Improving Warehouse Productivity Without …€Service (SaaS) model has become a popul flar means of dlideploying WMS With the SaaSmodel, the software vendor hosts the WMS application

Improving Warehouse Productivity Without Resorting to Tier 1 TechnologyWithout Resorting to Tier 1 Technology

What is “Tier 1” Technology?

The term “Tier 1” is frequently used, but is a gross over‐simplificationgross over‐simplification

Conjures up images of “expensive” technology

“Overkill”

“The Cadillac”

Often used in context of WMS vendors

| 2Image source: General Motors

Tier 1 Technology Isn’t Bad

For many large, complex operations, the only path tooperations, the only path to supply chain improvement involves making a large capital investmentinvestment

Many of the technologies which we consider “Tier 1” have been th i d l i ttithe pioneers – developing cutting edge technology that improves efficiency

This technology then get adapted and trickles down to mid‐tier providers over time

| 3

An Alternate Title for our Presentation…

"How can I improve myHow can I improve my warehousing problems without a major capital j p

investment?“

| 4

But how?

Isn’t this asking to get something for nothing?something for nothing?

No.

There are two basic ideas which are under‐exploited by many enterprises today:1 Leveraging new advances in1. Leveraging new advances in

technology which they may not be aware of

2 Sharpening the saw stepping2. Sharpening the saw – stepping back and making fundamental process changes to improve the operation

| 5

the operation

Common Challenges

Whether their capital budget is 5 figures or 8 figuresis 5 figures or 8 figures, companies face the same basic set of challenges:– Reduce labor costs

– Improve accuracy

– Improve space utilizationp p

Secondary challenges:– Meet regulatory compliance

mandatesmandates

– Meet retail compliance mandates

| 6

No Shortage of Solutions…

There are countless solutions available to address these challengeschallenges…

Conveyor‐based pick modules Pick‐to‐Light Systems SpeechWMS Conveyor based pick modules Pick to Light SystemsWMS

Carousels AS/RS Robotic Handling Warehouse Control Software

| 7Image sources, clockwise from top left: Intermec, Abel‐Womack Integrated Handling Solutions, Lightning Pick,

Voxware, Remstar, Diamond Phoenix, TGW Ermanco, Kiva Systems, FORTE Industries

/ obot c a d g(WCS)

Process‐Centric Approach

Rather than jumping immediately to technology let’s look at several strategies totechnology, let s look at several strategies to address these challenges…A. Pick more efficiently

ff lB. Put‐away more efficiently

C. Pack and ship more efficiently

D. Reduce walking

E. Improve labor productivity

F. Improve accuracy

G Improve space utilizationG. Improve space utilization

| 8


Each strategy has a set of execution tactics…1 Cluster picking 16 Pick restriction1. Cluster picking2. "Tandem" picking3. Receiving staging by zone4. Clustered put‐away 5 P b bl i

16. Pick restriction 17. Large quantity override 18. Min/max replenishment19. Demand‐based replenishment 20 Sl h h5. Put‐away by movable unit

6. Implement specialized packing processes

7. Pre‐manifesting 8 D i l b l li i

20. Slot the warehouse more effectively

21. Basic productivity tracking22. Advanced productivity tracking23 T k i l i8. Dynamic label application

9. Cartonization 10. Palletization11. Seal cases more quickly

23. Task interleaving 24. Pick confirmation 25. Cycle counting26. Track product by lot #

12. Weight‐based accuracy confirmation

13. Create a forward pick area14. Two‐tier bin system

27. Pick product by lot #28. Track serial numbers29. Track country of origin30. High density storage

| 9

15. SKU Mirroringg y g


Some Tactics require enabling technology…

| 10

Focus on Mid‐Tier WMS

Mid‐Tier WMS has been in use for at least 15in use for at least 15 years

Generally, mid‐tier means a more limitedmeans a more limited set of functionality for a lower priceOft id ti WMS Often, mid‐tier WMS systems had some key gaps which made them

i l fnot practical for many users with special requirements

| 11

The SaaS Model

In the last 5 years, the Software‐as‐a‐Service (SaaS) model has become

l f d l i WMSa popular means of deploying WMS With the SaaS model, the software

vendor hosts the WMS application on their own server and deploys iton their own server and deploys it via a web connection

True SaaS is multi‐tenant: multiple users are on the same instance of the software

Customers do not pay an up‐front license fee – just a monthly usage feefee

Upgrading and remaining on the current version of the software is much easier

| 12

much easier

What are the TRUE Capabilities?

Commonwealth Supply Chain Advisors conducted a surveyAdvisors conducted a survey of three of the top mid‐Tier WMs providers to assess the

h h f lextent to which functionality gaps have been plugged in recent yearsy

Two providers offer only SaaS‐based WMS

The third offers both traditional, licensed WMS and a SaaS WMS

| 13

What are the TRUE Capabilities?

We created a list of 30 functionality points which have traditionally been challenging for mid‐tier WMS providers

Challenges Strategies Tactics Enabling Technology

Level of support from Mid‐Tier WMS

Cluster picking ‐ pick multiple orders at the same time and put them in discrete containers by order

WMS 3

WMS 2Double‐length electric pallet

jacksn/a

Pick more efficiently "Tandem" picking ‐ when case picking, two different orders can be picked at the same

time utilizing a double‐length electric pallet jackg g pto address

We asked each vendor to indicate whether this functionality was:– Standard Functionality

jTugger vehicles n/a

Receiving staging by zone ‐ at receiving, direct that inbound product be staged on a pre‐defined movable units based upon it’s destination zone

WMS 1

Clustered put‐away ‐ allow multiple SKUs to be put away in the same trip through the warehouse in a logical pick path

WMS 2

Put‐away by movable unit ‐ allow multiple SKUs to be placed on a license plated movable unit; allow the movable unit license plate to be scanned once at put‐away, and direct put‐away of all SKUs on that movable unit in a logical pick‐path

WMS 2

Implement specialized packing process Process change n/aPre‐manifesting ‐ Calculate weight and quantity of all the multi‐SKU pallets on an order before picking

WMS 3

Dynamic label application: Apply a retail‐compliuant label to cases at time of picking with scan confirmation

WMS 2

Put‐away more

efficiently

– Standard Functionality– Configurable Functionality– Customization Required– Not Available CurrentlyW l k d b l

Cartonization ‐ determine the optimal size shipping container based on the cube and longest dimension of the items which are to be picked for an order

WMS 2

Palletization ‐ prior to case picking, determine the number of cases to be picked to each pallet based on cube

WMS 1

Tape dispensers n/aCase sealer n/a

Weight‐based accuracy confirmation ‐ weight a carton or a pallet and compare it to a database of the actual weights ‐ verify if the carton or pallet is within tolerance

WMS 1

Create a forward pick area n/aTwo‐tier bin system ‐ the same SKU can exist in two different bins in the distribution center

WMS 3

SKU Mirroring ‐ the same SKU can exist in two different bins in the same ZONE WMS 3Pick restriction ‐ the system can limit picking only to bins designated as "forward pick

WMS 3

Reduce labor costs

Pack and ship more

efficiently

Seal cases more quickly

We also asked about actual usage amongst their client base. Was the functionality:– Currently in‐use with referenceable clients

bins"WMS 3

Large quantity override ‐ if a single pick exceed x quantity and will drastically deplete the forward pick area, the system will direct the pick to be made from the overstock bin

WMS 2

Min/max replenishment ‐ replenish to a bin if the quantity falls below a pre‐set minimum level

WMS 3

Demand‐based replenishment ‐ proactively replenish to a bin if known demand for the item will exceed the quantity in the bin, EVEN IF the bin is not currently below it’s minimum stocking level

WMS 1

Slotting software n/aSlotting spreadsheet n/a

WMS 2Labor management software n/a

Reduce walking

Basic Productivity Tracking: Track lines picked per hour by worker regardless of pick type

Slot the warehouse more effectively

– Available but not currently in use– Not available

The vendors responded on the condition that they not be identified by name in

WMS 2

Labor management software n/a

WMS 1

Labor management software n/aPick confirmation ‐ confirm that the correct product was picked based on a bar‐code scan of the item or bin

WMS 3

Cycle counting ‐ allow incremental cycle counting in lieu of physical inventory WMS 3Track product by lot # WMS 3Pick product by lot # WMS 3Track serial numbers WMS 3Track country of origin WMS 3

Improve labor productivity

Improve accuracy

Accuracy is poor

Advanced Productivity Tracking: Track lines picked per hour by worker by pick type (i.e. distinguish between piece picks, case picks, pallet picks)

Task interleaving ‐ combined put‐away/picking cycles ‐ when full pallet is put‐away, search for full pallet picks which need to occur in proximity to the put‐away bin and place this pick as the next task in queue

| 14

that they not be identified by name in this presentation

Track country of origin WMS 3Push back rack n/a

Double deep rack n/aVery narrow aisle (VNA)

storagen/a

Mobile storage rack n/a

Improve space utilization

The DC is out of space Improve storage density

The Rating System

Three levels…

Level: 3 Generally available

Level: 2 Available but often

Level: 1 If available at allGenerally available

with minimal customization required

In use by at least some referenceable

Available but often with some customization required

Might not be currently in use by

If available at all, customization is required

Might not be currently in use by any companies

| 15

some referenceablecompanies

currently in use by any companies

any companies

The Tactics…

1. Cluster picking2 "Tandem" picking

16. Pick restriction 17 Large quantity override2. Tandem picking

3. Receiving staging by zone4. Clustered put‐away 5. Put‐away by movable unit6 Implement specialized packing

17. Large quantity override 18. Min/max replenishment19. Demand‐based replenishment 20. Slot the warehouse more

effectively6. Implement specialized packing processes

7. Pre‐manifesting 8. Dynamic label application9 Cartonization

effectively21. Basic productivity tracking22. Advanced productivity tracking23. Task interleaving 24 Pick confirmation9. Cartonization

10. Palletization11. Seal cases more quickly12. Weight‐based accuracy

confirmation

24. Pick confirmation 25. Cycle counting26. Track product by lot #27. Pick product by lot #

k l bconfirmation13. Create a forward pick area14. Two‐tier bin system 15. SKU Mirroring

28. Track serial numbers29. Track country of origin30. High density storage

| 16

1. Cluster picking

Definition: pick multiple orders at the same time and put them in discrete containers by

WMS Availability Assessmenttime and put them in discrete containers by

order



In use by at least

| 17

use by at eastsome referenceablecompanies

2. "Tandem" picking

Definition: when case picking, two different orders can be picked at the same time

WMS Availability Assessmentorders can be picked at the same time

utilizing a double‐length electric pallet jack or tugger vehicle


with some customization required

Might not be

| 18


Deep Dive: Pick Methodologies

Which style of picking is best?

Discrete Order Picking Cluster Picking Batch Picking

Zone Pick: Pick & Pass Zone Pick: Pick & Consolidate

| 19


• Pro’s:– Simple for operators– Less error prone– Little/no technology requiredMay be the only practical method to

Discrete Order – May be the only practical method to pick very high‐cube items

• Con’sPicking

– Very high levels of walking– Operators return to home‐base after each order is pickedeach order is picked

– Each order requires a trip through the entire warehouse


• Pro’s:– Dramatically reduces walkingDramatically reduces walking– Possible to do on a limited scale

without a high degree of technology– Each order is only touched onceCluster Each order is only touched once– Orders are ready‐to‐ship as soon as

picking is done• Con’s

Cluster

PickingCon s– Hard to pick a large group of orders

without real‐time instructions– Orders may travel significant distances y g

without any picks being performed– Travel distances are excessive in large

warehouses with many SKUs– Increased likelihood of errors


• Pro’s:– Reduces walking in larger distribution g g

centers– Each order can only be routed to zones

where there are picksp– Orders are ready‐to‐ship as soon as

picking is done

• Con’s

Zone Pick: Pick & Pass Con s

– Almost impossible to manage without real‐time warehousingZ ti l b d ith– Zone routing can only be done with complex conveyor systems

– All of the SKU’s in the order travel thro gh the entire DCthrough the entire DC


• Pro’s:– Reduces overall travel distances for the

SKU’s in the order– Well‐suited for orders with diverse sizes

and shapes of SKU’sZone Pick: Pick p– Well‐suited for mixing case and piece

picking on the same order

• Con’s

& ConsolidateCon s– Very complex for software to manage

consolidation processR i l b d t t– Requires labor downstream to consolidate orders

– Requires space to buffer product


• Pro’s:– Well suited for instances where the

same SKU appears on a large number of orders

– Well suited for single line single pieceB h Pi ki Well suited for single line, single piece orders

• Con’s

Batch Picking

– Only suits a limited order profile

– Requires additional downstream handlinghandling

– Can be complex to execute

3. Receiving staging by zone

Definition: at receiving, direct that inbound product be staged on a pre‐defined

WMS Availability Assessmentproduct be staged on a pre‐defined

movable unit based upon it’s destination zone

Level: 1

Inbound

Zone 1 Zone 2 Zone 3 If available at all,

customization is required


| 25


4. Clustered put‐away

Definition: allow multiple SKUs to be put away in the same trip through the

WMS Availability Assessmentaway in the same trip through the

warehouse in a logical pick path

Level: 2 Available but

often with some customization requiredMi ht t b

| 26


5. Put‐away by movable unit

Definition: allow multiple SKUs to be placed on a license plated movable unit; allow the

WMS Availability Assessmenton a license plated movable unit; allow the

movable unit license plate to be scanned once at put‐away, and direct put‐away of all

h bl i i l i l i kSKUs on that movable unit in a logical pick‐path

Level: 2MU #

T‐745 Available but often


Might not be

T 745

| 27

g t ot becurrently in use by any companiesZone 1

6. Implement specialized packing process

Definition: separate the less skilled packing functions from the more skilled manifestingfunctions from the more skilled manifesting functions

10‐step process

| 28

7. Pre‐shipping

Definition: Calculate weight and quantity of all the multi‐SKU pallets on an order before

WMS Availability Assessmentall the multi‐SKU pallets on an order before

picking



In use by at least

| 29


8. Dynamic label application

Definition: Apply a retail‐compliant (or other) label to cases at time of picking with

WMS Availability Assessmentother) label to cases at time of picking with

scan confirmation

Case label



Might not be

| 30

g t ot becurrently in use by any companies

9. Cartonization

Definition: determine the optimal size shipping container based on the cube and

WMS Availability Assessmentshipping container based on the cube and

longest dimension of the items which are to be picked for an order



Might not be

| 31


Image source: Tetris

10. Palletization

Definition: prior to case picking, determine the number of cases to be picked to each

WMS Availability Assessmentthe number of cases to be picked to each

pallet based on cube

Level: 1 If available at all,



| 32


11. Seal cases more quickly

Definition: speed up the case sealing process without adding excess laborprocess without adding excess labor

| 33Image sources: Betterpack, 3M

12. Weight‐based accuracy confirmation

Definition: weigh a carton or a pallet and compare it to a database of the actual

WMS Availability Assessmentcompare it to a database of the actual

weights ‐ verify if the carton or pallet is within tolerance




| 34


13. Create a forward pick area

Definition: stock a smaller supply of many SKUs in a high‐density area of theSKUs in a high‐density area of the warehouse

8 SKUs stored on 8 pallets = 32 walking feet

vs.

Smaller supply of the same 8 SKUs stored in carton flow

rack

8 SKUS = 8 walking feet*

| 35

8 SKUS 8 walking feet

*(Can be increased to 32 SKUs per walking foot)

13. Create a forward pick area

Storage mediums include:carton flow– carton flow

– static shelving

Image source: Borroughs Corporation, Frazier Industrial Company | 36

14. Two‐tier bin system

Definition: the same SKU can exist in two different bins in the distribution center

WMS Availability Assessmentdifferent bins in the distribution center

OverstockOverstock

Level: 3 G ll il bl Generally available


In use by at least

Forward pick

| 37

some referenceablecompanies

15. SKU Mirroring

Definition: the same SKU can exist in two different bins in the same ZONE

WMS Availability Assessmentdifferent bins in the same ZONE

OverstockOverstock



In use by at least

Forward pick

| 38


16. Pick restriction

Definition: the system can limit picking only to bins designated as "forward pick bins"

WMS Availability Assessmentto bins designated as forward pick bins

OverstockOverstock



In use by at least

Forward pick

| 39


17. Large quantity override

WMS Availability Assessment

Definition: if a single pick exceeds x quantity and will drastically deplete the forward pickand will drastically deplete the forward pick area, the system will direct the pick to be made from the overstock bin



Might not be

| 40


18. Min/max replenishment

Definition: replenish to a bin if the quantity falls below a pre‐set minimum level

WMS Availability Assessmentfalls below a pre‐set minimum level



In use by at least

| 41


19. Demand‐based replenishment

Definition: proactively replenish to a bin if known demand for the item will exceed the

WMS Availability Assessmentknown demand for the item will exceed the

quantity in the bin, EVEN IF the bin is not currently below it’s minimum stocking level




i

| 42

any companies

20. Slot the warehouse more effectively

3 Methods of Slotting:– Level 1: Determine the correct

Slotting Tools:Spreadsheet tools

STORAGE MEDIUM– Level 2: Determine the correct BIN

#l l

– Spreadsheet tools

– Specialty slotting software

– Level 3: Dynamic slotting

Factors influencing slotting methodology:– Demand volatility– Product lifecycle– # of new product introductions

per yearper year– Stackability requirements– Segregation rules– Family grouping rules

| 43

– Family grouping rules

Image source: Rubic’s

How to slot with a spreadsheet…

Create Item Master– SKUSKU– Description– Length– Width

Item Master

Width– Height– Overall cube

Conveyabiility

SKU Description Current Location Overall Cube

Qty. on Hand, 2008

Non‐Conveyable?

– Conveyabiility– Pack size info

Determine Current Quantity on H d

TG511A1000 THERMOSTAT GUARD 05050C0601 176.83 N 189SC16124 16X12X4 SCREW COVE10040E0101 835.52 N 46HGM‐SZ SINGLE ZONE REFRIGE 08010D0202 5,751.18 N 14AT150F1022 50VA TRANS 120/208/ 08010E0101 76.62 N 197

Hand Determine rationalization

strategy for current QOH

220B BRASS FLOW SENSOR 07010B0601 444.35 N 47RIB2401B SPDT POWER RELAY 2403070B0601 73.32 N 306UCP‐422‐43 MA/PSI XDUCER W/PS07020E0601 193.69 N 124T‐PB202‐0 24VAC POWER SOURC03040B0601 161.76 N 180

| 44


Define variables:Velocity Variables– Velocity Variables

– Growth Rate Variables

– Bin Variables, Primary Pick Area

– Bin Variables, Overstock

– Tote Variables

– Current Storage Capacityg p y

– Current Bin Box Used by Client

– Pallet Rack Bays Available

| 45


Establish multiple replenishment intervalsreplenishment intervals…

| 46


Create storage medium rules

Calculate theoretical qty on hand Calculate theoretical qty on hand

Rationalize against actual qty on hand

Determine optimal storage medium

Summarize results:Summarize results:– # of units of each storage medium

required

– “walk‐back” bays requiredwalk back bays required

– Impact of various replenishment intervals

– Changes over time

| 47

Changes over time

21. Basic Productivity Tracking

Definition: Track lines picked per hour by worker regardless of pick type


worker regardless of pick type

Level: 2 Available but often with Available but often with

some customization required


| 48

22. Advanced Productivity Tracking

Definition: Track lines picked per hour by worker by pick type (i e distinguish

WMS Availability Assessmentworker by pick type (i.e. distinguish

between piece picks, case picks, pallet picks)



Might not be

| 49


22. Advanced Productivity Tracking

LMS on Demand?

YES.

| 50

23. Task interleaving

Definition: combined put‐away/picking cycles ‐ when full

WMS Availability Assessmentcyc es e u

pallet is put‐away, search for full pallet picks which need to occur in proximity to the put‐away bin and

3. Pick outbound pallet

2. Put‐away

inbound palletthe put‐away bin and

place this pick as the next task in queue

Level: 11. Pickup inbound pallet 4 Stage

If available at all, customization is required


pallet 4. Stage outbound pallet

| 51


24. Pick confirmation

Definition: using some form of automatic data capture technology to confirm that the

WMS Availability Assessmentdata capture technology to confirm that the

correct item was picked (at the time of pick)

Level: 3 Generally available Generally available


b l

| 52

In use by at least some referenceablecompanies

25. Cycle counting

Definition: counting portions of the inventory each day to ensure bin and item‐

WMS Availability Assessmentinventory each day to ensure bin and item‐

level accuracy



In use by at least

| 53


26. Track product by lot #




In use by at least

| 54


27. Pick product by lot




In use by at least

| 55


28. Track serial numbers




In use by at least some referenceablecompanies

| 56

companies

29. Track country of origin




In use by at least

| 57


30. Improve storage density

D bl d t3 Under‐Utilized Storage

Double‐deep storage Systems…

Mobile storage rack

Push‐back rack

| 58

On‐Demand WMS: What does it cost?

Cost estimates…– Vendor #1

• Ongoing monthly cost: Averages $3,000‐$4,500 per month, but could be as much as $6,000.

• Implementation cost estimate: $20,000 ‐ $40,000– Vendor #2

• Ongoing monthly cost: Averages $1,700 – 2,500per month• Implementation cost estimate: $4,000 (editorial note: Commonwealth feels

this is a significant under‐estimate)– Vendor #3Vendor #3

• Ongoing monthly cost: $0• Implementation cost estimate: Under $100,000 for license and

implementation for a moderate‐complexity project

Hardware: The above prices do not include: Hardware: The above prices do not include:• Installation of wireless network in the DC• Handheld computers• Bar‐code printers

| 59

WMS: Keys to success

Don’t rush it!Allow 12 18 months for selection and implementation– Allow 12 – 18 months for selection and implementation

Evaluate all the options (even Tier 1!)

Document EVERYTHING about the current state– Al normal processes

– All exceptions

T t th hl Test thoroughly

Train

Assign ownership Assign ownership

Ensure visibility & reporting exist

Conduct an honest readiness assessment

| 60

18 Steps to Success

Strategy Solution Selection

Execution Management

WMS VendorDistribution WMS

V

WMS Vendor Selection

RFI: Determine Vendor Pool

Optimization

Detailed Discovery with Data Analysis

Implementation

Functional Alignment

is

Round 2: Scripted

Round 1: RFP (Written Bids)

Define Current State

Design Future Test

Build

io

pDemos

Round 3: Site Visits

gState

Project Future Savings

Test

Train

n Negotiation & Selection

Estimate Implementation Costs

Build Business Case

Convert

Go‐Live

| 61Optimize

In Summary…

Improved distribution efficiency IS within reach, providing a company is willing to make at least SOME investment incompany is willing to make at least SOME investment in processes or technology

Savvy companies who conduct a thorough evaluation of technology can often find that improvement is not as expensive as they thought

Don’t rush the process take the time required to design the Don t rush the process – take the time required to design the solution correctly the first time.

| 62

Thank You

20 Park Plaza, Suite 400 | Boston, Massachusetts 02116

(O) 617.948.2153 | (F) 617.507‐6112

www.commonwealth‐sca.com

Di t ib ti O ti i ti | T t ti O ti i ti | S l Ch i Pl iDistribution Optimization | Transportation Optimization | Supply Chain Planning

| 63

Documents

Improving Warehouse Productivity Without …€Service (SaaS) model has become a popul flar means of dlideploying WMS With the SaaSmodel, the software vendor hosts the WMS application