THE NEW RULES OF MATERIAL HANDLING

Transcription

1 20122 Supply Chain Leadership Forum Denver, CO THE NEW RULES OF MATERIAL HANDLING Kelly Reed, EVP, Tompkins International Dan Avila, Partner, Tompkins International

2 Topics Distribution Centers (DCs) in Context of the Supply Chain The Rules Have Changed New Design Considerations Adaptive Material Handling Systems DC Design Implications and Steps for Success The Importance of Warehouse Control ls Systems (WCS) WCS Best Practices and Integration Key Tk Takeaways Discussion 2

3 DCs in Context of the Supply Chain Strategy Before Structure Understand the overall supply chain strategy DC design must complement supply chain strategy 3

4 DCs in Context of the Supply Chain The DC is an integral part of the supply chain and cannot be thought of separately. Other factors include: Tax effective supply chain management and network design S&OP and inventory optimization Demand driven supply chain Transportation and horizontal collaboration Procurement and low cost country sourcing China Flexibility and adaptability must be built into the DC design to provide the ability to: Respond to changing business requirements Respond to uncertainty Emphasize more sensitivity analysis, modeling, and scenario planning 4

5 The Rules Have Changed Traditional Design Principles Based on historical activity: receipts, orders, lines/order, pieces/line, pieces/line /carton, SKUs, shipments, inventory levels, etc. Five year business plan with growth projections (SKUs and orders) Value added added services An understanding of how future requirements may vary Seasonality considerations # of NSNs Future Requirements '03 '04 '05 '06 '07 SKUs Order Size Client Volume of Eaches ABC Profile Eaches ABC (Refrigerated) 100% 90% 80% 70% 60% B C 50% 40% A 30% 20% 10% 0% 1% 11% 20% 30% 40% 50% 60% 70% 80% 89% 99% % of Items 1,587 1,600 1,522 AnnualOrders ,400 1,200 1, , > 20 % Annual Orders 1,150,660 Annual Lines 2,147,374 Annual Units 8,634,251 SKUs 28,926 Average Min 85th Percentile Max Orders / Day 4,499 1,249 5,111 7,782 Lines / Day 8,403 1,889 9,576 12,813 Units / Day 33,776 8,025 38,461 56,472 Lines / Order 1.9 Units / Order 7.5 Units / Line 4.0 5

6 The Rules Have Changed Why are Traditional Design Principles not Enough? Business has changed. The world is more unpredictable. More companies are moving toward a more demand driven supply chain. Strategic, contingency, and financial planning all assume a certain degree of stability. A key design principle today is the ability of the system to adapt to doing new things quickly. 6

7 New Design Considerations Adapt to the Realities of the Business Climate 1. Uncertainty: Unpredictability and doubt result from natural disasters, political tensions, and economic concerns. 2. Volatility: Sharp and irregular demand fluctuations occur as a result of mergers and acquisitions, marketplace turmoil, commodity costs, and competitive innovation. 3. Rapid Change: The rate of change is at warp speed and five year plans are becoming irrelevant. 4. Culture: Many companies have adopted a culture of caution and restraint, which may be the opposite of what is required to thrive. 7

8 New Design Considerations Adapt to the Realities of the Business Climate 5. Scope: Must understand requirements across the supply chain to include suppliers and customers. 6. Time Frame: Predictable time frames are becoming shorter. 7. Responsiveness: Listen to what is happening in the marketplace and quickly act to refine, rework, redefine or reinvent business processes. 8. Financial Sync: Adjust for today s realities and allocate resources accordingly. 8

9 New Design Considerations Tools for Adaptability Scenario Thinking: (Long Term) Thinking about and anticipating the unknown future by examining possible future developments Predictive Modeling: Ui Using statistical ttiti models dlto predict future results, including (Mid Term) regression analysis that predicts how dependent variables respond to independent variables Rolling Forecasts: (Mid Term) Supply Chain Intelligence: (Short Term) Annual, or longer, budgets are becoming inadequate to deal with today s business pace; a rolling forecast enables monthly updates to the next 12 month forecast based on the latest information The process of taking real time data into actionable insights that allows for real time responses and involves the use of decision support tools that facilitate a quick response to what is occurring right now 9

10 Adaptive Material Handling Systems Adaptability Factors Supply Chain Intelligence Rolling Forecasts Predictive Modeling Scenario Thinking 1. Uncertainty 2. Volatility 3. Rapid Change 4. Culture 5. Scope 6. Time Frame 7. Responsiveness 8. Financial Sync Time Horizon The ability to turn real-time data into actionable insights that enable real-time responses Monthly forecasts of the next 12-month forecast based on best information available for each month Statistical modeling to predict future results The process of thinking about and anticipating the unknown future by examining potential future developments 10

11 Adaptive Material Handling Systems The New Reality Material handling system design principles have not changed; however, the game has changed. The business climate contains more risk, instability, and rapid change than it did before the Great Recession, and the new climate is here to stay. Business success today relies on the ability to do new things quickly and well. 11

12 Adaptive Material Handling Systems Material Handling System Design Impact Design for flexibility and modularity to respond to changing business requirements. Use the adaptability factors to shape the design and apply the time frame based tools to refine the path. The design is about tomorrow not yesterday; focus on the business realities of current and future requirements. Design Thoughts How can an adaptive warehouse control system provide immediate feedback that enables action to be taken? Does the equipment selected provide for flexibilityor does itlimitoperations? How will certain customer categories respond to advertising campaigns or specials? How would a major acquisition impact the design? 12

13 DC Design Implications More emphasis on selecting the right data What is the right data to use? How do you know it is right? More emphasis on responding to change Flexible solutions that expand or contract based on changing business requirements Success based on ability to do new things quickly and well More emphasis on energy efficiency DC sizing Equipment building systems and MHE LEED certification More emphasis on supply chain intelligence Real time access to actionable information Adjust operations based on the actionable information Flexible and adaptive MHE controls Operational Data (Internal, Previous History) Resource Costs (Land, Equipment, Staffing, Energy) DC Design Business Changes (External, Forward Facing) Supply Chain Intelligence (IT Infrastructure, External Connectivity, Internal MHE Controls) 13

14 DC Design Steps for Success 1. Analyze and evaluate operational 100 data Consider different scenarios 70 Understand historical data Recognize future operating requirements Establish goals and objectives 0 Future Requirements '09 '10 '1 1 '12 '1 3 SKUs Orde r Size Clie nt V olum e 2. Define requirements Indentify storage and throughput needs Recognize labor requirements Determine operating costs Distribution Center Strategic Master Plan Alternatives Matrix Baseline Alternative 1 Alternative 2 Alternative 3 Alternative 4 Alternative 5 Alternative 6 Receiving Manual no sortation X X Manual sortation X X X Automated sortation X X Storage Aisles Standard Aisle X X Narrow Aisle X X X X X X X Storage Method Selective Pallet Rack X X X X X X X Push Back Pallet Rack X X X X X X X Double Deep Rack Deep Lane Pallet Flow Drive In Rack Floor Stack X X X X X X X GOH X Order Fulfillment Ground level zone picking X X Pick to cart X Pick and Pass Ground X Pick and Pass Pick Module X Pick and Pass Pick Module (Auto Pass) X Pick to Light X Voice Picking X Order Accumulation X Put to Light X Batch Pick w/tilt Tray X Shipping Manual shipping sorter X X Automated shipping sorter X X Automated shipping sorter direct load X X X All Alternatives Include: Reserve Storage Off Price Storage Office Space Trash Compactor GOH (if required) Hanger Change Corrugate Bailer Inbound QC Corrugate Storage Security Cage Packing Special Projects Returns Area Battery Charging Area Pack and Hold (if required) 14

15 Drive-up Door Compactor 5 TRANSPORTATION OFFICES, REST ROOMS 2,000 sq. ft. Receiving, Inspection & Returns 7,000 sq. ft. LTL UPS Sh ip ping 8,000 sq.ft. ND A INT 'L & M ISC Shipping Hold (International) Maintenance & Battery Charging 6,300 sq.ft. Carton Make-Up Area 6 00 sq. ft. Weigh, Manifest & Packing MultiPack & Bagging MultiPack 600 Stations Catalog/Lit Insert Station (on 1st floor of module) Q A Station HANGING CELL #1 Large Order Make-up/Staging Area OPEN/ PACK Rac k Hoop Hoop OUTPUT FRO M VAS 6 Head 6 He ad HP8 HP9 HP8 HP 9 6 H ea d 6 Head Rack O PE N/ PA C K Rac k 6 -HE AD C E L L # 2 CUSTO M EMBROIDERY HP3 HP4 H oop 6 He ad Rack 6 Head 6 Head Hoop HP 3 HP4 6 Head 6 Head H oop Rack OPEN/ PAC K Security Cage Rack Hoop Hoop HP8 HP9 Hoop 6 Head Rack 6-HEAD CELL #3 CUSTO M EMBROIDERY Data, Dum my, P ho enix 6 Head 6 H ea d INPUT TO VAS ELE VATO R SIN GL E-HE AD EM BR O ID ER Y CELL #4 DC Design Steps for Success 3. Identify and document alternatives Develop alternative approaches to meet requirements Document investment and operating costs of each alternative Determine the intelligence of each alternative Simulate viable ibl alternatives 4. Evaluate and recommend the best approach Complete economic and qualitative evaluation Perform sensitivity analysis to test robustness of the solution Select the best approach Receiving Non-con area Shipping Multi-pak 400' 10 Product Line 2 Product Line 3 Product Line QA Station Non-Cons 8,400 sq. ft. A ctive & Reserve RESERVE 47,500 sq.ft. Trash Offices, Lunchroom & Restrooms 8,900 sq. ft. (17,800 sq. ft. 2-story) 400' Trash Reserve storage 3-level module AS/RS picking 3,800 sq. ft. VAS area w/ UPM 15

16 Adaptive MHE Control System Considerations Design For Flexibility Your DC requirements will grow (or shrink) hi over time. SKU proliferation Business growth or retrenchment Recognize that new hardware sensors/controls are intelligent in ways that can be exploited to help your operations. Points of data collection that can push data through a network to your IT systems A WCS is the tool that connects the cement floor of your DC to the glass house of your IT infrastructure. The right information, to the right users, in time to make meaningful decisions Client Quote: I ve got plenty of data. What I need is information! 16

17 The Importance of the WCS A full featured commercial solution for warehouse control that adapts as your business changes System intelligence Standard interface between the ERP/WMS and the automation Execute business rules Built in diagnostic capability Converts data into actionable information Open expandable architecture Easy to use Used to fine tune daily operations Capability to rapidly add additional features and equipment Real time access to information Graphical User Interface (GUI) available from any location on the network Mobile devices (i.e., smart phones, tablets, etc.) 17

18 Warehouse Control System Approach Comparison Traditional Warehouse Automation Tompkins Control System Islands of automation Automation is integrated WMS has no (or multiple) WMS (via TCS) has single interfaces to automation interface to all automation Multiple architectures and user Intuitive, data rich, unified user interfaces interface for all systems No system overview stove pipe Comprehensive system graphic approach Standard library of reports plus No reports or disparate reports user developed reports 18

19 Control System Architecture: Two Approaches 19

20 WCS Integration to WMS or ERP Advantages of Isolating WMS or ERP Integration from the Machine Automation Layer: Data from WMS or ERP is mapped to business processes, not cells of automation. WCS handles all data communication to/from automation cells (areas of control). Automation cells can be added and subtracted to the layout as needed, without disturbing integration to the WMS or ERP. Significantly minimizes regression testing and modification expenses versus traditional controls model Upgrades to the WMS or ERP can be performed and managed without concern for the machine automation layer. Simply duplicate the data messages to/from TCS 20

21 WCS Integration to WMS or ERP Client Examples A client is deploying SAP changes while simultaneously implementing a new automated warehouse. By testing one interface to WCS, we have eliminated the need for SAP interfaces to carousels, mini loads, pick modules, packing sorters and shipping sorters. A client implemented WCS five years ago for a small material handling system interfaced to Manhattan Associates PkMS. Since then, the MHE has expanded to 3x the initial size without requiring modifications to the PkMS warehouse management software. 21

22 Key Takeaways Think strategically Match the concept with the strategy Design for maximum flexibility and adaptability Pick your partners carefully Match risk profile and vision Find leaders to deliver early results Ensure well rounded focus Visibility extending into the customer and supplier Planning dynamic with focus on execution Execution optimized and nimble Challenge your application s architecture Align with strategy Think long term Don t get hung up on sunk cost Beware ERP 22

23 Discussion