Instructor: Spyros Reveliotis

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IE6202 Warehousing Systems

• Instructor Spyros Reveliotis
• Office Room 316, ISyE Bldng
• tel [phone]
• e-mail spyros_at_isye.gatech.edu
• homepage www.isye.gatech.edu/spyros

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Course Logistics

• Office Hours 2-330pm MW (ow, an open-door
  policy will be generally adopted, but an
  appointment arranged by e-mail is preferred)
• Grading policy
• Homework Projects 25
• Midterm I 20 (Tent. Date Thursday, Oct. 4)
• Midterm II 20 (Tent. Date Thursday, Nov. 1)
• Final 35
• Exams closed-book, with 2 pages of notes per exam
• Make-up exams and Incompletes Only for very
  serious reasons, which are officially documented.

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Course Logistics (cont.)

• Course Reading Materials
• J. Bartholdi and S. Hackman, Warehouse and
  Distribution Science, Release 0.08, unpublished
  manuscript, 2000, URL http//www.isye.gatech.edu/
  jjb/wh/book/wh.pdf
• An assembled package of various books excerpts
  and papers on warehousing topics, available by
  the Georgia Tech bookstore
• Any other material distributed or cited in the
  lectures
• Books on reserve
• Tompkins et al., Facilities Planning, John
  Wiley Sons, 1996.
• Heragu, S., Facilites Design PWS Publishing
  Co., 1997.

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Course Objectives(What is this course all about?)

• An introduction to the fundamental concepts and
  techniques involved in the design and operation
  of contemporary warehouses and distribution
  centers
• In particular, a balanced development of the
  following issues
• Familiarization with contemporary warehouses and
  their operation
• A systematic exposition of the overall design,
  planning and control problem, as it arises in the
  context of contemporary warehouses
• The decomposition of the problem to a series of
  sub-problems, and the development of
  analytical/quantitative methodologies for
  addressing these sub-problems
• (Time permitting,) an introduction to the
  emerging issues and needs that arise from modern,
  globalized and internet-based economy.

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Next...

• Understanding the role of warehouses in
  contemporary distribution networks
• A description of the warehouse operations and
  equipment
• A (conceptual) description of the major design,
  planning and control problems arising in
  contemporary warehousing
• Key References
• J. Bartholdi and S. Hackman, Warehouse and
  Distribution Science, Release 0.08, unpublished
  manuscript, 2000, URL http//www.isye.gatech.edu/
  jjb/wh/book/wh.pdf Chpts 1-4
• G. Sharp, Warehouse Management, Chpt 81 in
  Handbook of Industrial Engineering, by G.
  Salvendy (ed.), John Wiley Sons, NY, 2000.
• B. Rouwenhorst et. al., Warehouse design and
  control Framework and literature review,
  European Journal of OR, Vol. 122, pgs 515-533,
  2000.
• Tompkins et al., Facilities Planning, John
  Wiley Sons, 1996 Chpt. 9

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The role of warehousing in contemporary
distribution networks

• Buffer It holds inventory for downstream stages
  of the supply chain, in order to allow the entire
  production / distribution network to deal
  efficiently with the systematic and random
  variation in the network operations, or to
  exploit significant economies of scale.
• Typical sources/examples of systematic variation
• product seasonalities (e.g., Toys R Us, CVS
  merchandise)
• cyclical / batched production due to large set-up
  costs
• Typical sources of random variation
• variations in transportation times due to
  weather, traffic congestion, bereaucracy, etc.
• variations in production times due to unreliable
  operations, unreliable suppliers
• Typical economies of scale involved
• Price breaks in bulk purchasing

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The role of warehousing in contemporary
distribution networks (cont.)

• Consolidation center It accumulates and
  consolidates products from various points of
  manufacture within a single firm, or several
  firms, for combined shipment to common customers.
  
• Consolidation allows to control the overheads of
  transportation operations by
• allowing the operation of the carriers to their
  capacity, and therefore, the more effective
  amortizing of the fixed transportation costs
• reducing the number of shipping and receiving
  operations
• Cross-docking Consolidation without staging

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The role of consolidation in contemporary
distribution networks
Retailers
Manufacturers
Manufacturers
Retailers
Consolidator
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The role of warehousing in contemporary
distribution networks (cont.)

• Value-Added-Processing (VAP) Increasingly,
  warehouses are required to undertake some
  value-added-processing tasks like
• pricing and labeling
• kitting (i.e., repackaging items to form a new
  item e.g., beauty products)
• light final assembly (e.g., assembly of a
  computer unit from its constituent components,
  delivered by different suppliers)
• invoicing
• In general, this development is aligned to and
  suggested by the idea/policy of postponement of
  product differentiation, which allows for
  customized product configuration, while
  maintaining a small number of generic product
  components.

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The major warehouse operations

• Inbound processes
• Receiving (10 of warehouse operating costs)
  the collection of activities involved in
• the orderly receipt of all materials coming into
  the warehouse
• providing the assurance that the quantity and
  quality of such materials are as ordered
• disbursing materials to storage or to other
  organizational functions requiring them.
• Put-away (15 of warehouse operating costs) the
  act of placing merchandise to storage it
  includes
• determining and registering the actual storage
  location(s)
• transportation
• placement

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The major warehouse operations (cont.)

• Outbound processes
• Processing customer orders (typically done by the
  computerized warehouse management system of the
  facility) This set of activities includes
• checking that the requested material is available
  to ship
• if necessary, coordinating order fulfillment with
  other facilities of the distribution network
• producing the pick lists to guide the order
  picking and the necessary shipping documentation
• scheduling the order picking and the shipping
  activity.
• Order-picking (55 of warehouse operating
  costs) the set of physical activities involved
  in collecting from the storage area the materials
  necessary for the fulfillment of the various
  customer orders, typically identified as
• traveling (55 of the order picking time)
• searching (15 of the order picking time)
• extracting (10 of the order picking time)
• documentation and other activities (20 of the
  order picking time)

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The major warehouse operations (cont.)

• Outbound processes (cont.)
• Checking Checking orders for completeness (and
  quality of product)
• Packing Packaging the merchandise in appropriate
  shipping containers, and attaching the necessary
  documentation / labels.
• Shipping The activities of
• preparing the shipping documents (packing list,
  address label, bill of lading)
• accumulating orders to outbound carrier
• loading trucks (although, in many instances, this
  may be the carriers responsibility).
• Others Handling returns, and performing the
  additional value-added-processing supported by
  contemporary warehouses, as discussed in a
  previous slide.

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Product concepts related to the characterization
of material flow in a contemporary warehouse

• Item (otherwise piece or each) The smallest unit
  of product sold by a distribution center, e.g.,
• a 1-liter bottle of a soft drink
• a box of 100 paper clips
• Carton a paperboard container holding identical
  product, usually of a size and weight allowing
  manual handling example dimensions 14x10x20in
  or 30x20x40cm.
• Tote a container usually made of plastic and
  often used for storing and handling different
  products usually similar in size to a carton,
  but re-usable.

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Product concepts related to the characterization
of material flow in a contemporary warehouse
(cont.)

• Inner pack several units of a product secured
  together and sold by the distribution center as a
  unit, if many items are contained in a carton,
  and purchase quantities per item are large a
  carton contains several inner packs.
• Pallet a set of cartons or totes of identical
  product arranged in a cubical pattern and usually
  supported by a base that may be of wood or
  plastic example dimensions are 40x48x54in and
  80x120x100cm.
• Mixed unit load a set of cartons or totes of
  different products arranged to a cubical pattern
  similar to a pallet, often wrapped or strapped
  for stability.
• Overpack a large carton or tote containing
  different products smaller than a pallet but
  larger than a carton, so that manual handling may
  be difficult.

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Product concepts related to the characterization
of material flow in a contemporary warehouse
(cont.)

• Stock Keeping Unit (SKU) a set of product(s),
  packaged in a pre-specified manner, that it is
  identified as a distinct entity for distribution
  purposes e.g.,
• a 2-liter bottle of Coca-Cola Classic
• 6 2-liter bottles of Coca-Cola Classic packed in
  a carton
• 12-ounce cans of Coca-Cola Classic, packed 24 in
  a carton.
• Order a document from a customer, requesting
  specific SKUs in specific quantities.
• Line item a line in an order document
  designating a specific SKU and quantity

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A schematic representation of the warehouse
material flow
Replenishment
Replenishment
Reserve Storage and Pallet Picking
Case Picking
Broken Case Picking
Accumulation, Sortation Packing
Direct putaway to reserve
Direct putaway to primary
Receiving
Shipping
Cross-docking
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Operational Cost Breakdown
10
20
15
55
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The major concerns underlying the organization of
order-picking

• Establish an efficient operation by controlling
  the order-picking labor costs, especially those
  due to traveling, and
• maintain a high level of responsiveness to
  customer orders, while
• preserving the order integrity.

Responsiveness
Costs
Quality
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How?

• By organizing the associated work-flow so that it
  presents
• high pick density, i.e., average number of picks
  per foot of travel
• short (order) flow time, i.e., the amount of time
  elapsed between the arrival of an order into the
  warehouse management system and the time it is
  loaded on the shipping carrier.