Other Voices: Don’t judge a DC by its shape

Editor’s Note: The following column by Norman Saenz, Senior VP & Principal with TranSystems Corporation, is part of Modern’s new Other Voices column. The series, published on Wednesdays, will feature ideas, opinions and insights from end users, analysts, systems integraters and OEMs. Click on the link to learn about submitting a column for consideration.

Recently, I was flying into an airport surrounded by industrial parks. Looking out the plane window, I couldn’t help but notice the various shapes of the vast number of distribution centers. My first thought was what a great place to advertise. But, then the logistics side of my brain took over and I was amazed at the shapes and sizes of the buildings on display. There were squares, rectangles, L shapes and others with no specific shape at all. Many seemed to be the same exact shape!

Looking at the shapes got me to thinking that while facilities come in all different sizes and configurations, the processes within the buildings are the most critical factors.

Before naysayers get offended, it is true that the clear height, bay spacing, floor design, the number of dock doors, fire protection and other facility configuration factors impact the layout design. But, too often little planning is done when establishing a new operation. A simple strategy of floor storage and standard pallet rack across the entire facility might work for a few companies but very likely won’t result in an efficient operation.

The modern distribution center must handle receipts from international and domestic suppliers and endure an increasing amount of value added services to satisfy customers. Often, a company’s own retail stores are the most demanding! Today’s distribution center must deliver accurate and on-time shipments, with an efficient and nimble operation. Such demands can’t be satisfied with basic racking and floor storage.

Where does management start with this level of challenges and expectations?  The answer is receiving, but they must continue with planning for all major warehouse processes through shipping. The Order Fulfillment area typically has the most labor and the greatest demand for accuracy. It is also the area where technology and automation can make a big difference in achieving both accuracy and higher throughputs while controlling labor costs.

An untapped and overlooked area is often the last 100 feet, where packaging, manifesting and shipping occur. An order fulfillment solution can kick-out volumes only as fast as the last 100 feet can free-up space on the shipping dock. More often than not, the picking area gets the necessary attention, but many of the other areas lack the required planning. The fact is that every area, starting with receiving, is critical to the successful fulfillment of customer demands. Stepping through the major warehouse functions, you can see the important considerations in each area.

Receiving
Receiving controls the receipt of inventory into the facility and can impact pending orders. It can also impact the allocation and release for future orders. Ignore it at your peril.

How can you speed-up receiving?  Automated Shipping Notices (ASN’s) come to mind first. ASN’s are generated from your suppliers and give the receiver a forewarning of the purchase orders and inventory arriving. Additionally, ASN’s enable the receiving clerk to manage the dock equipment, staging space and staffing for a receipt before it arrives.

Most importantly, ASN’s allow for the rapid receipt of entire purchase orders with the scan of a pallet identification bar code vs. the scanning of each case or piece in the receipt.

Stocking / Cross-Docking
The speed and accuracy of the receiving process directly integrates with the stocking of products into the storage area. Additionally, when products are received, they can be flagged for immediate cross-docking for completion of a staged order ready for shipping. The stocking of products is most efficient when directed by a warehouse management system (WMS), and with the use of a random storage philosophy.

While random, the WMS should also consider the planned volume or activity profile of the products so they can be stored in the most accessible location for replenishment or picking. Depending on your operation, you might store products within the same area/equipment for which orders are fulfilled.

Alternatively, you might have a separate forward picking area for order fulfillment that is replenished from a reserve storage area. Traditionally, the stocking activity is directly into the reserve storage area. However, more advanced systems may be able to direct the putaway into a forward pick area should there be no overstock and the picking location is empty.

Replenishment
Not running out of product in the pick location is cardinal rule #1 or #2. The replenishment process alone can’t be blamed should a location run out of product during picking. The first objective should be to size the pick locations so that they hold enough product quantity to limit the need for replenishment. This is a delicate balance between reducing replenishments to an average of every two weeks and not over sizing the picking area.

Assuming that the pick locations are adequately sized, the success of replenishment falls on the process and technology supporting the process. The ideal technology is for the system to trigger replenishment when the pick location reaches a minimum quantity in the pick location. The replenishment would occur during an off-picking shift and ready the pick location for the proper amount of inventory prior to the picking activity.

Should the replenishment function be based on a visual queue, then the operation is at risk for stock-outs during picking.

Picking
To this point, you see the importance of properly designing the prior functions within the distribution center. The picking area is often the most critical function within the warehouse to have properly designed.

There are many details to work-out including the process, equipment and technology. The processes range from discrete to various combinations of batching, zone-batch, zone-pass and zone-batch-pass.

The decision depends on the level of technology to support these applications and the complexity of the orders to fulfill. Discrete picking provides complete accountability for the accuracy of the order on one picker, but often provides the lowest order throughout. Simply batching multiple small orders with a single picker, can speed-up the productivity of completing those orders.

When moving to various zone combinations, then technology is a must in order to accurately manage the orders moving through the system and consolidate them in shipping.

The Last 100 Feet
Coined the last 100 feet by some, this includes processes after the order has been picked. The main functions described below include value-added, packaging, manifesting and shipping. These areas often result in a bottleneck due to a lack of focus in planning and execution.

Let’s dig into each of these areas and point out the challenges and opportunities.

Value Added
The space and design for providing value-added services is rarely mentioned. These are mostly tasks to prepare products for the store within the distribution center. This might include adding hangers, inserting product within a clear bag, changing pricing labels/tags or putting product into a new packaging design.

The decision often is where to provide this service, at the source (domestically or internationally), in manufacturing, at receiving or after picking. Most perform the activity after order processing and in a separate area setup with tables and conveyors.

Packaging/Manifesting
If you pick directly into a shipping case, the packaging area within a facility disappears. These cases go through a print and apply process to automatically be manifested and receive a shipping label. However, picking into the shipper isn’t always possible. The alternative most used is picking into totes or onto a pallet. In these situations, a packaging area is required.

Much like the value-added area, the packaging area is often crunched into the corner of the shipping area and becomes a bottle neck for facility throughput. To avoid this situation, clearly calculate the capacity required to support the operation over the planning horizon. Consider the use of conveyor technology, divert systems and efficient workstations to ensure this area is efficient to handle the future volumes.

Shipping
Regardless of how the orders were processed or packaged, the shipping area is the last step in most warehouse operations. However, if orders are being batch picked by warehouse zone and are required to be consolidated on the shipping dock, additional space may be required. Adequate space should be provided to stage larger orders for full-truck or less-than-truck-load shipments. And, if you have high volumes of small parcel shipments, consider the use of conveyors to ‘fluid-load’ trailers. If you have conveyor loading systems, there needs to be enough space to also potentially load a pallet onto the trailer.

Final Thoughts
Spend time planning your next warehouse transition and focus on each area of the facility to ensure the best solution is provided. Regardless of the building shape and size provided, ensure the process is optimized within those four walls. To leave you with more ideas on process optimization, consider these three ideas within the process, layout and labor and technology factors of your next facility strategy.

Process

1. Visually map the process within your operation to validate if the proper processes are being followed, to identify inefficient steps, and generate improved solutions.

2. Use colored totes to identify different type of orders, such as rush, internet, value-added services required, etc…

3. Study use of various picking methods, such as Cluster Batch Picking which is the method of picking multiple 1-2 line orders onto a uniquely designed cart.

Layout

1. Visually map the flow of goods and people on your facility layout to identify backtracking and inefficient movement.

2. Limit ‘White Space’ on layout plan including Aisles and Dock Space.

3. Utilized ‘Vertical Space’ in the selection of rack types, within storage positions and consideration of mezzanines.

Labor

1. Train for exceptions and ensure employees understand and are following the proper procedures.

2. Establish a ‘Get to Know’ employee monthly board to improve team synergy and recognition of an employee’s family, hobbies and other interests.

3. After you streamline the process, study the use of technology to further enhance your productivity, including Voice, Pick to Light and Conveyors.

WMS/Technology

1. Perform a Gap Assessment on your WMS to benchmark against what Best of Breed solution can provide. Identify the major functionality gaps and quantify the savings potential in upgrading those functions.

2. Look into Fork Lift Management software to improve the utilization of your Fork Lifts, energy used, accident alerts, efficient of use, and ultimately if you really need to buy that next truck.

3. Product Slotting software can increase picking productivity 15-30%, reduce product damage, employee injuries and typically has ROI of less than a year.