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

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