Order Fulfillment Strategies for Low Velocity Inventory

Transcription

1 Order Fulfillment Strategies for Low Velocity Inventory Presented by: Ken Ruehrdanz 2018 MHI Copyright claimed for audiovisual works and sound recordings of seminar sessions. All rights reserved.

2 Order Fulfillment Strategies for Low Velocity Inventory Abstract How is your efficiency when it comes to accommodating the huge number of SKUs/part # s in your operation that are considered slow moving? This presentation will investigate practices and solutions that can help you optimize the way you receive, putaway, store, pick, pack and ship low velocity inventory. Monday April 9: 12:00 noon Theater A

3 Chapter 1 Define the Opportunity 3

4 Slow Moving Inventory: Top Issues Space & Travel Time Labor & Ergonomics SKU & Sales Growth 4 Accuracy & Quality Throughput & Processing Time Access & Transactions

5 Your Business Model Impacts slow moving inventory Example: Accommodate more SKUs than competitors 5

6 Data Analysis Define the Opportunity Inventory profile Review year to validate movement Productivity = sales per year per SKU Days on hand / turns Classify SKU s (A, B, C) Seasonal Order profile Evaluate SKU s from order perspective % of orders contain A s, B s, C s Activity Profile Where is labor allocated DC Transactional costs travel / handling Define slow mover in your operation: once a day, week, month? 6

7 Data Analysis example Inventory profile by velocity: A: 15,000 SKU s B: 25,000 SKU s C: 75,000 SKU s Order profile 40% picked from shelving Activity Profile 350,000 picked/day as eaches 145,000 picked/day from shelving 7

8 0% 2% 4% 6% 9% 11% 13% 15% 17% 19% 21% 23% 26% 28% 30% 32% 34% 36% 38% 40% 43% 45% 47% 49% 51% 53% 55% 57% 60% 62% 64% 66% 68% 70% 72% 75% 77% 79% 81% 83% 85% 87% 89% 92% 94% 96% 98% Data Analysis to Identify Daily Volume Example 100% 90% 80% 70% # SKUs as % of Daily Volume 60% 50% 40% %of volume 30% 20% 10% 3% of SKUs account for 20% volume 30% of SKUs account for 60% volume 67% of SKUs account for 20% volume 0% 8 SKU s

9 Activity to Movement Analysis Example 9 0% 20% 40% 60% 80% 100% 120% A - 5% C 89% B - 6% SKU

10 Things to Consider: Variable SKU Velocity SKU velocity stable? Or does velocity NOT follow ABC rules? A mover velocity today, is a C mover velocity tomorrow? Example: e-commerce retailer 80% of SKUs changed velocity from A to C 10

11 Things to Consider: Inventory Does your business demand that you keep everything that you currently have in storage? Do you have no-movers vs. slow-movers? Lost inventory? Old, expired? Inventory carrying cost? Buyers decide what s in warehouse? What is the cost of keeping vs. getting rid of? cost of material customer service 11 rare SKU manual replenishment

12 Things to Consider: Inventory Does your business demand that you keep even more slow moving inventory in storage? Retailers don t want it: in their warehouses in their stores fulfill online instead? 12

13 Things to Consider: Storage Put value to lost & misplaced inventory? How are you storing your slow movers? How does storage tie to transaction cost? Using up valuable space? Are you out of space? Can inventory be condensed? Where is it located in warehouse? Are you utilizing cube? 13

14 Things to Consider: Storage Shelving Flow rack Pallet rack with VNA truck 14

15 Things to Consider: Labor Based on labor, how much time is spent picking slow moving inventory: Time to replenish Time to access? Time to shuffle material? Time to find material? Time to travel to get the material? Significant labor used for picking slow movers / merging to orders Receiving & Putaway Replenish Pick Transport Sort Pack Transport Sort Ship 40% 45% 15% 15

16 Things to Consider: Labor Example: Discrete Order Pick: RF wrist mount Voice or light directed Pick to tote Pick to shipping container Pick to conveyor Pick to cart 16

17 Things to Consider Labor Example: Batch Pick & Sort: Voice or light directed Re-useable totes Sort to customer orders 17

18 Things to Consider: Slotting Is your warehouse slotted effectively? By velocity, cube? When was the last time you re-slotted? Do you refrain from re-slotting due to cost & time to do so? Does your slotting tie in to replenishment, picking and order profiles? Do you measure transactional costs? 18

19 Things to Consider: Accuracy & Quality Are your orders going out the door accurately? Do you have a lot of returns due to accuracy? Are shipments leaving your warehouse late? 19

20 Chapter 2 What are Others Doing? 20

21 Warehouse Execution System (WES) Software Optimize processes Accommodates low velocity SKU strategies Receive Put-away Store, Buffer Replenish Picking, Kitting Consolidate Pack Palletize Ship 21

22 Smart Order Execution Strategies Software Storage location management Planning & optimization Labor productivity Waveless, on demand, continuous flow 22

23 Storage Strategies Put away & retrieval Receiving Storage location optimization Omit multiple load moves Use variety of position sizes: depth & height Consider cost: each touch, time & equipment each storage location, utilization 23

24 Storage Strategies Use appropriate solution based on velocity & Utilization Pallet rack Flow rack Shelving Layer quantity Totes/containers Totes/containers w/multiple SKUs WES assigns appropriate location 24

25 Slotting Strategies Family groups Similar SKUs together Cube Random Replen to any open position Multiple locations assigned for each SKU Spread A movers to avoid congestion 25

26 Picking & Replenishment Methods For slow moving inventory Goods-to-Person Order containers-to-person Person-to-Goods 26

27 Case Study #1 Food Distributor Dynamic Slotting Re-cycle pick slots throughout shift automated storage 27

28 Value Analysis Conventional Pallet Rack 12,000 sq ft 1 or 2 High Pick Faces Pick Face Width = 4 All Floor Level Manual let down Dynamic Slotted 3500 sq ft 4 high pick faces 1600 Pick Faces Automatic let down Pick face width = product case Walk Path = 650 ft Walk Path = 6200 ft 28

29 Pallet Version Food Distribution Dynamic Slotting storage upper levels Dynamic Pick Faces case pick automated storage 29

30 Automatic Replenishment Case pick to pallet 30

31 Case Study #2 Office Supplies Person-to-Goods, Low Volume Piece Picking Carts Discrete order pick Multiple order per cart RF or voice directed Pick path optimization 31

32 Case Study #3a Beverage Person-to-Goods Pick to pallet: voice directed Pick path optimization Directed to the pick face Fast movers: case pick Slow movers: pre-pick to carts or totes WES plans & merges fast & slow movers at shipping 32 high velocity SKU s low velocity SKU s

33 Case Study #3b Beverage Buffer C Movers Pre-pick slow movers to tote Pre-pick slow mover cases Stage in Buffer Release to shipping By order, by route Merge with fast moving inventory 33 automated storage

34 Case Study #4 Electronic Parts Piece Picking 250,000 SKU s Low velocity SKU s Interlink sorter packing picking 34 flow

35 Case Study #5a Auto Parts Distributor Batch Pick to Put Wall Piece Picking, Low Volume Batch pick to carts: voice directed Pick path optimization Consolidate with put wall Light or voice directed Every fast mover is a slow mover Red totes: store pick up Grey totes: store shelf 35

36 Case Study #5b: Apparel e-com Batch Pick to Put Wall Piece Picking: high volume 135,000 SKU s All low velocity SKU s Batch pick Consolidate Pack 90,000 pieces/day chutes sorter put wall packing 36

37 Case Study #6: Electrical Supplies Zone Route High SKU count SKU velocity by zone Put-away (blue totes) Pick to carton (shipper) Direct cartons to zones with picks Put-away to pick zones 37 Order Container pick zones

38 Case Study #7: Industrial Supplies ASRS with Goods-to-Person (SKUs to Picker) 1. Travel time 2. Omit pick face 3. Omit re-slot 4. Accurate 5. Less space 6. Security 7. Optimized replenishment 8. Ergonomic 9. Engineered work stations 10. Speed 11. Productivity 12. Less labor 13. Staff accordingly 14. Sequencing workstations 38 automated storage

39 Case Study #8: Industrial Supplies ASRS with Goods-to-Person (SKUs to Picker) Low velocity SKU s Order processing: priority picks inserted immediately Do not wait for batch processing 39

40 Case Study #9 ASRS, Goods-to-Person Mixed Case Pallets, low velocity SKU s automated storage 40 build mixed case pallet

41 Case Study #10: Document Storage ASRS with Goods-to-Person Bins ASRS All slow moving inventory University libraries Books stored in bins Single or multiple SKUs/bin High density storage 41 workstation automated storage

42 Case Study #11 Healthcare Hybrid System Slow movers in ASRS Goods-to-person picking slow movers Zone route conveyor for fast movers Productivity Rates Inbound: Pick Station: Pick to Light: 40 totes/hr order lines/hr order lines/hr automated storage shipping Order containers to zone inbound decant 42

43 pick module Hybrid System automated storage outbound Reserve & bulk storage Decant & 43 Goods-to-person

44 Hybrid System Pick strategies by SKU classifications 4,000 SKUs 4,000 Orders/day 44

45 Case Study #12: Medical Supplies Piece Picking System for Low Velocity SKU s Distribute to hospitals Decant, store, pick 24,000 tote locations 7,000 order lines/day 35,000 pieces per day Load totes to wheeled carts Reverse route loading automated storage picking decant cart loading 45

46 Key Takeaways Understand what you have in your inventory Understand your order profiles Analyze & classify your SKU productivity Reconsider storage and labor strategies Slow moving inventory inefficient to accommodate Consider better methods. Drive results! 46

47 For More Information: Ken Ruehrdanz Or visit us at MODEX - Booth B3047