenhorst et. al., Warehouse design and
  control Framework and literature review,
  European Journal of OR, Vol. 122, pgs 515-533,
  2000.
• Yoon, C. S. and Sharp, G., A structured
  procedure for analysis and design of order pick
  systems, IIE Trans., Vol. 28, pgs 379-389, 1996

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The role of warehousing in contemporary
distribution networks

• Buffer It holds inventory for downstream stages
  of the supply chain, in order to allow the entire
  production / distribution network to deal
  efficiently with the systematic and random
  variation in the network operations, or to
  exploit significant economies of scale.
• Typical sources/examples of systematic variation
• product seasonalities (e.g., Toys R Us, CVS
  merchandise)
• cyclical / batched production due to large set-up
  costs
• Typical sources of random variation
• variations in transportation times due to
  weather, traffic congestion, bereaucracy, etc.
• variations in production times due to unreliable
  operations, unreliable suppliers
• Typical economies of scale involved
• Price breaks in bulk purchasing

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The role of warehousing in contemporary
distribution networks (cont.)

• Consolidation center It accumulates and
  consolidates products from various points of
  manufacture within a single firm, or several
  firms, for combined shipment to common customers.
  
• Consolidation allows to control the overheads of
  transportation operations by
• allowing the operation of the carriers to their
  capacity, and therefore, the more effective
  amortizing of the fixed transportation costs
• reducing the number of shipping and receiving
  operations
• Cross-docking Consolidation without staging

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The role of consolidation in contemporary
distribution networks
Retailers
Manufacturers
Manufacturers
Retailers
Consolidator
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The role of warehousing in contemporary
distribution networks (cont.)

• Value-Added-Processing (VAP) Increasingly,
  warehouses are required to undertake some
  value-added-processing tasks like
• pricing and labeling
• kitting (i.e., repackaging items to form a new
  item e.g., beauty products)
• light final assembly (e.g., assembly of a
  computer unit from its constituent components,
  delivered by different suppliers)
• invoicing
• In general, this development is aligned to and
  suggested by the idea/policy of postponement of
  product differentiation, which allows for
  customized product configuration, while
  maintaining a small number of generic product
  components.

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Warehouse classification by customer type

• Factory warehouse Interfaces production with
  wholesalers
• small number of large orders daily
• advance info about order composition
• Retail Distribution warehouse Serves a number of
  captive retail units
• advance info about order composition
• carton and item picking from a forward area
• more orders per shift than consolidation/shipping
  lanes
• Catalog Retailer A warehouse filling orders from
  catalog sales
• a large number of small (frequently single-line)
  orders
• item and, sometimes, carton picking
• daily composition of orders usually unknown
• only statistical information available
• Support of Manufacturing operations A stock room
  providing raw material and/or work-in-process to
  manufacturing operations
• many small orders
• only statistical information available about
  order composition
• stringent time requirements (e.g., response in 30
  min)

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Product concepts related to the characterization
of material flow in a contemporary warehouse

• Item (otherwise piece or each) The smallest unit
  of product sold by a distribution center, e.g.,
• a 1-liter bottle of a soft drink
• a box of 100 paper clips
• Carton a paperboard container holding identical
  product, usually of a size and weight allowing
  manual handling example dimensions 14x10x20in
  or 30x20x40cm.
• Tote a container usually made of plastic and
  often used for storing and handling different
  products usually similar in size to a carton,
  but re-usable.

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Product concepts related to the characterization
of material flow in a contemporary warehouse
(cont.)

• Inner pack several units of a product secured
  together and sold by the distribution center as a
  unit, if many items are contained in a carton,
  and purchase quantities per item are large a
  carton contains several inner packs.
• Pallet a set of cartons or totes of identical
  product arranged in a cubical pattern and usually
  supported by a base that may be of wood or
  plastic example dimensions are 40x48x54in and
  80x120x100cm.
• Mixed unit load a set of cartons or totes of
  different products arranged to a cubical pattern
  similar to a pallet, often wrapped or strapped
  for stability.
• Overpack a large carton or tote containing
  different products smaller than a pallet but
  larger than a carton, so that manual handling may
  be difficult.

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Product concepts related to the characterization
of material flow in a contemporary warehouse
(cont.)

• Stock Keeping Unit (SKU) a set of product(s),
  packaged in a pre-specified manner, that it is
  identified as a distinct entity for distribution
  purposes e.g.,
• a 2-liter bottle of Coca-Cola Classic
• 6 2-liter bottles of Coca-Cola Classic packed in
  a carton
• 12-ounce cans of Coca-Cola Classic, packed 24 in
  a carton.
• Order a document from a customer, requesting
  specific SKUs in specific quantities.
• Line item a line in an order document
  designating a specific SKU and quantity

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A schematic representation of the warehouse
material flow
Replenishment
Replenishment
Reserve Storage and Pallet Picking
Case Picking
Broken Case Picking
Accumulation, Sortation Packing
Direct putaway to reserve
Direct putaway to primary
Receiving
Shipping
Cross-docking
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The major warehouse operations

• Inbound processes
• Receiving (10 of warehouse operating costs)
  the collection of activities involved in
• the orderly receipt of all materials coming into
  the warehouse
• providing the assurance that the quantity and
  quality of such materials are as ordered
• disbursing materials to storage or to other
  organizational functions requiring them.
• Put-away (15 of warehouse operating costs) the
  act of placing merchandise to storage it
  includes
• determining and registering the actual storage
  location(s)
• transportation
• placement

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The major warehouse operations (cont.)

• Outbound processes
• Processing customer orders (typically done by the
  computerized warehouse management system of the
  facility) This set of activities includes
• checking that the requested material is available
  to ship
• if necessary, coordinating order fulfillment with
  other facilities of the distribution network
• producing the pick lists to guide the order
  picking and the necessary shipping documentation
• scheduling the order picking and the shipping
  activity.
• Order-picking (55 of warehouse operating
  costs) the set of physical activities involved
  in collecting from the storage area the materials
  necessary for the fulfillment of the various
  customer orders, typically identified as
• traveling (55 of the order picking time)
• searching (15 of the order picking time)
• extracting (10 of the order picking time)
• documentation and other activities (20 of the
  order picking time)

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The major warehouse operations (cont.)

• Outbound processes (cont.)
• Checking Checking orders for completeness (and
  quality of product)
• Packing Packaging the merchandise in appropriate
  shipping containers, and attaching the necessary
  documentation / labels.
• Shipping The activities of
• preparing the shipping documents (packing list,
  address label, bill of lading)
• accumulating orders to outbound carrier
• loading trucks (although, in many instances, this
  may be the carriers responsibility).
• Others Handling returns, and performing the
  additional value-added-processing supported by
  contemporary warehouses, as discussed in a
  previous slide.

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or in Yoon and Sharps representation...
RECEIVING
pallets
(items totes) cases
pallets
cases overpacks mul
PALLET RESERVE
Breakdown function
pallets
pallets
CASE PICK
(items cases) pallets
cases
cases
cases
ITEM PICK
totes (cases)
items
(items cases) totes
SORTING A
totes
totes
Consolidation Function
SORTING B
(items cases) totes
totes cases overpacks
UNITIZING
totes cases overpacks
mul pallets
SHIPPING
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Operational Cost Breakdown
10
20
15
55
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The major concerns underlying the organization of
order-picking

• Establish an efficient operation by controlling
  the order-picking labor costs, especially those
  due to traveling, and
• maintain a high level of responsiveness to
  customer orders, while
• preserving the order integrity.

Responsiveness
Costs
Quality
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How?

• By organizing the associated work-flow so that it
  presents
• high pick density, i.e., average number of picks
  per foot of travel
• short (order) flow time, i.e., the amount of time
  elapsed between the arrival of an order into the
  warehouse management system and the time it is
  loaded on the shipping carrier,
• while providing the appropriate mechanisms /
  procedures to
• maintain the order integrity.

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Major mechanisms for increasing the pick density

• Establishing a high SKU density, i.e., the number
  of SKUs encountered per foot of travel.
• In general, the effectiveness of this approach
  will depend on the characteristics of the stored
  product and the equipment involved in its storage
  and retrieval.
• Maintaining a forward pick area, containing a
  certain quantity from each of the most popular
  SKUs in the facility.
• The implementation of this approach necessitates
  a systematic procedure for determining the items
  to be stored in the forward pick area and the
  associated amounts, in a way that it balances the
  incurred space and labor (replenishment) costs.
• In case of a dynamically varying demand, the
  implementation of this idea might involve the
  frequent reconfiguration of the facility.

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Major mechanisms for increasing the pick density

• Batching the orders, i.e., have the workers
  retrieve more than one order at each trip in the
  storage area.
• Requires an additional sortation process
• sort-while-pick the picker carries a
  compartmentalized container that allows the
  separate accumulation of each order on its
  picking list
• downstream sorting sorting of the orders takes
  place at a dedicated station of the facility,
  possibly involving some sophisticated equipment
  (sorting conveyors).
• Sortation implies additional space, labor and
  equipment costs
• Batching is another complex economic decision,
  especially for medium size orders

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Major mechanisms for reducing the order flow time

• Maintaining a high pick density (which translates
  to a high level of worker productivity).
• Appropriately parallelizing the order processing,
  i.e., have each order being processed by more
  than one worker.
• A critical aspect for selecting the order
  parallelization scheme is the order work content,
  typically quantified as follows
• order work content (number of picks in the
  order) x (average person-hours per pick)
• If the total work of picking and loading an order
  is small enough, then orders are repeatedly
  assigned to the next available worker.
• If the orders are large and/or span distant
  regions, then, they must be parallelized.
• Parallelization typically involves a zoning
  scheme.

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Warehouse zoning
Zone A part of the warehouse to which an order
picker is restricted, e.g., a 40-aisle system
divided into zones of 10 aisles each. In case of
warehouse systems involving automated storage and
retrieval equipment, a zone can be also defined
by one unit of this equipment, e.g., a carousel.
Zoning patterns
Progressive Zoning
Parallel/Simultaneous Zoning
To packing and shipping
To sorting and consolidation
Z1
Z2
Z3
Z4
Z5
Z1
Z2
Z3
Z4
Z5
Order
Order
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Combining Batching with Zoningthe resulting
order-flow patterns

• Single-order pick one picker works on one order
  at a time until the order is filled
• sort-while-pick, no zoning one picker works on
  several orders at a time with a container/vehicle
  that has compartments for maintaining the order
  integrity
• batch-picking with downstream sorting, no zoning
  several orders are picked by one person
  completely, often applied with conveyor transport
  of items to the sorting area
• single-order-pick with zoning, progressive or
  parallel an order is split into sub-orders by
  zone and a picker in each zone fills the
  corresponding sub-order

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Combining Batching with Zoningthe resulting
order-flow patterns

• sort-while-pick with zoning an order is split
  into sub-orders by zone and a picker in each zone
  fills the corresponding sub-orders using a set of
  containers or a vehicle that has compartments for
  maintaining order integrity
• batch picking with downstream sorting and zoning,
  usually simultaneous several orders are split
  into sub-orders and the sub-orders for each zone
  are filled by the picker(s) operating in that
  zone

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Pick Wave Planning

• Time window a portion of the day/shift during
  which a set of orders is released and fully
  processed, e.g., four 2-hour time windows in an
  8-hour shift.
• Pick wave The set of orders processed during a
  time window.
• Necessitated by, e.g.,
• a downstream sorting system that limits the
  number of orders that may be in process at any
  time (e.g., the number of streams/output chutes
  in a conveyor-based sortation system).
• a forward pick area with a storage capacity
  insufficient to satisfy the entire daily demand,
  and therefore, must be replenished, but
  replenishment cannot occur simultaneously with
  picking activity for, e.g., safety or efficiency
  reasons.
• Small time windows tend to cause workload
  imbalances and longer travel times, but they also
  lead to smaller equipment and/or space costs and
  smaller order completion times.