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Ramping Up Your Pick, Pack, and Ship for Peak Season Workflow
Presented by:John M. Hill, Principal and Board Member, ESYNC
Todd Bartlett, Senior Vice President, Fulfillment Services, ClientLogicRama Ramaswami, Editorial Director, Operations + Fulfillment Magazine
Live Event: August 3, 2004
Sponsored by:
Welcome, everyone.
This is Rama Ramaswami, editor of "Operations & Fulfillment" magazine. It is my pleasure to welcome you today to our Webinar, brought to you with the cooperation of ClientLogic.
The topic of seasonality is so vital to operations that it needs no explanation. For most direct-commerce companies, sales typically peak at certain times of the year—mostly during the holiday season, but also during the summer vacation period or in the fall, depending on the type of merchandise sold. To handle a sudden surge in volume requires much ingenuity on the warehousing and distribution side of the business. No matter howexperienced a company is, the process is always challenging, and there’s always something new and different that can be done to make it flow more smoothly. Today’s Webinar addresses the crucial problem of how to revamp your pick, pack, and ship processes for peak season workflow. We have two distinguished industry experts discussing this important subject for you.
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Introductions
HousekeepingIntroductions
Rama Ramaswami, Operations & FulfillmentJohn M. Hill, ESYNCTodd Bartlett, ClientLogic
As moderator, I will introduce the speakers and give you a quick overview of the Webinar format. We will then go into presentations. You may submit questions throughout the presentation and we will answer as many as possible during the Q&A section at the end. On the left-hand side of your screen, you’ll see an “Ask a Question”button. Simply click on the button, type in your question, and hit “Submit.”Also, notice the drop-down menu at the lower left titled, “Print Documents and View Links.” This gives you access to a copy of the presentation and the links mentioned. At the end of the Webcast, you’re welcome to click on the Discussion Forum link as we will continue our Q&A on the O+F Website.We will be recording this Webinar and it will be available on the O+F Website in the next few days. So if you or your colleagues were not able to join us, you can access the information later on.“Operations & Fulfillment”—which we hope you subscribe to—serves the needs of executives involved in direct-to-customer order fulfillment. We are the only integrated source of information for this marketplace, and we reach readers and vendors both in the United States and overseas. We invite you to visit the Resources section on our Web site.ClientLogic is a global infrastructure service company with operations in North America, Europe, and Asia. It offers a vast array of customer service, fulfillment, and marketing services to retail, manufacturing, technology, insurance, and other companies worldwide. I have been the editor of “Operations & Fulfillment” since 1998 and a business journalist for 15 years, covering a variety of financial, technical, and economic issues.Our first panelist is John Hill. John is something of an international legend in the warehousing and material handling business, in which he has more than 30 years of experience. He is the principal of ESYNC, a supply chain and logistics consultancy based in Toledo, Ohio. John is a co-founder of AIM, the Automatic Identification Manufacturers Trade Association, and is on the board of governors of the Material Handling Industry of America. He is a world-renowned authority on RFID. We are delighted to have him with us.After John we will hear from Todd Bartlett, senior vice president of fulfillment operations at ClientLogic. Todd directs the three group leaders of the fulfillment operation, which includes supply chain management, response processing, and publication services. At ClientLogic, Todd led a management initiative to improve quality, productivity, and documentation at every level of the company. At his former company, SHPS, where he was vice president of operations for five years, Todd managed the largest project in the firm’s history and was responsible for turning around a losing acquisition.Over to you, John . . .
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John M. HillPrincipal
Optimizing Infrastructure
Thank you Rama. Allow me to add ESYNC’s welcome to our Webcast. I look forward to sharing my thoughts with attendees and appreciate the time each of you has taken to join us. My assumption is that you are looking for ways to apply methods, technology and systems to the challenge of improving and sustaining operating performance in spite of swings in order volume and case and item throughput requirements. I am not a catalog merchandiser - nor a high volume direct to consumer supplier. On the other hand, over the past 20 years, I have walked the warehouses and distribution centers of many in your industry. And although there are exceptions to my general observations, I am frequently astounded by the number of unaddressed opportunities that could be exploited through a return to fundamentals and the deployment of proven not space-age technology and systems.How and in what sequence you approach your own opportunities will depend upon an objective analysis of strengths and weaknesses in each functional area of your operations – and a solid understanding of the options available for balancing physical and systems infrastructure to meet fluctuations in workload.Let’s get started…
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The Goal
Volume-independent, Error-free Fulfillment,
Delivery
ANDVISIBILITY
What’s warehousing all about? In a nutshell, in tandem with transportation, warehousing contributes to supply chain performance (or a lack thereof) by providing the infrastructure and tools that enable companies to store, pick and deliver the right products in the right condition to the right place at the right time.
This is NOT a new concept, but how well does management recognize that the manner in which a company leverages its warehousing infrastructure and tools can be a source of significant competitive advantage and differentiation?
Further, a solid warehousing infrastructure coupled with contemporary technology and systems provides a level of activity visibility that permits customer service to proactively execute its mission.
This TOO is NOT a new concept, nor for that matter is the idea that------
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SYNCHRONOUS MATERIAL & DATA FLOW
SYNCHRONOUS MATERIAL & DATA FLOW
+
The Strategy
--- a key component of world-class warehousing is the ability to match material and data flow synchronously. That is, every time a product moves, the information associated with its characteristics and location should be updated.
NO, the concepts I’ve mentioned are not new. We talked about each of them 30 years ago. Our problem back then was that we did not have the necessary tools to make them a reality.
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Automatic ID & Data Capture--- right material
Supply Chain Systems--- right time
People--- all of the above
Material Handling & Controls--- right condition
The Tools Are Here
Well, we certainly have those tools today!
The challenge for most companies and particularly those whose seasonal order volumes vary dramatically or for those impacted by promotional initiatives with periodically sharp increases in volume is --------
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7© 2004 ESYNC, All rights reserved
The Challenge
Selecting, Integrating, Optimizing & Managing The Right Combination of
Facilities, Processes, Systems & People to Meet Customer Service Goals
Without Breaking The Bank!
determining the right combination of tools, systems and people to accommodate the peaks and service level targets while containing associated costs.
I continue to see an inordinate number of companies that, excited by new tools, overlook the importance of taking a step back and assessing their options for improvement before running off to buy “a silver bullet” ––– and, by the way there is NO silver bullet.
What I urge you to consider is a more measured approach to performance improvement that - - - -
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Caveat
The Best Technology and Systems Installed in Operations With
Ill-conceived Processes & Material Flow Will Only Enable Users to Do Things
Badly - - - Faster!
----- starts with cleaning up your infrastructure and recognizes that the best technology and systems installed in operations with ill-conceived processes & material flow will only enable users to do things badly - - - faster!
The process I recommend ----
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Where Do You Start?
Profile Current Operations Develop KPI’s & Improvement TargetsDefine Trading Partner NeedsFine-tune Processes/infrastructureAssess MH, AIDC & System OptionsMatch Costs Vs. Potential BenefitsSecure Investment ApprovalSelect Technology & Systems
- follows a timeworn, but invaluable roadmap that begins with establishing an accurate profile of where you are today, takes a hard look at the basics, and ends with the application of tools and technology to fine-tune, streamline and optimize your operations. As you profile operations, take a look at historical receipt and sales order transaction data as well as labor hours to get a better handle on your throughput rates and costs by function.
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Profile Current Operations
MATERIALMATERIAL
DATADATA
Proceeding with your analysis, take the time to carefully map material and data flow -- and, then, compare them. Often, there is a lack of correlation between the two --material goes one way and the information associated with it sits there or goes another.
This disparity between material & data flow creates time lags that impact the accuracy of inventory and affect space and labor utilization, order fulfillment and shipping efficiency.
Disparity analysis highlights opportunities for layout modifications, process improvement and technology deployment that can contribute to cost reduction and avoidance.
Moving ahead with your analysis - - - -
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Profile Performance
ORDER PICKING PRODUCTIVITYORDER PICKING PRODUCTIVITY
January Through NovemberLines
10
20
30
40
50
60
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
LaborLabor
OrdersOrders
Lines/PersonLines/Person
Orders
and using the sales order and labor hour data that I mentioned amoment ago, take the time to develop activity profiles for each functional area in your operations.
Here, for example, is the real-world result of a profiling exercise that shows an average pick rate per person per hour over an 11-month period of about 32 or 33. The problem was that before theanalysis, management estimated the rate to be about 80 lines perperson per hour. The culprits were a poorly configured forward pick area and congestion and -- the solution was NOT bar coding or a WMS. NO, the solution was re-layout and a $15,000 expansion of the forward pick area coupled with velocity-based inventory slotting. Given these changes, pick rates climbed to better than 80 lines per person per hour within a month.
The lesson is not rocket science. Don’t underestimate the potential of getting back to basics!
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KPI’s
Profile Performance
Order Fill RatesOrder Cycle TimesLines & Orders/HourErrorsInventory AccuracyInventory VisibilityDamageCost/OrderCost as % of Sales
Further, the data you collect can be used to establish key performance indicators or KPI’s. These, coupled with analysis of fill rates, cycle times and the other measures shown on this slide will enable you to better quantify your performance and establish targets for improvement.
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Polling Question
Are You Currently Using Key Performance Indicators (KPIs) to Establish Targets & Monitor
Performance?
Yes No
Are You Currently Using Key Performance Indicators (KPIs) to Establish Targets & Monitor Performance?
Yes No
NOTE: See next slide’s notes for poll results.
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Fulfillment, Inventory, Warehouse
Orders per Hour Orders Picked/PackedTotal Whse Labor Hrs
Total Warehouse CostTotal Orders Shipped
Lines per Hour
Items per Hour
Cost per Order
Cost % of Sales
Ord/Hr
$/Order
% %
$
$
$
$
$
Ord/Hr
Lines/Hr
Items/HrItems/Hr
Lines/HrLines Picked/PackedTotal Whse Labor Hrs
Items Picked/PackedTotal Whse Labor Hrs
Total Warehouse CostTotal Revenue
$/Order
MEASUREMEASURE CALCULATIONCALCULATION TODAYTODAY FUTUREFUTURE VALUEVALUE
On-Time Delivery Orders On-TimeTotal Orders Shipped % % $
Orders Filled CompleteTotal Orders Shipped
Order Fill Rate % % $
Error-Free OrdersTotal Orders Shipped
Order Accuracy % % $
Error-Free LinesTotal Lines Shipped
Line Accuracy % % $
Actual Ship Date MinusCustomer Order DateOrder Cycle Time Hrs Hrs $
Perfect DeliveriesTotal Orders Shipped
Perfect Order Completion % % $
MEASURE CALCULATION TODAY FUTURE VALUE
Inventory Accuracy Actual Qty per SKU System Reported Qty % % $
Total Damage $$$Inventory ValueDamaged Inventory % % $
Avg. Occupied Sq. Ft. Total Storage CapacityStorage Utilization % % $
Total Dock to Stock HrsTotal ReceiptsDock to Stock Time Hrs Hrs $
Receipt Entry Time -Physical Receipt TimeInventory Visibility Hrs Hrs $
MEASURE CALCULATION TODAY FUTURE VALUE
Days On Hand Days Days $Avg. Month Inventory $Avg. Daily Sales/Month
Speaking of KPI’s, suppliers often quote potential savings with new technology of20-40% from improved labor utilization, 30% in inventory cost reductions, and so on. Management, however, is unlikely to accept these generalizations as a basis for moving forward. What’s required? A detailed analysis of potential that directly links improvement opportunities and dollars in a format that can be readily understood. Such an analysis not only helps to tighten your value proposition, but also enables you to establish performance targets against which the success of your program can be measured.
The templates shown here provide a mechanism for contrasting current performance against that you would expect to achieve with improved processes, layout, technology or systems. After completely the middle columns, develop realistic targets or goals for the FUTURE column for each of the metrics and then put a value on the improved performance by preliminarily quantifying associated cost reduction opportunities.
Rama, how are we doing on the question?
Rama - Yes John, so far, 66% of our audience has responded and among them roughly 52% say yes, they are using Key Performance Indicators and roughly 47% are not.
John – Sounds to me like there is an opportunity here.
Moving to the next slide, there’s another fundamental that cannot be overlooked --------
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Define Trading Partner Needs
PackagingPalletizing or ContainerizationOther Value-Added ProcessingProduct IdentificationShipment IdentificationTransportation PreferencesOrder Cycle TimesShipment NotificationException Reporting
What are your trading partners asking for?
How will the changes you are considering help you to meet these requirements? Or, alternatively, what changes will be required to meet these demands?
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Opportunities
0%
10%
20%
30%
40%
50%
60%
Traveling Searching Picking Other
Operator Time
55%55% 15%15% 10% 20%20%
While doing your assessment, take a close look at current staff deployment and related costs. How much of your operating budget can be attributed to the tasks shown on this slide?
Although the percentages shown are averages based upon surveys conducted by Georgia Tech, I find them to be reasonably representative. How do your costs compare? If they are dramatically different, perhaps they point to additional opportunities for performance improvement --- or, alternatively, celebration!
And, then --------
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Opportunities
0%
10%
20%
30%
40%
50%
60%
Receiving Storage Picking Shipping
15%15% 15%15% 15%55%55%
OperatingCosts
How about the amount of time your team spends on these tasks? If your numbers mirror or exceed those shown here, you should take the time to examine the reasons. If for example, you were able to cut pick travel and search times, more time would be available for your staff to focus on other warehousing functions -- in other words, receiving, storage, crossdocking, value-added processing, packing and shipping.
Indeed, there may be more time available to handle an increase in volume without a corresponding increase in labor.
Now, shifting gears - - - -
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Fine-tune Processes
As I've already suggested, technology deployment without a hard look at facility layout, handling systems and methods will almost certainly produce sub-optimal performance. Indeed, minor changes to layout, material flow, storage and picking procedures will often produce benefits well before technology deployment.
Next, could enhancements to your existing information system contribute to improved utilization of space, people and equipment through real-time task interleaving, random storage, automatic replenishment, location consolidation, cycle counting, and so on? If not, should you be looking at a WMS?
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ISSUE SOLUTIONS
Fine-tune Infrastructure
Travel between locations
Location searching
Pick tour set-up
Case & item picking
Checking & verifying
Counting
Replenishment
Congestion
Operator idle time
-- Bring location to operator
- Use WMS, lights, RFID or voice
- Sequence via WMS
- Evaluate storage mode/pick options
- Bar code, RFID, voice & RFDC
- Prepackage or weigh
- Dynamic via WMS
- Spread fast movers
- WMS task management
Now that you have challenges and opportunities, doesn’t it make sense to review them with your workforce to obtain their insights on changes that could be made to methods and procedures to improve performance?
For example, if travel is an issue, is it possible that you could make layout changes that would reduce travel time orredeploy inventory to minimize the amount of travel required to store or pick the high velocity items that move through your facility? A WMS certainly can help here. As it can with a location map that virtually eliminates inventory searches and streamlines pick tour set-up.
In addition to gaining valuable insights from the people actually doing the work, the approach will help to build morale and employee ownership of your program.And now, to some of the areas highlighted in the promotional materials for our webcast.
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Considerations
RFDC InfrastructureAIDC (Bar Code, Voice)WMS Task Management
Real-time controlImproved decision-makingUSING WIRELESS
Scalable infrastructure & systemsOutsourcing
Ability to gear up & down while managing costs
SEASONAL DEMANDS
Understanding optionsWorkforce stability
Maximize return on invested capitalMaintain flexibility
BALANCING LABOR & AUTOMATION
REQUIREMENTSPOTENTIAL BENEFITSISSUE
ASN’s, Carrier Scheduling, Scheduling thru WMS Task Management, Pallet/Case License Plates, Location Map
Improved throughputCross-dockingReduced labor costs
PUTAWAY CYCLE TIME
Impossible without WMSSlotting rules critical
Improved space useLower cost/items storedRANDOM PUTAWAY
The use of random storage algorithms coupled with activity-based product slotting can significantly contribute to improved space utilization and pick tour streamlining --- but you can’t do it without a warehouse management system or WMS.
Reduced putaway and, indeed, crossdock cycle time differentiates world class operations. The requirements highlighted here from advanced ship notices and carrier scheduling to WMS-driven resource management should be examined for the potential they hold for your operations.
The approach Todd and I are covering today provides a roadmap that will enable you to quantify the trade-offs between the application of technology and piling on more labor to meet peak seasonal demands. Key considerations here are workforce competence and stability. Depending upon the complexity of requirements, you may find that the most economic solution to handling peaks is outsourcing to an established third-party.
Radio frequency data communications or RFDC is the wireless enabler for real-time data collection with bar code and voice recognition terminals. With a WMS, an RFDC network provides the mechanism for issuing tasks and monitoring execution as it occurs within the warehouse. Have youconsidered one?
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Considerations
LayoutProcessVerification tools
Reduced errorsImproved throughput
STREAMLINING PACKING & SHIPPING
Understand the optionsMatch picking techniques to order profiles
Improved throughput Reduced labor costsPICKING METHODS
REQUIREMENTSPOTENTIAL BENEFITSISSUE
Training, AIDC, WMS, Performance Measurement & Dashboards
Picking error eliminationReduced returnsASSURING QUALITY
Out of mainstreamProactive management
Reduced disruptionAggregated costs by client
VALUE-ADDED PROCESSING
Cross-trainPerformance monitoringRecognition
Improved accuracy & throughputMinimal surprises
TRAINING PICKERS
The key to efficient picking is matching the method to order volume and content. Pallet picking is relatively straightforward, but case and item picking, particularly in high volume environments, can be dicey. In most operations that I’ve observed, a combination of techniques is employed. We’ll address them shortly.
Cross-training the workforce is fundamental to balancing throughput and labor costs. Few can afford to run any warehouse today where workers are dedicated to specific functions. At peak, everyone may be picking and a week or month later, they may be processing returns. Todd will talk to training in his portion of our session, but, beyond continuous training, two keys that I’ve found to improving performance include, on the one hand, involvement of the core workforce in assessment of methods and processes and, on the other, regular recognition of their contributions.
Value-added processing is perhaps the toughest area to handle in most warehouses. Here I’m talking about non-mainstream special packaging, labeling, and other activities that are customer or promotional campaign-driven. Why? Because, even with the best layout, processes and technology, performance quality is very dependent upon workforce conscientiousness. The keys? Keep the processes simple, minimize operator multi-tasking and hold your best supervisors accountable for performance. Here again, you may also want to consider outsourcing.
Finally, when properly implemented, the physical and systems infrastructure alternatives we are suggesting you consider can be leveraged to streamline packing and shipping task execution while improving the overall quality of warehouse performance and output.
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Metrics & EnablersWMSWMS
••Total Logistics CostsTotal RevenueCOST % OF SALESCOST % OF SALES
••Total Logistics CostsTotal OrdersCOST PER ORDERCOST PER ORDER
••Lines Picked & PackedTotal Labor HoursLINES / HOURLINES / HOUR
••Orders Picked & PackedTotal Labor HoursORDERS / HOURORDERS / HOUR
•Receipt Data Entry -Time of Physical ReceiptVISIBILITYVISIBILITY
••Average Dock-To-StockHours per ReceiptDOCKDOCK--TOTO--STOCKSTOCK
••Avg. Inventory Sq. Ft.Storage Capacity Sq. Ft.STORAGE USAGESTORAGE USAGE
••Total Damage $Total Inventory $DAMAGEDAMAGE
••Ship Date - (minus)Customer Order DateORDER CYCLE TIMEORDER CYCLE TIME
••Error-Free LinesTotal Lines ShippedLINE ACCURACYLINE ACCURACY
••Error-Free OrdersTotal Orders Shipped
••Orders Filled CompleteTotal Orders ShippedORDER FILL RATEORDER FILL RATE
••Orders On-TimeTotal Orders ShippedONON--TIME DELIVERYTIME DELIVERY
••••••
••
AIDCAIDCENABLERS
•
MHMH
•
••
•••••••••••••
ORDER ACCURACYORDER ACCURACY
ProcessProcessMETRICSMETRICS
We’ve talked about a number of challenges to and opportunities for optimizing performance. Assuming that you have used KPI’sto target the opportunities, the next job is to identify the process improvements, technologies and systems that will enable you to meet them. Then comes the homework needed to scope a program and establish probable costs. Here, you’ll need to characterize functional performance requirements and then talk with suppliers, consultants and / or current users to develop preliminary estimates.
Note that this table and others I’ve shown today are only templates. Obviously, you will have to create your own based upon the nature of your operations.
Let’s quickly take a look at a few more that may be helpful to assessment of your options.
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Typical Performance Observed Range
1501501001008080Lines Picked/ Total HrsLines Picked/ Total HrsSystem AssistedSystem Assisted909075756060Lines Picked/ Total HrsLines Picked/ Total HrsOperator ControlledOperator Controlled
150150120120100100Lines Picked/ Total HrsLines Picked/ Total HrsPick to LightPick to Light
10010070704040Lines Picked/ Total Hrs Lines Picked/ Total Hrs Paper pick to tote from binsPaper pick to tote from bins
12012080806060Lines Picked/ Total HrsLines Picked/ Total HrsPaper pick to tote from flow rackPaper pick to tote from flow rack
99.9%99.9%99.5%99.5%95%95%Errorless Orders / TotalErrorless Orders / TotalOrder AccuracyOrder Accuracy
2 Hrs2 Hrs8 Hrs8 Hrs24 Hrs24 HrsAvg. DTS Hrs/ReceiptAvg. DTS Hrs/ReceiptDock to StockDock to Stock
10 Min10 Min2 Hrs2 Hrs16 Hrs16 HrsData Entry Data Entry -- Actual Actual Receipt VisibilityReceipt Visibility
200200150150120120Lines Picked/ Total HrsLines Picked/ Total HrsSystem ControlledSystem Controlled
HighMedLowCALCULATIONMETRICINBOUND
OUTBOUND
Carousel
Broken Case Pick Rates
Here, for example, are some statistics that we at ESYNC have collected from a number of warehouses and distribution centers around the country. On the left, we have a variety of performance indicators and, on the right, observed performance. Can you imagine, for example, the cost of a 95% shipped order accuracy rate? Or the cost of holding inbound materials on the dock for 16 to 24-hours before they are available for order filling? Where do you stand?
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Typical Performance Observed Range
10010060604040Lines Picked / Total HrsLines Picked / Total HrsRF Pick to Tote: BinsRF Pick to Tote: Bins
12512580806060RF Pick to Tote: Flow RackRF Pick to Tote: Flow Rack
10010080807070Lines Picked / Total HrsLines Picked / Total HrsVoice Pick to Tote: Flow RackVoice Pick to Tote: Flow Rack
909060605050Voice Pick to Tote: BinsVoice Pick to Tote: Bins
98%98%85%85%70%70%Complete / Total OrdersComplete / Total OrdersOrder FillOrder Fill
.06%.06%1.5%1.5%30%30%
99.8%99.8%95%95%85%85%Line FillLine Fill
250250200200150150System ControlledSystem Controlled
Lines Picked / Total HrsLines Picked / Total Hrs
Lines Picked / Total HrsLines Picked / Total Hrs
Lines Picked / Total HrsLines Picked / Total Hrs
Actual performance will vary as a function ofproducts handled, layout, inventory slotting and tools employed.
Discrepancies / Total CountDiscrepancies / Total Count
HighMedLowCALCULATIONMETRIC
Lines Picked / Total HrsLines Picked / Total Hrs
Cycle Count Discrepancy RateCycle Count Discrepancy Rate
Mini-Load Automated Storage & Retrieval System
Other
OUTBOUND
And, here are some more statistics. The low rates shown for manual RF Pick to Tote are in operations that require that the bar code on each item picked be scanned. The higher rates are achieved in operations where one item may be scanned for verification prior to picking multiple items from the same slot. The reward for the latter? Higher throughput. The risk? Item count accuracy. YOU have to evaluate the trade-off.
Moving to the bottom of the table, can you imagine a warehouse where inventory accuracy is at 70%? Good Lord, even my pantry is in better shape! Location management and the discipline provided by a WMS can help here.
Line and order fill rates are a primary function of inventory availability - something over which most warehouse managers have little control. On the other hand, you can control shortages by cleaning up the haphazard inventory slotting and location management that lead to lengthy search times and lost stock.
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Storage Mode Selection
STORAGE MODE UNIT VOLUME DAYS SUPPLY
Bulk > 40 cubic ft/day 2 to 3
Single Deep Pallet Rack > 20 cubic ft/day 2 to 3
Double Flow Rack 10 - 20 cubic ft/day 1 to 10
Flow Rack 1 - 10 cubic ft/day 1 to 10
Bins .5 - 1 cubic ft /day ∫ Bin Size/Volume
Half-Bins <.5 cubic ft/day ∫ Bin Size/Volume
Shifting gears, here are some rules of thumb for storage media selection based upon item volumes and the number of days supply to be deployed in your warehouse or distribution center. Similar tables covering such automated alternatives as mini-load storage & retrieval systems, carousels, A-Frames andmechanical dispensers can be obtained from material handling equipment suppliers, many of whom belong to the Material Handling Industry of America. You may want to visit their web site: www.mhia.org.
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26 C = Carton Picking T = Tote Picking W = Wave Picking
Case/item Storage ModesSystem
Attribute Measure Bin
ShelvingStorage Drawers
HorizontalCarousel
VerticalCarousel
Miniload AS/RS
AutomaticDispensing
SystemCost
Cost Per Cubic Foot Cost Per
Cubic Foot $10-$30 $40 - $65 $40 - $70 $65 - $100 $38 - $50
Floor Space Rqmts
Cubic Ft. /Square Ft Cubic Ft. /Square Ft 1.0-1.2 1.8 - 2.5 0.8 - 1.25 5.0 - 6.0 4.0 - 5.0
Human Factors
Ease ofRetrieval Ease of
Retrieval Average Good Average Excellent Excellent Good
MaintenanceRqmts Low Low Medium Medium High High
Item Security Average Excellent Medium Medium High High
Flexibility Configura-bility
Configura-bility High High Medium Low Low Low
Pick RateLines/ Person/Hour/
Lines/ Person/Hour/
C:25-125T:100-350W:300-500
C: 50 - 250 C: 50 - 300 C: 25-125 C:500-1000
$400-$800/Dispenser
Varies
GravityFlowrack
$3 - $5
0.7 - 0.85
Average
Low
Average
High
C:25-125T:100-350W:300-500
C:25-125T:100-350W:300-500
This table, from Georgia Tech, compares various media used for case and item storage in terms of cost, space requirements, human factors or ergonomics, maintainability, item security, flexibility or configurabilityand pick throughput support. Note that there are some variations between the supported pick rates shown here and those that I mentioned we have observed. Naturally, performance will vary depending upon your environment, order profiles and workforce.
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Picking Approach Picking Rates Initial Cost
Pallet Jack 100 - 250 Cases/Hour $2k to $12k/vehicle
Order Selector 50 - 100 $30k/vehicle
Pick To Pwrd Roller 125 - 250 $200 - 275/ft. + $5k/divert
Pick To Belt 250 - 400 $180 - 250/ft + $5k/divert
End-of-Aisle AS/RS 200 - 300 $300k - $450k/aisle
Auto Extract 500 - 800 $200k/unit = $130/lane
Tier Picking 1,000 - 1,500 $150k/unit
Case Pick Equipment
This table outlines typical rates achieved with various types of case picking equipment as well as relative costs. Additional information can be obtained from the industry groups listed on the MHIA web site that I mentioned earlier.
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28 * Require WMS or real-time “equivalent”
Item Pick AlternativesMethod Features Benefits ConstraintsOrder Pick Operator picks single order
at a time Single operator accountability Typically slower Error-prone if paper-driven
Pick & Pass Zone operator picks materials for
order to tote or carton & then passes to next zone
Reduced operator travel time Cumbersome and error-prone when paper-driven
Batch Pick Operator picks multiple orders at a time
Single visit to each storage location for multiple orders
Requires downstream order sortation
Cluster Pick Operator picks multiple orders at a time
Single visit to each storage location for multiple orders
# Orders defined by line item size & pick cart capacity
Tools* Features Benefits Constraints
Bar CodeOperator uses RF-linked scanner to verify location and item before
picking
Positive location & item identification
Scanning may slow throughput – Quantity picked accuracy may
vary
Voice Operator directed to location, item & quantity thru headset Hands-free, paperless
Quantity picked accuracy may vary with operator training &
performance monitoring
Pick to LightStorage location displays
illuminate to indicate items & quantities to be picked
Hands-free, paperless Positive location verification
Accuracy may vary with operator training & performance
monitoring
Put to Light Used to sort batch picked items to shipping containers
Depending upon volume, a lower cost alternative to automated
sorting
Accuracy may vary with operator training & performance
monitoring
Finally, let’s take a look at some of the primary item picking alternatives. The top half of the table outlines methods and the bottom half describes tools used to facilitate operator pick task execution. Although slide dimensions preclude a full discussionof each, I’ve highlighted primary features, a few potential benefits and some of the constraints. Note that each of the methods can be employed in paper-driven operations. Performance and throughput, however, can be enhanced through deployment of wireless bar code, voice or pick-to-light subsystems. The latter notwithstanding, unless each picked item is scanned, safeguards must be put in place to verify item and quantity accuracy. In most cases, pack station or shipment staging area checking is used –either on a 100% basis or, alternatively, by sampling picker output based upon past performance, time on the job, or both. I’m surethat many of you may have questions on the methods and tools -and I’ll be delighted to address them during our Q & A session at the end of the program.
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Polling Question
Which picking methods are you currently employing?
Single orderPick & PassBatchCluster
At this point we would like to know which picking methods you are using and if we could poll the audience…
Which picking methods are you currently employing?
Single orderPick & PassBatchCluster
NOTE: See next slide’s notes for poll results.
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Valuation Process
Probable CostAnnual Savings
2.7%3.1%Total Warehouse Costs / Total RevenueCost % of Sales
$3.62$4.26Total Warehouse Costs / Total OrdersCost per Order
54/Hr40/HrTotal Lines Picked /Total Whse Labor HrsLines per Hour
20/Hr15/HrOrders Picked & Packed /Total Whse Labor HrsOrders per Hour
85%78%Avg. Inventory Sq. Ft. /Storage Capacity Sq. Ft.Storage Utilization
42 Days50 DaysAvg. Inventory Value ($) /Average Daily Sales $Days on Hand
.50%.75%Total Damage $$$ / Total Inventory ValueDamaged Inventory
99%96%Actual Quantity by SKU /Reported Qty by SKUInventory Accuracy
8 Hrs12 HrsActual Ship Date (minus)Customer Order DateOrder Cycle Time
98%92%Errorless Orders /Total Orders ShippedOrder Accuracy
95%87%Total Orders On Time /Total Orders ShippedOn-Time Delivery
TargetCurrentCalculation
$$
Measure Value
Coming full circle, once you have identified your opportunities for improvement and preliminarily quantified the potential, it’s time to revisit the valuation process with a final collaborative assessment of those areas where enhancements are likely to provide the greatest return on investment. Here you’ll be matching potential against projected costs to determine feasibility.
But before we go further, Rama, could we take a look at the results of the poll?
Rama – Yes, John, about 71% of the viewers have responded so far and of that about 37% use a Single Order Process, roughly 18% use the Pick and Pass, about 36% use Batch and 8% use a Cluster method.
John – Those are interesting statistacs that I hope we will have time to talk about at the end of the Webcast.
Moving back to the slide I was on, it shows a matrix, how the matrix was calculated and displays current performance, and the target performance. It’s time now to place a value on the impact of improved performance upon customer retention, sales and lost sales, product costs, logistics costs and so on by discussing them with beneficiaries throughout your company.
For example, improvements in order accuracy, on-time delivery and order cycle time will have a direct impact upon customer satisfaction and, one would think, sales. Ask sales for their valuation of these improvements. What are they worth? Quantify their answers. Could a 10% improvement in warehouse performance increase sales or reduce lost orders? By how much? What’s the value? Insist upon hard numbers and use them to complete the right hand column in this template.
In addition to providing you with outside input for calibration of the potential value of changes, the process is a very useful mechanism for building support for the initiative throughout your company -- support that should prove to be invaluable when the investment proposal is presented as well as during program roll-out.
Then, total the current costs of warehouse operation and match this total against the reduced costs anticipated with improved performance. The difference between the two, in effect, provides you with a preliminary justification for moving forward. What’s the next step?
If the preliminary numbers make sense, seek management approval and funding to proceed to more detailed assessment of the opportunities and, as appropriate, funding to move forward.
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As You Move Ahead
Random infusions of technology will merely leave your enterprise in greater disarray.Take a measured approach to opportunity analysis.Identify, value & prioritize opportunities.Simplify & streamline layout & processes.Prize flexibility & scalability. Shun customization.The measure of an infrastructure change, technology solution or system is the ease with which it can be adapted to meet new business requirements.Establish realistic expectations for performance.
As you move ahead, keep the points on this slide in mind.
The bottom line? Success with infrastructure or process change is rarely a fortuitous accident. In warehousing, it begins with mastery of the fundamentals – and– given that, then upon solid preparation, rigorous attention to detail, a clear vision of where you are headed and a corporate-wide commitment that builds organizational ownership from the time of opportunity identification to and through deployment, acceptance and beneficial operation. I wish you well as you embark on the journey.
And now, Todd, I’ll turn it over to you.
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Todd Bartlett Senior Vice President of Fulfillment Operations
I’d like to thank Operations and Fulfillment for inviting me to be a part of this presentation and extend a warm welcome to all the participants fromClientLogic
I have fifteen years experience in the logistics / fulfillment arena - 5 years with UPS, 2 years with Leggett and Platt (maker of component parts for the furniture industry, Three years with a tier one supplier to Ford Motor Company remanufacturing and distributing parts, Five years with SHPS, Inc conducting Business Process Outsourcing (including fulfillment) primarily in the healthcare vertical market. Currently I am with ClientLogic as the Senior Vice President of Operations for the Fulfillment division.
This portion of the presentation is more from a practitioners point of view and will assist you in building your checklist to assure your readiness for peak season volume.
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Polling Question
Have you developed a detailed written plan to execute your peak season requirements?
Yes No
Have you developed a detailed written plan to execute your peak season requirements?
NOTE: See slide #35 for poll results.
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Process ControlProcess Control
Systems ControlSystems Control
People ControlPeople
Control
Increased ThroughputIncreased Throughput
Pillars for Success
Key Elements To Ensure Success
In order to maximize your throughput you have to approach peak season requirements utilizing this strategy and in this order:
First, Systems control – Have you engineered the system to be all it can be?
Second, Process Control - Have you designed processes that compliment the system and its capabilities?
Third, People Controls – Do you have individual functional performance measures and accountability. Do your people know how to successfully execute your processes with precision?
The following presentation will reinforce the need for this approach. Following this approach will insure your readiness for peak season.
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Systems, Process & People Controls
Know your systems infrastructureCapabilityThroughputCycle times
OrdersData in, out, archive
Capability, throughput, and cycle times are critical elements you need to understand to insure your systems infrastructure is ready for peak season volumes.
Capability : How many orders can your system process without having any hiccups? If your system provides feeds to other systems, with increased transactions will additional time be needed to execute, Quality Assure, and transmit the data?
Throughput: Are orders processed in real time or batch mode, if real time, what is the utilization of the processing engine for non-peak and peak season volumes? At what point does the volume of incoming orders begin to affect the systems ability to process them?
If batch, will the increased size of orders in a batch impede the systems ability to report on the information being processed?
Cycle Times - How long are your cycle times? For example, if you have 5,000 orders and the cycle time to process the batch is 1 hour, if you have 10,000 orders is the cycle time 2 hours? At what point does the amount of orders received begin to intrude on the systems ability to report against the transactions it is processing?
Are you receiving feeds into your system from external sources, or creating and sending feeds out? How will the increased volume affect these feeds?
Archive – can you archive information off your system to free up disk space to increase throughput and cycle times?
Rama – Todd, we have the results in from the poll and of the 67% of our audience that have responded so far, 42% have developed a detailed written plan to execute peak season requirements and roughly 57% have not.
Todd – all right, thanks.
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Systems, Process & People Controls
Know your processes as they relate to your infrastructure
Functional areas
Identify bottlenecks
Cycle time for each functional area
Total time to execute process
Know your processes as they relate to your infrastructure
How many functional areas touch your process? For example, receiving, warehousing, picking, packing, and shipping. Because of the distinct differences in these areas, understanding each functional area and how it relates to the next is critical.
What bottlenecks, besides your boss, slow down your processes. Understanding each functional area will help identify bottlenecks and in most cases provide some solutions.
We all know each functional area requires different amounts of time to complete. Understand how long it takes one order to cycle through each functional area. Rolling all the functional areas cycle times together will provide a large percentage of the total time it takes to execute the entire process.
From the time the system receives the order until it is ship confirmed is the total time it takes to execute the process. In my experience, very few know the total time it takes to perform their process. For example, most understand to some degree human time but few take into consideration systems and equipment time.
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Systems, Process & People Controls
People controls within your processes
Time studies
Streamline paperwork
People Controls within your process
Conduct time studies for each function, the individual performing it, and the entire process that has to be completed. Each piece must be studied, for example, if your processing a continuity order, the person receiving the order is starting the process, the system cycles the order information and payment, creates an order to pick, pack and ship the item, sends it to the warehouse, and each function has to be completed all the way through quality assurance to ship confirmation. Everything mentioned is part of the entire process.
Improve your process by streamlining your paperwork. Paperwork can be cumbersome, time consuming, and unnecessary. What elements do you really need? Useless paperwork is expensive. For example, lettershopactivities require printed orders, during peak times it may make sense to go to an electronic format that eliminates the need to print the orders. Another example, and one of my personal favorites, is reporting. Are you using the reports your creating?
Are the folks gathering the information for the reports able to deposit it centrally into the system so results can be monitored and accurately reported in a timely manner?
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Training Prep and Execution5 Steps of Training
1. Explain the task to the associate2. Demonstrate the task to the associate3. Have the associate explain the task
to you4. Have the associate perform the task5. Review the process
Expansion / contraction for order velocity
Systems, Process & People Controls
Follow the five effective steps of training when documenting your training:
1) Explain the task to the associates
2) Demonstrate the task to the associate
3) Have the associate explain the task
4) Have the associate perform the task
5) Review
Training on the front-end insures the associate knows what is expected of them. New associates should understand the correlation between the systems, processes, and the performance metrics they are required to meet. Knowing what happens up stream and downstream from their particular function builds a sense of ownership.
During peak periods, order velocity fluctuates. Expanding and contracting your staffing is the difference between a great peak season and, unfortunately, a lousy one. The toughest elements to maintain during high volume periods are productivity and quality. One without the other is unacceptable. Each areas productivity and quality should be measured and reported back to the staff daily. Good, bad or indifferent, everyone needs to have skin in the game, associates should know where they stand. Having skin in the game promotes responsibility and accountability. Great productivity with poor quality means you hit 50% of your goal, where I went to school, 50% is failing. Keep in mind that quality is just as important as productivity. It is imperative for Quality Assurance functions to be performed by full- time associates who are both responsible and accountable. Build your plan to expand and contract around quality assurance and your productivity metrics.
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Polling Question
How do you fill additional staffing needs?
Traditional temporary agencySeasonal associatesPart-time associates
POLLING QUESTION:
How do you fill additional staffing needs?Traditional temporary agencySeasonal AssociatesPart-time associates
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Successful Seasonal Throughput Successful Seasonal Throughput
Systems ControlSystems Control
Issue:Insufficient infrastructure
Simulate order complexity and velocity
Process ControlProcess Control
Issue:Process flow execution
Design flows for seasonal peak
People ControlPeople Control
Issue:# people to execute
Expand / contract around Q/A
Putting It All Together
Putting it all togetherAs I mentioned earlier, in order to be successful you must prescribe to this methodology AND in this order. First executing systems controls, second process controls and third people controls. Let me expand:
Insufficient infrastructure will hamstring you before you can get out of the blocks. Test your infrastructure - number of orders and velocity simulation will help you understand if your infrastructure is sufficient to support your peak season volumes.
Expand your process flows to accommodate peak volumes by adding only the necessary processes or eliminating extra steps in order to achieve your quality and productivity goals.
Controlling the number of people you use will make or break your peak season. This may be the only instance where quality assurance and cost containment are synonymous.
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As You Move Forward…
Create a checklistAssign areas of responsibilityCreate ownershipEstablish accountability across the board
As you move forwardDevelop a checklist to include the questions we have discussed so far and more importantly, the answers you’ll need to know in order to be successful.
Assign areas of responsibility so people will have “skin in the game”
Skin in the game equals ownership.
Across the board accountability insures your peak season fulfillment will be done right without breaking the bank.
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Execution – the name of the game
Build your game plan with your team’s buy-inCall the plays you have developedPlay your positionExecute your play
Have a successful peak season!
Execution - The name of the Game
Webster defines execution, as “carrying out what is required”.
Simply enough, the best laid plans will fail without everyone’s buy-in, you can design the greatest play ever but if everyone that has to execute it does not buy-in, it will fail.
Nothing would be done at all if we waited until it could be done so well that no one could find fault. Practice and call the plays you’ve developed.
Each functional area has to follow their processes. Without everyone playing their position first and executing their functional processes, the entire play can not materialize. Sometimes people get out of position, as a manager or coach, it is your responsibility to recognize when someone is out of position and get them back into the rhythm of the game. Know your position and play it well.
A good coach knows every player’s position; what is required to execute the play; and what the team can and can’t do. At ClientLogic, we have lots of cans. We reward associates that provide improvements that help our business execute our plays. Remember: Success comes in cans; failure in cant’s. So get a hold of a can opener and get started.
I would like to thank you for your time and attention, Rama back to you.
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Q&A
After this Webinar, join us on the O+F& NCOF Discussion Forum to continue Q&A Session. (http://forums.ncof.com/ncof/See Print Documents and View Links Pull-down on lower left corner for link to Website)
Thank you, John and Todd, for an enlightening and thought-provoking presentation. And thank you to everyone who participated. We now invite questions from the audience. Send in your question, I’ll pose them to our speakers, and they’ll do their best to answer them in the short time available. Please be assured that even if we don’t get to your question today, we will answer it on the Discussion Forum, so make sure to click on that link.
