Mar Koulak I

Warehouse management for improved order picking performance: An application case study from the wood industry
G.P. Broulias, E.C. Marcoulaki* G.P. Chondrocoukis and L.G. Laios

Department of Industrial Management & Technology University of Piraeus, Greece
*emarc@unipi.gr
Warehouse management for improved order picking performance, Zakynthos 2005
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Warehouse operation
Warehouses are important links between the production sites and the customers Need to shorten the throughput times in the supply chain Need for faster response to customer demand
Fluctuations in customer demand Increase in the frequency of orders Decrease in the size of orders Increase in product proliferation
Trade-offs between warehouse costs and delivery performance

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Warehousing performance
Once a certain order has been placed, the warehousing performance depends on
the time required, the precision achieved, the efficiency achieved in satisfying the customer demand
High performance provides a competitive advantage, so, many companies invest on the warehouse operation to improve their position in the market.
Order picking
one of the most significant activities in a warehouse Physical procedure of retrieving stock-keeping units (SKUs) from specified storage locations, to satisfy the customer demands in the fastest and cheapest way Order Picking (OP) activities involve:
taking the customer order searching for the requested SKUs retrieving the requested SKUs transporting the requested SKUs
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Order picking
The most labor intensive all warehouse processes
typically done manually
The retrieval cost exceeds by far the storage cost, and contributes by ~60% in the total warehousing economics The most time-consuming procedure in the warehouse.
Travel time may be up to 50% of the total OP time
Factors affecting the efficiency of OP

product demand warehouse layout location of the SKUs picking methods routing methods experience of the employees extent of automation.
Review of policies related to OP

decisions usually concern policies for
the assignment of the customer orders to the pickers, the routing of the pickers in the warehouse, and the storage schemes for the products in the warehouse.
the usual practice is to consider them separately current research shifts towards the co-evaluation of all three policy types
1. Order assignment policies

Strict-order picking
assigns a picker only one order during a picking tour
Batch picking
assigns a picker more than one order/tour (order list).
Zone picking
assigns a picker to a designated picking zone, where the picker is responsible for only those SKUs that are in his/her zone of the warehouse. Sequential zone picking Batch zone picking Wave picking
2. Routing policies
Propose route for a picking tour and the picking sequence of the items on the pick list Use of decision-making technologies, e.g.
mathematical programming tools (may generate confusing routes, and difficult to implement) heuristic routing methods (good but not optimal routes)
In practice, many warehouses use the traversal policy

the picker must pass through the entire aisle and in order to collect the items
Interaction of warehouse shape and storage policy
3. Storage policies
Storage policies remain the least investigated among the three policy categories random storage policy
Extensively used and by far the simplest option Requires less space compared to more sophisticated options Balanced utilization of the warehouse Good for few codes needs WMS
structured-storage schemes
Class-based policies Volume-based policies (e.g. within-aisle, across aisle) Demand-based policies (Pareto principle)
Demand Demandbased storage

Today the focus is on faster delivery of small more frequent orders of inventory at a lower total cost.
This often precludes the use of full pallet picking in warehouses, and leads to many broken-lots.
Pareto principle for world economics

80% of the wealth m 20% of the population
For warehouse management the principle is modified to:

80% of the demand m 20% of the products
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This work
Systematic and practical methodology for applying improvements in a warehouse system. The study is divided into different stages involving:
Data collection Analysis and implementation of improvement tasks System simulation and optimization
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Case study
Case study is conducted in a timber goods production & trading company warehouse The main objective is to reduce the overall OP time that is quite high due to the lack of proper management and the nature of the stored products.
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Warehouse description
The company has 6 warehouses for the finished products The panel warehouse has over 6000 codes of stored products, distributed into 4 individual sections.
panels are 80% of the total product sales of the company panel size is usually 3.661.83m, and thickness 6-25cm.
The present study considers one of these sections, where

the number of codes is around 1000 the part has 12 series of piles, 7 meters high and the products are stored in up to 4 depths of pile levels
13
Initial layout of the panel warehouse section

12 series of piles
Main aisle
4 depths of pile levels

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12 series of piles
Main aisle

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12 series of piles
Main aisle

16

12 series of piles
Main aisle

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Stages
1st series of time measurements
target the improvement that may be accomplished.
Suggest, implement and study alternative storage, picking and routing schemes
Based on observed situation and past know-how
2nd series of time measurements

investigate the achieved benefits from the transition from a totally disorderly situation to an organized and controlled warehouse environment
Simulate and decide on alternative warehousing policies, using the time data collected above.
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Stage 1
Initial situation
The warehouse suffered from many problems that mainly affected the search and retrieval times
Order assignment followed the strict-order policy. No routing policy - the choice of an efficient route depended on the experience of the picker. Random storage policy. The products were grouped in section parts according to the type of their surface.
Tracing a product relied on the experience of the warehouse managers and the memory of the pickers. Warehouse management depended on the experience of the personnel.
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Time measurements
The picking procedure is divided into four phases, and the time measurements concern the:
travel time required for the picker to reach the pick point, search time required for the products to be found, retrieval time required for the products to be retrieved, return time required for the picker to transport the products to the order point.
Each time measurement considered 15 order plans. Number of orders ranged from 5 to 17 per plan.
representative and included a large number of products.
Times are presented in minutes per cubic meter.

20
Sample of the order picking form
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Stage 1
Results of the 1ST measurement series
1ST measurement before modifications t1 (minutes) % total 0.51 9.0 2.05 36.0 2.50 43.9 0.63 11.1 1.14 5.69 20.0 100.
Phases Travel time Search time Retrieval time Return time Travel & return times Total

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Stage 2
Proposed modifications
Introduce a WMS Change order assignment policy from strict to zone picking Apply optimal routing policies To reduce the retrieval time
reduce the storage depths from 4 to 2 trade off between the time needed to access the products and the cost of extending the warehouse area
Relocate fast moving products, to reduce the retrieval time for small orders
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Stage 2
Implemented modifications
Installation of a simple WMS and change in the product locations (ABC analysis). Storage mode changed to demand-based, hence the fast moving products were placed closer to the section entrance to reduce the travel and return times. Two piles were allocated on each side section, to place broken lots of <20 SKUs Reluctance to apply any modification involving the use of more space, i.e.
reduction of storage depths levels adoption of zone order assignment policy.
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Final layout of the panel warehouse section

12 series of piles
Main aisle
4 depths of pile levels Piles containing only broken lots

25
Stage 3
Results of the 2ND measurement series
1 measurement 2 measurement before modifications after modifications Phases t1 (minutes) % total t2 (minutes) % total Travel 0.51 9.0 0.33 11.5 Search 2.05 36.0 0.37 12.9 Retrieval 2.50 43.9 1.73 60.5 Return 0.63 11.1 0.43 15.0 Travel & 1.14 20.0 0.76 26.6 return Total 5.69 100. 2.86 100.
ST ST
Relative time reduction (t1 -t2 ) / t1 % 35.3 82.0 30.8 31.7 33.3 49.7

26
Warehouse simulation
Simulate the order picking activities to find conditions that optimize the system performance
screening of different storage scenarios study the trade-offs and suggest optimal alternatives
Stochastic simulation in the form of a Monte Carlo process Performance measure is the total picking time.
Other objectives e.g. cost or deliverability can also be considered if relevant data are available.
The simulated process is based on available picking data collected during the normal operation of the warehouse.
27
Problem description
The picking time can be reduced by allocating M of the front area piles to items of high demand or leftovers The simulation results should assist the estimation of the optimal number of Broken Lot Piles (BLPs) the optimal maximum number of SKUs in the broken lots moved to the BLP.
28
Problem description
N piles M front piles for broken lots . . . . . . . K pile levels
29
. . Main aisle (clarks)
. .
System representation definitions

given frequency of product code demands, FPC = [FPCP] For every product code (P) stored in the warehouse, given are
lot size, LP (vector of lot sizes, L = [LP]) thickness, W P (vector of thicknesses, W = [W P]) set of demand quantities, DPQP and quantity frequencies, FPQP. set of picking times, DPTP, and their picking times frequencies, FPTP. Time depends on the storage depth J of P, J{1,2,,K} the number of piles allocated for broken lots, M, MeN, the maximum pile height allowed in the warehouse, Hmax, and the maximum allowable broken lot size, Smax. the set of BLP times, DBT, and the BLP time frequencies FBT.
For the BLPs, given are:

30
System representation definitions

given frequency of product code demands, FPC = [FPCP] For every product code (P) stored in the warehouse, given are
lot size, LP (vector of lot sizes, L = [LP]) thickness, W P (vector of thicknesses, W = [W P]) set of demand quantities, DPQP and quantity frequencies, FPQP. set of picking times, DPTP, and their picking times frequencies, FPTP. Time depends on the storage depth J of P, J{1,2,,K} the number of piles allocated for broken lots, M, MeN, the maximum pile height allowed in the warehouse, Hmax, and the maximum allowable broken lot size, Smax. the set of BLP times, DBT, and the BLP time frequencies FBT.
For the BLPs, given are:

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Simulation data
Based on real data collected during the normal operation of the warehouse, for M=2 and Smax=20 SKUs.
different picking orders in terms of The quantity and product code of an ordered item The time required for traveling, finding and retrieving the item.
The data are used to estimate occurrence probabilities for different states of the studied OP system,
adjusted to allow the screening of generic operation schemes simulation of different scenarios, other than the normal / original operation of the system.
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Example of simulation data for P=13
L13 = 50 pieces, W13 = 16 mm, FPC13 = 0.0784 FPQ13 = [0.125, 0.625, 0.000, 0.125, 0.125, 0.000, 0.000, 0.000, 0.000, 0.000] DPQ13 = [10, 20, 30, 40, 50, 60, 90, 100, 120, 180], in pieces FPT13 = [0.125, 0.750, 0.125, 0.000] DPT13 = [1.50, 3.20, 5.15, 10.5], in minutes
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Monte Carlo process

At any simulation time, T:
a dynamic vector of P quantities stored in BLP, VBQT = [BQT,P].
the algorithm selects stochastically: a P, according to the FPC frequencies. a P quantity PQT,P DPQP, according to FPQP a picking time instance PTT,P, depending on PQT,P simulation constraints: satisfy Hmaxand Smax New simulation time Td = T + PTT,P New quantities of P in the BLPs: if PQT,P e BQT,P, then BQTd,P = BQT,P PQT,P if PQT,P > BQT,P and , then BQTd,P = BQT,P + RQT if PQT,P > BQT,P and , then BQTd,P = BQT,P
34
The simulation terminates once a user-specified number of iterations (orders) has been completed. This number is sufficiently high to ensure that the simulation results depend on the given distribution, and not the distribution instances (i.e. the products, and their quantities and picking times) selected stochastically during the simulation.
Deviations obtained for 20 runs and 0 piles

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System initialization
The simulation starts with an initial vector of product quantities stored in the BLPs Different initialization options can be
random initial state empty front piles at the beginning of the simulations, i.e. VBQ0= 0 to place the broken lots on the M piles proportionally based on the demand frequency and quantity for each product code.
The last option provides a more rational instance of the system
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Results table [1]
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Results table [2]
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Simulation results
No piles
Overal OP time (days)
160 10 20 130 30 40 50 60 100 70 80
70 0 2 4 6 8 10 12
Number of broken lot piles
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Simulation results
No piles
160 10 20 130 30 40
now
100
50 60 70 80
70 0 2 4 6 8 10 12
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Simulation results
No piles
160 10 20 130 30 40
now
100
50 60 70 80
70 0 2 4 6 8 10 12
proposed
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Proposed modifications
The company is currently using 2 BLPs and up to 20 pieces in the broken lots. This scenario has a time benefit 6% compared to the zero-piles scheme. The optimum is found at 3 BLPs and >80 pieces. This reduces the overall time by 47% compared to the current situation, and by almost 50% compared to zero-piles. The estimated time reduction is high enough to suggest that that the company should consider these (very simple) modifications.
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Conclusions
Methodology to improve the performance of order picking in an existing company warehouse
register the situation in the warehouse. The total time is divided into travel, search, retrieval and return time. Adoption of WMS, change of storage and order assignment policies
The implemented modifications resulted to a mean 50% reduction in the total picking times, even though the company avoided expensive modifications. Simulation results indicate further benefits from increasing the BLP from two to three, and moving all the broken lots to the frontal area, regardless of their size.
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Warehouse simulation tool
Evaluate the effect of different policies on the picking times, evaluate their performance, using the time data collected in this work, and propose optimal scenarios. The results provide qualitative incentives and suggest promising policies for modifications in the current warehouse layout.
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Warehouse management for improved order picking performance: An application case study from the wood industry
G.P. Broulias, E.C. Marcoulaki* G.P. Chondrocoukis and L.G. Laios
Department of Industrial Management & Technology University of Piraeus, Greece
*emarc@unipi.gr
.
45
Multiobjective optimization & Pareto principle
The principle is applied on multiobjective optimization A solution is Pareto-optimal if the value of any objective function fi(x) cannot be improved without degrading at least one of the other objective functions. Generate a set of Pareto-optimal solutions, according to the weight vector (w) The final choice relies on the preferences of the decision maker
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Multiobjective optimization & Pareto principle

f2(x)
z( x0 ) w2
(f1(x0), f2(x0))
Optimization objective Maximize fi(x) or Maximize z(x) = 7 wifi(x) e.g. z(x) = w1f1(x)+ w2f2(x)
f1(x)
47
References (CUT)
48

Mar Koulak I

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Warehouse management for improved order picking performance: An application case study from the wood industry

G.P. Broulias, E.C. Marcoulaki* G.P. Chondrocoukis and L.G. Laios

Trade-offs between warehouse costs and delivery performance

Warehouse management for improved order picking performance, Zakynthos 2005

Warehouse management for improved order picking performance, Zakynthos 2005

Warehouse management for improved order picking performance, Zakynthos 2005

Warehouse management for improved order picking performance, Zakynthos 2005

Factors affecting the efficiency of OP

Warehouse management for improved order picking performance, Zakynthos 2005

Review of policies related to OP

Warehouse management for improved order picking performance, Zakynthos 2005

1. Order assignment policies

Warehouse management for improved order picking performance, Zakynthos 2005

In practice, many warehouses use the traversal policy

Interaction of warehouse shape and storage policy

Warehouse management for improved order picking performance, Zakynthos 2005

Demand Demandbased storage

Pareto principle for world economics

For warehouse management the principle is modified to:

Warehouse management for improved order picking performance, Zakynthos 2005

Warehouse management for improved order picking performance, Zakynthos 2005

Warehouse management for improved order picking performance, Zakynthos 2005

The present study considers one of these sections, where

Warehouse management for improved order picking performance, Zakynthos 2005

Initial layout of the panel warehouse section

4 depths of pile levels

Initial layout of the panel warehouse section

4 depths of pile levels

Initial layout of the panel warehouse section

4 depths of pile levels

Initial layout of the panel warehouse section

4 depths of pile levels

2nd series of time measurements

Times are presented in minutes per cubic meter.

Sample of the order picking form

Warehouse management for improved order picking performance, Zakynthos 2005

Times are presented in minutes per cubic meter.

Warehouse management for improved order picking performance, Zakynthos 2005

Final layout of the panel warehouse section

4 depths of pile levels Piles containing only broken lots

Times are presented in minutes per cubic meter.

Warehouse management for improved order picking performance, Zakynthos 2005

Warehouse management for improved order picking performance, Zakynthos 2005

. . Main aisle (clarks)

Warehouse management for improved order picking performance, Zakynthos 2005

System representation definitions

For the BLPs, given are:

Warehouse management for improved order picking performance, Zakynthos 2005

System representation definitions

For the BLPs, given are:

Warehouse management for improved order picking performance, Zakynthos 2005

Warehouse management for improved order picking performance, Zakynthos 2005

Example of simulation data for P=13

Warehouse management for improved order picking performance, Zakynthos 2005

Monte Carlo process

Deviations obtained for 20 runs and 0 piles

The last option provides a more rational instance of the system

Warehouse management for improved order picking performance, Zakynthos 2005

Results table [1]

Warehouse management for improved order picking performance, Zakynthos 2005

Results table [2]

Warehouse management for improved order picking performance, Zakynthos 2005