Friday, August 12, 2011

Logistics - Warehouse Management (Facility Design) - Part IV

In this session, we are focusing our attention to compute the storage space requirement of Finished Goods warehouse, which is slightly technical in nature. I am trying to explain the computation methodology in a lucid way so that even non technical people can understand the concepts clearly.

Once we understand this concept through simple example then we can explore more complex concept like Warehouse Layout Design in our subsequent session. Let us take GSK (Glaxosmithkline) Products (Horlicks, Boost and Junior Horlicks) to decide about warehouse storage space requirement. The data and example given below are hypothetical and not represent the actual GSK process.

Assumptions / basic input are given below

• GSK products are sold in cases/carton boxes only from their respective sales depot / warehouse to various distributors.
• Monthly sales pattern are more or less constant and volume of each products are given in cases as below
         o Horlicks           – 1500 cases / month
         o Boost               - 1100 cases / month
         o Junior Horlicks – 800 cases / month

• Carton / Case Size for each product is given below

From the above assumption / input, the SCM manager now need to compute the godown / warehouse approximate space or area requirement in terms of SQFT.

To facilitate blog readers to comprehend the concept easily, we give below the image of carton box with length, width and height.

Now we will get into calculation mode. The godown spaces/area requirements are expressed in SQFT (Square Feet). The area is getting calculated by multiplying Length and Width.

Carton box size are measured in Millie meter or centimeter or meter according to industry practice. In our example the carton box size are expressed in Millie meter (MM). Since you want to compute the godown area (Length x width) requirement in SQFT, we need to measure the area of each carton box basis its length(mm) and width(mm) and convert them into SQFT. For example each Horlicks carton box is having 420mm in length and 288mm in width. Hence area of each Horlicks carton box 120960 Square mm (length x width). If you convert 120960 Sq mm to Sq feet, you will get 1.3020 Sqft area. It means each Horlicks carton box occupy 1.3020 Sqft area. Now the question is how to convert Square millimeter to Square feet ? The users may use the site to do all area conversion work.

We have learnt that each Horlicks carton box occupy 1.3020 Sqft area. Now we need to consider the height of Horlicks carton box (531 mm which is 1.7421 feet) to decide how many carton boxes can be stacked on each other vertically. Manually operated godown can store carton boxes vertically up to 6 ft (182 cm) height so that workers can lift the carton box without much strain basis weight. Since each Horlicks carton box occupy 1.7421 feet height, they can store maximum of 4 carton boxes vertically.

In layman language, 1.3020 Sqft area can accomodate 4 cases of Horlicks vertically. In order to compute the area requirement of 1500 cases of Horlicks, we need to multiply 1.3020 with (1500/4) as we are going to store 4 cases of Horlicks on each other vertically. We require 488 Sqft area to store 1500 cases of Horlicks alone.  Similarly for Boost and Junior Horlicks also the products are stacked 4 cases on each other vertically. Hence stacking or storing norms plays important role in deciding warehouse space calculation.

Basis the above computation methodology, we have calculated the SQFT area requirement for each product and the same give below as table.

Incase if the warehouse operation is carried out through automation (using forklift) then company can decided to stack 10 cases on each other vertically in a steel rack using pallets and hence the SQFT area requirement will come down. But one must remember the other costs like Fork lift, steel rack, pallet, and aisle (passage area) for fork lift movement and reserve area for fork lift and pallets will go up.  Hence Facility design (Warehouse designing) should be done with utmost care after careful consideration of various cost involved.

So far, whatever we have learnt in Warehouse facility design is tip of the iceberg. We have not considered area requirement for aisles (passage area) for handling equipment movements, reserve area for keeping handling equipment, pallets  etc. In the next session we will explore more structured concepts in Facility layout design.