World Class Warehousing

World-Class Warehousing & Material Handling

World-Class World-Class Warehousing Warehousing EdwardH. H.Frazelle, Frazelle,Ph.D. Ph.D. Edward Logistics Resources International Logistics Resources International www.LRILogistics.com www.LRILogistics.com

Copyright: Edward H. Frazelle, Ph.D., Page 1

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Logistics Framework LOGISTICS Customer Response

Inve ntory Planning & Management

Supply

Transportation

Warehousing

Customer Service Policy

Forecasting

Supplier Service Policy

Network Design

Receiving

Customer Satisfaction

Order Quantity Engineering

Sourcing

Shipment Management

Putaway

Order Entry

Fill Rate Planning

Supplier Integration

Carrier Management

Storage

Order Processing

Control Policy

Purchase Order Processing

Fleet Management

Order Picking

Invoicing & Collections

Deployment

Buying & Payment

Freight Management

Shipping

Copyright: Copyright:Edward EdwardH. H.Frazelle, Frazelle,Ph.D., Ph.D.,Page Page22

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The Plight of the Warehouse Manager More Transactions SKUs Customization International Orders Value Added Services Returns

Wit h L ess Time Margin for Error Young, Skilled Labor WMS Capability

Consolidation & Assembly


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InInord order, er, Warehouse Warehouse Warehouse Master Plannin Master Plannin gg addresses addresses Master _________, _________, Planning _________, _________, Investigate __________, __________,and and _________ _________for for _______, _______, _________, _________, S O _________, h rd _________, ip er p ________, and in S P ________, and to g ic P r _________. ki u Measures a R t _________. g n a e & e g w ce (measures Goals ay iv (measuresand and Innovate in goals, g goals, Processes processes, processes, warehouse Warehouse E warehouse Management Warehouse US management O Systems Workforce H management RE system A system W requirements, Master Planni ng requirements, warehouse warehouse workforce workforce requirement, requirement, receiving, receiving, putaway, putaway, sto storage, rage,ord order er picking, picking, Copyright: Edward H. Frazelle, Ph.D., Page 4

Implement

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DC Operations Practices Gap Analysis Profile 5.00

Infrastructure

Metrics 4.00 3.00 2.56

Workforce

2.89 Receiving

1.81 2.00

3.36

3.47

1.00

3.09 4.43 Flow

Putaway

3.12 3.62

3.16

Shipping

Storage

Order Pic king


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World-Class Warehousing Rational Warehousing

Paperless Warehousing

Right Sourcing/ESPs SKU Flow Optimization Issue Pack Optimization Warehouse Performance Gap Analysis Dock Management Flexible Flyers Storage Mode Optimization Slotting Optimization

Real-Time Warehousing Warehouse Data Mining & Simulation Warehouse Optimization Service Providers Warehouse Workforce Optimization Human Friendly Warehousing Remote Warehouse

Warehouse Layout Optimization Metamorphic Material Handling Systems

Management Waste-Free Warehousing Wise Warehousers


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World-Class Warehousing Rati on al Warehous in g


Right Sourcing/ESPs SKU Flow Optimization Issue Pack Optimization Warehouse Performance Gap Analysis Dock Management Flexible Flyers Storage Mode Optimization Slotting Optimization Warehouse Layout Optimization Metamorphic Material Handling Systems




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Rational Warehousing Should we have a warehouse?


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Merge-in-Transit CPU Factory

CPU Order System Order

Headquarters

Monitor Order

C e n te r

Monitors

Speaker Order

Speakers


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S o r ti n g


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Right Sourcing/ESPs


SKU Flow Optimization Issue Pack Optimization Warehouse Performance Gap Analysis Dock Management Flexible Flyers Storage Mode Optimization Slotting Optimization Warehouse Layout Optimization Metamorphic Material Handling Systems Copyright: Edward H. Frazelle, Ph.D., Page 11


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Logistics Outsourcing Suitability Analysis y ti x le p

Process

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2 2 4 2 1 3 4 1 2 2 4

Pre-Receiving Receiving Unload Inbound Inspection Putaway Picking Outbound Audit Outbound Inspection Packing Manifesting Shipping Returns Processing

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3PL

Hybrid Insource/Outsource

Receiving

Cross Dock Flows

Inbound Inspection

Client

Put-Away

RMA

Storage Outbound Inspection Order Picking

Shipping


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The Race to Third Party Logistics

Third-Party Third-Party Warehousers Warehousers

LISs,LEXs, LEXs, LISs, LVPs,SCEMs SCEMs LVPs,

Consolidators Consolidators Freight Freight Forwarders Forwarders Third-Party Third-Party Logistics/LLP Logistics/LLP

Freight Freight Payers/Auditors Payers/Auditors Copyright: Edward H. Frazelle, Ph.D., Page 14

Custom Custom Brokers Brokers

Transportation Transportation Carriers Carriers 

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Satisfaction with Third-Party Logistics Services 3PLs in 2003 Warehouse Benchmarking Survey 3PLs in 2003 Warehouse Benchmarking Survey Almacenar Operador Logistico, Anthar Logistics, APL Logistics, Almacenar Operador Logistico, Anthar Logistics, APL Logistics, Atlanta Bonded Warehouse, BLJC, Camion Transport AG, DANZAS, Atlanta Bonded Warehouse, BLJC, Camion Transport AG, DANZAS,

FALLS FAR BELOW expectations

DIAKINISIS DIAKINISIS SA, SA,Exel, Exel,F&M F&MLogistics, Logistics, Genco Genco Distribution Distribution Systems, Systems, General Warehouse, Green Field Agencies, Inprax, General Warehouse, Green Field Agencies, Inprax, J.D. Smith and Sons Ltd., Kenco Logistics, Linfox Pty Ltd, J.D. Smith and Sons Ltd., Kenco Logistics, Linfox Pty Ltd, Menlo Logistics, Peoples Services, Power Logistics, REWICO, Menlo Logistics, Peoples Services, Power Logistics, REWICO, Shenzhen ST-Anda Logistics Co. LTD, Sunland, Shenzhen ST-Anda Logistics Co. LTD, Sunland, Tibbett and Britten, TNT Logistics Malaysia, Tibbett and Britten, TNT Logistics Malaysia, USCO Logistics, Zust Ambrosetti Group USCO Logistics, Zust Ambrosetti Group

5%

FALLS BELOW expectations

2%

35%

MEETS expectations

37%

EXCEEDS expect ation s

GREATLY EXCEEDS expectations

21%

0%

5%

10%


15%

20%



25%

G

30%

35%

40%

Impact of Third-Party Logistics Services 7.4%

13.6%

Ag gr e gate

30.8%

35.1%

13.2% 0.0% Workforce Capability

26.7% 26.7%

20.0% 0.0%

Information Systems

8.3%

13.3%

26.7%

20.0%

Inv entor y Accur acy

50.0%

25.0%

16.7%

33.3%

6.7% Shipping Accuracy

20.0% 20.0% 20.0%

0.0%

0.0%

40.0%

20.0%

Custom er Service

40.0% 40.0%

0.0% Productivity

18.2%

0.0%

45.5%

27.3%

9.1% 0.0% 13.3%

Costs

53.3%

20.0% 0.0%

10.0%

20.0%

30.0%

40.0%

% of Wa reho uses Significantly Better


Better

No Differ ence

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Significantly Worse

50.0%

60.0%



Right Sourcing/ESPs


SKU Flo w Opt im izati on Issue Pack Optimization Warehouse Performance Gap Analysis Dock Management Flexible Flyers Storage Mode Optimization Slotting Optimization Warehouse Layout Optimization Metamorphic Material Handling Systems Copyright: Edward H. Frazelle, Ph.D., Page 17


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SKU Rationalization It em Profitabilit It em Profitabilit

y

Microsoft Excel Worksheet

y

$10,000.00 $10,000.00

$8,000.00 $8,000.00 $6,000.00 $6,000.00

$4,000.00 $4,000.00

$2,000.00 t $2,000.00 fi itf ro ro P P $0.00 $0.00

1

1

5

5

9

9

3 31 1

7 71 1

1 12 2

5 52 2

9 92 2

3 33 3

7 73 3

1 14 4

5 54 4

9 94 4

3 35 5

7 75 5

1 16 6

($2,000.00) ($2,000.00)

($4,000.00) ($4,000.00) ($6,000.00) ($6,000.00)

($8,000.00) ($8,000.00)


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5 56 6

9 96 6

3 37 7

7 77 7

1 18 8

5 58 8

9 98 8

3 39 9

7 79 9

SKU Activity Profile 150+ C SKUs purchase d o nly by C Cust omers 300 200 100

C SKUs B SKUs A

B

C

A SKUs

Cus to mer Catego ri es Copyright: Edward H. Frazelle, Ph.D., Page 19

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SKU Threshold Analysis: Fixed and Variable Cost Model International Import Buys $2,385

$926 No No Buy Buy Zone Zone

Domestic Domestic Buys Buys

$292 Copyright: Edward H. Frazelle, Ph.D., Page 20

Import Buys

$2,385

Domestic 

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Right Sourcing/ESPs SKU Flow Optimization


Iss ue Pack Opti mi zati on Warehouse Performance Gap Analysis Dock Management Flexible Flyers Storage Mode Optimization Slotting Optimization Warehouse Layout Optimization Metamorphic Material Handling Systems Copyright: Edward H. Frazelle, Ph.D., Page 22


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Issue Pack Optimization $12,000.00 t $10,000.00 s o C g n i $8,000.00 k c i P + C $6,000.00 C I = t s $4,000.00 o C l a t o $2,000.00 T

1

Optimal Issue Pack Size = 32 Units

2

4 8 16

256 32

$0

50

64

128 100

150

200

Is s ue Pa ck (U nits )


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250

300



Right Sourcing/ESPs SKU Flow Optimization Issue Pack Optimization


Wareho us e Perf or mance Gap Analys is Dock Management Flexible Flyers Storage Mode Optimization Slotting Optimization Warehouse Layout Optimization Metamorphic Material Handling Systems Copyright: Edward H. Frazelle, Ph.D., Page 24


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It pays to measure!

87.0%

Few - 1 to 5

s c rit e M f o Average - 6 to 10 r e b m u N Many - '11 to 15

74.6%

66.9%

60.0%

65.0%

High Performance


70.0%

75.0%

80.0%

Warehouse Performance Index

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85.0%

90.0%

Low Performance

Logistics & Supply Chain Scoreboard SUPPLY

t s o C

DISTRIBUTION Inbound Transportation 

Warehousing 

Inventory Planning

Procurement 

Finance

Inventory Carrying Cost (ICC)

Total Cost to Procure (TCP)

Inbound Transportation Cost (ITC)

Productivity

Inventory Planning Hours (IPH)

Procurement Processing Hours (PPH)

Inbound Transportation Hours (ITH)

Quality

Outbound Transportation

Customer Service & Order Processing

TOTAL LOGISTICS

Total Warehousing Cost (TWC)

Outbound Transportation Cost (OTC)

Total Response Cost (TRC)

Total Logistics Cost = ICC + TCP + ITC + TWC + OTC + TRC

Total Warehousing Hours (TWH)

Outbound Transportation Hours (OTH)

Customer Response Hours (CRH)

Logistics Hours per Order = [IPH + PPH + ITH + TWH + OTH + CRH]/[Orders Shipped]

Order Shipping Accuracy (O ES)

Claims Free Order Percentage (CFOP)

Order Entry Accuracy (O EA)

Perfect Order Percentage = OFR x OES x DFOP x OTOP x CFOP x OEA x OCA x ODA

Order Fill Rate (OFR)

Damage Free Order Percentage (DFOP)

e c i v r e S

On-Time Orders Percentage (OTOP)

Response Time

Dock-to-Stock Time (DTS) Purchase Order Cycle Time (POCT)

Order In-Transit Time (OITT)

W arehou se Order Cycle Time (WOCT)


Order Communication Accuracy (OC A) Order Documentation Accuracy (OD A)

Order Entry Time (OET) Order Processing Time (OPT)

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Total Logistics Cycle Time = [(1- OFR) x POCT] + D TS + WOCT + OITT OET + OPT


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Warehouse Performance Gap Analysis Productivity 5 4.5 Safety

4 3.5

Storage Density

3 2.5 2 1.5 1 0.5 Wareho us e Order Cycle Time

0

29Inventory Accuracy

Current World-Class

Dock-to-Stock Time


Shipping Accuracy

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Warehouse Project Justification

Ann ual Volum e Current Performance Current Resource Requirement World-ClassPerformance World-ClassResource Requirement ResourceSavings Rate

y c a r y ti u c s y n c e A it D y iv r t e o c g t u a n d r e o o v r t P S In 360,000 26,000 29,000 360,000 lines/year SKUs locations 4 1.89 85% lines/PH SF/SKU %locations 90,000 54,810 3,900 person-hours SF locations 1 6 95% 99.97% lines/PH SF/SKU %locations 60,000 29,000 1,300 person-hours SF locations 30,000 25,810 2,600 person-hours $25 $/PH

SF $11 $/SF*Yr.

locations $100 $/location

An nu al Sav in gs $750,000 $283,910 $260,000 Total Savings ($s/year) $1,805,510 PaybackPeriod(Years) 1.5 Justifiable Investment $2,708,265 Copyright: Edward H. Frazelle, Ph.D., Page 30

e m i T k c to -S o tk c o D

y c a r u

r e d r

c O e e A s m g u i o T in y h p t e e e p r lc i f a y h a S WC S 120,000,000 $ $ 120,000,001 lines/year on-hand inventory on-hand inventory 99.7% 48 24 5 %lines hours hours accidents/year 1,080 locations 24 12 1 %lines hours hours accidents/year 108 lines/year 972 24 12 4 lines/year $300 $/line

hours 0.1% %/day

$291,600

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$120,000

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hours 0.1% %/day

$60,000

$10,000 $/accident

$40,000

Warehouse Financial Performance Total Warehousing Costs and Cost Ratios

Labor Cost Receiving $ 1,963,055 Putaway $ 1,090,534 Storage $ 999,640 Picking $ 1,946,966 Consolidation $ 287,188 Delivery $ 68,225 Marking $ 3,534,218 Returns $ 68,225 Total $ 9,958,052 %ofTotal Cost/Sales Cost/Order Cost/Case Cost/Line Cost/Piece Cost/CF Cost/Pound Cost/SKU

$ $ $ $ $ $ $

54.03% 4.05% 199.16 4.58 2.79 0.11 2.77 0.35 183.89

SpaceCost $ 238,125 $ $ 1,933,250 $ $ 100,500 $ 50,000 $ 105,000 $ 99,250 $ 2,526,125

MHS Cost $ 569,820 $ 416,000 $ 1,650,710 $ 1,830,782 $ 135,000 $ 69,000 $ 222,200 $ 6,000 $ 4,899,512

WMS Cost $ 218,333 $ 240,333 $ 123,833 $ 161,833 $ 38,333 $ 38,333 $ 113,833 $ 113,000 $ 1,047,831

13.71% 1.03% 50.52 1.16 0.71 0.03 0.70 0.09 46.65

26.58% 1.99% 97.99 2.25 1.37 0.06 1.36 0.17 90.48

5.68% 0.43% 20.96 0.48 0.29 0.01 0.29 0.04 19.35

$ $ $ $ $ $ $

$ $ $ $ $ $ $


$ $ $ $ $ $ $

Cost per Total Cost Transaction $ 2,989,333 $ 1.38$ per receipt $ 1,746,867 $ 3.56$ per line $ 4,707,433 $ 86.93$ per SKU $ 3,939,581 $ 1.10 $ per line $ 561,021 $ 61.45$ per load $ 225,558 $ 24.71 $ per load $ 3,975,251 $ 0.22$ per piece $ 286,475 $ 18,431 ,520 $ 368.63$ per line 100.00% 7.49% 368.63 8.47 5.16 0.21 5.12 0.64 340.37

$ $ $ $ $ $ $

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Warehouse Quality Index = Shipping Accuracy x Inventory Accuracy 100.00% 99.00% 98.00% 97.00%

x e d n I y ti l a u Q e s u o h re a

96.00% 95.00% 94.00% 93.00% 92.00% 91.00% 90.00% 89.00% 88.00% 87.00% 86.00% 85.00% 84.00% 83.00% 82.00% 81.00% 80.00% 79.00% 78.00% 77.00% 76.00% 75.00% 74.00% 73.00% 72.00% 71.00% 70.00% 69.00% 68.00% 67.00% 66.00% 65.00% 64.00% 63.00% 62.00% 61.00% 60.00%

W

Average = 93.2% Median = 97.1% Average for Top Quartile = 99.65% Median for Top Quartile = 99.76%

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Right Sourcing/ESPs SKU Flow Optimization Issue Pack Optimization Warehouse Performance Gap Analysis


Doc k Management Flexible Flyers Storage Mode Optimization Slotting Optimization Warehouse Layout Optimization Metamorphic Material Handling Systems Copyright: Edward H. Frazelle, Ph.D., Page 33


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Inbound Dock Assignment


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Driver-Load-Dock Driver-Load-Dock Verification Verification Copyright: Edward H. Frazelle, Ph.D., Page 35

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Interleaving Unload & Putaway Deadhead Back

UnloadInterleaving & Putaway Pickup and Load


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Right Sourcing/ESPs SKU Flow Optimization Issue Pack Optimization Warehouse Performance Gap Analysis Dock Management


Flexib le Fly ers Storage Mode Optimization Slotting Optimization Warehouse Layout Optimization Metamorphic Material Handling Systems Copyright: Edward H. Frazelle, Ph.D., Page 37


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DC Staffing: Offsetting Peaks & Crosstraining DC Workforce Requirements Picking Returns

Receipts

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Copyright: Edward H. Frazelle, Ph.D., Page 38

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Right Sourcing/ESPs SKU Flow Optimization Issue Pack Optimization Warehouse Performance Gap Analysis Dock Management Flexible Flyers


Storage Mode Optimization Slotting Optimization Warehouse Layout Optimization Metamorphic Material Handling Systems Copyright: Edward H. Frazelle, Ph.D., Page 39


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Right Sourcing/ESPs SKU Flow Optimization Issue Pack Optimization Warehouse Performance Gap Analysis Dock Management Flexible Flyers Storage Mode Optimization


Slot tin g Opti miz atio n Warehouse Layout Optimization Metamorphic Material Handling Systems Copyright: Edward H. Frazelle, Ph.D., Page 41


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Warehous e Layout Optimization


Metamorphic Material Handling Systems Copyright: Edward H. Frazelle, Ph.D., Page 43

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A+ Movers in Flow Rack

4

2 C’s

B’s

A’s

3

1 Packing Shipping Stations Copyright: Edward H. Frazelle, Ph.D., Page 44

Order Completion Zone 

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44

Building Length to Width Ratio 22.8%

1 ito1.5 a R 2 th d i W2.5 to h t 3 g n e3.5 L g n i 4 d il u B 5 0.8%

35.0% 14.6%

Average = 2.1 Median = 1.7

9.8% 5.7% 4.9% 5.7%

6 0.8% 0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

% of Buildings


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30.0%

35.0%





Warehouse Layout Optimization


Metamorphic Material Hand li ng Syst ems Copyright: Edward H. Frazelle, Ph.D., Page 46

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Metamorphic Logistics Logistics Systems Systems Metamorphic


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Real-Time WarehouseWarehousing Data Mining & Simulation Warehouse Optimization Service Providers Warehouse Workforce Optimization Human Friendly Warehousing Remote Warehouse Management


Waste-Free Warehousing Wise Warehousers


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Pen Pencomputers computersare are especially especially appropriate appropriatefor for form-based form-based warehousing warehousing tasks. tasks. (true) (true)

Pen Computing Computing Pen Copyright: Edward H. Frazelle, Ph.D., Page 49

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Pick-to-LightSystems Systems Pick-to-Light

Pick-to-light Pick-to-lightsystems systems commonly commonlyuse uselights lights totoindicate the indicate the correct correctpicking picking location locationand andlighted lighted displays to indicate displays to indicate the thecorrect correctpicking picking quantity. quantity. (true) (true)


Pick-to-Light Systems

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Voice Voiceheadsets headsets allow allowan anoperator operatortoto talk through talk throughaaseries series of ofwarehousing warehousing transactions transactions- instructions instructionsspoken spoken by byaasynthesized synthesized voice voice(heard (heardininaaset set of ofearphones) earphones)

Voice Headsets

verified verifiedcomplete complete back by human back by human voice voiceinto intoaaheadset headset microphone. microphone. (true) (true)

Virtual Display Copyright: Edward H. Frazelle, Ph.D., Page 51

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Virtual Warehouse Displays


www.vrwarehouse.com

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Paperless Warehousing Warehousing Network Network Paperless ay K ingW

1

M Y IN T LC S E D R O

ulnctio C F S P A C ulnctio F S P A

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DC Data Warehouse

RF Hub

Cycle Counting Wireless Pen

Voice Headsets

NE T X

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t h g i L o t k ic

Productivity Reporting

P

Warehou se Data H igh way Warehouse Simulator

Warehouse Operations Controller

Warehouse Satellite Communications Mobile Receiving Stations

Cross Docking Conveyor Controller

ASN Generation

Warehouse Decision Support Copyright: Edward Paperless Warehousing Network

H. Frazelle, Ph.D., Page 53

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Real-Time Warehousing Warehouse Data Mining &




Simulation Warehouse Optimization Service Providers Warehouse Workforce Optimization Human Friendly Warehousing Remote Warehouse Management

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RF Tags in Distribution

Apply tag to unit.

Apply tag to case.

Scan tag on receipt.

ID for putaway.

Electronic Product Code “Ping” for check-out.

“Ping” for replenishment.

Source: Auto-ID Center - MIT


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“Ping” for picking.

Container Management


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WMS: Perpetual, Managed To-Do List w/Event Triggers WMS To-Do List Location Goes Empty

Receipt On Premises Replenish Location

Putaway

Order Picking Order Release to DC Floor

Pick


Packing

Complete

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Paperless Warehousing Real-Time Warehousing


Wareho us e Data Min in g & Simula tio n




Warehouse Optimization Service Providers Warehouse Workforce Optimization Human Friendly Warehousing Remote Warehouse Management

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Web-Based Customer Customer Activity Profile Activity Profile

Profiling & Optimization

Client’s Client’s Server Server

Inventory Inventory Activity Profile Activity Profile

Item, Customer, Item, Customer, Supplier, Carrier Supplier, Carrier MasterFiles Files Master

Customer Customer Orders Orders

Supply Supply Activity Profile Activity Profile

Purchase Purchase Orders Orders

Transportation Transportation ActivityProfile Profile Activity

SKUlytics.com Warehouse Warehouse Activity Profile Activity Profile


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59

Sample Item-Order Completion Profile


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Demand Correlation Profile I te m Nu mb er

Item N umb er

Pair F requ ency

1 8 9- 2 - 4

1 8 9 -2-1

58

4 9 3- 2 - 1

4 9 3 -2-8

45

0 0 7- 3 - 3

0 0 7 -3-2

36

11 9 -2 -1

1 19 -2-7

30

9 9 9- 1 - 8

9 9 9 -1-6

22

2 0 7- 4 - 2

2 0 7 -4-4

15

6 6 2- 1 - 9

6 6 2 -1-1

12

3 3 9- 7 - 4

8 7 9 -2-8

9

11 2 -3 -8

1 12 -3-4

6


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Warehouse Data Mining Order by Cube/Lines

12.00%

10.00%

8.00%

%Orders

6.00%

4.00%

2.00% <1

90 - 149.99 1 - 4.99 5 - 14.99 15 - 29.99 30 - 59.99 60 - 89.99

0.00% 1 2

30 - 59.99

-5 6

-

90 - 149.99 150 - 500+

Lines per Order

0 1

0 -5 0 1

5 - 14.99 0 0 -1 1 5

0 0 -2 0 0 1


Cube per Order 0 0 -3 0 0 2

<1 + 0 0 3

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Simulation Animation


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Real-Time Warehousing Warehouse Data Mining & Simulation


Remote Warehouse Management Waste-Free Warehousing Wise Warehousers


Warehouse Opti mi zati on Servi ce Providers Warehouse Workforce Optimization Human Friendly Warehousing

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Logistics & Supply Chain Master Planning (LSCMP)© Supply Chain Intelligence, Optimization & Planning Suite (SCIOPS)© Purchase Orders

Customer Response Scoreboard

EHF1

Customer Activity Profile

Supplier Master

Customer Orders

Customer Master

Shipment Manifests

Customer Response Master Plan

Logistics Data Mining System

Inventory Activity Profile

Inventory Optimiza tion System Inventory Practices Audit

Inventory Master Plan

Supply Scoreboard

Supply Activity Profile

Transportation Activity Profile

Warehouse Activity Profile


• Customer Response Metrics & Benchmarks • Customer Service Policy Optimization • Customer Satisfaction Analysis • CRMS Requirements & Selection • Inventory Metrics & Benchmarks

Inventory Scoreboard

Carrier Master

Item Master

Customer Response Optimiza tion System Customer Response Practices Audit

Supply Optimiza tion System

Supply Master Plan

• Supply Metrics & Benchmarks • Supplier Service Policy • Sourcing Optimization • Supplier Rationalization • SRMS Requirements & Selection

Transportation Master Plan

• Transportation Metrics & Benchmarks • Network Optimization • Routes & Schedu le Optimization • Mode & Carrier Optimization • Carrier Bid Optimization • TMS Requirements & Selection

Warehouse Master Plan

• 3PL Requirements & Selection • Warehouse Metrics & Benchmarks • Flow & Process Optimization • Layout Optimization • MHS Requirements & Selection • WMS Requirements & Selection • 3PL Requirements & Selection

Supply Practices Audit Transportation Scoreboard

Transportation Optimiza tion System Transportation Practices Audit Warehouse Scoreboard

Warehouse Optimiza tion System Warehouse Practices Audit

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Forecast Optimization • Inventory Level Optimiz ation • Safety Stock & Fill Rate Optimization • Deployment Optimization • IMS Requirements & Selection

Slide 65 EHF1

asdf;lksadjf;lsakdjf;lkj as;dlfkjsad;lksdjf;lkj Edward H. Frazelle, Ph.D., 9/4/2003

Warehouse Optimization Service Providers (WOSP) Warehouse Application Service Providers On-Line Warehouse Performance Measurement On-Line Warehouse Data Mining On-Line Storage Mode Optimization On-Line Slotting Services


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World-Class Warehousing Rational Warehousing Right Sourcing/ESPs SKU Flow Optimization Issue Pack Optimization Warehouse Performance Gap Analysis Dock Management Flexible Flyers Storage Mode Optimization Slotting Optimization Warehouse Layout Optimization Metamorphic Material Handling Systems


Paperless Warehousing Real-Time Warehousing Warehouse Data Mining & Simulation Warehouse Optimization Service Providers

Warehous e Wor kfo rce Optimization Human Friendly Warehousing Remote Warehouse Management Waste-Free Warehousing Wise Warehousers

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Workforce Turnover vs. Warehouse Quality

25%+ re v o n r u 10% to 25% T e rc 5% to 10% fo rk o WLess than 5%

91.57% 93.57% 95.44% 96.08% % 0 9

% 1 9

% 2 9

% 3 9

% 4 9

% 5 9

Warehouse Quality Index


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% 6 9

% 7 9

It pays to pay! Pay Scales for Survey Warehouses The average Warehouse Quality Index for Above Average Pay = 98.3%. The average Warehouse Quality Index for Average Pay = 90.3%.

1.4%

Far Below Average

4.1%

Below Average

47.6%

A ve ra ge

42.2%

A b ov e A ve ra ge

4.8%

Far Above Average

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35 .0%

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45 .0%

50.0 %

Operator to Supervisor Ratios Average = 11.3

100.0% % 90.0% 80.0% 70.0%

Cum%

Median =Best 10.2= 12 Productivity Quality Best = 8

60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0%

% 9 . 1 2

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Operator to Supervisor Ratio


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% 5 . 9

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30 29 28 26 25 24 23 22 21 20 19 17 16 15 14 13 12 11 10 9

% 7 . 3 7

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2

Warehouse Workforce Workforce Warehouse Optimization Optimization Copyright: Edward H. Frazelle, Ph.D., Page 71

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Real-Time Warehousing Warehouse Data Mining & Simulation Warehouse Optimization Service Providers Warehouse Workforce Optimization




Human Friendly Warehousing

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Waist Level Transactions Copyright: Edward H. Frazelle, Ph.D., Page 73

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Paperless Warehousing Real-Time Warehousing Warehouse Data Mining & Simulation Warehouse Optimization Service Providers Warehouse Workforce Optimization Human Friendly Warehousing


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Remote Warehouse Management


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Management



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Reusable Containers

C.Collapsible CollapsibleRoll RollCages Cages C.

A.Plastic PlasticPallets Pallets A.

D.Multi-use Multi-useCorrugated CorrugatedCarton Carton D.

B.Plastic PlasticTotes Totes B. Copyright: Edward H. Frazelle, Ph.D., Page 79

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Reusable Unitization Copyright: Edward H. Frazelle, Ph.D., Page 80

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Paperless Warehousing Real-Time Warehousing Warehouse Data Mining & Simulation Warehouse Optimization Service Providers Warehouse Workforce Optimization Human Friendly Warehousing Remote Warehouse Management Waste-Free Warehousing

Wis e Wareho us ers

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The “Pe rfect” Warehouse A building 671 feet long, 447 feet wide, 30 feet clear with 300,000 square feet in adelivery rapidly of appreciating inside trade zone to within 24 hour all U.S. ziparea codes and a in free close proximity a highly skilled and motivated workforce. The building is 80% occupied during “normal” inventory levels and 90% occupied during “peak” inventory levels. The operation is a hybrid insource-outsource model with the perfect outsource provider(s) chosen to perform those activities inside the warehouse that SHOULD BE outsourced. The operation is supported by a WMS provided by an ASP enabling all world-class warehousing practices and integrating with a wide variety of paperless communication devices chosen perfectly to meet the unique needs of each activity within the warehouse.


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The “Pe rfect” Warehouse The workforce is cross-trained with an operator to supervisor ratio of 12 where QUALITY is the key success driver and 8 where PRODUCTIVITY is the key success driver and where operators are delighted with average to above-average pay. The SKUs would be highly active, yielding 1000+ hits per year on average. An APPROPRIATE level of material handling technology is in place, each device chosen to perfectly match the handling requirements of the task. A holistic set of financial, productivity, quality and cycle time metrics work together to motivate and maintain world-class warehouse performance.


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World Class Warehousing

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