Thursday, July 9, 2015

Logistics – Warehouse Management (Material Handling & Order Picking) – Part VIII

In this session, initially we will learn about Warehouse Layout / design and the products arrangement.  We give below sample warehouse layout basis GSK products (25 SKUs) explained in the previous session.

I would like to recall your attention to our earlier session wherein we have discussed 25 SKUs with FSN classification basis sales movement such as F (fast),  S (Slow) and N (Non moving or Very Slow moving).  Out of 25 SKUs, 6 are fast moving items, 8 are Non moving (or very slow moving) items and 11 are Slow moving items. Now let us understand the significance of doing such analysis.  Horlicks powder is packed in 2Kg, 1Kg, 500g and 200g.  But the end consumers prefer to buy 500g pack more than any other pack due to economic reason and hence the retailers order more quantity for Horlicks 500g pack (bottle or pouch) which makes that SKU fast moving.  Horlicks 2Kg pack cost more, resulting less demand from the end consumer, which makes that SKU non moving or very slow moving. 

In what way FSN classification analysis going to help in Customer Order Picking ? 

If we design warehouse layout in such a way that all Fast moving items / SKUs are stored near to outbound area, it would be easier to pick these items and keep it in the shipping area with less effort while executing the customer orders.  Since these items are fast moving, most of the retailers or distributors, would places an order for the same.  Now our reader can ask a logical question that why should we store fast moving items near to outbound area and not near to inbound area as inbound operation also critical in the warehouse management.  Warehouse is receiving few SKUs or items in bulk quantities from manufacturing unit in the inbound area and hence the warehouse staff need to check the quantities and putaway the bulk quantities in storage area.  Whereas  the outbound is the area where multiple customer orders (Number of orders) of various SKUs (Number of Lines / SKUs) in small quantities (Pick per Order) are arranged for final shipment.  The  outbound dispatches are time bound complex activity which are error prone, and hence the warehouse managers pay more attention to outbound activities.

In the above warehouse layout example, are we following FSN classification model while storing the materials ?.  If you observe the above diagram closely, you can easily identify we are not storing the materials as per FSN model. FSN model is one method of storing items in the warehouse.  However in GSK, the customer order character influences the storage pattern and Order Picking method.  If you notice in the customer order example given in our last session, the most of the customers included even non or very slow moving items in small quantity in their order eg., even though Horlicks 2Kg is non / very slow moving items, most of the customers invariably ordered small quantity of Horlicks 2Kg to cater few end consumers, along with other Horlicks product group (like 500g, 1Kg).  Hence the company has decided to store their products according to the product groups (all SKUs of Horlicks are grouped etc) for easy pick up .  In the above example entire Horlicks ranges are stored in Aisle 1 and 3 which are adjacent side (refer figure) so that the picker can pick all Horlicks items in a given order without travelling much distance. 

In case, If the company decide to follow FSN Model to store materials, then the SKUs  of different product groups according to FSN classification are stored together in different aisle.  For example Fast moving items like Horlicks 500g Bottle & Pouch, Boost 500g Bottle and Pouch, Choc Horlicks 500g Pouch and Crocin Tablets are stored in aisles 1 , 2 & 3.  In this case, the picker has to pick Horlicks 500g items which is fast moving from Aisle 1 and probably slow moving Horlicks 1Kg items  from Aisle 5 and Non moving Horlicks 2Kg from Aisle 9.  This makes the picker to travel more distance across different aisles to pick the products of same group, makes the order picking more tedious and time consuming process.

Tips : I would like readers to pay special attention to yellow highlighted portion.  This is where I have explained how the Customer Order Characters (eg Number of orders received, number of lines or SKUs in a given order, Number of picks per order etc) effect the Order picking method.


In simple words order picking involves movement of products and human (picker).  According to the movements of products and human, order picking is classified into Picker to Part and Part to Picker.  These classification further sub classified and the details are given below in the chart.

Now Let us understand each of these terms. 

Picker to Part is the most common system where an order picker walk (may be with pallet Truck) or drive fork lift along the aisle to pick the materials.  Two types of Picker to Part system are Low Level order picking and High Level (Man on board) order picking.

High Level (Man on Board) Order Picking - High-level picking systems employ high storage (vertical) racks, Shelves or storage cabinets can be stacked as high to the extent of floor load withstanding capacity, weigh capacity, Product movement  and ceiling heights limit.  Pickers travel to the pick locations on board of a picking truck or crane. The machine stops in front of the appropriate pick location and picker to perform the pick.

High-level (man-on-board) order picking system has higher installation and maintenance cost and lower reconfigurability. Ergonomic factors should also be taken into consideration while choosing the proper system since order picking can be heavy work.  Hence this system are rarely used in warehouse operation.

Low Level Order Picking  In low level order picking systems, products are stored in bins on shelves or cartons on flow racks. The height of the storage system is limited by the reaching height of a human being and weight of the product. An order Pickers pick the requested items from storage racks or bin shelving storage, while traveling along the storage aisles.   

Low-level order picking systems are widely used in warehouses because of their low initial cost, easy installation, easy reconfigurability, and low maintenance cost.

Low level order picking is further sub classified into Pick by Order, Pick by Part and Zone pick (Progressive zone pick & Synchronize zone pick).

Pick by Order - In this method, products are stored in fixed locations on static shelving or pallet rack.  An order picker picks one order at a time covering each aisle until all items in the order is picked.  In this method, it is advisable that the picking document (pick list) should have the picks sorted in the same sequence as the picking flow.  Preferably, Fast moving product should be stored close to the main cross aisle and additional cross aisles put in to allow short cuts.

Pick by Order method can work well in warehouse operations with a small number of orders and a high number of picks per order.  Operations with low picks per order will find more travel time in this type of picking and operations with large numbers of orders will find that the congestion from many pickers working in the same areas slows down the processing.

Pick by Part / Batch Picking – In this case, multiple orders (say 2 to 10 orders) are grouped into small batches.  An order picker will pick all orders within the batch in one pass using a consolidated pick list.  

Batch sizes usually run from 2 to 10 orders per batch depending on the number of lines or SKUs per order and low picks per order.  In operations with low picks per order, batch picking can greatly reduce travel time by allowing the picker to make additional picks while in the same area due to consolidation of orders.

For example 3 customers placed order for Horlicks 500g Pouch 20 cases each. In batch picking all these 3 customer orders are consolidated due to low pick and less number of SKUs.  An order picker will pick 60 cases of  Horlicks 500g Pouch for all orders from Aisle 1 for dispatch.  Otherwise the picker has to pick 20 cases of Horlicks 500g Pouch by visiting Aisle 1 at 3 different time.  

In busy operations like large customer order with high pick per order and more lines or SKU per order, batch picking is often used in combined with zone picking (will be explained shortly) and automated material handling equipment.

Since the order picker is picking multiple orders at the same time, systems and procedures will be required to prevent mixing of orders.  The sub systems of batch pick are

Sort while pick – picking multiple orders followed by immediate sorting (on the pick cart or at the shipping dock) by the order picker. 

Pick and Sort  - In this case sorting takes place after the pick process has finished

Zone Picking  - In zone picking, the picking area is broken up into individual pick zones (Refer warehouse layout figure eg Horlicks 500g Bottle in Zone 1 and Boost 500g bottle in Zone 5 etc). Order pickers are assigned to a specific zone, and only pick items within that zone.  In zone picking it’s important to balance the number of picks across all zones to maintain same work load among the zones.  In our example, we have combined the areas of Boost 1kg bottle, Boost 200g bottle and Eno Bottle to form zone 2 to balance the number of picks and maintain the equal work load across all zones.

Separate zones also provide for specialization of picking techniques such as having automated material handling systems like mechanized fork lift in one zone and manual handling in the next zone.  One can observe from our warehouse layout example, we can use mechanized fork lift in zone 1, 2,5,6 & 7 and rest of the zones can use Order Picker with pallet truck.

Zone Picking has got two sub system.

Progressive Zone Picking (Pick & Pass) – In this method each order or possibly batch of orders are moved from one zone to the next, once the picking from the previous zone is completed.  Hence this method is also known as pick-and-pass.

Progressive Zone picking is most effective in large operations with high numbers of skus, high number of orders, and low to moderate picks per order.

Synchronize Zone Picking (Wave Picking) -  In synchronized zoning method, all zone pickers can work on the same order (or normally a batch of orders) at the same time and the items are later sorted and consolidated into individual orders for shipments.  Wave picking is the quickest method  for picking multiple item orders due to shortest cycle time, however the sorting and consolidation process require more attention. 

Operations with high total number of SKUs, high total number of orders and moderate to high picks per order may benefit from wave picking

Tips : Cycle time is the amount of time the process takes to get an customer order from order entry level to move the all items of the given order to the shipping dock for final dispatch. 

Parts to Picker -  In this system the part or items are moved towards the picker, so that he can keep the items in the shipping dock.    The two most popular parts-to-picker systems are

Carousels - A carousel consists of a number of bins and shelves that rotate either horizontally or vertically. It is fit for small load storage and retrieval. Control of the carousal can be either manual by the order picker or automatic.  Example, at airport the luggage are kept in the conveyor system and move towards the passenger.  The passenger need to pick up his luggage from the conveyor.

Automated Storage and Retrieval Systems (AS/RS) -  An AS/RS is a system of rows of rack, each row having a dedicated retrieval unit that moves vertically and horizontally along the rack, picking and putting away loads. 

Very few warehouse operation uses Carousel or AS/RS system.  Due to prohibitive cost, cumbersome installation process, difficult in reconfigurability, and high maintenance cost, most of the operation not to go for carousel or AS/RS system.

In the next session, we will recap what we learned so far about Order Picking method in chart form for easy reference. and let us analyse which order picking method is most appropriate for GSK customer order example.

Tuesday, July 7, 2015

Logistics – Warehouse Management (Material Handling & Order Picking) – Part VII

In the previous session we have seen how the product nature and business process affect order picking method in terms of product picking such as piece picking, case picking and pallet picking.

In the next few sessions we further explore with an example,  how the Product Character, Business process, customer order character and Warehouse Layout and Product storing pattern affect the order Picking method and Material Handling Equipment selection.  We once again deal with Glaxosmithkline (GSK) company customer order details, to explain how the product and  customer order characters affect the order picking method and equipment selection.  Please note that GSK or any other company process details or data shared or explained in my SCM  blog are not representing the respective company actual procedure or data. 

In the given below example following assumptions are made

  • GSK produce and sell only 25 SKUs.    
  • The company engaged 15 pickers.  The pickers are used to receive incoming finished goods from factory and put away the materials in their respective bin or storage location (inbound) as well as to pick the materials against customer orders from storage location and keep it in the shipping yard (outbound).
  • Currently the company uses only manual labors (pickers) to pick the materials.  However the company exploring the possibility using the MATERIAL HANDLING EQUIPMENT such as machine operated fork lift or manually pulled pallet truck to pick the materials, due to high picking operation at warehouses.  

There are automatic equipment available such as carousels, Robots, ASRS (Automatic Store Retrieval System).  Carousel is similar to the one you can find in airport bagging handling system. The passenger baggage are offload from the aircraft and then loaded into conveyor system. Once the passenger stand near the conveyor system he can pick his baggage when it reaches him.  However the usage of such equipment in warehouse are rare due to huge investment. 
  • Warehouse working time is morning 9.30 AM to 6 PM in the evening.  Any extra work beyond the regular working time for pickers will be treated as over time (double the wage on hourly basis)    
  • All customer orders received by the company is expected to dispatch within two days  (order checking /processing at office for one day and dispatch activities at Warehouse on another day).  The warehouse manager has to take prior permission from office to delay a customer order dispatches.
  • All customer orders received by the company are in cases
  • As per company standard practice, the warehouse can dispatch up to 8000 cases (average) of various SKUs per day (8 working hours) by using 10 pickers only.  In an hour the company can handle an average of 100 picking per picker.  This is called as PICK RATE and the concept will be explained later.

Now let us analyze the character of the customer order in the above example.

  • The number of orders received from customers for dispatch on each day varies.    On day 1 there are 7 customer orders.  Only one customer order on day 2.  Two customer orders on day 2. 
  • On day 2 customer-8 has placed order for all 25 items or lines, the total number of cases are 143 and the pick per order for this customer is 133.  In other words the customer has placed order of small quantity against all items. 
  • On day 3 customer-9 has placed order for only 4 SKU/items out of 25, the total number of cases are 9000 and the pick per order for this customer is also 9000.  In this case the customer has placed bulk quantities against these four items.
  • Number of lines per order means how many SKUs have been indented in a given customer order. 
  • All SKUs have been classified as F or N or S basis last year sales volume.  F indicate those items which are moving Fast like hot cake.  N indicate that  items which are Non Moving or very slow selling  and S indicate those items which are selling slowly.  The importance of this classification will be dealt at relevant stage in this blog.
  • The number of Pick Per order with respect to Manual picker, manually operated pallet truck and machine operated fork lift is given. 
    • From this we can observe, there is a significant improvement in pick per order is noticed in respect of manually operated Pallet Truck over Manual picker.  The reason is a picker or loader can carry one or two cases only according to product weight from storage location to shipping yard, whereas the pallet truck can carry a pallet which contains 8 cases of a particular SKUs.  The manually operated pallet truck requires small investment.
    • There is also improvement in pick order is noticed in respect of machine operated fork lift over manual operated pallet truck even though both system carry only a pallet of 8 cases.  The using of forklift is beneficial when the warehouse 
      • uses vertical storage system so that fork lift can pick pallet from higher location in ease.  
      • uses large area to store materials
      • the travel distance between storage location to shipping area is long.  One can easily observe that both Pallet Truck and Fork lift carry a pallet of 8 cases in a trip.   Productivity in order picking is measured by the pick rate.    The pick rate improve in case of Fork lift due to fast coverage of distance (travel time) by fork lift machine from storage picking location to shipping dock area.  Since the actual amount of time it takes to physically remove the product from the location tends to be fixed regardless of the picking method used, productivity gains in terms of pick rate are usually in the form of reducing the travel time
However the Fork Lift system requires huge investment and also require more aisle (passage) at warehouse to operate as compared to pallet truck.

In the next session we will see in details 
  • Different method of order picking
  • Warehouse layout and stacking method and finally
  • how product character , customer order character and warehouse layout  affect the order picking method along with material handling equipment selection

Wednesday, June 24, 2015

Logistics – Warehouse Management (Material Handling & Order Picking) – Part VI

In this session we will be learning more about order picking method and equipment used in the warehouse.  

What is Order Picking ?  It is the process of retrieving/picking right products of specified quantity from the storage (Inventory) location and move it to the shipping dock (outbound area) for shipment, in response to a customer order.  It is the

  • most labour intensive operation in those warehouse where the manual operation is followed
  • high capital intensive operation where the automated operation is followed

The methods of order picking vary greatly.  Choosing the best order picking method for your warehouse will depend on the Product character, type of business operation followed and customer order character.  Many times a combination of picking methods is needed to handle diverse product and order characteristics.

Let us see few factors that will affect your decision on a method for order picking for a product.

   a)   The characteristics of the product being handled.  (eg., solid , liquid or gas, fragile, hazardous, weight etc)

b)    Whether your business process follows piece pick, case pick, or full-pallet loads.

For example, Glaxosmithkline company who is the manufacturer of Horlicks 2Kg bottle, may dispatch this item in cases only (6 pieces in a carton box) to their distributors, as per their business polices.  Hence the company is following case pick as order picking method for that product.  Whereas the distributor may sell the Horlicks 2 Kg bottle to retail shops either in cases or in pieces according to their business policies / process.  Retail shop can sell the same product to consumer in  pieces.  Hence the retail shop follow Piece Pick as order picking method.

From this example one can easily understand that even though the product is same (Horlicks 2 Kg) but the order picking method (Pallet /case / piece picking)  varies according to the product character and the business operation followed ie., manufacture / distributor / retailer.

c)   Customer Order Character (Refer the given below example) 

     -Total number of orders – Number of customer orders received per day.
-     picks per order (highlighted in black color in the below example)
-     quantity per pick (column 4)
-     picks per SKU(column 7)  
-     total number of SKUs (Number of products in the given order ie 5 items)

d)      Value added processing such as private labeling.  For example AIIMS Hospital, Delhi places an order of 10 lakhs bottle of Crocin Syrup 60 ml from Glaxosmithkline with AIIMS logo stickers on the top of the crocin pack. 

We will learn customer order character in details with an example for better understanding.  Please note that the data given below are meant for illustrative purpose only and not the actual company process.

In the above example Glaxosmithkline received only one customer order from ABC Ltd on a particular day.  Hence total number of customer order received on that day by the company is 1.
Column 1 - The product name 

Column 2 explain how many units of each product packed in a case eg., 24 units of Horlicks 500g bottles are packed in a carton box or case.  The company can sell products in case lot as per their business policy

Column 3 gives approximate weight of the carton of each product.  For example Horlicks 2 Kg bottle case weight 12 Kgs when 6 units are packed inside the case.  

Column 4 - The weight of carton given in column 3, enable the warehouse manager to decide how many cases can be picked and carried (column 4) by a picker / loader with less effort in a single trip.  In the above example we can understand that 1 case of Horlicks 2Kg can be picked by picker / loader in a trip, whereas the same person can pick 2 cases of Crocin tablets per trip due to less weight.  

Column 5 is the customer order of each product in units and column 6 is the customer order of each product in case lot.

Column 7 indicate how many picks from storage area and trip to shipping dock area a picker / loader has to make to complete one particular SKU / product in a given customer order.  In the above example a picker / loader has to pick 20 times of  Crocin syrup case to complete that particular SKU in a given order.  Please note that the picker / loader can carry 2 cases of Crocin syrup in a single trip as per norms due to less weight.

Picks per order is the sum of the column 7.  In other words it is the number of picks a picker / loader has to make to complete all SKUs / products in the given order.  In the above example, a picker has to pick 385 times of all products in order to complete the dispatch for a given order.  Please note that one pick means the picker has to pick one (for Horlicks 500g Bottle) or two cartons (for Crocin Tablets) according to picking capacity at one time from the storage location and move it to shipping (outbound) area.

In our subsequent sessions, we will learn the following :

  • how the customer order character affect the decision on order pick method with example
  • learn more about different order pick methods and selection of equipment
  • how to measure (Key performance Indicator) the efficiency of Order pick methods.