A PROPOSED FRAMEWORK FOR LEAN WAREHOUSING

A PROPOSED FRAMEWORK FOR LEAN WAREHOUSING Muhammad Salman Mustafa Ph.D Candidate Anna Corinna Cagliano Post-doc Research Assistant Carlo Rafele Full Professor Dept. of Management & Production Engineering Politecnico di Torino Corso Duca degli Abruzzi 24, 10129 Torino (Italy) Contact information: muhammad.mustafa@polito.it (phone +39 0110907206) anna.cagliano@polito.it (phone +39 0110907206) carlo.rafele@polito.it (phone +39 0110907286)

2 A proposed framework for lean warehousing

3 M.S. Mustafa, A.C. Cagliano, C.Rafele Abstract Lean warehouses can serve production or business systems and supply chains in general by contributing to the achievement of lower costs of operations and increased flexibility and efficiency. The work aims to present a 3-step framework for lean warehousing based on a conceptual analysis. The framework starts with 5Ws Analysis of 7 Wastes ("muda") for warehouse operations. The outcomes set a baseline for selection and effective implementation of lean tools. As the second step, the 5S lean tool is applied for waste control in warehouse operations for achieving an improved visibility, smoother material flows, work organization and standardization. As the third step, the Value Stream Map (VSM) technique is introduced as a mean to represent the material and information flows in warehouse operations. VSM shows the elements that control the time of warehouse activities and, thus, the lead time of the whole process. The proposed framework can help to control waste and increase efficiency in warehouse operations. Further research directions include an accurate validation of the developed approach by applying it to multiple warehouse settings, the analysis of human resources and information systems requirements as well as the development of design principles for lean warehousing. Keywords: Lean, Waste, Warehouse Operations 1. Introduction Warehouses are meant for storage and distribution of goods by connecting suppliers and customers. Lean warehousing is based on the fact that warehouse operations can be improved through lean tools and concepts. In fact, lean tools are able to support the optimisation of material flows and the reduction of waste, with a consequent beneficial effect on the time to perform warehouse activities (Garcia, 2003).

4 A proposed framework for lean warehousing A five-step process has been suggested as a guide to implement lean principles in any environment, either distribution or manufacturing systems (Womack & Jones, 1997). According to it, the following tasks should be performed: Identifying the value that you add to a process or product; distribution people usually assume all the handling they do adds value, but customers do not think the same. Value stream mapping: diagramming all the activities in the distribution process, from order placement to delivery, and identifying activities that are not adding values and need to be eliminated. Removing bottlenecks to improve material flows. Adopting a pull approach so that the supply chain is driven by the customer demand downstream. Aiming to perfection by continuous improvement and repeated efforts for waste removal. Lead time in warehousing opearations can be reduced by improving methods for material handling, order picking, putaway and palletizing, trucks loading and checking inventory locations etc. A list of lean tools can be applied to warehouse operations such as 7 wastes ("muda") classification, 5 Ws, 5S, Value Stream Mapping (VSM) and line balancing (Garcia, 2003). In order to contribute to the development of a strategy for lean warehousing, this study proposes a framework that includes waste analysis of warehouse operations and the application of the 5S lean tool to reduce waste. In addition, VSM is introduced to represent the state of warehouse operations and the elements that control the time of single activities and the total lead time. The proposed framework aims to suggest a practical approach for waste analysis and lean tools applications in warehouse operations. The plan of this paper is as follows. Literature review is discussed in Section 2, the proposed framework is detailed in Section 3, while Sections 4 and 5 respectively present discussion and conclusions. 2. Lean Warehousing Lean has originated from mass production and has its roots in the automotive industry, mainly in Toyota. However, the lean concept is not limited to the

5 M.S. Mustafa, A.C. Cagliano, C.Rafele manufacturing sector only but it is also applicable to the service industry environment, and warehousing is one example. (Womack & T.Jones, 2003). The understanding of lean starts with the analysis of the so called "muda". Lean and "muda" are two contrary elements because "muda" means waste, specifically any human activity which absorbs resources but creates no value. Lean thinking supports "muda" reduction by providing a way to specify value and line up value creating actions in the best sequence. Lean thinking helps to achieve better results with less human effort, less equipment, less time and less space, in order to satisfy customers needs (Womack & T. Jones, 2003). The main objectives of developing warehouses are to earn profit and assure the appropriate level of customer service. These objectives are reached through maximizing the utilization of warehouse storage space, equipment, and human resources (Mulacahy,1993). The general warehouse processes start from receiving goods, including sub-processes of unloading, unpacking and sorting, and proceed with storing, picking, packing, and shipping them. Warehouse is a necessary requirement to support the fullfillment of variable customer demands. The key to improve velocity and flow in warehouse operations is to reduce the non value added steps as much as possible (Garcia, 2003). Lean warehouse actually means applying lean concepts and techniques to warehousing operations and making it more efficient by reducing the total lead time as well as the processing time for different activities. Here the lead time is defined as the sum of the total processing time and the storage time. Many lean practitioners believe that the lean and warehousing concepts are mutually exclusive because lean is focused on just in time operations with preferably no inventory between the different steps of a process (Tostar & Karlsson, 2007-08). In comparison to manufacturing processes, warehouse operations are simpler and not very much considered for lean applications. However there exists the opportunity for time and cost savings in warehouse operations. In warehouses people and products seem to be in constant motion but high levels of activities do not necessarily mean high productivity (Gaunt, 2006). In order to obtain performance improvements, warehouse activities may be considered as an assembly line. Non value added tasks can be reduced by analysing

6 A proposed framework for lean warehousing physical operations, paths of picking, and waste motions and by trying to avoid a poor availability and maintenance of tools and equipment (Myerson, 2012). Most of the lean tool concepts can be applied to warehouses, such as 5S,VSM, team building, kaizen, problem solving and error proofing, kanbans/ pull systems, line balancing and general waste reduction (Myerson, 2012). The tool that is most commonly adopted in warehousing is VSM. It can be used to analyse operations and evaluate the associated lead time and the total processing time. Also, it highlights waste and non value added activities and indicates areas of improvement (Garcia, 2003). The literature available on lean warehousing is mainly academic in nature. Therefore, there is a need for developing practical approaches by considering all the necessary aspects of warehouse operations as well as the available lean tools. In order to contribute to bridge this gap, the present work suggests a framework for the implementation of lean tools in warehouse operations. This aims to be a roadmap for analysing both material and information flows, identifying their weaknesses and setting appropriate improvement strategies. The first step in the proposed framework is the 7 wastes analysis of warehouse operations and their sub-operations. The 5Ws (what, when, where, why, who) tool is used for such investigations. In the second step, 5S (sorting, straitening, shining, standardizing and sustaining) lean tools are applied to control the waste activities. The third step includes the drawing of VSM for representing the state of warehouse operations. Material as well as information flows are reviewed and improved as per the 5S application. The factors that contribute to improve the flow of materials and reduce the lead time are mentioned. 3. Presentation of the Framework Each warehouse has its own categorization of processes: however, the typical ones are receiving, putaway, storage, picking, packing and delivery (Frazelle, 2001). The first step of the proposed framework is about classifying and investigating waste ("muda") in warehouse operations by applying the 7 wastes categorisation and 5Ws (what, when, where, why, who) lean tools. 5Ws has been adopted here because it a generic and quite intuitive technique to find the causes for waste.the waste is classified as transport, inventory, motion, waiting, overprocessing, defects and overproduction. However, overproduction would be excluded in this case as the

7 M.S. Mustafa, A.C. Cagliano, C.Rafele warehouse operations do not include the conversion of raw materials into products. This taxonomy was originally developed by Toyota s Chief Engineer Taiichi Ohno as the core of the Toyota lean production system (Ohno, 1943). It has been used because the proposed 7 types of waste are the baseline of the lean concept and are applicable to both manufacturing and service industries. The goal of the first part of the framework is to suggest an approach that relies on the combined benefits of the Ohno s classification and 5Ws technique to study types of waste and their causes. Such approach has been applied to all the warehouse processes mentioned above. However, due to space constraints, just the outcomes of the receiving process are discussed in Table 1. For example, the analysis of the third type of waste (i.e motion) shows that sometimes warehouse staff has to walk around to search the equipment and tools used in the receiving process or to find empty spaces for putting the unloaded items. It causes unnecessary movement of workers. The reason may be the placement of equipment and tools in an incorrect manner or place, bottlenecks in the material flow, oversized inventory in the receiving area, or poor information. The description of waste in the receiving process is mainly based on literature review of the work by Toster and Karlson (2007-08). The said work has studied the warehouse operations in detail and has set a baseline for the waste classification and analysis performed in this research. In fact, the possible types of waste have been explained according to the description of activities provided by Toster and Karlson and their causes have been identified by using the questions suggested by the 5Ws technique.

8 A proposed framework for lean warehousing 7 Wastes 5 Ws Analysis Operation ("muda") What (Deascription of waste) When Where Why Who Long turnaround time for vehicles/ After Warehouse dockyard Poor yard control, not Transport trucks completion of receiving optimized strategy for unloading vehicles operations Bottlenecks in the flow of goods / During the In the area of the Poor layout planning Inventory unnecessary stock receiving / unloading warehouse between receiving and storage Inadequate working methods process Poor line balancing Walking around by the warehouse Lack of straitening (setting in staff to search and find the At the In the receiving / order) principles for tool equipment and tools used in the beginning and unloading area placement Motion receiving process. Walking around by workers to find during the receiving Bottlenecks in the material flow empty spaces for placing the process. Oversized inventory in the Receiving (Unloading, unpacking, sorting) Waiting unloaded items Vehicles have to wait a long time before starting the unloading process On vehicle arrival at the warehouse In or outside the dock area receiving area, information errors, human errors Already occupied dock positions, poor scheduling, poor dockyard control. Planning and scheduling Arrivals of vehicles earlier or department later than scheduled Placement of goods in the wrong During the In the receiving/ Poor record keeping, Multiple order and area after receiving receiving/ unloading area information errors, delayed departments Defects Items received but not appearing in unloading During the material data entry the warehouse information system process handling process Over Processing Over Production Unnecessary repeated checks for product quantity and quality During the sorting and quality assurance processes In the receiving area Information errors Human errors Not Applied Table 1: The 5Ws Analysis of 7Wastes of receiving operation In the first step of the framework, the combined use of Ohno s waste classification and 5Ws allowed to define sources of waste and to organize them in a structured way. Therefore, at this stage of the analysis, it is necessary to devise appropriate actions to reduce such waste. For this purpose, the 5S technique has been chosen because of its generic structure and straightforward approach that make it a suitable tool for starting lean applications. Implementing 5S in the warehouse can improve the visibility, material flow, work organization and standardization of processes ( Gergova, 2010). As the second step of the framework, this proposed technique has been applied to all the considered warehouse processes but, due to space constraints, just the outcomes of the receiving process are detailed in Table 2. The waste description of

9 M.S. Mustafa, A.C. Cagliano, C.Rafele the receiving process as given in Table 1 has been the basis for applying 5S to each of the identified types of waste seperately. For example, in order to reduce the third type of waste (i.e motion), it is suggested to remove all the tools and equipment from the working area and put them in the designated places. Furthermore, the places dedicated to different sub-operations in the receiving process should be marked and segregated, and unnecessary storage of goods should be avoided by moving them to their next phase in the warehouse process at the earliest. Finally, tools and equipment should be kept clean and maintained and the working areas should always be clean and tidy. For long term applications, it is also suggested to standardize the instructions and check whether they are followed through periodic audits.

10 A proposed framework for lean warehousing 7 Wastes 5 S Applications Operation ("muda") Description Of Waste Sorting (Seiri) Straitening (Seiton) Shining (Seiso) Standardizing (Seiketsu) Sustaining (Shitsuke) Receiving (Unloading, unpacking, sorting) Long turnaround time for vehicles/ trucks Transport Bottlenecks in the flow of goods / unnecessary stock Inventory Walking around by the warehouse staff to search and find the equipment and tools used in the Motion receiving process. Walking around by workers to find empty spaces for placing the unloaded items Vehicles have to wait a long time before starting the unloading Reduce the unnecessary stay of vehicles in dockyard areas Remove unnecessary equipment and material placed in receiving area Remove the unnecessary stock on the way between the receiving and storage areas Remove all the tools and equipment from the working area at the end of their use. Create an empty space in the receiving area for upcoming goods by moving the unpacked and sorted items to their next positions in the warehouse. Sort out the unnecessary inventory in the receiving area and Waiting process remove the unnecessary activities before the start of the unloading process Placement of goods in the wrong order and area after receiving Defects Items received but not appearing in the warehouse information system Over Processing Over Production Assign an Define and keep appropriate place the paths for to each vehicle in the dockyard area vehicle movement clean and tidy Move the goods to Keep the working the next phase in and transit areas the warehouse clean and tidy process at the earliest Make line balancing for receiving and storage operations Put all the tools and equipment in designated places and mark it accordingly. Segregate and mark the places dedicated to different steps of the receiving process Review the vehicle arrival schedules and synchronize them with the outgoing schedules Place the goods in the predefined and designated area and order. Perform data entry process Standardize the practice Continue following the procedures and make periodic checks/ audits Standardize procedures for the inventory flow from the receiving to the storage area Continue following maintenance and workplace Keep all the tools Develop corrective and cleaning standards and equipment preventive maintenance clean and maintained. Keep the receiving area clean and tidy during the receiving process as well as at the end of it Keep the storing areas clean Unnecessary Review the repeated checks process of quality for product and quantity quantity and verification quality Not Applied procedures for tools and equipment and standardize them according to the work requirements. Develop standards for keeping aclean work place and assuring the removal of the unnecessary inventory Develop special procedures for vehicles arriving out of schedule Standardize procedures for inventory handling Continue following the procedures and make periodic checks/ audits Standardize the process of checking product quantity and quality Table 2: Waste reduction in receiving operation through 5S Application

11M.S. Mustafa, A.C. Cagliano, C.Rafele The second step of the framework suggests improvements to reduce the waste identified in the first step. However, a tool is needed in order to support the implementation of such improvements and the quantification of the associated effects. To fullfill these objectives, the third part of the framework relies on VSM. It represents all the value added and non value added activities in warehouse operations and the related flows of goods and information, together with the linkages between them. The VSM gives a visual representation of a process and helps to evaluate the order lead time and the processing time (Garcia, 2003). The approach suggested in this part of the framework is to draw a VSM for representing all the warehouse processes. The sequence of operations in Figure 1 is adapted from Frazelle (2001). "Inventory stocking" and "storage inventory" represent the materials waiting between two warehouse operations, while c/t and c/o mean cycle time and change over time respectively. Additionally, the double-line arrows represent material flows and single line arrows represent information flows between warehouse operations and the information (database) system. Since this is an example of the way to implement the third step of the framework, the time values for the different operations have not been set and the lead time as well as the processing time cannot be represented in numerical terms. Supplier Supplier Supplier Warehouse Planning & Control Warehouse Database Customer Customer Customer Receiving Put Away Storage Picking Packing Delivery Lead Time Processing Time Inventory stocking Inventory stocking Storage Inventory Inventory Stocking Inventory Stocking C/T C/O C/T C/O C/T C/O C/T C/O C/T C/O C/T C/O Figure 1: Current State Value Stream Map

12 A proposed framework for lean warehousing The shown current state map is supposed to be a situation of a warehouse suffering from waste activities and information related problems, as mentioned in the first part of the framework (Table 1). In the current example, the receiving process is the operation considered for revamping. It is assumed that there is a need to reduce the material handling time by controlling waste and non value added activities and by improving the information flow. Based on the conceptual outcomes of the first two steps of the framework, the processing time of the receiving process can be decreased by adopting the improvements out of the 5S application (Table 2). As a consequence to that, the total lead time of the warehouse will be improved. For example, the following re-engineering activities can be carried out: Revamping the information flows between different parts of the warehouse operations and the database. Improving the method of unloading vehicles. Improving yard control for incoming vehicles. Improving layout design by using the line balancing technique. Tools and equipment used in different warehouse operations are well cleaned and maintained and placed in dedicated places. Removing delays in the data entry in the warehouse information system. It is important to mention that after the application of these improvements the future state VSM can be redesigned and the efficiency parameters, such as reduction in lead time or processing time, can also be assessed.

13M.S. Mustafa, A.C. Cagliano, C.Rafele 4. Discussion The present research work is a conceptual analysis of different factors that contribute to reduce waste and improve flows in warehouse operations. The approach used in developing the framework is analytical and generic. The discussion about classification of waste and their causes of occuring can help practitioners with the use of the 5S lean tool to control waste activities. Different warehouses may have different environments and working methodologies, thus the generic approach of the framework makes it flexible so that it can be applied to a variety of situations. VSM is a main tool for lean applications: the combination of VSM with the 5S approach helps to reshape warehouse operations and the sequence of flow. As VSM also represents the information flow patterns between different steps of warehouse operations, it can be helpful in tracing out the gaps and shortcomings found in the warehouse information system. The framework can be more useful for warehouses beginning to implement the lean concept in their organizations as compared to warehouses already adopting advanced lean management tools. Practioners can analyse their warehouse activities based on the suggested approach. Keeping in mind both the theoretical and the practical aspects of the framework, it can be expected that the study may have implications for both practitioners and researchers. On the one hand, to a general warehouse practitioner it gives a baseline for investigating and re-engineering warehouse activities according to the lean principles. On the other hand, to a researcher it can help to find new opportunities for fostering continuous improvement in warehouse operations. In particular, it can be a good starting point in order to structure analysis on lean warehousing and can stimulate a more integrated use of lean approaches. Finally, the proposed approach can inspire studies about the connections between different lean tools. The most important limitation in this work is the absence of a real case study warehouse, therefore the practical implementation of the proposed framework is still missing. Since real time values are not available, general efficiency parameters cannot be applied. Additionally, this research has suggested several warehouse improvements. However, it has not further elaborated these points by proposing methods and approaches of performing such actions.

14 A proposed framework for lean warehousing As far as future research is concerned, the given framework will be applied to different case study warehouses. The results obtained will help to improve it as well as to enhance the academic literature on lean warehousing. Also, there are further possibilities for future work in this field. Main topics include investigating the models of information systems for lean warehousing, studying the connection between automation and lean warehousing, and defining implementation strategies, namely plans of action for existing warehouses. Furthermore, it would be interesting to analyze the human resources requirements for lean warehousing and develop principles of lean warehouse design. 5. Conclusions The aim of lean warehousing is to make warehouse operations more productive. Lean tools are available to help with this purpose, however where to start and how to proceed are major issues. The proposed framework is an attempt to answer these questions based on waste analysis, waste control tools and applications, and visual representation of warehouse activities through VSM. The framework provides a generic and flexible approach, therefore it may be useful in many warehouse environments. It can be beneficial to both practitioners, in order to evaluate and improve warehouse operations, and researchers, in order to find new opportunities for continuous improvement in warehousing. In general, it can be concluded that lean for warehousing is not just a tool but a way of dealing with every day operations. Lean warehousing assists in performing activities more efficiently, accurately, and with less damages and loss of inventory. The labour time can be more productive and resources, such as floor and storage space, are better utilized. Finally, the velocity is improved and efforts can give significant financial advantages for an organization.

15M.S. Mustafa, A.C. Cagliano, C.Rafele References Frazelle,Edward H, 2001, World-Class Warehousing and Material Handling, Mc- Graw Hill Garcia, Frank C, 2003, Applying Lean Warehouse Operation, http://www.lean-automation.com/pdf/applying%20lean%20concepts-wp.pdf Gaunt, Ken 2006, Are your warehouse operations lean, http://www.plantemoran.com/perspectives/articles/2009/pages/are-your-warehouseoperations-lean.aspx Gergova, Iva, 2010, Warehouse improvement with Lean 5S - A case study of Ulstein Verft AS, Master thesis at Molde University Colledge, Molde, Norway Mayrson, Paul 2012, Lean Supply Chain and Logistics Management, Lean Warehouse: Low-Hanging Fruit (Chapter 8), Mc Graw-Hill, Inc Mulcahy, David E, 1993, Warehouse Distribution & Operations Handbook, Mc Graw- Hill, Inc Ohno, Taiichi, Beyond large scale production, New York: Productivity Press 1988 Tostar, Martin & Karlson, Per. 2007-08, Lean Warehousing (Gaining from lean in Warehousing) Master Thesis written at Linkopings Tekniska Hogskola, Sweden Tostar, Martin & Karlson, Per. 2007-08, Lean Warehousing (Gaining from lean in Warehousing) Master thesis written at Linkopings Tekniska Hogskola, Sweden Womack, James P & Jones, Daniel T, 1997, Lean Thinking (Banish waste and Create Wealth in your Corporation) Touchstone Books