Storage and

Warehousing
Techniques

Warehouse Management, 3rd edition by Gwynne Richards

Published November 2017 (Kogan Page)

Copyright D.G. Richards 2015

Introduction and
Background
Section 1

Copyright D.G. Richards 2015

Warehouse definition
“Warehouses are typically viewed as a temporary
place to store inventory and as a buffer in supply
chains.
They serve as static units matching product
availability to consumer demand and as such have
a primary aim which is to facilitate the movement
of goods from suppliers to customers, meeting
demand in a timely and cost effective manner”.
Primarily a warehouse should be a trans-shipment
area where all goods received are despatched as
quickly, effectively and efficiently as possible.
Van den Berg (2012)

Copyright D.G. Richards 2015

Whether they’re old….

Copyright D.G. Richards 2015

 Or ultra-modern

they have the majority of processes in

common Copyright D.G. Richards 2015
The Objectives of Warehousing

 The primary objective of warehousing is to maximize

the effective use of the operational resources while
satisfying customer requirements.
 Match product availability to customer demand
 Maximum customer satisfaction at Minimum cost
 Ensure visibility and accuracy of stock
 SIX BASIC PRINCIPLES
 Accuracy, Cost Control, Cleanliness,

Efficiency, Safety & Security

Copyright D.G. Richards 2015

Warehouse trade-offs
Accuracy
• Speed

• Time V Space

Service
• Cost

• Cost Accuracy

• Efficiency Responsiveness

• Volume purchases Storage costs

Copyright D.G. Richards 2015
 Key Warehouse Challenges (Adapted from Dematic)
Challenge Operational Requirements
Increase productivity, improve utilisation of space, staff and
Cost reduction
equipment

Improve productivity, increase accuracy, improve handling and invest

Achieve the Perfect Order
in systems

Shorter order lead times Improve processes and increase productivity

Sales via multiple channels and Improved picking strategies such as bulk picking and greater use of
increase in smaller orders technology

Fluctuations in demand Flexible working hours and improved forecasting

Improved use of equipment such as carousels, A Frames and flow

Proliferation of SKU
racks

Staff retention through excellent working conditions, flexible hours,

Labour cost and availability
training and improved productivity

Increasing cost of energy and

Manage energy more efficiently, better use of waste
environmental challenges

Data accuracy and speed of Introduce Warehouse management system and real time data
transfer transfer
Copyright D.G. Richards 2015
Warehouses in the supply chain
Raw materials
Disposal

Re-process
Component manufacture Direct sales

Product assembly /manufacture

Return
s Wholesalers/Dealerships Retailers
centre
s

Consumers

- Warehouse requirement
Copyright D.G. Richards 2015
Role of the warehouse

To facilitate getting the product to the customer:

• On time (OT)
• In Full (IF)
• To the right place
• In the right condition
• With the right paperwork
• At the right cost
• As environmentally friendly as possible

Copyright D.G. Richards 2015

The need for retailer warehouses?
• To better match supply with customer demand
• To consolidate deliveries and reduce shipping costs
• To reduce store deliveries

Warehouse

Vendors Retail stores Vendors Retail stores

Copyright © John J. BARTHOLDI III. Georgia Tech University All Rights Reserved.

Copyright D.G. Richards 2015

Why do we need to hold stock?

Copyright D.G. Richards 2015

Why do we need to hold stock?

• Buffer in the supply chain or manufacturing process • Smooth the flow of goods
• Satisfy demand – can be erratic • Packaging material
• Buy low sell high – precious metals, oil, coffee etc. • Store returns
• Shortage or unreliability in supply • Promotions and Product launch
• Cope with peak demand - seasonality • Cover for production shutdowns
• Maintenance parts • Lower unit cost if bought in large quantities and if
• Quality control cover transported in large quantities

• Customer and supplier lead times • Production breakdown

• Sub assembly • Ripening products, cheese, meats, whiskies

• Holding stock in numerous locations • Delay taxation payments

• Ability to increase production runs

• Humanitarian storage
• Archive storage

Copyright D.G. Richards 2015

Seasonality/demand uncertainty Finished Goods storage

12000

10000

8000

C1
No. of pallets

C2
6000 C3
C4
Total FG

4000

2000

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Week number
February 2010

July 2009

Copyright D.G. Richards 2015

 Seasonality/demand uncertainty
Distributor Collections 2009
300,000

250,000

200,000
Kgs

150,000

100,000

50,000

-
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Copyright D.G. Richards 2015

Warehouse Location
Section 2
Warehouse location

Exercise
Customer area A
Customer Area B
200 kms

30%
volume 70% volume
20 40 60 80 100 80 60 40 20
(Kilometres)

Where would you site a distribution centre to economically supply both customer areas?

Richards (2005)

Copyright D.G. Richards 2015

Warehouse location
Exercise

Cost of transport = $5 per kilometre

70 loads per day into Customer area A
30 loads per day into Customer area B
200 Days per annum
Customer area A

30%
volume 70% volume
20 40 60 80 100 80 60 40 20
Customer area B
(Kilometres)

Where would you site a distribution centre to economically supply both customer areas?
What if it costs an additional $350,000 to operate a warehouse within 10 kms of
customer area A? Minimum distance away is 1 km.
Richards (2005)
Copyright D.G. Richards 2015
Calculations
Loads Days Kms $ per km Sub-Total Additional cost Total
(If applicable)
70 200 $5
30 200 $5
TOTAL
70 200 $5
30 200 $5
TOTAL
70 200 $5
30 200 $5
TOTAL
70 200 $5
30 200 $5
TOTAL
70 200 $5
30 200 $5
TOTAL
Copyright D.G. Richards 2015
Answers
Loads Days Kms $ per km Total SubTotal Additional Total
cost

70 200 1 $5 $70,000
30 200 199 $5 $5,970,000
$6,040,000 $350,000 $6,390,000
70 200 10 $5 $700000
30 200 190 $5 $5700000
$6,400,000 $350,000 $6,750,000
70 200 11 $5 $770,000
30 200 189 $5 $5,670,000

$6,440,000 $6,440,000
70 200 60 $5 $4,200,000

30 200 140 $5 $4,200.000

$8,400,000 $8,400,000
70 200 100 $5 $7,000,000

30 200 100 $5 $3,000,000

$10,000,000 $10,000,000

Richards (2005)
Copyright D.G. Richards 2015
 Exercise (continued)

• What other factors do you need to take into account when making
this decision?

Copyright D.G. Richards 2015

Factors affecting warehouse location

Of importance to Local Government Planners

• Utilisation of brown field sites
• Build in areas of high unemployment
• Appropriate mix of industry
Companies
• Access to transport networks e.g. parcel and pallet hubs
• Availability of trained labour
• Transport links for staff
• Availability of funding, grants etc
• Use of suitable existing buildings
• Availability of utilities including telecoms
• Availability of finance and resources
• Goods traffic flows
• Proximity to ports and airports
• Where are our suppliers and manufacturing points?
• No weather issues such as flooding

Copyright D.G. Richards 2015

Warehouse location criteria
Best location selection criteria for warehouse location

Cost Macro environment Labour characteristics Infrastructure Environment Markets

Existence of modes of
transport
Land cost
Telecommunication Proximity to
Labour costs Labour availability systems
Government policies customers
Transportation cost Skilled labour Energy and water Geography
Industry regulations Proximity to
Tax incentives Transport links for utilities Weather supplier/producer
Enterprise Zones and staff
Tax structures Quality and reliability Lead times and
construction plans
Financial incentives of modes of transport responsiveness
Handling costs Proximity to ports and
airports
Existing sites

Location
Location 1 Location 2 Location 3 Location 4
1Location
Copyright D.G. Richards 2015
Adapted from T. Demirel et al./Expert Systems with Applications 37 (2010) 3943–3952
Port centric Logistics
“The provision of distribution and other value adding logistics services at a port.”

Advantages:
• Faster unloading (emptying) of containers as long journeys from
ports to DCs eliminated.
• Subsequent empty running between the DC and the port
eliminated.
• Lower demurrage fees
• No need to worry about landside weight restrictions on
imported containers allowing them to be filled to capacity.
• Faster repositioning of ‘empties’.
• Reduced carbon footprint.

Example: Asda Walmart at Teesport

Copyright D.G. Richards 2015
Location determination
Centre of Gravity
 Volume Centre of Gravity

 Locates warehouse at the centre of supply &

demand by minimizing distances to customers

 Cost Centre of Gravity

 Locates warehouses at the centre of supply or

demand by minimizing transportation costs

Copyright D.G. Richards 2015

 Global land and rent costs
USD/sq m/year
Top 10 Rent Outgoings Total costs
London (Heathrow) 214.34 98.86 313.19
Hong Kong 222.96 48.31 271.27
Zurich 196.63 21.85 218.48
Singapore 174.19 40.51 214.70
Oslo 208.45 2.70 211.15
Moscow 157.00 48.00 205.00
St. Petersburg 144.00 41.00 185.00
South East England 122.48 57.74 180.22
São Paulo 152.13 26.04 178.17
Taipei 149.04 15.00 164.04
Bottom 15
Philadelphia 42.73 32.34 75.07
Chicago 44.35 30.01 74.36
Shanghai 67.35 5.27 72.62
Budapest 51.45 20.58 72.03
Denver 38.10 33.25 71.35
Lyon 56.73 13.46 70.19
Houston 41.98 27.42 69.40
Brussels 60.69 7.59 68.27
Antwerp 59.37 8.13 67.50
Dallas 40.36 26.45 66.81
Marseille 54.09 12.14 66.23
Chengdu 59.60 2.98 62.58
Atlanta 42.19 17.00 59.19
Shenyang 54.69 3.66 58.35
Wuhan 42.44 4.39 46.83

Copyright D.G. Richards 2015

 How many warehouses?
MANY WAREHOUSES
 Inbound transport is
expensive (to supply
warehouses)
 Outbound transport is
cheaper (to deliver to
customers)
 Closer to customers so
quicker to react
 Cost of maintaining many
warehouses is expensive
 Cost of keeping many buffer
stocks is expensive

Copyright D.G. Richards 2015

How many warehouses?

FEWER WAREHOUSES
 Inbound transport is
cheaper
 Outbound transport is
more expensive
 Less responsive to urgent
orders
 Less cost to maintain &
equip warehouses
 Less cost of buffer stock

Copyright D.G. Richards 2015

 Major Cost Relationships

Cost
Total logistics cost

Primary transport cost

Inventory holding cost

Storage cost

Systems cost

Local delivery cost

Number of DCs / depots

Rushton, Croucher and Baker (2010)

Copyright D.G. Richards 2015

 Maister’s Rule
Reducing the number of warehouses from y
to x, reduces the total amount of safety
stock in the system by:

1 - [ √x ]
[ √y ]
Multiply the result by 100 to find the
percentage reduction

Copyright D.G. Richards 2015

Exercise: Maister’s rule

Use the data from the European manufacturer

example to test Maister’s rule:
 From 16 to 3 warehouses
 Original safety stock in the system was $16M
 By how much will the stock be reduced?

1 - [ √x ] =
[ √y ]

Copyright D.G. Richards 2015

 Answer

Reducing from y to x
y = 16 16 = 4
x = 3  3 = 1.732

% Reduction = 1 – 1.732 = 56.7%

4
56.7% of $16M = $9M

Copyright D.G. Richards 2015

Maister’s rule - grid
Original Percentage extra stock or reduced stock for change in no. of warehouses
number of
warehouses New number of warehouses

1 2 3 4 5 10 15 20

1 0% 41% 73% 100% 124% 216% 287% 347%

2 -29% 0% 22% 41% 58% 124% 174% 216%

3 -42% -18% 0% 15% 29% 83% 124% 158%

4 -50% -29% -13% 0% 12% 58% 94% 124%

5 -55% -37% -23% -11% 0% 41% 73% 100%

10 -68% -55% -45% -37% -29% 0% 22% 41%

15 -74% -63% -55% -48% -42% -18% 0% 15%

20 -78% -68% Copyright

-61%D.G. Richards
-55% 2015 -50% -29% -13% 0%
Types of Warehouse
Operation
Section 3
Functions of a warehouse
• Inventory holding point - Stock is held to fulfil orders / demand.
Provide a buffer stock, preparation for a new
product launch,
facilitate long production runs
Storage of Customs and excise goods under bond
Other types
• Sequencing centre - Just in time related techniques
• Consolidation centre - Product lines from various locations are
consolidated into complete customer orders.
• Cross-dock centre - Goods are received and shipped onwards without
storage.
• Sortation centre - Goods are sorted by customer or region.
(parcels/pallets)
• Sub-Assembly facility - Final assembly of goods prior to distribution e.g.
postponement or labelling.
• Trans-shipment point - Goods are sorted into smaller vehicle loads for
delivery to the customer – break-bulk centre.
• Fulfilment centre e-commerce and catalogue sales
• Returned goods centre - To handle returned / faulty goods.
Copyright D.G. Richards 2015
Warehouse Types

• Local, regional, national, international stock holding points

Copyright D.G. Richards 2015

Cross dock operation

Grid
A Outbound
Inbound C

C C
B B B C C
A B C C AB B B B C
AA B B C C AA AA AA

Copyright D.G. Richards 2015

Ambient storage (room temp storage)

Photo – Newman Paperboard Photo – Howard Tenens

Copyright D.G. Richards 2015

Hazardous Goods storage

Photo - EDIE

Photo – Transmare - chemie

Copyright D.G. Richards 2015

There are nine classes, some with divisions, as
follows:
UN Class Dangerous Goods Division(s) Classification
1 Explosives 1.1 - 1.6 Explosive
2 Gases 2.1 Flammable gas
2.2 Non-flammable, non-toxic gas

2.3 Toxic gas

3 Flammable liquid Flammable liquid
4 Flammable solids 4.1 Flammable solid
4.2 Spontaneously combustible
substance
4.3 Substance which in contact
with water emits flammable
gas
5 Oxidising substances 5.1 Oxidising substance
5.2 Organic peroxide
6 Toxic substances 6.1 Toxic substance
6.2 Infectious substance
7 Radioactive material Radioactive material
8 Corrosive substances Corrosive substance
9 Miscellaneous dangerous Miscellaneous dangerous
goods goods

Copyright D.G. Richards 2015

Packaging and Labelling
The consignor is responsible for ensuring that the packaging conforms to the
regulations for the product. The packaging can be as simple as a cardboard box or
paper bag for low risk powders in small quantities to very sophisticated double skinned
stainless steel packages for more complex high risk products. In general the package
needs to be UN approved and compatible with the product but for every UN number
there is a list of packaging options available to the packer.

Having packed the product the package has to be labelled, this is not about the
product labelling or CHIP labelling which has health and safety advice for the user, but
a rather simple class warning symbol. On small packages a 100 mm square coloured
diamond with a symbol, these can be larger on IBC’s and road tankers. I have
illustrated a couple of examples below:

Copyright D.G. Richards 2015

New Haz chem codes

Copyright D.G. Richards 2015

Temperature controlled storage

Photo by fordsproduce.com

Photo by Texas ice house

Copyright D.G. Richards 2015

Bulk storage

Copyright D.G. Richards 2015

Garment storage

Photo by Asda Walmart

Photo by Transformer

Copyright D.G. Richards 2015

Archive Storage – Abandoned Salt
mines

Copyright D.G. Richards 2015

 Fulfilment Centres

Photo by BBC News - Amazon

Copyright D.G. Richards 2015

Other Warehouse examples

Copyright D.G. Richards 2015

Warehouse types
Open spaces can also be classed as
warehouses if products are stored for a period

Copyright D.G. Richards 2015

Returns/Recycling
warehouse

J & M Re-cycling

http://your.asda.com/sustainability-store-
waste/waste-not-want-not-2

Copyright D.G. Richards 2015

Customs warehousing - advantages

• Customs warehousing is a procedure that enables the

suspension of Import Duty and/or VAT.
• Delay paying import duty and/or VAT and excise duty on your
stocks of imported goods.
• If you want to re-export you don’t pay import tax
• If you do not know the ultimate destination of the imported
goods and want to delay having to declare imported goods to
another customs procedure, for example release for free
circulation
• Certain countries operate Free Trade Zones on a similar
principle
Copyright D.G. Richards 2015
HM Revenue and Customs
requirements
• The warehouse will be used primarily for the
storage of goods
• There is a genuine economic need
• Your stock records are adequate to verify the
receipt, storage, handling and disposal of the
goods and they must be able to show at all times
the current stock of goods that are held under the
customs warehouse procedure.
• You must be solvent and have a compliant
revenue record
• You must use it regularly
Copyright D.G. Richards 2015
Warehouse Processes
Part 1
Section 4
Lean Warehousing

Kaizen = Continuous Improvement

Cerasis.com Copyright D.G. Richards 2015

Shadow boards

Copyright D.G. Richards 2015

 Warehouse processes and flow
Item
picking
Reserve storage Replenishment Replenishment
Case picking
and full pallet pick

Direct movement
To pick faces

Fu
ll p
al l
et
de Sortation, Consolidation, Value adding
Direct put-away s pa
tch services and packing
to reserve stock

Receiving Despatch

Cross-docking

Adapted from Schmidt & Follert 2011

Copyright D.G. Richards 2015
 Warehouse functions

• Goods inward/receipt
• Inward sortation and Cross-docking
• Storage
• Replenishment
• Order picking
• Secondary sortation
• Collation
• Postponement
• Value adding services
• Despatch
• Housekeeping
• Stock counting Cranfield University

• Returns processing
Copyright D.G. Richards 2015
Pre-receipt

• Agree specifications with supplier

• Inform supplier of requirements regarding:
• Size and type of delivery vehicle
• Size and type of pallets
• Size of cartons
• Labelling requirements
• Delivery documentation
• Pre-notification
• Delivery procedures
• Unloading requirements
• Role of the driver
Copyright D.G. Richards 2015
Pallets
• Pallet rental companies
• Charged on a pence per day basis
• Pallets are normally in very good condition
• Does require both suppliers and buyers to be part of the
rental scheme
• Removes requirement to collect pallets from customers

V
Copyright D.G. Richards 2015
Pallet Dimension (Continued…)

The following website provides a tool for calculating the

pallet dimension and weight as well

http://onpallet.com

 Open this website and play with the web page using
different dimensions and weights.
Checking in Loads

 TiHi describes the arrangement of cases on a pallet.

 It stands for Timarandum Height or ‘layers of’ × height.

 ‘Ti’ means the number of boxes or cases in a pallet layer.

 ‘Hi’ means the number of layers high on a pallet.

 TiHi refers to the number of boxes/cartons stored on a layer, or

tier, (the Ti) and the number of layers high that these will be

stacked on the pallet (the Hi)

Checking in Loads

Example:

A TiHi of 8 × 6 means 8 cases

per layer; 6 layers high.

Ti and Hi 
Ti × Hi = Pallet
quantity

TiHi = 8 × 6
Pallet quantity = 48
Checking in Loads

When pallets arrive, the TiHi must be the same as on the delivery
note.

Imagine this:

Pallet A = 120 cases with a TiHi of 20 × 6

Pallet B = 120 cases identical to those on pallet A, but with a TiHi

of 6 × 20

 Which TiHi gives the taller pallet?

 Which TiHi gives the larger ‘footprint’?

 How many cases make this larger ‘footprint’?

Checking in Loads

What problems might occur if a tihi of 6 × 20 is accepted when a

tihi of 20 × 6 is on the delivery sheet?
Receiving
• Allocate the supplier a time for delivery
• Estimate time to unload, check and put-away
• Allocate sufficient labour and MHE for unloading
• Check if load requires special handling
• Check for any special handling instructions (Hazardous, fragility etc)
• Unload and check quantities and quality of delivery
• Record variances
• Check status of goods
• Label or ID tag
• Record quantities
• Clear dock area and ensure goods are on system and available to pick –
dock to stock time is crucial!
• Locate - Quarantine, cross dock, pick face, reserve storage

Copyright D.G. Richards 2015

Booking in sheet
DOOR One

Time slot Supplier Units Unit type Time Eqpt Actual time Comments
estimate

0700 ARCO 24 Pallets 45 mins PPT 40 mins Vehicle was

2 hours late

0750 TCO Deli 10 Parcels 10 mins 10 mins Urgent

delivery

0805 SBH Ltd 12 Pallets 24 mins PPT 25 mins

0835 Delta ltd 24 Pallets 45 mins PPT 45 mins

0925 Argo.com 1000 cases 3 hours x FLT 2hrs 50 Container

3 staff mins x 3

Copyright D.G. Richards 2015

In-handling equipment

Copyright D.G. Richards 2015

 Dock Equipment

Dock Levelers
• Hydraulic
• Air Bag
• Mechanical

• Power Assisted

• Bumper Pads

• Dock Shelters

• Dock Lights

• Safety lights/warnings

• Operating procedures

• Signage in different languages

Copyright D.G. Richards 2015

Labelling and Put-away

• Ensure supplier has labelled products correctly

• Produce own labels although not as efficient
• Scan labels
• System determined put-away
• Location allocation by system or manual
• Take into account size, weight, velocity, compatibility
• Quarantine areas
• Fixed or random locations?
• Check stock rotation policy
• Consolidate stock if FIFO rules allow
• Record stock against the location
• Task interleaving or dual cycling – put-away and retrieve in same movement

Copyright D.G. Richards 2015

Inbound and put away processes

Inbound check
Location verification
and put-away

WMS

Copyright D.G. Richards 2015

Fixed v Random storage
Fixed locations total = 453

Code Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

Κ1 100 155 100 140 100 120 120 100 100 120 150 150

Κ2 50 20 51 30 30 30 40 50 50 40 40 50

Κ3 10 5 12 17 10 10 5 10 10 5 5 10

Κ4 90 80 80 75 75 75 80 80 95 90 80 90

Κ5 40 40 50 50 135 130 130 130 50 40 40 40

SUM 290 300 293 312 350 365 375 370 305 295 315 340

Random locations
Copyright D.G. Richards 2015
Packaging

• Be involved when initially discussing new products

• It’s not all about the product!! – think about the packaging!
• Nature of the product – size, selling quantities, hazard, cost
• Arrival packaging, returnable plastic pallets, stillages etc
• Labelling
• Nature of storage medium
• Despatch quantities
• Recycled packaging

The protective packaging company

Copyright D.G. Richards 2015

 Unitisation
• An approach aimed at creating an appropriate standard
module for handling, storage, movement, loading and
unloading during the transport and distribution process.
• Small containers used in small parts storage and handling.
• Wooden pallets which have become a key unit load within the EU market.
• Totes and Dollies
• Cage and box pallets
• Roll cage pallets used in wholesale operations, e.g. grocery distribution
• Stillages – used in automotive
• Intermediate bulk containers in ranges of one to two tonnes payloads

Copyright D.G. Richards 2015

 The importance of Unit Loads
Used by manufacturers, retailers and service providers,
unit loads are key cost drivers. They impact on
transport, storage, handling and packaging, which
together represent 12-15% of the retail sales price.

Developing more Efficient Unit Loads is critical to the

success of Efficient Consumer Response and is estimated to save
1.2% of the retail sales price.
E.g. Prescribed length and width is seen as a must by
manufacturers and retailers, with the 600x400 master
module accepted as the basis in Europe for 1200 x 800mm
pallets.

Copyright D.G. Richards 2015 Copyright © March 1997 by ECR Europe

Order Picking Methods
• Paper pick lists
• Pick by label
• Pick by voice https://www.youtube.com/watch?v=yy53EMEmx_c https://www.youtube.com/watch?v=BcbhbGRXZRE

• Barcode scanning https://www.youtube.com/watch?v=CJW5D5SDAgw

https://www.youtube.com/watch?v=Xe7UaH20n7A https://www.youtube.com/watch?v=86ttdESB9_g

• Radio Frequency identification https://www.youtube.com/watch?v=gEQJxNDSKAE

• Pick By light /Pick to light https://www.youtube.com/watch?v=tPIQpKi_-Ko
Location I.D.

• 4 E 14 C 1 or
• 04.05.14.03.01
Where 4 (04) = zone
E (05) = Aisle
14 = Bay
B (03) = Level
1(01) = Pallet, Shelf or bin position

Copyright D.G. Richards 2015

 Picking systems
• Picking is paramount to any warehouse operation
• It is the most labour intensive
• It is fundamental to customer service
• There are often extensive floor space requirements
• There may be limited scope for automation

On average up to 65% of the warehouse operating expenses

can be attributed to the Picking function.

On average travel time accounts for 50% of the total picking

time (Petersen C.G. 2002).

Copyright D.G. Richards 2015

Pick volumes

Copyright D.G. Richards 2015

78
Picking – The set up

Pareto or the 80/20 rule

• Sales (80% of sales from 20% of product lines)

• Sales (20% customers provide 80% of sales)

• Suppliers (80% of volume from 20% of suppliers)

• Value of product (20% of product lines – 80% of value)

• Cost of servicing clients (20% of clients – 80% of problems)

• Labour (20% of staff – 80% of problems)

• Labour (80% of efficiency from 20% of staff)

Copyright D.G. Richards 2015
ABC/Pareto Analysis
Ranking (by Order frequency Cumulative Cumulative % of Cumulative % of Category
frequency) in period frequency total frequency number of stock
lines

1 300 300 30 5 A

2 225 525 52.5 10 A

3 150 675 67.5 15 A

4* 125 * 800 * 80 20 A

5 40 840 84 25 B

6 30 870 87 30 B

7 25 895 89.5 35 B

8 25 920 92 40 B

9 15 935 93.5 45 B

10 15 950 95 50 B

11 10 960 96 55 C

12 8 968 96.8 60 C

13 6 974 97.4 65 C

14 5 979 97.9 70 C

15 5 984 98.4 75 C

16 4 988 98.8 80 C

17 4 992 99.2 85 C

18 3 995 99.5 90 C

19 3 998 99.8 95 C

20 2 1,000 100 100 C

Copyright D.G. Richards 2015
Why is ABC Analysis
Important?

Take an example:
200 full pallet, ground floor pick positions
5 aisles

Copyright D.G. Richards 2015

Why is ABC Important ?

Apply sku –
ABC Analysis

Copyright D.G. Richards 2015

Why is ABC Important?

Generate a 10 Item Pick

Copyright D.G. Richards 2015

Why is ABC Important?

Add the Route Travel Time: 209 seconds

Copyright D.G. Richards 2015

Why is ABC Important?

Apply a Slotting Strategy

Copyright D.G. Richards 2015

Why is ABC Important?

Reduced Travel Time

Shorter
Distances 116 sec vs 209 sec

Copyright D.G. Richards 2015

% Benefit
Non-
Slotting Slotting

Journey Time 116 209

Pick Time 75 75
(10 items @ 7.5 sec)

Start & End 70 70

Total 261 344

24%
Reduction
Courtesy of
Copyright D.G. Richards 2015
ABC layout

C Zone
Slow movers
45% SKU,
5% frequency

B Zone
Medium movers,
35% SKU,
15% of frequency

A Zone
Fast movers,
20% SKU, 80%
of order
frequency

C B A B C
Despatch
Copyright D.G. Richards 2015
Actual example (1350 stock items in total)
No.Orders Cumulative Cumulative % Current stock Stock item Y/N ABC Pallet/shelf
CC214 1600 1600 4.94 317 Stock A Pallet
CC208 1166 2766 8.55 107 Stock A Pallet
CC216 1099 3865 11.94 117 Stock A Pallet
BC301 1055 4920 15.21 60 Stock A Pallet
CC114 731 5651 17.46 119 Stock A Pallet
BC028 728 6379 19.71 20 Stock A Pallet
BC010 715 7094 21.92 42 Stock A Pallet
BC031 626 7720 23.86 5 Stock A Pallet
KE977 549 8269 25.56 382 Stock A Pallet
KE976 547 8816 27.25 128 Stock A Pallet
CC116 521 9337 28.86 68 Stock A Pallet
CC109 521 9858 30.47 83 Stock A Pallet
BC296 501 10359 32.01 0 Stock A Pallet
BC300 355 10714 33.11 10 Stock A Pallet
KE978 352 11066 34.20 592 Stock A Pallet
BC302 343 11409 35.26 11 Stock A Pallet
CC217 343 11752 36.32 44 Stock A Pallet
BC011 315 12067 37.29 18 Stock A Pallet
BC503 312 12379 38.26 10 Stock A Pallet
BC012 285 12664 39.14 18 Stock A Pallet

Copyright D.G. Richards 2015

270 stock items produced 80% of the orders!
ABC Analysis – volume and frequency
Frequency

Aa Ab Ac

Ba Bb Bc
Sales

Ca Cb Cc

Ac – products sold less frequently but with high impact on sales

Ca – Products sold often but in fewer quantities

Copyright D.G. Richards 2015

Pick face examples

Copyright © John J. BARTHOLDI, III. All Rights Reserved

Copyright D.G. Richards 2015

Pick sequence and aisle
numbering

Copyright D.G. Richards 2015

 Picking procedures
 Pick by order
 All lines are collected for a specific customer order
 Minimal handling, order sizes are typically high.

 Pick by label
 All lines are collected for a specific customer order and labels attached to each item during the picking process
 Minimal handling, order sizes are typically high.

 Cluster picking
 Take several individual orders out at the same time
 Can be confusing without technology

 Pick by batches
 Products collected for a large number of orders with the same product lines
 Fewer runs but increased handling and sortation, mainly large quantities of small orders

 Pick by zones
 Products are categorised into specific groups and picked from defined areas
 Reduced walking distance, increased sortation

 Pick by waves
 Large batches of orders are collected for defined time periods e.g. arrival of vehicle

Copyright D.G. Richards 2015

ORDER PICKING – individual
and cluster Area picking / U path picking

Courtesy of VanDerLande Industries

Order Release
Dispatch Area
Point
Copyright D.G. Richards 2015
Pick by label

• Each operator is given a

batch of labels detailing location,
quantity etc - once all labels are
attached to the products and placed in
a carton or onto a pallet the individual
order pick is complete

Copyright D.G. Richards 2015

Cluster Picking method

Copyright D.G. Richards 2015

(Photos by QAD, Kardex Remstar)
 Zone picking
Can be simultaneous or sequential
Each person is allocated their own area
Dispatch Area

Products
Products
orders

Order Release
Point

Copyright D.G. Richards 2015

Products
Courtesy of VanDerLande Industries
Batch picking

Copyright D.G. Richards 2015 Oracle.com

Wave picking
• There are two basic planning elements and benefits of wave
picking.
• To organize the sequence of orders and assignment to waves,
consistent with routing, loading and planned departure times
of shipping vehicles or production requirements, etc., to
reduce the space required for shipping dock handling to
assemble orders and load; and
• To assign staff to each wave and function within a wave, with
the expectation that all the work assigned to each wave will be
completed within the wave period and thus more effectively
utilize the staffing throughout the shift.

Copyright D.G. Richards 2015

Goods to person
Increased use of automation – goods to person

Order distribution System (ODS) is a dynamic goods-to-person solution.

It is especially strong in business processes where a large numbers of
order lines are fulfilled from relatively low numbers of articles. Totes or
cartons are transported by a conveyor system to operators who place
goods into order totes controlled by put-to-light displays.
Courtesy of VanDerLande Industries

Copyright D.G. Richards 2015

What affects picking performance?
Pick location
identification Replenishment
Product processes
identification Operating
processes

Order Warehouse
release management
strategy software

Picking Stock
technology availability

Pick location Walk

appropriate to distances
product size and
dynamics

Product Picker
and/or pack Pick face Handling training
size and quantity and unit (pallets,
weight stock cover totes, etc.)

Courtesy of The Logistics Business

Copyright D.G. Richards 2015

 The human factor

• Safety first
• Ergonomic design of storage system and equipment
• Light loads (max 25 kgs men, 15 kgs women)
• Adequate lighting
• Comfortable temperature
• Clear instructions
• Clear labelling
• Adequate breaks
• Good communication with team
• Good supervision
Copyright D.G. Richards 2015
Replenishment

When using pick or forward locations

•Replenishment is the replacement of goods picked from the forward locations
•Goods are transferred from bulk or reserve locations
•This can be done overnight, at the beginning or end of a shift or during the
picking process depending on the urgency – however try not to replenish at the
same time as you are picking
•Ensure sufficient items in pick location for duration of shift if possible

•Biggest error is to have an empty pick location

Copyright D.G. Richards 2015

Value Adding Services

• Labelling
• Kitting
• Sub-assembly
• Testing
• Packing
• Shrinkwrapping
• Tagging
• Kimballing
• Promotional work (e.g. BOGOF)
• Gift wrapping
• Call centre support
Copyright D.G. Richards 2015
Despatch

• Random quality checks on exit depending on product

value
• Pack products securely and safely
• Weigh product as an alternative to physical count
• Recording of batch numbers, serial numbers etc.
• Load manifest compilation
• Loading in sequence
• Load optimisation (e.g. Cubiscan)
• Smooth the flow of despatches
• Vehicle sealed and recorded
Copyright D.G. Richards 2015
 Load optimisation

Vehicle load configuration –

Pallet configuration – no overhang
Optimum number of
- Optimum number of cartons
pallets/cartons

http://onpallet.com/
Copyright D.G. Richards 2015
 Packing on despatch

Stretch-wrap by hand
Pallet straps (courtesy of Velcro)
Stretch-wrap machine

Automatic carton erector and sealer

Shrink-wrap tunnel
(Courtesy logismarket) Packing station, (courtesy Cisco Eagle)

Copyright D.G. Richards 2015

Housekeeping/Supervision

If you have a large warehouse you may have separate teams for the
following:
• Provision, allocation and maintenance of equipment
• Replenishment of fast moving items
• Dealing promptly with non-conforming, lost or found stock
• Security of high value or hazardous stock
• Identification of non-moving stock
• Ensuring efficient space utilisation
• Work flow and congestion
• Cleanliness of warehouse
• Review of procedures
Copyright D.G. Richards 2015
Minimising Theft

• Staff training and awareness

• Use of CCTV
• Use of lockable cages or Carousels for high value goods
• Parking of cars away from the warehouse
• Random searches
• Regular cycle counts
• Staff vigilance
• Especially in dark, less accessible areas of the warehouse. These are prime areas from which
product will disappear. Same goes for inventory near exit doors. Staging areas for both incoming
and outgoing shipments may be too close to the dock doors. If no one is around to keep an eye
out, it would be easy to take something and put it in a truck.

• Conduct security surveys/audits (Independent)

• Use security tags for vehicles leaving the warehouse
Copyright D.G. Richards 2015
Stock counting

• Perpetual inventory or cycle counting

• Use ABC analysis to determine how many and how often
you count which items of stock e.g. 8% of A, 4% of B and
2% of C items
• Monthly, quarterly, annual stock checks
• Depends on what you agree with your auditors

N.B. You need to be organised:

Who’s counting, are they trained and motivated, what are you counting,
when do you count, what tools do you need.
Copyright D.G. Richards 2015
Stock turn

• How often stock turns over in a warehouse

• How to calculate:
• Divide the total throughput of items by the average number of items
in stock
Or
• Divide the total cost of sales by the total average cost of goods stored
at a particular time

Examples of stock turn

100+: Japanese manufacturing company
30-100: Good European manufacturing or distribution
10-30: Typical European manufacturing
10 – 35: Retailer
<10: Poor European manufacturing
<2: Maintenance stores

Copyright D.G. Richards 2015

Stock turn
• The following table provides data regarding sales and average
stock holding per month for ACME products.
• Calculate the stock turn.
Average no. of units
Month Sales per month in stock
January 40,000 150,000
February 32,000 165,000
March 35,000 170,000
April 90,000 175,000
May 100,000 165,000
June 75,000 153,000
July 45,000 126,000
August 32,500 122,000
September 40,000 165,000
October 58,000 185,000
November 74,000 195,000
December 84,000 110,000
Copyright D.G. Richards 2015
Stock turn
Average no. of units
Month Sales per month (units) in stock (units)
January 40,000 150,000
February 32,000 165,000
March 35,000 170,000
April 90,000 175,000
May 100,000 165,000
June 75,000 153,000
July 45,000 126,000
August 32,500 122,000
September 40,000 165,000
October 58,000 185,000
November 74,000 195,000
December 84,000 110,000
705,500 156,750
Stock turn = 4.5

Copyright D.G. Richards 2015

Days stock in hand
Item ID Description Tot QOH M1-12 Usage Days stock Year's stock
SE041-002-02R BOTTLE REPLACEMENT SALINE STA 39 1 14235.0 39.0
HN031-020-01 CAP .375 IN NPT SST 77 3 9368.3 25.7
ZN80 CASSETTE 9X12 24 1 8760.0 24.0
EC211-001-01 CONNECTOR F TYPE CRIMP-ON 96 4 8760.0 24.0
0285263 BOOTLACE FERRULE 1.5 SQ MM WIRE INSULATED BLACK PK 100 92 4 8395.0 23.0
MF551-S11-13 ALL THREAD .25-20UNC-2A X 1 316SS 64 3 7786.7 21.3
MB041-011-01 SEAL SHAFT RING CURVETECH 20 1 7300.0 20.0
0218293 FERRULE 90 SERIES -4 SST 19 1 6935.0 19.0
EC121-033-01 CONNECTOR CIRCULAR STRAIGHT PLUG 6 PIN MALE 16 1 5840.0 16.0
0378818 CAPACITOR ALUM ELECTROLYTIC 100UF 35VDC RADIAL 8MM DIA 47 3 5718.3 15.7
0415982 HOSE SUCTION 1-1/4 IN W/ FEMALE JIC STR ENDS SPEL-6000 TMS 15 1 5475.0 15.0
AC99-R CLEANER (AEROSOL)ARDROX 9PR5 30 2 5475.0 15.0
AD99-R DEVELOPER (AEROSOL)ARDROX 9D1B 28 2 5110.0 14.0
HN071-078-01 ELBOW .75 NPTF 90 DEG SST 25 2 4562.5 12.5
0009398 HEAT SHRINK SLEEVING BLK 3IN DIA ADHESIVE WALL 12 1 4380.0 12.0
0314786 KIT FIRST AID 50 PERSON 12 1 4380.0 12.0
BPGA GRIGRI 12 1 4380.0 12.0
0206719 LIFT TUBE MOUNT AFT 35 3 4258.3 11.7
0318915 COUNTERSINK SLTD FLT LG 90 DEG M2.5 - 0.45 X 10MM 23 2 4197.5 11.5
0270423 TUBE STABBING GUIDE CAGE EXTENSION DETAIL 11 1 4015.0 11.0
CA121-002-02 TAPE DUCT OLIVE DRAB 2.83 IN WIDE X 60 YD LONG 21 2 3832.5 10.5
IX01-0005AB AGFA RCF SCREENS 70mm x 5mtr 21 2 3832.5 10.5
MM021-523-01 O-RING,8.10 ID X .070 BUNA 70 004-0792 21 2 3832.5 10.5
AD02-R DEVELOPER MANUAL G128 2QBUS 10 1 3650.0 10.0
0006659 CONNECTOR BNC PLUG RG179 75 OHM MINIMUM 20 2 3650.0 10.0
MB011-N22-79 O-RING 2-279 BUNA N70 20 2 3650.0 10.0

Copyright D.G. Richards 2015

Average Days of Sales held
in inventory- USA by REL
Top 5 lowest DIO (Days inventory outstanding) sectors:
(1) Retail Convenience Stores: 8.4;
(2) Restaurants: 12.6,
(3) Business Furniture 19.3;
(4) Retail Grocery: 30.1;
(5) Printing: 30.2

Top 5 highest:
(6) Spirits: 287.6;
(7) Retail Auto Parts: 208.9;
(8) Pharma: 177;
(9) Biotech: 161.2;
(10)Life Sciences Equipment: 151.1

Average Inventory Level/[total revenue*365]

Copyright D.G. Richards 2015
Warehouse Automation
and Equipment
Section 6
Warehouse automation and technology

Support systems Semi-automation Automated systems

Warehouse Carousels/Vertical lift AS/RS (Automated
Management systems modules storage and retrieval
systems)
Warehouse Control A frames Cranes
Systems
Shuttle systems
Bar codes and Pick and put to light Conveyors
scanners
Automated guided
Radio frequency ID Shuttle carts vehicles
Scanners and voice
terminals Robotics

Copyright D.G. Richards 2015

Warehouse automation
Case study – Tele Danmark site

Introduction of very narrow aisle mini-load crane system.

Consolidated stock from 3 distribution centres and 60 small local sites into a
Single warehouse of 7,200 square metres. This handling system supported
13,500 lines and an annual throughput of 7,000,000 items.

Other benefits included:-

•Handling costs reduced by 75%

•Order accuracy improved from 62% to 96%
•Duplicate stock was almost eliminated
•Flexibility improved – same day order despatches
•Reduced labour costs

Warehouse of the month – Modern Materials Handling Online

Copyright D.G. Richards 2015

Advantages of Automated
systems
• Increased Space Utilisation
• High bay narrow aisle systems (up to 30 metres high)
• Random storage
• Improved Control
• Pallet tracking through enhanced warehouse management system
• Labour and Energy Savings
• No heat and light requirement apart from maintenance
• Minimum supervision required
• Continuity
• 24 hour, 7 days per week operation
• Product Security
• High bay areas, Use of First in First out principles, less human intervention
• Safety
• Elimination of majority of manual handling
• Reduction in accidents
• Can cope with hazardous/harsh environments
• Integration
• Coordination of product flows, avoiding bottle necks
• Constant performance levels
Copyright D.G. Richards 2015
• Continuous review
 Disadvantages of Automated
systems
• High investment costs
• Building, equipment, Information technology
• System failure, operations are entirely reliant on technology
• High opportunity cost
• Require standardised unit loads
• Anomalies not accepted and need to be handled separately
• More quality control required at inbound
• High cost of disposal of equipment
• Lack of flexibility

Copyright D.G. Richards 2015

Reasons for choosing Automation

% of replies

Running out of space

Customers need their orders faster

Existing system can't keep up with increased order volumes

High cost and/or low availability of labour

% of replies
Increased need for cross-docking

Retail compliance mandates

Increasing the number of piece picking

Existing automated system can't handle the new dimensions,

weights of products

0% 10% 20% 30% 40% 50%

Copyright D.G. Richards 2015 Aberdeen Group
Reasons against automating a warehouse
% of replies

Upfront cost perceived as too high

Flexibility fears

Software integration fears

% of replies

Doesn't fill the need

Reliability fears

Building size/shape is prohibitive

0% 5% 10%15%20%25%30%35%40%45%
Copyright D.G. Richards 2015 Aberdeen Group
Automated guided vehicle

Copyright D.G. Richards 2015

A Frame – automatic pick

Courtesy of Knapp and SSI Schaeffer

Copyright D.G. Richards 2015

Other automation systems
• Cimcorp 3D shuttle
• No racks

Copyright D.G. Richards 2015

More automation
• Swisslog Autostore

Copyright D.G. Richards 2015

Robo pick by Kiva

10,000 sq. metres - $4 - $6 million

Copyright D.G. Richards 2015

Automation in pallet storage
• Proctor and Gamble – Activ pallet sequencer
by Retrotech

Copyright D.G. Richards 2015

Storage Systems
Section 7
Main types of storage systems

 Block stacking
 Wide aisle racking
 Cantilever racking
 Narrow aisle racking
 Automated
 Manual
 Drive-through/ Drive-in racking
 Sliding or Mobile racking
 Double deep racking
 Push-back racking
 Flow or Live racking
 Mezzanine
 Carousels

Copyright D.G. Richards 2015

Storage Equipment
Bulk Storage/Block Stack
• High density storage on the warehouse floor.
• Unit loads stacked on top of each other
• Best for large quantities of a single SKU (stock keeping unit)
• Allowable stack heights (3 or 4)
• Low utilization threshold

Copyright D.G. Richards 2015

Storage Equipment
Adjustable Pallet Rack APR
• Consists of uprights, beams and back supports
• Anchored to floor with adjustable beams
• Must know weight capacity, width of rack opening and the distance between load
bearing beams
• Flexible and easily reconfigurable

Copyright D.G. Richards 2015

Rack configuration options

(ground access)
Picking Zone

Layer Pallet Pick Half Pallet Pick Full Pallet Pick

Copyright D.G. Richards 2015

Rack tunnels

Copyright D.G. Richards 2015

Storage Equipment
Cantilever Rack
• Storage of long materials such as piping or wood products
• High capital cost per square foot
• Higher density for multiple SKU’s

Copyright D.G. Richards 2015

Warehouse storage methods
Very Narrow aisle racking
 Consists of uprights, beams and back supports
 Anchored to floor with adjustable beams
 Requires less space than APR
 Must know weight capacity, width of rack opening and the distance
between load bearing beams

Copyright D.G. Richards 2015

Storage Equipment
Drive-in/Drive Through Rack
• Similar to pallet racking but the forklift can drive into the rack
• High density storage medium for large quantities of single SKUs
• Need good quality pallets
• LIFO - Drive In
• FIFO - Drive Out

Copyright D.G. Richards 2015

Storage Equipment
Sliding Rack or Shelving
• Mounted on guides or rails
• Highly space efficient
• Very effective for small parts and high SKU
• Strong medium for slow moving parts

Copyright D.G. Richards 2015

Storage Equipment
Double Deep Rack
• High Density Storage medium
• Must use reach truck only with extendable forks
• Requires multiple pallets of Single SKUs

Copyright Constructor
D.G. Richards 2015
Storage Equipment
Push back racking
• Supports slow moving product
• Needs same product in the line
• LIFO
• No individual pallet access

Copyright D.G. Richards 2015

Storage Equipment
Flow or Live Rack
• Great for carton flow or piece pick
• Many SKU’s in small footprint
• Supports high speed and slow moving product
• Designed for High speed picking

Copyright D.G. Richards 2015

Gravity flow versus static
shelving

Courtesy of Cisco Eagle

Copyright D.G. Richards 2015

Storage Equipment
Satellite/Shuttle racking
• No aisles
• Many pallets in small footprint
• Supports high speed and slow moving product
• Good utilisation of space at the loading bay
• Continuous flow

Copyright D.G. Richards 2015

Capacity utilisation
• Warehouse managers are tasked with making use of the whole cubic
volume of the warehouse taking into account accessibility, practical
utilisation limits, cost and accountability
• Consider introduction of mezzanine floors for example – e.g. space
above dock doors

Courtesy of AWS Ltd and Cisco Eagle

Copyright D.G. Richards 2015
Storage Equipment
Horizontal and vertical Carousel
• High capacity storage for pick and pack
• Brings parts to operator
• High speed picking solution, reduction of travel by SKU
• High security
• Good ergonomics

Copyright D.G. Richards 2015

Decision table
Wide Narrow VNA Drive Double Live Mobile
aisle aisle in deep storage racking

Floor space utilisation 2 3 4 5 3 4.5 4.5

Cubic space utilisation 3 4 5 3.5 4 3.5 4
Access to each pallet load 5 5 5 1 3 4 3.5
Speed of access 4 3 3 2.5 3 5 2
Stock rotation 4 4 4 1 3 5 3
Stock control and mgt. 4 4 4 2 2 5 3
Specialised mhe (in terms No Yes Yes No Yes No No
of cost) 5 2 1 5 3 5 4
Ease of re-location 5 4 2 3 3 1 1
Speed of installation 5 4 2 3 4 3 1
Beam adjustments 5 4 1 1 2 1 3
Total 42 37 31 27 30 37 29

Advantages/disadvantages – marks out of 5 Copyright D.G. Richards 2015

Mechanical Handling
Equipment
Section 8
Choice of pallet movers
• Functions to be performed
• Type of product
• Degree of use – shift length, work patterns, pallets per shift, seasonality, peaks and troughs,
special handling requirements
• Travel distances and lift height, inside and/or outside the warehouse, private/public roads,
working conditions (freezer, chill, ambient, hazardous).
• Type of fuel, diesel, LPG, Electric. Available ventilation, noise level, space for re-charging and
storing batteries
• Store layout and dimensions
• Building restraints
• Floor condition
• Aisle gangway space at front and between racks – can the truck turn 90 degrees. Also needs
additional 200mm to its normal turning circle
• Delivery and collection vehicles
• Access doors, bays, overhead pipes (sprinklers)
• Rack heights
• Method of acquisition and maintenance
Copyright D.G. Richards 2015
• Budget
A variety of trucks to choose from

Courtesy of Toyota
Copyright D.G. Richards 2015
 Vertical movement

(Courtesy of Atlet, Toyota, Central Training and Flexi),

Copyright D.G. Richards 2015
 Horizontal movement

Courtesy of Demag, AS Conveyor Systems and Seegrid),

Copyright D.G. Richards 2015
Pallet movers
Product type Lift height Aisle width (m) Lift capacity To Cost from (£) To (£)
Approx. in kg from

Hand pallet truck, jack N/A 1.8 m 2,300 kg 3,000 kg 300 1,000

Powered pallet truck N/A 2.8 m 1,200 3,000 2,800 16,000

Powered pallet stacker 1.35–6.3 m 2.2–3.0 m 1,000 1,600 5,000 18,000

Reach truck 4.5–12.5 m 2.65–3.15 m 1,400 2,500 15,000 30,000

Counter-balance truck 3.0–6.5 m 3.0–7.0 m 1,300 5,000 12,000 20,000

Low-level order picker N/A 1.636 m 1,800 2,500 7,000 12,000

Medium-level order 2.0–4.7 m 1.59 m 1,000 1,200 10,000 18,000

picker

High-level order picker 4.7–9.5 m 1.664 m 1,000 1,200 19,000 32,000

Combination truck or 14.8 m 1.6–2.3 m 1,000 1,500 40,000 80,000

VNA
Articulated forklift truck Up to 12 m 1.6–2.1 m 1,000 2,000 29,000 35,000

Prices and data at July 2013 UK only

Copyright D.G. Richards 2015
Lifetime Costs of MHE Equipment

The pie chart shows the breakdown of the cost of ownership. Courtesy
of Toyota
Copyright D.G. Richards 2015
Warehouse Storage Justification

Setting the scene…

Looking for a new

warehouse with 2500
pallet locations…

Copyright D.G. Richards 2015

Warehouse Storage Justification
• Counterbalance Forklift Truck
• Gas/Diesel
• LPG
• Battery electric

The Conventional Way

Copyright D.G. Richards 2015

Warehouse Storage Justification

• Racking system
• Clear aisle of 4200 mm
• Top beam of 4775 mm
• Stacking 4-high
• 1 ground location plus 3 elevated beam
levels

Copyright D.G. Richards 2015

Warehouse Storage Justification
CONVENTIONAL SYSTEM NARROW AISLE SYSTEM VERY NARROW AISLE SYSTEM

Gas, LPG or Electric Trucks

Clear aisle 4200mm

Top beam 4775mm

Stack 4 high (1 on the ground; 3 in

the air)

Single command system

The truck loads & unloads trailers,

loads & unloads rack plus pick up &
deliver to manufacturing

80% Travel. 20% Lift

66% Aisle

Copyright D.G. Richards 2015

Warehouse Storage Justification

The Conventional Way - Layout

▪ Rack footprint: 3251 sq. metres

Copyright D.G. Richards 2015

Warehouse Storage Justification
• Electric Reach Truck
• Battery electric
• Compact frame and reach forks/mast provide for a smaller aisle.

Narrow-Aisle System

Copyright D.G. Richards 2015

Warehouse Storage Justification
CONVENTIONAL SYSTEM NARROW AISE SYSTEM VERY NARROW AISLE SYSTEM

Gas, LPG or Electric Trucks Electric Reach Trucks

Clear aisle 4200mm Clear aisle 2700mm

Top beam 4775mm Top beam 4775mm

Stack 4 high (1 on the ground; 3 in Stack 4 high (1 on the ground; 3 in

the air) the air)

Single command system Dual command system

The truck loads & unloads trailers, The truck pick up & deposits loads
loads & unloads rack plus pick up & from staging and pick & deposits
deliver to manufacturing loads in the rack systems

80% Travel. 20% Lift 60% Travel. 40% Lift

66% Aisle 51% Aisle

Copyright D.G. Richards 2015

Warehouse Storage Justification

Narrow-Aisle System - Layout

▪ Rack footprint: 2554 sq. metres

Copyright D.G. Richards 2015
Warehouse Storage Justification
• Electric Very-Narrow-Aisle (VNA) Truck
• Battery electric
• Lateral fork movement allows specification of
aisles a fraction larger than the size of pallet.

Very-Narrow-Aisle System

Copyright D.G. Richards 2015

Warehouse Storage Justification
CONVENTIONAL SYSTEM NARROW AISLE SYSTEM VERY NARROW AISLE SYSTEM

Gas, LPG or Electric Trucks Electric Reach Trucks Electric Very Narrow Aisle Trucks

Clear aisle 4200mm Clear aisle 2700mm Clear aisle 1650mm

Top beam 4775mm Top beam 4775mm Top beam 4775mm

Stack 4 high (1 on the ground; 3 in Stack 4 high (1 on the ground; 3 in Stack 4 high (1 on the ground; 3 in
the air) the air) the air)

Single command system Dual command system Dual command system

The truck loads & unloads trailers, The truck pick up & deposits loads The truck pick up & deposits loads
loads & unloads rack plus pick up & from staging and pick & deposits from staging and pick & deposits
deliver to manufacturing loads in the rack systems loads in the rack systems

80% Travel. 20% Lift 60% Travel. 40% Lift 50% Travel. 50% Lift†

66% Aisle 51% Aisle 39% Aisle

† Travel & Lift are simultaneous

Copyright D.G. Richards 2015

Warehouse Storage Justification

Very-Narrow-Aisle System - Layout

▪ Rack footprint: 1950 sq. metres

Copyright D.G. Richards 2015

Warehouse Storage Justification

Conventional vs. Very-Narrow-Aisle System

▪ Counterbalance rack footprint: 3251 sq. metres

▪ VNA Rack footprint: 1950 sq. metres
– 3251 sq. m - 1950 sq. m = 1301 sq. m (40%)
Copyright D.G. Richards 2015
Special equipment - Slip sheet attachment

Copyright D.G. Richards 2015

 Courtesy of Bridgestone

Courtesy of Bluewater Forklift Copyright D.G. Richards 2015 Courtesy of easy rack
 Contingency Planning

Managers must formulate a plan of action to avoid crisis management and

significantly reduce the time taken to employ some form of corrective action

• Equipment down time

• Labour problems
• Significant changes in demand
• Supply problems
• Information Technology down time
• Other emergencies

Copyright D.G. Richards 2015

Exercise
• Produce a contingency plan for a breakdown in a
warehouse automation system.
• What are the key things to be included?
• What do you need to do on a regular basis?

Copyright D.G. Richards 2015

Warehouse Costs
Section 9
Logistics – Cost factors
16%

38%
6%

Transport
Warehouse operation
8% Order processing
Administration
Cost of inventory holding

32%

Holding cost includes loss, obsolescence, interest, insurance and depreciation

Copyright D.G. Richards 2015
Warehouse costs

UK Chartered Institute of Logistics and Transport

Survey stated that between 24% and 35% of Logistics
costs relate to warehouse activity and can be between
2% and 5% of the cost of sales.

EQUIPMENT 10 - 15%

LABOUR 48-60%

SPACE 25 - 42%

Copyright D.G. Richards 2015

Cost of Service improvement

Cost of service (£)

60 70 80 90 100
Level of Service (%)

The cost of providing a given service is markedly higher

the nearer it reaches the ‘perfect service’ (100%).
Rushton, Croucher and Baker (2010)

Copyright D.G. Richards 2015

 Warehouse Costs
A Labour
Salary, Overtime, NHI, Pension, insurance, PPE, holiday pay, sick pay, training
Agency labour

B Equipment
Fork lift truck lease or rental, depreciation and interest, maintenance, energy
Automated equipment depreciation and interest
Cleaning equipment, stretch-wrap machines
Scanners, voice units, pick to light systems depreciation and interest
Pallets and packaging material

C Storage
Facility - lease, rent or depreciation and interest, rates, taxation, insurance, maintenance, landscaping, cleaning, security,
sprinkler depreciation and maintenance, alarms, pest control, waste disposal
Equipment – Rack and shelving depreciation, maintenance, inspection

D Utilities
Heat, air conditioning, lighting, water

E Overheads
Management, supervision, administration, office equipment depreciation and interest, IT hardware and software rental
or depreciation and interest, maintenance, training, communication costs, legal and professional, taxation and licences,
travel expenses, insurance and claims, claim losses due to damages, shortages, errors

Variable costs
Copyright D.G. Richards 2015
Health and Safety
Section 10
Racking disasters
DMD.com

Nene

Copyright D.G. Richards 2015

Safety Surveys
The Accident Pyramid

1 fatal accident

10 serious injuries

30 property
accidents

600 near misses

Record, Investigate, Action, Train, Review

www.hse.gov.uk
Continually undertake Risk Assessments!!!
Copyright D.G. Richards 2015
Risk assessment and duty of
care
50%

45%

40%

35%

30%

25%

20%

15%
Causes of major injury
10% Causes of 3+ days absence from work
5%

0%

r ip in
g ht je
ct icl
e r y
en
t
t dl ig h na d
or an he ob ve ti o c ci
Sli
p l h m li ng g sta a
ua fr o al vin
or s of
an ls f o d
Fa
l g, ym e d
kin
M vin b fix r
o t he
Hi ng t
bym e thi O
t
Hi so
m
t
Hi

N.B. More litigation than ever before

Copyright D.G. Richards 2015

Warehouse Technology
Section 11
Warehouse Technology

Warehouse Management System (WMS)

Automatic Identification and Data Capture (AIDC)
Radio Frequency Identification (RFID)
Warehouse Activity Methodologies
RF / Barcode Scanning
Voice technology
Pick to/by light technology

Copyright D.G. Richards 2015

Results / Benefits of effective I.T. systems

Quality of
Information

Minimise Improved
Reduced Lead Improved Space
Reduced Errors Unproductive Equipment
Times Utilisation
Labour Utilisation

Improved
Reduced
Customer
Operating Costs
Service

Increased Sales
Courtesy of Reed 1998)

Increased profitability/Success
Copyright D.G. Richards 2015
Eye For Transport Logistics IT report

Copyright D.G. Richards 2015

Copyright D.G. Richards 2015
Best-of-Breed WMS vs. Integrated Suite software such as ERP or
SCM

• Typically, best-of-breed applications have deeper functionality than modules within

integrated suites. In this case, that means more picking configurations, labour
management features, built-in integrations with other technologies, and other
warehouse-specific features within best-of-breed applications than WMS modules
within supply chain management or Enterprise Resource Planning (ERP) suites.

• Alternatively, buyers may want to evaluate integrated suites if they want a solution
that can manage other aspects of the business (accounting, human resources,
manufacturing, customer management, etc.) in addition to the warehouse. These
vendors are also typically more stable, meaning buyers won’t have to worry about
their provider going out of business or being acquired by another vendor.

Copyright D.G. Richards 2015

ERP and WMS systems
• SAP • JDA/Red Prairie
• Oracle JD Edwards • Manhattan
• PeopleSoft • High Jump
• Access Delta
• Microsoft Dynamics
• Chess
• Infor
• ATMS
• Syspro • Clydebuilt
• Netsuite • Proteus
• Epicor • Snapfulfil
• Sage

Copyright D.G. Richards 2015

© 2013, Business-Software.com.
Adoption of software as
a service. (SaaS)
• The initial investment is lower,
• the implementation can be quicker,
• the user interface is familiar (it runs in a web browser)
• companies don’t need full-time IT staff to maintain servers
and hardware.

Most ERP and WMS vendors now offer - or have plans to offer -
some kind of Web-based option.
Copyright D.G. Richards 2015
Why Implement a WMS ?
- Where does the payback come from ?

• To Reduce Errors in all warehouse processes.

• Improving customer service.
• Reducing the amount of unproductive / non value adding time in
the warehouse.

• To Improve Productivity.
• Reducing downtime in the warehouse.
• Better matching of labour resource with activity.

Copyright D.G. Richards 2015

Warehouse Management System (WMS)
What should it manage within the warehouse ?

• All processes within the warehouse –

• Receiving and checking stock
• Directed put-away
• Replenishment
• Task interleaving
• Processing orders into pick instructions
• Routing and planning of pick operations
• Despatch to customer

• Stock location and administration -

• Optimum stock location and control
• Slotting
• Stock Rotation & Traceability
• Perpetual Inventory and Stock Counts

• Tracking and location of products from source to end user

• Productivity reporting
• Control of multi-site operations
Copyright D.G. Richards 2015
 Stock visibility via Internet :
- WMS providing stock visibility and order traceability to customers and
vendors

Copyright D.G. Richards 2015

 Types of WMS – Jacobs (1997)
3 Levels of WMS / History
1980s : 1990s 2000s
WCS – Warehouse WMS – Warehouse Integrated System
Control System Management System
BASIC ADVANCED COMPLEX
Stock and location control only Additional facility to plan resources Optimisation of warehouse or
and activity group of warehouses
Storing and picking instructions Enables synchronisation of Full product tracking
activities

Simple information focussing Focus on throughput, stock and Complex storage replenishment,
on throughput capacity analysis picking and cycle counting
strategies
Possible links to RF Interfaceswith other systems
(Route planning, RFID, Freight
systems, Customs and Excise
Value added logistics support

Copyright D.G. Richards 2015

Choosing a WMS – What factors to
consider
Criteria Weight Vendor 1 Vendor 2 Vendor 3 Vendor 4

Rate Score Rate Score Rate Score Rate Score

Software standard function 25 3 75 2 50 5 125 3 75

Software Custom function 20 4 80 3 60 4 80 4 80

Ability to interface with ERP 15 4 60 2 30 4 60 4 60

Hardware supply 15 2 30 3 45 3 45 4 60

RF System 10 3 30 2 20 5 50 4 40

Development/ 5 3 15 2 10 4 20 3 15
Implementation service
Annual support/ 5 3 15 2 10 4 20 3 15
Maintenance cost
Multi-site cost 5 2 10 2 10 3 15 2 10

Total 100 315 235 415 355

1 = Does not meet minimum requirements; 2 = Does not meet performance requirements by one or more factors

3 = Expected performance; 4 = Exceeds one or more requirements; 5 = Significantly exceeds performance

Tomkins Associates

Copyright D.G. Richards 2015

 But a WMS on its own is not enough

• Needs automatic data identification to replace manual

data collection.
• Poor information input = poor information output.
• Garbage in – Garbage out
• Needs the appropriate technology – RF scanning, voice,
pick to light – to compute data and implement control.

Copyright D.G. Richards 2015

Automatic identification (AIDC) methods –

because a WMS is only as good as the information contained within it throughout the warehouse processes.

TECHNOLOGY DESCRIPTION
Optical Character Recognition (OCR) Readers Use optics to scan characters that are also
readable by an operator

Bar code readers and scanners Use optical methods to read reflected light from
a barcode label

Radio Frequency Identification Use radio transmission to collect data. The

radio waves can travel through most mediums
except metal. Doesn’t require line of sight
Voice recognition systems Instruction relayed direct to operative thus
allowing hands free picking

Vision systems Use camera images to identify characteristics.

Able to compare items as well as codes and
numbers

Copyright D.G. Richards 2015

Traditional Scanning - Barcodes and
barcode readers

2D image

Copyright D.G. Richards 2015

Advances in scanning
• Finger scanners

Copyright D.G. Richards 2015

Radio Frequency IDentification

Transponder chip holds data

Tag antenna used to power and transmit/receive data

High frequency ID tags

Copyright D.G. Richards 2015
Active v Passive tags

N.B. Some semi-passive tags have a power

Copyrightsource
D.G. Richards 2015
 RFID tag readers

Hand Held

Portal

Flatbed
Portable
Industrial

Copyright D.G. Richards 2015

RFID Applications

Closed Loop
Inventory Management

Asset Management
Any object that has
value and needs to
be tracked to ensure
operational uptime.

EPCglobal Compliance
RFID with Trading
partners outside 4 walls.
Slap n’ Ship for
Suppliers.

Copyright D.G. Richards 2015

Use of RFID tags

Copyright D.G. Richards 2015

 RFID - Popular beliefs

 Tags cost pence each

 Tags cost £0.05 minimum (Cheaper tags are in experimental stage but won’t be
available for an estimated 3 years minimum.)
 Multiple tags will read in any orientation
 Tags need to matched to an aerial and generally square to the aerial for best results
 RFID will replace barcodes in the next few years
 RFID will only replace 10% barcodes by 2015 (Source AIM Intl. 2003)
 All tags can be read from any distance
 Most tags read from 5mm – 2 Metres unless you are paying over £5 per tag.
 Tags can be applied to most items
 Most tags have difficulty reading when attached or in the proximity of liquids or
metals - A tin of beans is the worst case scenario!

Copyright D.G. Richards 2015

Comparison – RFID v Barcodes

 25 trays per dolly

 36 dollies per vehicle Portal

Barcode Scanning = 36 x 29 secs = 1044secs = 17.4 mins

Portal ‘Scan’ = 36 x 5 secs = 180secs = 3 mins

Reduction in data recording time =

83%

Copyright D.G. Richards 2015

Copyright D.G. Richards 2015
Voice recognition
At start
of a new
task

Warehouse Voice Server

Management
System FTP server
Main Voice tasks and
applications Voice profiles
Orders,
Substitutions,
Stock
Voice interface updates, etc. Stateless
programs Socket task

Application
Intermediate database
Database

Copyright D.G. Richards 2015

Why Voice Outperforms
Scanning

Elapsed Time

Press
Read Travel Read Free Hands
Scan Perform Locate Buttons
Next to Qty on Place Device
Location Elsewhere Task Device to
Location Location Screen
Confirm

Hear Hear Next

Next Speak Check Digits,
Hear Instructions,
Location; Perform Task Location,
Travel Travel

No manual entry, no extra steps,

no wasted time =
better productivity + improved accuracy

Copyright D.G. Richards 2015

Know the Benefits – of Voice
Benefit Business Impact

Improves Accuracy Reduces order fulfillment errors

 Can increase accuracy up to Increases customer satisfaction
99.99% Reduces cost of resolving issues & processing returns

Improves Productivity Reduces labour required to accomplish new levels of

 Can increase productivity by 10-25% throughput. Helps accommodate seasonal increases without
increasing headcount.
Reduces Training Time Time to full productivity for a new worker for scanning is
 Cut Training Time by 50% typically 2-3 weeks; voice is 3-4 days.

Reduce Operating Costs Reduction in annual cost of scanner equipment,

maintenance of systems, (e.g. pick to light),
paper/labels/printer costs.
Improves Safety Eases worker compensation claims leading to reduced
insurance costs, etc.

Reduced Administrative Support and Auditing Need for secondary audits are eliminated
Functions

 Somerfield – increase in productivity by 7.9%, accuracy up to 99.97% plus

reduction in clerical staff and use of paper
 Waitrose – Productivity increased between
Copyright 7 2015
D.G. Richards and 8%
Disadvantages of voice technology

• Only small amounts of data can be transmitted at one time

• Only sequential picking can take place
• The actual products to be picked are not generally identified
• The possibility of scanning barcodes such as serial numbers doesn’t
exist unless additional hardware is provided
• External noise can cause issues
• It can be tiring for the employees after hours of use

Copyright D.G. Richards 2015

Put / Pick to Light

• With Paper picking, RF Scanning and Voice technology, the

system moves the person to the product.
• With Put to Light / Pick to Light technology, the person
remains within a specific zone or at a work station.

Copyright D.G. Richards 2015

Pick/Put to light - Dematic

Copyright D.G. Richards 2015

Put to light

Cost - €150/location (display) for a smaller installation (e.g. up to 1500 displays), which could descend
towards €100/location for a larger installation (e.g. 10,000 displays).

Copyright D.G. Richards 2015 WarehouseBy Design

Comparing technologies
Pros and cons

Pick-To-Light Voice Picking

•Cost per Location •Cost per Picker

• Medium number of Products •High Number of Products

•Fast Movers •Slow & Medium Movers

•150-350+ picks per hour •100 – 200 picks per hour
•Limited flexibility •Highly Flexible
•High accuracy •High accuracy
•2 stage operation if simultaneous pick
Copyright D.G. Richards 2015
 Pick rate comparison
Velocity in order lines selected per paid person hour
SKU 0 100 200 300 400 500 600 700 800 900 1000 1100 1200
velocity
Category
A Automated/semi-automated pick technologies

A Horizontal carousels

A&B Pick to light

Movement category

ABC Voice picking

ABC Visual picking

C&D RF picking

C&D Paper pick

0 100 200 300 400 500 600 700 800 900 1000 1100 1200

Rack and static Pick to belt carton Carousels and semi-automated systems
shelving and pallet flow

http://www.mwpvl.com/html/order_pick_technologies.html
Copyright D.G. Richards 2015
IT investment in near future

Copyright D.G. Richards 2015

Summary
• WMS – the essential system that -
• Controls all the processes in the warehouse.
• Directs data within the warehouse.
• Accurate data input throughout the warehouse essential – best
achieved through automated data capture.
• Replace manual processes with WMS-controlled automated ones.
• Pick the most appropriate picking / process methodology for -
• The warehouse.
• The range and type of products.
• Real time data in most circumstances.
• Improved productivity and reporting.

Copyright D.G. Richards 2015

 Warehouse Layout,
Planning & Simulation
Section 14
Warehouse layout
Five fundamental process objectives
1. Warehouse designs should be based on throughput not storage
i. Look at forecasted growth over the next five years
ii. Evaluate the number type and physical features of the products
iii. Understand the potential changes in product profiles over the period
iv. Evaluate type and variability of demand and order profiles
2. Emphasis is placed on eliminating time, space and movement
3. Material and information flow should be properly integrated to avoid delays
and uncertainty
4. All issues should be linked to wider business issues
i. Understand long term market strategy
5. Solutions should be aligned to customer requirements
i. Potential use of warehouse as postponement centre
Ballard 1994

Copyright D.G. Richards 2015

Space consumption in the
Facility
• Dock Doors

• Storage Mediums

• Personnel Support areas

• Cafeteria

• Restrooms

• Shipping and staging areas

• Pre-process and handling areas

• Battery charging, packaging and pallet storage

Copyright D.G. Richards 2015
Warehouse layouts

Inverted ‘T’ Warehouse Flow

Low usage Advantages

Items •Better utilisation of loading docks
Medium usage •Reduction in total area required
Bulk •Increased flexibility
Storage Items
•Unified management of merchandise
flow
High usage •Better security control
items •Ability to extend warehouse
•Improve employee comfort and
reduce heat loss
Pick area
Disadvantages
•Congested central area
•Potential friction between inbound
and outbound teams
Goods inwards Despatches

Copyright D.G. Richards 2015

Warehouse layouts

Advantages
Cross flow or ‘U’ flow Warehouse •Better utilisation of loading docks
•Reduction in total area required
C •Integration of bulk and picking stocks
•Unified management of merchandise
flow
•Better security control

B Disadvantages
•Congested aisle areas
•Potential friction between inbound
and outbound teams
A •Grouped product may not be stored
in the same area

Goods inwards Despatches

Copyright D.G. Richards 2015
Warehouse layouts

Through Flow Warehouse Advantages

•Less disruption at the loading bays
•Natural flow of goods

Low usage items

Disadvantages
•More difficult to expand without
Goods inwards

Medium usage items major changes internally

Increase security required
Possibility of requiring 2 exits from
High usage items the yard

Medium usage items

Despatches

Low usage items

Copyright D.G. Richards 2015

 Battery
charging C
C C C C

Item picking

Short cut through racking with reserve storage above B

B B B B

A
Packing area

A A A A
Empty pallet Full carton pick at floor level, reserve storage above Flow rack with reserve storage above
storage

Copyright D.G. Richards 2015

Warehouse layout diagrams
1 2 3 4 5 6 7

MHE Charging Area

Office & Mezz Floor Despatch Overspill

Despatch Area
Damages

66 m

115 m

Goods Receipt

8 9 10

Copyright D.G. Richards 2015

Proposed layout

Not fully to scale.

Copyright D.G. Richards 2015
The Right Answer?

• Typically there is no
one definitive
answer for your
warehouse
• Design is a trade off Travel

between travel,
Handling
Storage

handling and
Storage

Copyright D.G. Richards 2015

Calculating Dock Requirements
• Using heuristics

• Space =
{ Roundup (Number of loads x Hours/load) } X (size of Load x space/pallet)
time of shift

= receiving 20 loads per day

- each load is 26 pallets
- each pallet is 1m x 1.2 m
-45 minutes per load to unload vehicle
- 30 minutes per load to stage prior to put-away
- 8 hours per day work shift

Additionally
• Office space required
• Empty pallet and sundry space requirements
Copyright D.G. Richards 2015
Calculating Dock Space
Requirement

• {Roundup (20 x 1.25)/8} x (26 x (1.2 x 1.0))

• = 3.125 (4) x 31.2 = 124.8 square metres
Dock space = 124.80 sq. metres

Add double space for working and travel area = 249.60

Total space = 374.40 square metres

Copyright D.G. Richards 2015

Calculating Storage Space
Requirement
• Determine the type of storage medium and the sq.m./pallet configuration

• Determine the Height of the storage chamber and the max lift height of the MHE

• Include Aisle spacing and work space requirement for the end of the aisle

H = H1 + H2 + ..... + Hn + (n-1) * Z
H2

H1

W1 W2 T T
W = W1 + W2

Copyright D.G. Richards 2015

Pallet quantity calculations -
width
Module Width = width of aisle + 2 pallet length (short side) + 100 mm
Aisle = 2,500mm (variable with type of MHE used)
Two pallets = 2,000mm (2 x 1,000mm)
Clearance = 100mm between back to back pallets

Aisle Aisle Aisle

Therefore:
Width of module = 4,600 mm (the sequence is pallet – aisle – pallet -
clearance)

Copyright D.G. Richards 2015

Pallet quantity calculations -
length
Module Length = width of upright + clearance +2 pallets (long side)
Rack upright plus clearance = 420 mm (120 mm + 3 x 100 mm)
Two pallets (long side) = 2,400 mm (2 x 1,200mm)

Therefore:
Length of module = 2,820 mm
(the sequence is upright/clearance/pallet/clearance/pallet/clearance)

Copyright D.G. Richards 2015

Pallet quantity calculations -
height

Module Height = Height of goods on pallet (e.g. 1.20 metres) + 150

mm (pallet height)
Total Pallet height = 1,350 mm

Clearance above pallet = 150 mm

APR beam width of 140 mm

Therefore:
Height of module = 1,640 mm

Copyright D.G. Richards 2015

 Pallet calculation

Total pallets stored within cubic capacity of a warehouse section,

excluding receiving and despatch areas, gangways and other
areas

(No. of width modules x pallets in module width) x (No. of length modules

x pallets in module length) x (No. of height modules) = No. of pallets into
cube volume of warehouse.
So for a warehouse section with a width of 48 metres, a length of 120 metres
and a height of 10 metres.
Width = 48/4.6 = 10
Length = 120/2.82 = 42
Height = 10/1.64 =6

Therefore total = (10 x 2) x (42 x 2) x (6) = 10,080 pallet locations in a this

warehouse storage space

Copyright D.G. Richards 2015

Plan and Model
Analysis approaches / techniques:

Most common techniques:

• Optimisation
Linear or mathematical programming
• Simulation
Physical scaled down model or computer model
• Analytical
Using numerical tools such as spreadsheets
• Heuristics
Rule of thumb assessment
Bowersox, Closs & Bixby Cooper (2010) &
Rushton, Croucher and Baker (2010)

Copyright D.G. Richards 2015

Plan and Model

Why Model Solutions?

• Discrete event simulation allows the evaluation of operating

performance prior to implementation.
• Enables companies to model what-if scenarios leading them
to better planning decisions.
• Allows comparison of various operational alternatives without
interrupting the real system.
• Allows time compression so that faster decisions can be
made.

Copyright D.G. Richards 2015

Why use Simulation?
 Understanding and improving system behaviour
 Tracing bottlenecks
 Testing system performance before commissioning
 Giving customer confidence, satisfy requirements
 Training tool for operators

– Reduce costs
– Save time
– Reduce risks
–Predictable Productivity

Copyright D.G. Richards 2015

Sequence of simulation activities

Planning Realisation Experimentation

• WHY • Collect Data • Define scenarios

• WHAT • Perform flow analysis • Run scenarios
• WHEN • Specify model • Analyse outcomes
• WHO • Create (simulation) model • Document results
• HOW • Verify and validate model

Copyright D.G. Richards 2015

Yale Warehouse Simulator
Simulation observations

Copyright D.G. Richards 2015

Data requirements
• Product Storage
• Item length, width, height, weight
• Pallet Build (TI and HI) • Buying/Replenishment
• Economic Order Quantities
• Crushability and Toxicity
• Cube fill in Pick Face
• Tote-able
• Min/Max Cartons in Pick face
• Special Pre-Processes
• Number of primary pick face slots
• Floor Stackable and Height • Buying Multiples – Pallet, TI, Case
• Family Grouping • Number of shifts per day
• Order and Sales • Number of shifts per week
• Sales over Time (x) • Replenishment/Pick Overlap
• Pick Location ‘hit’ rate • Put-away and replenishment Overlap
• Replenishment Triggers
• Minimum order Quantities
• Minimum Let-Downs
• Full Pallet or Case/Each Pick
• Business/Rules
• FIFO
• Seasonality • Productivity & Costs
• Fixed Costs
• Building/Racking Constraints • (Overhead, Racking and MHE, Capital
• Flat Floor Ex)
• Ceiling Height • Variable Costs
• Sprinklers, Vents, etc. • (Pick rates, receiving, shipping, put-
away and replenishment costs)
• Pallet Configuration

Copyright D.G. Richards 2015

The Environment and
the Future of
Warehousing
Section 15
The Wheel of Green Logistics
3
Optimise Storage 4
2 Optimise
Space
Renewable & Goods
Efficient Movement
Energy Usage & Handling
1 5
Green Warehousing
Construct
Reduce
Green Green Logistics Inventory
Warehouses •Pollution • Reduce
Prevention Cost
1 •Emission • Fast
Appropriate Control Deliveries
Reverse
mode Logistics
selection Green Transportation Reduce 6
Maximise Fossil Fuel
2 utilisation
Reduce Consumption
movements Fleet 5 Adapted from Emmett
& Sood (2010)
3 and optimise Management
routes 4

Copyright D.G. Richards 2015

Environmental drivers
• The Environment Act 1995
• Noise, vibration and visual intrusion
• Exhaust emission and waste management
• Waste management (WEEE- Waste Electrical & Electronic Equipment)
• ISO 14000- Environmental Management
• Health and Safety
• Hazardous product handling
• Ergonomics
• Absenteeism
• Fatigue
• High error rates

Copyright D.G. Richards 2015

Building new warehouses
• Opportunity to ‘design in’ environmental considerations.

Carbon
Managemen Waste
Embodied t Managemen
Carbon t
Operational
Carbon
Design
Considerations Good insulation &
Airtight
construction = less
heating
Ecology
Increased use
Energy
of daylight
Efficiency

Developed from Dalton, 2009 ProLogis Developments Ltd

Copyright D.G. Richards 2015

Measurement of Environmental Impact

• Impact measured by Voluntary Sustainable Building Award

schemes:
– (Building Research Establishment Environmental Assessment Method) – UK
http://www.breeam.org
– LEED (Leadership in Energy and Environment Design) – USA http://www.usgbc.org/
– – Australia http://www.gbca.org.au
– CASBEE (Comprehensive Assessment System for Building Environmental Efficiency) – Japan
http://www.ibec.or.jp/CASBEE/

Has led to developers such as ProLogis delivering warehouses that use 69% less energy and
carbon than a typical 15 year old distribution centre.

Copyright D.G. Richards 2015

Example of Eco-warehousing
Gazeley Chatterley Valley Staffordshire UK

http://www.gazeley.com

Copyright D.G. Richards 2015

JCB: Chatterley Valley

Copyright D.G. Richards 2015

M&S NDC, Castle Donington

www.leicestermercury.co.uk http://www.firstindustrial.co.uk/news/

• 900,000 square feet, 25 metres high.

• Over 140 dock levellers.
• 3 Storey offices.
• Purpose built rail freight terminal.
• Opened in 2013.
• Designed to achieve an ‘Excellent’ BREEAM rating.

Copyright D.G. Richards 2015

M&S Environmental Features

• Carbon neutral.

• Part built using concrete from a former power

station.

• UK’s largest single roof mounted solar panel array-

24,272 panels. Generates nearly 25% of energy
required for the site.

• Rain water harvesting.

• Airtight building fabric- 4 times as airtight as http://www.cagroupltd.co.uk

current building regulations specify.

• Plenty of natural light- roof lights to minimise

artificial lighting.

Copyright D.G. Richards 2015

John Lewis at Magna Park Milton Keynes

CO2 Emissions Saving 40% CO2 pa (1,100,000 kg)

Energy Usage Saving 18% pa (2,500,000 kwh)
Water Usage Saving 45% pa (1,500,000 litres)
Operating Cost Saving € 250,000 pa

Copyright D.G. Richards 2015

The Future
Section 16
The future
• An acknowledgement that reducing warehousing and storage costs is essential
• Introduction of next and same day delivery requirements
• More orders, fewer items
• Automated stores and computerised systems make it possible to better manage
these facilities. Greater use of RFID
• Trade-offs between higher customer service levels, low inventory and low
operating costs need to be balanced
• Changes in business practices through the implementation of JIT, Lean, Kanban
and Kaizen concepts
• Better and easier to use logistics systems, improved supply chain integration,
visibility and collaboration
• ‘Time compression’ reducing time consumed in business processes. Elimination
of non-value-added time.
• Shortage of good quality staff at all levels
• Ageing population
• Robotics
• Increasing cost of fuel
• The Green agenda
Copyright D.G. Richards 2015
Mega-warehouses?

Quinn Glass Liverpool - 180 x 290 x 35 metres high

250,000 pallet capacity (Courtesy of Stocklin)

Copyright D.G. Richards 2015

Multi-storey warehouses
CWT Commodity Hub
24 Penjuru Road
A multi-storey ramp-up logistics facility comprising a five-storey warehouse with mezzanine office and a separate
office block and a container yard
Gross floor area: 2,295,994 sq ft

http://www.colliers.com/

Copyright D.G. Richards 2015

Vision picking

Copyright D.G. Richards 2015

Robotics

Copyright D.G. Richards 2015

Robotics

Honda’s ASIMO

Copyright D.G. Richards 2015

Will we actually need warehouses?

3D printing Can we 3D print the warehouse?

The future – as uncertain as it’s always been

Copyright D.G. Richards 2015