A Supply Chain Logistics Program for Warehouse Management 3

7 Chapter 2 Understanding the Supply Chain Logistics Segment Introduction Warehouse. components. are. arranged. to. provide. cost-effective. and. efficient. vendor. SKU. and. customer-order.flows..These.components.are.1).the.warehouse.facility;.2).the.material.handling. equipment. layout;. 3). warehouse. internal. operations. or. activities. (with. management. staff. and. employees);.4).vendor.SKU.and.customer-order.flows.for.small.items,.master.cartons,.or.pallets;. 5).company.informational.technology.(IT),.host,.WMS,.and.warehouse.computer.systems,.(for. communications.between.company.departments.as.well.as.between.the.company.and.vendors.and. customers);.and.(6).inventory.control,.basic.warehouse.management.program,.or.WMS. The.design.team’s.objective.is.to.design,.develop,.and.implement.a.WMS.program.in.a.cost- effective.and.efficient.new.(or.remodeled).warehouse..To.achieve.this.objective,.the.design.team. must.understand.your.company’s.existing.warehouse.components.(see.above).and.their.interaction. with.a.WMS.program..The.design.team.will.1).develop.cost.justification,.2).design.a.warehouse. with.a.WMS.program,.3).ensure.that.implementation.occurs.on.time.and.within.the.established. budget,.and.4).review.and.audit.the.warehouse.after.the.WMS.program.is.implemented. After.a.WMS.program.is. implemented,. the. result.will.be.a. sphere.with.numerous.connec- tion.lines.and.activity.points..Between.each.WMS.program.transaction.point.and.activity.point. are. vendor. WMS-identified. SKU. and. customer-order. flows. (i.e.,. travel. path. and. communica- tion.lines)..In.the.interaction.between.a.WMS.program.and.a.warehouse,.the.warehouse.handles. WMS-identified.SKUs.or.customer.orders.between.two.WMS-identified.positions/drop-points. and.the.warehouse.computer.(or.the.employee.that.controls.the.SKU-.or.customer-order–handling. equipment);.and.the.WMS.program.tracks.WMS-identified.SKUs.or.customer.orders.through.the. inventory.control.or.WMS-identified.positions.and.has.transactions.sent.to.a.WMS.computer.that. handles.data.or.information. AU0575.indb 7 4/28/08 8:57:50 AM © 2008 by Taylor & Francis Group, LLC 8  n  A Supply Chain Logistics Program for Warehouse Management Warehouse Design Parameters and Operational Aspects To.design.a.new.warehouse.(or.remodel.an.existing.warehouse),.the.design.team.collects,.evalu- ates,.reviews,.projects,.and.approves.your.present.and.proposed.vendor-SKU.and.customer-order. physical.transaction.volumes,.SKU.numbers.and.inventory.characteristics,.and.other.operational. parameters.for.each.warehouse.activity.(e.g.,.new.or.additional.warehouse.operations,.handling. manufacturer.lot.numbers,.serial.numbers,.expiration.dates,.hazardous.materials,.and.customer. delivery. companies. or. freight. forwarders).. Warehouse. operational. design. parameters. establish. transactions.for.the.completion.of.the.vendor-SKU.storage.and.physical-customer.order.and.deliv- ery.cycle..These.design.parameters.are . 1..The.average.number.of.SKU.and.customer.orders.per.day;.the.most.frequent.vendor.SKU. and.customer.orders.per.day;.and.the.peak.vendor.SKU.and.customer.orders.per.day; . 2..The.average.SKU.number.per.vendor.delivery.and.customer.order;.the.most.frequent.SKU. number.per. vendor.delivery. and.customer.order;. and. the.peak.SKU.number.per. vendor. delivery.and.customer.order; . 3..The.best.equipment.or.technologies.for.a.warehouse,.based.on.vendor.SKU.and.customer. order.volume; . 4..The.most.frequent.SKU.number.per.vendor.and.delivery.vehicle;.the.average.SKU.number.per. vendor.and.delivery.vehicle;.and.the.peak.SKU.number.per.vendor.and.delivery.vehicle; . 5..SKU.specific.inventory.classification; . 6..The.present.and.proposed.in-house.SKU-.and.customer-order.transport.conveyor.(or.vehi- cle).travel.speeds; . 7..The.present.and.proposed.vendor.SKU.and.customer-order.shipping.plan; . 8..The.down-load.time.for.the.IT.customer-order.host.computer,.and.the.time.it.takes.to.com- municate.with.warehouse.operations.(or.computer); . 9..Customer.order.priority; . 10..Customer.service; . 11..Profile.of.the.warehouse.storage.and.pick.areas; . 12..Proposed.warehouse.design,.including.vehicle.aisle,.rack.layout,.and.facility.for.all.required. activities,.simulations,.and.computer.requirements; . 13..Proposed.warehouse.receiving,.in-house.transport,.storage,.order.fulfillment,.manifest.and. shipping,.and.other.operational.concepts,.with.SKU.and.customer-order.flow.paths;.plans. should. include.block,.plan.view,.and.detailed.view.drawings. showing.all. required.opera- tional.activities. The.data.collection.and.analysis.ensures.that.the.proposed.warehouse.is.designed.to.handle. vendor-SKU,.customer-order,.and.WMS-program.transactions..Moreover,.the.features.ensure.a. cost-effective.and.effective.warehouse. Peak, Average, and Most Frequent SKU or Customer-Order Volumes Monthly.SKU.or.customer-order.volumes.are.used.to.project.warehouse.volume..SKU.and.cus- tomer-order.volumes.are.translated.into.warehouse-.and.WMS-program–supported.transactions.. Note.that.vendor.SKU.transactions.are.less.common.than.customer-order.transactions,.but.cus- tomer.orders.are.more.time.sensitive..In.a.small-item.warehouse,.small.items.are.received.as.loose. SKUs.(e.g.,.single.pieces.or.less.than.master.cartons).in.master.cartons.(or.master.cartons.on.a. AU0575.indb 8 4/28/08 8:57:50 AM © 2008 by Taylor & Francis Group, LLC Understanding the Supply Chain Logistics Segment  n  9 pallet). to.have. the.opportunity. to.have.valued.added.activities. and.are. shipped.as. loose. single. items..In.a.carton.warehouse,.a.master.carton.(or.a.pallet.of.master.cartons).is.sent.to.customers.as. a.single.master.carton.or.master.cartons.on.a.pallet.(or.as.a.replenishment.of.loose.SKUs.or.single. pieces.on.a.pallet.to.a.pick.position)..Finally,.in.a.pallet.warehouse,.an.SKU.is.received.(and.sent.to. customers).as.a.single.pallet.or.is.sent.as.a.replenishment.pallet.to.a.master-carton.or.single-piece. pick.area. Peak,.average,.and.most.frequent.monthly.SKU.or.customer-order.volumes.are.used.to.project. a.warehouse’s.future.transactions..Future.SKU.or.customer-order.volumes.and.transactions.are. based.on.present.SKU.or.customer-order.volumes.handled.during.a.specific.time.period.(e.g.,.day,. week,.month,.year).and.anticipated.growth..Future.SKU.or.customer-order.volumes.are.key.fac- tors.when.projecting.labor.and.material.handling.equipment.necessary.for.order.processing,.and. to.justify.labor.quantity,.costs,.savings,.and.other.operational.expenses.associated.with.a.WMS- program.capital.expenditure.request. Vendor-Delivered–SKU and Customer-Order Characteristics After.the.design.team.decides.upon.an.annual.SKU-.or.customer-order.volume,.the.team.applies. SKU.or.customer-order.characteristics.to.each.volume. The. company’s. receiving. department. will. have. the. following. vendor-delivered–SKU. characteristics: . 1..Purchase. order. number,. per. purchase. order. lines,. SKUs,. master. carton. SKUs,. or. pallet. SKUs; . 2..Receiving.documents.or.tally.sheet.numbers; . 3..SKU.master.carton.or.pallet,.label.numbers; . 4..Special.receiving.dock.time.slots.for.vendor.delivery. The.customer-order.process. (or.control.department).will.have.the. following.customer-order. characteristics: . 1..Customer-order.numbers; . 2..Customer-order.type.numbers.for.single.line/single.pieces,.single.line/multiple.pieces,.mul- tiple.lines/multiple.pieces,.SKU.combination,.express.shipments,.orders.from.foreign.coun- tries,.and.cash.on.delivery.(COD).orders; . 3..SKU.or.printed.lines.per.customer.order; . 4..Pieces.per.line.and.customer.order; . 5..Shipping.package.type.and.size. Projecting Vendor–SKU and Customer-Order Warehouse Transactions In.a.warehouse,.an.employee.or.a.computer-controlled.machine.completes.each.transaction..Each. activity.has.standard.or.hybrid.SKU.or.warehouse.physical.activity.for.a.WMS-program–identi- fied.SKU.(or.customer.order).and.to.determine.each.warehouse.activity.as.a.WMS-program.scan. or.non-WMS.transaction..A.WMS-program.transaction.is.sent.to.a.WMS.computer.that.accounts. for.a.WMS-program–identified.SKU.or.customer.order..When.the.project.team.plans.the.ware- house.with.WMS-program. activity. transactions,. each. activity. is. included. in. a.warehouse. and. WMS-program.transaction.projection. AU0575.indb 9 4/28/08 8:57:51 AM © 2008 by Taylor & Francis Group, LLC 10  n  A Supply Chain Logistics Program for Warehouse Management SKU and Customer-Order Characteristics Vendor.delivered.SKU.activity.is.not.as.time.critical.as.a.customer-order.completion.activity,.which. is.completed.within.24.hours.of.credit.approval..After.the.design.team.selects.a.design-year.SKU. and.order.volume,.the.team.applies.SKU.and.customer-order.characteristics.to.each.volume..The. company’s.receiving.department.will.have.the.following.vendor.delivered.SKU.characteristics: . 1..Purchase. order. number,. per. purchase. order. lines,. SKUs,. small. items,. master. cartons,. or. pallets; . 2..Receiving.documents.and.tally.sheets.per.purchase.order; . 3..Master.cartons/containers.or.pallet.labels.per.purchase.order. Vendor-Delivered–SKU Inventory Projection Characteristics Each.SKU.group.has.unique.characteristics.that.determine.the.storage.inventory.SKU.quantity..A. vendor.master.carton.or.container.inventory.quantity.with.few.SKUs.is.handled.as.an.individual. item..Each.master.carton.is.given.an.inventory.identification.and.placed.in.an.identified.storage. position..Each.master.carton.quantity.is.then.entered.into.the.inventory.files..If.vendor.master. cartons.or.containers.are.placed.on.pallets,.a.storage.identification.is.placed.on.the.pallet,.the.pallet. is.placed.in.an.identified.storage.position,.and.a.pallet.SKU.quantity.is.entered.into.the.inventory. files. With.a.small-item.operation,.a.design-year.piece/quantity.inventory.projection.is.divided.by. the.piece.number.into.vendor.master.cartons.or.containers..SKU.inventory.projection.quantity. options.for.vendor.master.cartons.or.containers.use.an.average.existing.SKU.quantity.for.each. master.carton.or.container.or.to.obtain.an.existing.SKU.quantity.range.for.each.master.carton.and. apply.each.SKU.quantity.range.percent.to.the.inventory.projection. With.a.master.carton.or.container.warehouse.inventory.number,.a.design-year.SKU.quantity. projection.is.divided.by.the.SKUs.for.each.master.carton.or.container.and.a.master.carton.con- tainer.number.for.each.pallet. Warehouse Operation Storage Position Utilization A.warehouse.storage.position.utilization.factor.is.the.percentage.of.occupied.pallets..During.peak. activity.periods,.the.pallet-storage.position.factor.allows.for.open.pallets.to.handle.vendor.deliv- ered.and.received.SKUs. WMS-Program–Identified Storage-Pallet Locations To.create.a.WMS-program–identified.storage.position.for.a.full,.high.pallet.and.half,.high.pallet. number,.the.design.team.counts.the.full.high.and.half.high.pallets.and.determines.the.percentage. for.each.pallet.type..Full.high.pallet.and.half.high.pallet.percentages.are.applied.to.the.projected. pallet.inventory..The.calculations.determine.the.full.high.pallet.and.half.high.pallet-storage.posi- tion.numbers. AU0575.indb 10 4/28/08 8:57:51 AM © 2008 by Taylor & Francis Group, LLC Understanding the Supply Chain Logistics Segment  n  11 Master Cartons To.obtain.a.master.carton.quantity.for.each.pallet,. the.design.team.completes.a.master.carton. count.for.each.pallet.in.the.warehouse.and.develops.a.percentage..Using.this.percentage,.the.pro- jected.inventory.piece.quantity.is.created.for.each.pallet. Pieces To.obtain.a.piece.quantity.for.each.master.carton,.your.design.team.completes.a.SKU.piece.count. for.each.master.carton.in.a.warehouse.storage.area.and.develops.a.percent.range..Based.on.a.SKU. percent.range.for.each.inventory.control.identified.master.carton,.a.projected.inventory.SKU.is. projected.based.on.actual.SKUs.for.each.master.carton.percentage. SKU Life Cycle The.SKU.life.cycle.traces.sales.over.a.specific.time.period..The.time.period.encompasses.the.first. day.a.SKU.is.available.for.sale,.is.promoted.to.customers,.and.majority.of.sales.occur..The.life.cycle. show.the.SKU’s.characteristics.for.each.day.of.the.time.period. In.a.warehouse.there.are.limited.storage/pick.position.numbers..One.answer.is.to.design.the. storage.area.or.pick.line.with.an.“ABC.approach”.with.two.storage/pick.zones..One.zone.is.des- ignated.for.fast.moving.SKUs,.and.one.zone.is.designated.for.medium/slow.moving.SKUs..New. (or.promoted).SKUs.are.allocated.to.the.“A”.zone.or.the.fast-moving.zone..Old.(or.nonpromoted). inventory.SKUs.are.allocated.to.the.“B”.and.“C”.zones.or.medium/slow-moving.zone. The.promotion.or. life.cycle.described.above. is.usually. linked.to.TV.marketing,.catalog,.or. retail.warehouse.industries..In.other.industries,.such.as.dental.or.pharmaceutical,.SKUs.are.pro- moted.and.have.a.SKU.life.of.two.to.three.months. To.achieve.high.productivity.in.the.storage.area.or.pick.line,.storage.area.and.pick.line.SKUs. are.allocated.to.the.storage/pick.positions..The.allocation.is.based.on.sales.volume.and.storage.and. pick.area.employee.productivity.rates. The.storage.and.pick.zone.numbers,.SKU.life.cycle,.and.total.inventory.SKU.numbers.assist. SKU.storage.area.and.pick.line.allocation..To.achieve.proper.SKU.hit.concentration.and.density,. new.and.promoted.SKUs.that.been.allocated.to.the.“A”.storage/pick.zone.and.are.plotted.on.a. historical.life.cycle.day.number..When.the.life.cycle.chart.shows.a.decline.for.a.day.number,.the. SKU.is.reallocated.to.the.“B”.or.“C”.zone. Inventory-Control–Identified SKU Storage and Pick Positions After.a.warehouse.receives.a.vendor-delivered.SKU.and.checks.the.vendor.quantity.against.a.com- pany.purchase.order.quantity,.the.SKU.is.transferred.to.a.storage.position.and.the.quantity.and. position.is.entered.into.inventory..Each.warehouse.storage.and.pick.position.has.a.discreet.identi- fication,.which.is.used.when.customer.orders.are.sent.to.the.warehouse.by.the.host.computer. AU0575.indb 11 4/28/08 8:57:51 AM © 2008 by Taylor & Francis Group, LLC 12  n  A Supply Chain Logistics Program for Warehouse Management Projecting Inventory-Control–Identified Storage Position To.project.a.storage.position,.the.design.team.must.know.the.storage.position.number,.type,.and. SKU.number.for.each.position..To.project.inventory.volume.and.the.associated.storage.position. number.housed.in.an.operation,.the.projection.methods.are.similar.for.small.items,.master.car- tons,.or.pallets. Master Carton and Pallet-Storage Volume To.project.the.SKU.inventory,.pallet.inventory.volume.is.the.SKU.volume.housed.in.a.storage. area,.static.volume.stored.in.a.floor.stack,.conventional.forklift.truck,.or.automatic/computer.stor- age.and.retrieval.system.(AS/RS).crane.rack,.flow.rack,.hand.stack,.or.standard.shelf..A.master. carton.or.pallet-storage. inventory.number. is.divided. into.master.carton.or.pallet.height,.pallet. size,.and.special.storage.conditions..Master.carton.or.pallet.inventory.volumes.provides.fiscal.year. end.master.carton.or.pallet.volume;.the.average.volume.for.a.specific.number.of.months;.and.the. average.master.carton.or.pallet.volume.for.a.predetermined.period.with.the.emphasis.on.a.prede- termined.month.period..In.most.companies,.the.period.is.the.last.three.months.of.the.fiscal.year. Master Carton and Pallet Pick-Position Projections A.master.carton.or.pallet.warehouse.position.is.the.master.carton’s.or.pallet’s.SKU.in.a.pick.position.. In.a.dense.storage.warehouse,.the.master.carton.or.pallet.position.adjacent.to.the.main.aisle.is.the. pick.position..Based.on.your.existing.pick.position.number,.your.design.team.applies.a.SKU.growth. number.or.percent.to.obtain.a.SKU.number.in.a.design.year.or.SKU.growth.number.or.percent.and. completes.calculations.to.determine.a.design-year.SKU.number. SKU Types: Pallet, Master Carton, and Small Items Vendor-delivered.SKU.and.customer-order.pieces.determine.equipment.type.and.layout..A.ware- house.can.be.set.up.to.handle.one.SKU.type.or.all.SKU.types. Master Carton Warehouse In.a.master.carton.warehouse,.a.vendor.carton.or.vendor.master.carton.has.a.SKU.inventory.and. storage.position.identification,.and.is.handled.as.individual.master.cartons.or.master.cartons.on. a.pallet..If.a.master.carton.does.not.have.side.wall.strength,.or.product.is.not.self-supporting.or. is.not.square,.master.cartons.are.stored.in.a.container,.a.tier.rack,.or.a.stacking.frame.(to.make. stackable.and.uniform.unit.loads),.or.as.individual.master.cartons.that.optimize.the.cubic.(air). storage.space..A.container.or.stacking.frame.has.fork.openings.and.the.tier.rack.is.placed.on.a. standard.pallet. A.master.carton.warehouse,.to.have.maximum.inventory.flexibility.and.accountability,.will. determine.at.the.receiving.dock.how.master.cartons.are.handled..If.a.SKU.has.a.low.master.carton. quantity,.the.cartons.are.handled.as.individual.SKUs..If.a.SKU.has.a.high.master.carton.quantity,. the.cartons.are.handled.on.a.four-wheel.carton,.slip.sheet,.stacking.frame,.tier.rack,.or.pallet..This. will.permit.an.employee-controlled.or.AS/RS.crane.to.move.the.largest.number.of.cartons.each. AU0575.indb 12 4/28/08 8:57:51 AM © 2008 by Taylor & Francis Group, LLC Understanding the Supply Chain Logistics Segment  n  13 trip,. thus.providing.the. fewest.handlings. from.receiving,. through.the.storage/pick.area,. to. the. shipping.dock,.and.onto.the.delivery.truck. It.is.important.for.the.design.team.to.know.master.carton.or.container.dimensions,.includ- ing.length,.width,.height,.and.weight,.as.well.as.the.smallest,.the.average,.and.the.maximum.size. master.carton..The.size.range.that.is.developed.can.be.used.to.determine.storage/pick.position,. number.of.cartons.for.each.pallet,.and.the.conveyor.travel.path.window. Small-Item Warehouse A.small-item.warehouse.handles.small.items.as.single.pieces.in.vendor.master.cartons,.containers,. or.master.cartons/containers.on.a.pallet..Master.carton.or.container.dimensions.determine.the. number.of.items.stored.on.each.pallet. Pallet Warehouse A.pallet.warehouse.receives,.stores,.and.ships.SKUs.on.pallets..The.vendor.delivery.tally.sheet.will. show.a.suggested.ti.and.hi.or.master.carton.quantity.for.each.pallet..If.a.master.carton.ti.is.within. a.pallet.(bottom.support.device).perimeter,.the.master.carton.hangs.over.the.edge.of.the.pallet. (length.or.width)..If.a.master.carton.ti.overhangs.a.pallet,.the.master.carton.dimensions.overhang. becomes.the.storage.pallet.dimensions..The.pallet’s.dimensions.determine.floor.stack.pallet.posi- tion.number.in.a.storage.area.or.pallet.number.wide.in.a.rack.bay.between.two.rack.upright.posts.. Rack.dimensions. along.with. clearances.determine. rack. row.and. rack.bay.number. that.will.fit. between.two.building.columns. Pallet.height.determines.the.pallet.number.in.the.floor.stack.in.the.rack.bay.in.the.vertical. stack..A.pallet.height.is.the.distance.between.the.bottom.deck.board.and.the.highest.master.carton. top..The.vendor.delivery.tally.will.show.a.suggested.ti.and.hi.or.master.cartons.for.each.pallet.that. will.not.exceed.the.pallet-storage.position.height. Pallet.weight.is.the.entire.pallet,.securing.material,.and.total.master.carton.weight..The.pallet. weight.determines.pallet.number.for.each.floor.stack,.pallet.or.load.beam.level.number.for.each. rack.bay.and.design,.rack.posts.base.plate.thickness,.foot.print,.design,.and.forklift.truck.wheel. size..The.forklift.truck.or.AS/RS.crane.weight.determines.the.floor.thickness.and.rebar.character- istics..The.vendor.delivery.tally.will.show.a.suggested.ti.and.hi.or.master.cartons.for.each.pallet. that.will.not.exceed.the.storage/pick.position.weight.capacity. Pallet Bottom Support Device A.pallet.supports.a.wide.SKU.mix.and.is.easily.handled.by.forklift,.AS/RS.crane,.or