Assignment 42

International Journal of Transportation Engineering and Technology 2017; 3(4): 49-52 http://www.sciencepublishinggroup.com/j/ijtet doi: 10.11648/j.ijtet.20170304.11 ISSN: 2575-1743 (Print); ISSN: 2575-1751 (Online)

Importance of Warehouse Layout in Order Fulfilling Process Improvement

Yu Zhang, Syed Abdul Rehman Khan

School of Economics and Management, Chang’an University, Xi’an, China

Email address: [email protected] (Yu Zhang), [email protected] (S. A. R. Khan)

To cite this article: Yu Zhang, Syed Abdul Rehman Khan. Importance of Warehouse Layout in Order Fulfilling Process Improvement. International Journal of

Transportation Engineering and Technology. Vol. 3, No. 4, 2017, pp. 49-52. doi: 10.11648/j.ijtet.20170304.11

Received: October 2, 2017; Accepted: October 26, 2017; Published: November 20, 2017

Abstract: The warehousing layout has strategic importance in the firms’ supply chain management strategy and service level. Usually, firms design their warehouse, which can increase service level, reduce order fulfilling process time and cost.

This research discussed the warehouse layout for improvement in order fulfilling process time. Researchers discussed the case

study of Mury distributor, which deals in plastic pipes and some electric products. The results indicate that Mury distributor’s

employees were not well-trained in their work and several times they deliver wrong products, which also become a cause of

delay in customer’s orders. The findings also show that shelves and racks were not as per the requirement of the items and after

model building and layout changes increased to the efficiency and service level.

Keywords: Distributor, Order Fulfilling Process, Warehouse, Supply Chain

1. Introduction

In today’s world warehouses can create significant value

addition for the organizations, but if management knows how

to use effectively and efficiently another wise warehouses

only can add a huge cost only in whole system of supply

chain management [1]. The order fulfillment process has a

significant role in warehouse management. Companies give

importance to order filling process for enhancement of

customer services. The biggest reason of switching customer

is “unsatisfactory services”. In today’s competitive world

customers are demanding immediate (in short time) accurate

deliveries in terms of right quality and right cost. That’s why

companies are more focus over “delighted customer

services” but challenge which companies face is cost. The

bottom line of every company is earned a healthy profit, so

companies least preferred to add cost in the system in terms

of hiring more workforce and buying any automated system.

The priority of top management is to minimize the system’s

cost and achieves to the following objectives: provide

delighted services to the customers, building good and long

term relationships with customers and earned healthy profit.

Usually handle to the fulfillment process, there are two

different methods: The first is in-house (using company self-

infrastructure) and the second is outsourcing (fulfillment

services provider) [2-4].

The process of order fulfillment initiate from the “point of

sales inquiry” and end at “delivery of product to the

customers” According to [5-6] for every warehouse the most

labor intensive activity is order picking and as per the

estimation the order picking expense is 55% of the total

warehouse operation cost, because the travel time, finding

and selecting the right item and transport towards point of

shipping. The picking the items from the storage area for the

purpose of to fill customers order is called order picking. As

per [7] the order picking is up to 60% of the total labor

activities in the warehouse because majority warehouses are

taking human services for the “order picking”. In simple term

order fulfillment is how seller responds after receiving orders

from customers till delivery [8]. In this research will identify

the problems face during the order fulfillment process and

how companies can minimize their cost and improve their

order fulfillment process.

Mury distributors established during 1876 in U. S. Majorly

Company deal in plastics pipes and electronics related items.

Company has 48 employees, and has 1750 active industrial

account as well annual sales of almost $ 16.5 Million; it is

considered a large size distributor. Company which started as

50 Yu Zhang and Syed Abdul Rehman Khan: Importance of Warehouse Layout in Order Fulfilling Process Improvement

a small partnership between Louis and Juli, now has become

a giant in the industry.

2. Warehouse Role in Modern Supply

Chain

Role of warehouse in the supply chain is not new, before

usually warehouses were using only storage purpose. But

from last few decades it is become broader horizon.

According to the [1] following activities are commonly use

in today’s warehouse; same day shipment (its common in

many warehouses), postponement, late configuration, Cross-

dock, Transshipment facility, Returned Goods, Make Bulk or

Break Bulk, Consolidation, accurate deliveries to customers,

flexibility, timeliness, respond quickly over customer’s

request, labeling and tagging is also very important and play

vital role in tracking and selecting the right material on the

right time during fulfillment of the customer’s order [9].

Usually, Customers do not care “warehouse is company

owned or it is operating by third party” in modern SC (supply

chain) warehouses are contributing 99% accurate and

perfectly respond over customers’ request [1, 10]. According

to the overview of warehousing in North America [1]

“contract warehousing” in U.S is 60% of commercial US

market. Third party role in the warehouses are growing, and

firms would like to take advantages of third party in terms of

cost minimization, storage space, flexibility, specialized labor

and technology. As well firms also can change the

warehousing network without burden of fixed (warehouse)

expenses, but interesting retailers and distributors are not

willing to use of third party [10]. Usually the common

characteristics for the successful warehouse operations are;

investment in the people by the training and provide them

more skilled regarding their job responsibilities, measure

performance of individual employee and use evaluation

process to gage the service level and cost, usage of latest

technology (software & hardware) as per the warehouse

requirement to increase the visibility and velocity (speed) of

the operations.

In the process of order fulfillment the important part is

“Order Picking”. And usually in the warehouses many time

waste in finding and selecting the right material. Order

picking can be done by several methods. Commonly uses are;

Batch or picked by article, to fulfill the multiple orders the

multiple products selected and then products sorted in the

area of staging and consolidate with other products to fulfill

the customer’s order, Discrete Order; on the basis of per

customer’s order only specific products selects, Waves; in the

method products are gathered on basis of specific routing or

shipping criteria, Reverse-Order; it is used when portion of

order held to consolidate with other order. Reverse order are

somehow related with cross docking.

3. Problem in Warehouse

Warehouse of the Mury distributor was 12000 square feet

approximately. And company was dealing in 44700 items,

and there were many items which were very expensive and

some was very low cost items. Major problem of which

company was facing are delaying in order filling process.

There were few basic reasons which we analyzed after the

visit to the warehouse and observed activities in warehouse.

All picking and selecting the products works has been done

by labor force (no automation), waste many times in finding

the right products and sometimes the picker transport wrong

products towards shipping department, which was also

caused of delaying in filling customer orders. Due to the

delaying in customer deliveries, customers were disappointed

from the services provided by the Mury distributor. And in

last few years company has lost many customers, one more

reason what we have identified is that “height of shelves” is

not as per the labor are working there, and it was also one

major reason in delaying in finding and picking. As per the

[11] the top shelf in the warehouse should be as per the short

height worker. Who will work there because a person height

of 5 foot and 5 inches can pick to the material and items as

high as 6 feet and 11 inches.

4. Design & Layout of the Warehouse

In the warehouse available space was 12000 square feet

approximately, and utilization of the warehouse space is

85%. In simple words, in real case we cannot utilize 12000

square feet space for the storage purpose. The company’s

policy for the storage and picking is creating significant

impact on the warehouse design and layout. Following are

the three approaches for pick the items (by hand):

a. The picker can enter from one aisle and exits from the

same aisle.

b. The picker can enter from the one aisle and exits from

the other aisle

c. The picker can enter from the one aisle and exits from

the middle of the aisle.

The third one is very convenient for the picker, because

in the third one approach the picker (employee) usually

work towards middle of the warehouse as well he can

cover much area in little time and can pick many items in

very short time. The shipping and receiving work steps

play a critical role for the warehouse design. Because

from the shipping area after assembling and finalizing the

customer orders, it is shipped to the customers, so

shipping area should be accessible conveniently for picker

to transport the items towards shipping departments.

As we have mentioned before warehouse space was

12000 square feet and firms can maximum utilize 10200

square feet. Before we go towards solutions and

recommendation we need to understand the problem from

every aspect, so we also conducted couple of interviews

with warehouse manager and shift in-charge, and also we

observed to the warehouse activities performed by labor

specially finding to the products, picking and shipping.

After the in-depth analysis we went towards solutions.

The major questions which we was facing is “how many

International Journal of Transportation Engineering and Technology 2017; 3(4): 49-52 51

racks, shelves should be for the storage of 44700 products

in the available space. As per the nature of the products

we have selected the very suitable racks which pair of

vertical sides, horizontal beams. We selected this rack

because it is most suitable for the products and usually

products was in small and medium sizes it is also

convenient for the picker, and picker can pick the products

from the back side or from the front side so ultimately it

will also support to save time during “Picking” work.

After the selection of the rack and shelves usually no we

need to calculate how many racks we need to stored 44700

products in the given constraint of space. So for the

accurate findings and results we are going to use

mathematical model by Heragu, [12]. The following is the

notation, which will be used in model.

X and Y = number of rows and column in the spaces of

rack.

A = multiplier, a (multiple) sum of the horizontal rack

spaces, length of the total required aisle.

B = multiplier, a (multiple) sum of the vertical rack spaces,

width of the total required aisle.

This mathematical model will minimize the one way travel

time by picker to collect to the required products is

formulated as follows [12].

Minimize = �( � ) � � (�� )

� (1)

Subjected to the following

XYZ ≥ n；

and X, Y are integers

The total space available for storage exceeds the minimum

requisite, it will be ensured by first constraint. The number of

columns and rows should take on integral values and it will

cover by second constraint.

Y = �n(a + 1) / [Z(b + 1)] (2)

X = �n(a + 1) / [Z(b + 1)] (3)

After run to the mathematical model, now we will apply

this model. In this case, in which a = b shows that

warehouse is square shape. The warehouse of the

company is a rectangle length and width with 125 and 82

respectively. In the model two parameters ratio is a/b =

125/82 or a=1.52b roughly, so here we are using

reasonable values which is presented in [12], a=0.45 and

b=0.30 we have set these values for further calculation.

Then second parameter which we need to decide is

“needed shelf spaces” are 585 at an avg. size of 8079

cubic inches we chose n = 2x585 = 1170 (double of the

shelves would avoid products cover and make convenient

for the storage of received goods and also convenient for

the picker). And final parameter of the mathematical

model can determine by the given information and the

number of levels (measurement is Z). In this model Z = 7.

As we have discussed before the normal person can reach

as high as 6 feet 11 inches. So now we are going to drive

this mathematical model.

Calculations

Y = �1170(0.45 + 1) / 7(0.30 + 1) = 13.63 (4)

X = �1170(0.30 + 1) / 7(0.45 + 1) = 12.24 (5)

5. Research Findings and

Recommendations

As per the research findings, Mury Distributor’s

employees was not trained and skilled. In fact, many times

employees transport wrong products towards shipping area

which was the cause of delay in customers’ orders, picking

all worked was done by manually no technology used (error

margin was high). As well shelves and racks were not as

per the requirement of the products. This model has shown

the accurate number of racks which is required in the

warehouse “minimum 14 column and 12 rows” This

calculation will help to utilize the storage area in a better

way with few and no congestion. This results will also help

to solve storage problem “some shelves were over loaded

and some was empty” and after implementation of this plan,

company will be able to respond quickly to the customer

orders.

6. Conclusion

In the today’s supply chain management warehouse plays a

vital role to fulfill the customers’ requirement in terms of

delivery to right customer and on time delivery. In short

words, warehouse creates direct impact over customer

service level and due to the efficient and effective warehouse

operations, firms can improve their overall performance and

service level. On the other hand, effective and efficient

warehousing operations also create positive image and

reputation of firms in the customers’ eyes. In this article, we

have discussed the problem of one distributor and provided

couple of recommendations with the help of mathematical

modeling and suggested to re-design the layout of warehouse

for the better space utilization of the warehouse and to

minimize the customer’s order fulfillment process time.

References

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Biography

Ms. Yu Zhang is affiliated with School of Economics and Management, Chang’an University, Xi’an, China. Ms. Zhang has been published more than 15 research papers in international scientific journals and conferences.

Mr. Syed Abdul Rehman Khan is affiliated with Chang’an University, China, and Business Research and Institute, USA. Mr. Khan has completed his PhD in 2014 and he has been published more than 35 research papers in highly scientific journals including SCI and EI indexing. Further, Dr. Khan has attended more than 20 international

conferences as a keynote speaker and/or committee member.