Don't Judge a DC by Its Shape - What's Inside Matters Most

Recently, while looking out the plane's window when flying into Ontario, California, I couldn't help but notice the valley of distribution centers (DCs) and their various shapes. There were squares, rectangles, "L"-shaped, and others that had no specific shape. There were also many that seemed to be the same exact shape! This emphasized my belief that while facilities can be different shapes and sizes, the process within is the more critical factor. It's true that the clear height, bay spacing, floor design, number of dock doors, fire protection, and other facility configuration factors impact the layout design. But, too often, little planning is done when establishing a new operation. A simple strategy of floor storage and standard pallet racking across the entire facility might work for a few companies, but very likely won't result in an efficient operation.

The modern distribution center must handle shipments from international and domestic suppliers and provide an increasing amount of value-added services to satisfy customers. Often it is a company's own retail stores that are the most demanding! Today's distribution center must deliver accurate and on-time shipments, with an efficient and nimble operation. Such demands can't be satisfied with basic racking and floor storage.

With this level of challenges and expectations, where does management start? The answer is receiving - but management must continue with planning for all major warehouse processes through shipping. The order fulfillment area typically requires the most labor and demand for accuracy. It is also the area where technology and automation can make a big difference in achieving both accuracy and higher throughputs while controlling labor costs. An untapped and overlooked area is often the last 100 feet, where packaging, manifesting, and shipping occur. The order fulfillment area can kick-out volumes only as fast as the last 100 feet can free up the shipping dock. More often than not, the picking area gets the necessary attention, but many of the other areas lack the required planning. The fact is that every area, starting with receiving, is critical to the successful fulfillment of customer demands. Stepping through the major warehouse functions, you can see the important considerations in each area.

Receiving: Don't ignore this area, which controls the receipt on inventory into the facility and can impact pending orders and/or allocation/release for future orders. How can you speed-up this process? Automated Shipping Notice (ASN) comes to mind first. ASNs are generated from the suppliers and give the receiver forewarning of the purchase orders and arriving inventory. Additionally, ASNs enable the receiving clerk to manage the dock equipment, staging space, and staffing for the receipt before it arrives. Most importantly, ASNs allow for the rapid receipt of entire purchase orders with the scan of pallet identification bar codes, vs. the scanning of each case or piece in the receipt.

Stocking/Cross-Docking: The speed and accuracy of the receipt process directly integrates with the stocking of products into the storage area. Additionally, when the products are received, they can be flagged for immediate cross-docking for completion of a staged order ready for shipping. The stocking of products is most efficient when directed by a warehouse management system (WMS), with the use of random storage philosophy. While random, the WMS should also consider the planned volume or activity profile of the products in order to store them in the most accessible location for replenishment or picking. Depending on the operation, management might store products within the same area/equipment from which orders are fulfilled. Alternatively, there might be a separate forward-picking area for order fulfillment that is replenished from a reserve storage area. Traditionally, the stocking activity is directly into the reserve storage area. However, more advanced systems may be able to direct the put-away into the forward-pick area, should there be no overstock and the picking location is empty.

Replenishment: Not running out of product in the pick location is cardinal rule #1 or #2. The function of replenishment alone cannot be blamed should a location run out of product during picking. The first objective should be to size the pick locations so that they hold enough product quantity to limit the need for replenishment. This involves a delicate balance of reducing replenishments to an average of every two weeks and not oversizing the picking area. Assuming that the pick locations are adequately sized, the success of replenishment falls on the process and technology supporting the process. The ideal technology is for the system to trigger replenishment when the pick location reaches a minimum quantity. The replenishment would occur during an off-picking shift and ready the pick location for the proper amount of inventory prior to the picking activity. Should the replenishment function be based on a visual queue, then the operation is at risk for stock-outs during picking.

Picking: Up to this point, you see the importance of properly designing the prior functions within the distribution center. The picking area is often the most critical function within the warehouse to properly design. There are many details to work out including the process, equipment, and technology. The process ranges from discrete to various combinations of batching, zone-batch, zone-pass, and zone-batch-pass. The decision depends on the level of technology to support these applications and the complexity of the orders to fulfill. Discrete picking provides complete accountability for the accuracy of the order on one picker, but often provides the lowest order throughout. Simply batching multiple small orders with a single picker can speed up the productivity of completing those orders. When moving to various zone combinations, then technology is a must in order to accurately manage the orders moving through the system and consolidate them in shipping.

"The Last 100 Feet": This includes processes after the order has been picked. The main functions described below include value-added, packaging, manifesting, and shipping. These areas often result in the bottleneck of an operation due to the lack of focus in planning and execution. Let's look at the challenges and opportunities in each of these areas.

Value Added - Once never mentioned, or at the very least an afterthought, is the space and design for providing value-added services. These are mostly tasks done within the distribution center to prepare products for the store. This might include adding hangers, inserting product within a clear bag, changing pricing labels/tags, or putting product into a new packaging design. The decision often is where to provide this service, i.e., at the source (domestically or internationally), in manufacturing, at receiving, or after picking. Most perform the activity after order processing, and in a separate area setup with tables and conveyors.

Packaging/Manifesting - If you utilized picking directly into the shipping case, the packaging area within a facility disappears. These cases would go through a print-and-apply process to automatically be manifested and receive a shipping label. However, picking into the shipper is not always possible, and the alternative most used is picking into totes or onto a pallet. In these situations, a packaging area is required. Much like the value-added area the packaging area is often crunched into the corner of the shipping area, and becomes the bottleneck of the facility throughput. To avoid this situation, clearly calculate the capacity required to support the operation over the planning horizon. Consider the use of conveyor technology, diverting systems, and efficient workstations to ensure this area is efficient to handle the future volumes.

Shipping - Regardless of how the orders were processed or packaged, the shipping is the last step in most warehouse operations. However, if orders are being batch-picked in the warehouse zone and need to be consolidated on the shipping dock, additional space may be required. Adequate space should be provided to stage larger orders for full-truck or less-than-truck-load shipments. And, if you have high volumes of small parcel shipments, consider the use of conveyors to "fluid-load" trailers. If you have a conveyor loading system, there needs to be enough space to also potentially load a pallet onto the trailer.

Process Optimization
Spend time planning your next warehouse transition, and focus on each area of the facility to ensure the best solution is provided. Regardless of the building shape and size provided, ensure the process is optimized within those four walls. For process optimization, consider these three ideas within the process, layout, labor, and technology factors of your next facility strategy.

Process

Visually map the process within your operation to validate if the proper processes are being followed, to identify inefficient steps, and generate improved solutions.

Use colored totes to identify different type of orders, such as rush, Internet, value-added services required, etc.

Study the use of various picking methods, such as cluster-batch picking, which is the method of picking multiple 1-2 line orders onto a uniquely designed cart.

Layout

Visually map the flow of goods and people on your facility layout to identify backtracking and inefficient movement.

Limit "white space" on layout plan including aisles and dock space.

Utilize "vertical space" in the selection of rack types, within storage positions and consideration of mezzanines.

Labor

Train for exceptions and ensure employees understand and are following the proper procedures.

Establish a "get to know" employee monthly board to improve team synergy and recognition of an employee's family, hobbies, and other interests.

After you streamline the process, study the use of technology to further enhance your productivity, including voice, pick-to-light, and conveyors.

WMS/Technology

Perform a gap assessment on your WMS to benchmark against what "best of breed" solution can provide. Identify the major functionality gaps and quantify the savings potential in upgrading those functions.

Look into forklift management software to improve the utilization of your forklifts, energy used, accident alerts, efficiency of use, and - ultimately - if you really need to buy that next truck.

Product slotting software can increase picking productivity 15-30 percent, reduce product damage and employee injuries, and typically has an ROI of less than a year.