- Increasing power of customers -
- Change of Customer Order Pattern
- Centralization of Warehouse
- Lower overhead cost due to decrease in facility (warehouse) numbers (for example instead of having 10 decentralized warehouses to cater entire India customer base having 4 or 5 centralized warehouses. This reduces the overall expenses like warehouse rent, salary to workers, material handling equipments etc. However one may note down that it may increases the transportation cost due to long distance to be covered. But saving in other overhead cost as explained above will offset the increase in transportation cost.
- Decreased inventory level. For example if you are having 10 decentralized warehouses you need to keep safety stocks across all 10 warehouses. Instead if you have 4 or 5 centralized warehouse, your safety stock level will go down as compared to decentralized warehouses.
- Higher fill rate. The factory or production units find it easy to dispatch finished goods in bulk to fewer warehouses due to centralization. The centralized warehouse will be having large variety of products and hence the higher fill rate with respect to customer order execution.
- a. machines and robots are used to stack the incoming products basis SKU/Item on pallets.
- b. The content of each pallet such as SKU / number of units, batch number, rate etc are communicated / input into the central computer which assigns the pallet to an empty location in the storage area.
- c. Conveyors or Vehicles are used to transport the incoming pallets to the storage location
- d. Automated Storage/Retrieval machines are used to store the pallet at the right position in the storage area.
Note : Putaway is the process in which materials are stored/putawy after being received by a warehouse. Determining where the materials will be stored and organized is part of this process, as well as identifying the materials in order for easy future retrieval.
- Basis the customer order, the computer (Warehouse Management System) will direct or inform the number of pallets and item units to be picked from the respective storage location details.
- Storage/Retrieval machines are used to assist order picking process. The picking process consists of few methodologies like Batch Picking, Zone Picking. These picking process is also supported by systems such as pick-to-light, pick-to-voice, Radio Frequency Identification (RFID), etc. We will learn more about these terms in our next session.
- The picked orders can be transferred through conveyor systems to an automated sorting area / location which contains multiple chutes (sub area) for different orders. For example you can pick 3 different customer orders which consist of multiple items / SKUs through Batch or Zone picking. All items picked against a given customer order goes only to a one specific chute (sub area) allotted by the computer system for that customer, without any mix up.
- The orders for a specific customer are sorted automatically to the same chute. Sorted orders are then packed and grouped for shipments.
- The development of information technology and warehouse management software systems integrates the Putaway and retrieval processes seamlessly.
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