World Class Warehousing

World-Class Warehousing & Material Handling
World-Class
World-Class
Warehousing
Warehousing
EdwardH.
H.Frazelle,
Frazelle,Ph.D.
Ph.D.
Edward
LogisticsResources
ResourcesInternational
International
Logistics
www.LRILogistics.com
www.LRILogistics.com
Copyright: Edward H. Frazelle, Ph.D., Page 1
Logistics Framework
LOGISTICS
Customer
Response
Inventory Planning
& Management
Supply
Transportation
Warehousing
Customer
Service Policy
Forecasting
Supplier
Service Policy
Network Design
Receiving
Customer
Satisfaction
Order Quantity
Engineering
Sourcing
Shipment
Management
Putaway
Order Entry
Fill Rate
Planning
Supplier
Integration
Carrier
Management
Storage
Order Processing
Control Policy
Purchase Order
Processing
Fleet
Management
Order Picking
Invoicing &
Collections
Deployment
Buying & Payment
Freight
Management
Shipping
Copyright:
Copyright:Edward
EdwardH.
H.Frazelle,
Frazelle,Ph.D.,
Ph.D.,Page
Page22
The Plight of the

Warehouse Manager
More
Transactions
SKUs
Customization
International Orders
Value Added Services
Returns
Consolidation &
Assembly
With Less
Time
Margin for Error
Young, Skilled Labor
WMS Capability
i ng
ipp
Sh
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ick
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Inorder,
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Warehouse
Warehouse
Warehouse
Master
Planning
Master
Planning
addresses
addresses
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_________,
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Investigate
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and
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and
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&
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and
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goals,
goals,
Processes
processes,
processes,
warehouse
Warehouse
warehouse
SE
Management
Warehouse
U
management
Systems
Workforce
HO
management
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R
system
system
WA
requirements,
Master Planning
requirements,
warehouse
warehouse
workforce
workforce
Implement
requirement,
requirement,
receiving,
receiving,
putaway,
putaway,
storage,
storage,order
order
picking,
picking, Copyright: Edward H. Frazelle, Ph.D., Page 4
G
shipping)
shipping)
DC Operations
Practices Gap Analysis
Profile
5.00
Infrastructure
Metrics
4.00
3.00 2.56
W orkforce
2.89
Receiving
1.81 2.00
3.36
3.47
1.00
3.09
4.43
Flow
Putaway
3.12
3.62
3.16
Shipping
Storage
Order Picking
World-Class Warehousing
Rational Warehousing
Right Sourcing/ESPs
SKU Flow Optimization
Issue Pack Optimization
Warehouse Performance Gap
Analysis
Dock Management
Flexible Flyers
Storage Mode Optimization
Slotting Optimization
Warehouse Layout Optimization
Metamorphic Material Handling
Systems
Paperless Warehousing
Real-Time Warehousing
Warehouse Data Mining &
Simulation
Warehouse Optimization
Service Providers
Warehouse Workforce
Optimization
Human Friendly Warehousing
Remote Warehouse
Management
Waste-Free Warehousing
Wise Warehousers
Right Sourcing/ESPs
Analysis
Dock Management
Flexible Flyers
Systems
Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers
Should we have a warehouse?
Merge-in-Transit
CPU
Factory
CPU
Order
Headquarters
Monitor
Order
Sorting
Center
System
Order
Monitors
Speaker
Order
Speakers
Right Sourcing/ESPs
Analysis
Dock Management
Flexible Flyers
Systems
Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers
Process
Complexity
Customer
Receptivity
Competitor
Differentiator
Service
Level
Vulnerability
Customer
Interaction
Level
Product
Knowledge
Requirement
Process
Knowledge
Requirement
Exception
Incidence
Learning
Curve
Current
Performance
Index
3PL Ability
to Assume
Quickly
and/or
Improve
Index
Outsource
Suitability
and Success
Logistics Outsourcing
Suitability Analysis
Pre-Receiving
Receiving Unload
Inbound Inspection
Putaw ay
Picking
Outbound Audit
Outbound Inspection
Packing
M anifesting
Shipping
Returns Processing
2
2
4
2
1
3
4
1
2
2
4
2
1
4
1
3
5
5
2
3
2
3
3
1
1
1
1
2
3
1
1
1
3
2
2
4
2
3
4
4
2
3
2
2
2
2
2
2
2
2
2
2
2
4
4
1
2
5
2
2
4
5
2
2
2
5
2
2
4
2
2
3
4
2
2
2
4
2
2
2
2
2
2
2
2
2
2
4
2
2
4
2
1
3
4
2
2
2
4
2
3
3
2
2
4
5
3
3
3
5
2
5
2
4
5
3
2
5
5
5
2
3.7
4.1
2.4
4.1
4.1
2.6
1.9
4.1
3.8
3.8
1.9
EASILY
EASILY
UNLIKELY
EASILY
EASILY
DIFFICULT
UNLIKELY
EASILY
EASILY
EASILY
UNLIKELY
4 .1
4 .1
4 .1
in
g
ss
in
g
ro
ce
hi
pp
P
R
ut
et
bo
ur
un
ns
an
i fe
ac
st
in
ki
ng
t io
ec
sp
In
un
bo
ut
1 .9
it
ud
A
d
ic
aw
ut
P
P
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un
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ki
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ay
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ec
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d
In
vi
ng
ei
ec
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3 .8
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ti o
d
nl
oa
U
ei
vi
ec
-R
3 .8
2 .6
2 .4
re
P
4 .1
3 .7
5 .0
4 .5
4 .0
3 .5
3 .0
2 .5
2 .0
1 .5
1 .0
0 .5
ng
1 = Low, 5 = High
S u i ta b i l i ty fo r O u ts o u r c i n g
Hybrid Insource/Outsource
Receiving
Cross
Dock
Flows
Inbound
Inspection
3PL
Client
Put-Away
RMA
Storage
Outbound
Inspection
Order
Picking
Shipping
The Race to
Third Party Logistics
Consolidators
Consolidators
Third-Party
Third-Party
Warehousers
Warehousers
LISs,LEXs,
LEXs,
LISs,
LVPs,SCEMs
SCEMs
LVPs,
Freight
Freight
Forwarders
Forwarders
Third-Party
Third-Party
Logistics/LLP
Logistics/LLP
Freight
Freight
Payers/Auditors
Payers/Auditors
Custom
Custom
Brokers
Brokers
Transportation
Transportation
Carriers
Carriers
Satisfaction with
Third-Party Logistics Services
FALLS FAR BELOW

expectations
FALLS BELOW
expectations
3PLsinin2003
2003Warehouse
WarehouseBenchmarking
BenchmarkingSurvey
Survey
3PLs
Almacenar
Operador
Logistico,
Anthar
Logistics,
APL
Logistics,
Almacenar Operador Logistico, Anthar Logistics, APL Logistics,
AtlantaBonded
BondedWarehouse,
Warehouse,BLJC,
BLJC,Camion
CamionTransport
TransportAG,
AG,DANZAS,
DANZAS,
Atlanta
DIAKINISISSA,
SA,Exel,
Exel,F&M
F&MLogistics,
Logistics,Genco
GencoDistribution
DistributionSystems,
Systems,
DIAKINISIS
General
Warehouse,
Green
Field
Agencies,
Inprax,
General Warehouse, Green Field Agencies, Inprax,
J.D.Smith
Smithand
andSons
SonsLtd.,
Ltd.,Kenco
KencoLogistics,
Logistics,Linfox
LinfoxPty
PtyLtd,
Ltd,
J.D.
Menlo
Logistics,
Peoples
Services,
Power
Logistics,
REWICO,
Menlo Logistics, Peoples Services, Power Logistics, REWICO,
ShenzhenST-Anda
ST-AndaLogistics
LogisticsCo.
Co.LTD,
LTD,Sunland,
Sunland,
Shenzhen
Tibbettand
andBritten,
Britten,TNT
TNTLogistics
LogisticsMalaysia,
Malaysia,
Tibbett
USCO
Logistics,
Zust
Ambrosetti
Group
USCO Logistics, Zust Ambrosetti Group
5%
2%
35%
MEETS expectations
37%
EXCEEDS expectations
GREATLY EXCEEDS
expectations
0%
21%
5%
10%
15%
20%
25%
30%
35%
40%
Impact of
Third-Party Logistics Services
7.4%
13.6%
Aggregate
30.8%
13.2%
0.0%
26.7%
26.7%
26.7%
Workforce Capability
20.0%
0.0%
Inform ation System s
8.3%
13.3%
26.7%
20.0%
Inventory Accuracy
50.0%
25.0%
16.7%
33.3%
6.7%
Shipping Accuracy
35.1%
20.0%
20.0%
20.0%
0.0%
0.0%
40.0%
20.0%
Custom er Service
40.0%
40.0%
0.0%
Productivity
18.2%
0.0%
0.0%
45.5%
27.3%
9.1%
13.3%
13.3%
Costs
53.3%
20.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
% of Warehouses
Significantly Better
Better
No Difference
Worse
Significantly Worse
60.0%
Right Sourcing/ESPs

Analysis
Dock Management
Flexible Flyers
Systems
Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers
SKU Rationalization
Microsoft Excel
Worksheet
I te m P ro fita b il ity
I te m P ro fita b il ity
$ 1 0 ,0 0 0 .0 0
$ 1 0 ,0 0 0 .0 0
$ 8 ,0 0 0 .0 0
$ 8 ,0 0 0 .0 0
$ 6 ,0 0 0 .0 0
$ 6 ,0 0 0 .0 0
( $ 2 ,0 0 0 .0 0 )
( $ 2 ,0 0 0 .0 0 )
( $ 4 ,0 0 0 .0 0 )
( $ 4 ,0 0 0 .0 0 )
( $ 6 ,0 0 0 .0 0 )
( $ 6 ,0 0 0 .0 0 )
( $ 8 ,0 0 0 .0 0 )
( $ 8 ,0 0 0 .0 0 )
97
97
93
93
89
89
85
85
81
81
77
77
73
73
69
69
65
65
61
61
57
57
53
53
49
49
45
45
41
41
37
37
33
33
29
29
25
25
21
21
17
17
13
13
9
9
$ 0 .0 0
$ 0 .0 0
$ 2 ,0 0 0 .0 0
$ 2 ,0 0 0 .0 0
Profit
Profit
$ 4 ,0 0 0 .0 0
$ 4 ,0 0 0 .0 0
SKU Activity Profile

150+ C SKUs
purchased only
by C Customers
300
200
100
C SKUs
B SKUs
A
A SKUs
Customer Categories
SKU Threshold Analysis:

Fixed and Variable Cost Model
International
Import Buys
$2,385
$926
No
No
Buy
Buy
Zone
Zone
Domestic
Domestic
Buys
Buys
$292
Import Buys
$2,385
Domestic
Right Sourcing/ESPs

Analysis
Dock Management
Flexible Flyers
Systems
Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers

Total Cost = ICC + Picking Cost
$12,000.00
$10,000.00
Optimal Issue
Pack Size =
32 Units
$8,000.00
$6,000.00
2
$4,000.00
$2,000.00
8 16
32
$0
50
256
128
64
100
150
200
Is s ue Pack (Units )
250
300
Right Sourcing/ESPs
Warehouse Performance
Gap Analysis
Dock Management
Flexible Flyers
Systems
Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers
It pays to measure!
87.0%
Number of Metrics
Few - 1 to 5
74.6%
Average - 6 to 10
66.9%
Many - '11 to 15
60.0%
65.0%
High
Performance
70.0%
75.0%
80.0%
Warehouse Performance Index
85.0%
90.0%
Low
Performance
Logistics & Supply Chain

Scoreboard
Cost
SUPPLY
DISTRIBUTION
Inbound
Transportation
Y
Warehousing
Outbound
Transportation
Customer Service &

Order Processing
TOTAL LOGISTICS
Inventory Planning
Procurement
)
Finance
Inventory Carrying
Cost (ICC)
Total Cost to
Procure (TCP)
Inbound
Transportation
Cost (ITC)
Total
Warehousing
Cost (TWC)
Outbound
Transportation
Cost (OTC)
Total Response Cost

(TRC)
Total Logistics Cost = ICC

+ TCP + ITC + TWC +
OTC + TRC
Productivity
Inventory Planning
Hours (IPH)
Procurement
Processing Hours
(PPH)
Inbound
Transportation
Hours (ITH)
Total
Warehousing
Hours (TWH)
Outbound
Transportation
Hours (OTH)
Customer Response
Hours (CRH)
Logistics Hours per Order

= [IPH + PPH + ITH +
TWH + OTH +
CRH]/[Orders Shipped]
Order Shipping
Accuracy (OES)
Claims Free
Order
Percentage
(CFOP)
Order Entry
Accuracy (OEA)
Perfect Order Percentage

= OFR x OES x DFOP x
OTOP x CFOP x OEA x
OCA x ODA
Quality
Order Fill Rate (OFR)
Service
Damage Free Order Percentage

(DFOP)
On-Time Orders Percentage
(OTOP)
Response
Tim e
Dock-to-Stock
Tim e (DTS)
Purchase Order Cycle Tim e (PO CT)
O rder In-T ransit

Tim e (OITT)
W arehouse O rder
Cycle Tim e
(W O CT)
Order
Communication
Accuracy (OCA)
Order
Documentation
Accuracy (ODA)
O rder Entry Tim e

(OET)
O rder Processing
Tim e (OPT)
Total Logistics Cycle Tim e

= [(1-OFR) x PO CT] + DTS
+ W OCT + O ITT O ET +
O PT
Warehouse
Performance Gap Analysis
Productivity
5
4.5
4
Safety
3.5
Storage
Density
3
2.5
2
1.5
1
0.5
Warehouse Order
Cycle Time
4
29 Inventory
Accuracy
4
Dock-to-Stock Time
Current
World-Class
Shipping
Accuracy
Annual Volume
Current Performance
Current Resource Requirement
World-Class Performance
World-Class Resource
Requirement
Resource Savings
Rate
360,000
lines/year
4
lines/PH
90,000
person-hours
6
lines/PH
60,000
person-hours
30,000
person-hours
$25
$/PH
29,000
SKUs
1.89
SF/SKU
54,810
SF
1
SF/SKU
29,000
SF
25,810
SF
$11
$/SF*Yr.
26,000
locations
85%
%locations
3,900
locations
95%
%locations
1,300
locations
2,600
locations
$100
$/location
Annual Savings
$750,000
$283,910
$260,000
Total Savings ($s/year)
$1,805,510
Payback Period (Years)
1.5
Justifiable Investment
$2,708,265
360,000 $
120,000,000 $
120,000,001
lines/year on-hand inventory on-hand inventory
99.7%
48
24
% lines
hours
hours
1,080
locations
99.97%
24
12
% lines
hours
hours
108
lines/year
972
24
12
lines/year
hours
hours
0.1%
$300
0.1%
$/line
%/day
%/day
$291,600
$120,000
$60,000
Safety
W arehouse Order
Cycle T ime
Dock-to-Stock Time
Shipping Accuracy
Inventory Accuracy
Storage Density
Productivity
Warehouse Project
Justification
5
accidents/year
1
accidents/year
4
$10,000
$/accident
$40,000
Warehouse Financial Performance Total Warehousing Costs and Cost Ratios

Labor Cost
Receiving
$ 1,963,055
$ 1,090,534
Putaway
Storage
$
999,640
Picking
$ 1,946,966
287,188
Consolidation $
$
68,225
Delivery
$ 3,534,218
Marking
$
68,225
Returns
Total $ 9,958,052
%of Total
Cost/Sales
Cost/Order
Cost/Case
Cost/Line
Cost/Piece
Cost/CF
Cost/Pound
Cost/SKU
$
$
$
$
$
$
$
Space Cost
$
238,125
$
$ 1,933,250
$
$
100,500
$
50,000
$
105,000
$
99,250
$ 2,526,125
54.03%
4.05%
199.16 $
4.58 $
2.79 $
0.11 $
2.77 $
0.35 $
183.89 $
MHS Cost
$ 569,820
$ 416,000
$ 1,650,710
$ 1,830,782
$ 135,000
$
69,000
$ 222,200
$
6,000
$ 4,899,512
13.71%
1.03%
50.52 $
1.16 $
0.71 $
0.03 $
0.70 $
0.09 $
46.65 $
WMS Cost
$
218,333
$
240,333
$
123,833
$
161,833
$
38,333
$
38,333
$
113,833
$
113,000
$ 1,047,831
26.58%
1.99%
97.99 $
2.25 $
1.37 $
0.06 $
1.36 $
0.17 $
90.48 $
$
$
$
$
$
$
$
$
$
Cost per
Transaction
$
1.38
$
3.56
$
86.93
$
1.10
$
61.45
$
24.71
$
0.22
Total Cost
2,989,333
1,746,867
4,707,433
3,939,581
561,021
225,558
3,975,251
286,475
18,431,520 $
5.68%
0.43%
20.96 $
0.48 $
0.29 $
0.01 $
0.29 $
0.04 $
19.35 $
100.00%
7.49%
368.63
8.47
5.16
0.21
5.12
0.64
340.37
$ per receipt
$ per line
$ per SKU
$ per line
$ per load
$ per load
$ per piece
368.63 $ per line
100.00%
99.00%
98.00%
97.00%
96.00%
95.00%
94.00%
93.00%
92.00%
91.00%
90.00%
89.00%
88.00%
87.00%
86.00%
85.00%
84.00%
83.00%
82.00%
81.00%
80.00%
79.00%
78.00%
77.00%
76.00%
75.00%
74.00%
73.00%
72.00%
71.00%
70.00%
69.00%
68.00%
67.00%
66.00%
65.00%
64.00%
63.00%
62.00%
61.00%
60.00%
Average = 93.2%
Median = 97.1%
Average for Top Quartile = 99.65%
Median for Top Quartile = 99.76%
12
435
67
8
1109
1121
3
11154
1176
1298
2210
222243
222765
2398
3310
3332
3354
333687
4409
444132
4454
4476
4598
555210
5543
555765
5698
6610
6632
666654
6687
7709
777132
7754
7776
887098
8821
8843
888576
8998
999210
9943
9965
11099879
0
1100021
1110043
110056
110078
11109
1111121
1143
11111165
111178
1290
11122221
112234
5
1122276
8
Warehouse Quality Index
Warehouse Quality Index =

Shipping Accuracy x Inventory Accuracy
Right Sourcing/ESPs
Analysis
Dock Management
Flexible Flyers
Systems
Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers
Inbound Dock Assignment
Driver-Load-Dock
Driver-Load-Dock
Verification
Verification
Interleaving
Unload & Putaway
Deadhead Back
Unload & Putaway

Interleaving
Pickup and Load
Right Sourcing/ESPs
Analysis
Dock Management
Flexible Flyers
Systems
Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers
DC Staffing: Offsetting
Peaks & Crosstraining
DC Workforce Requirements
Picking
Returns
Receipts
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Right Sourcing/ESPs
Analysis
Dock Management
Flexible Flyers
Storage Mode
Optimization
Systems
Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers
Right Sourcing/ESPs
Analysis
Dock Management
Flexible Flyers
Systems
Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers
Right Sourcing/ESPs
Analysis
Dock Management
Flexible Flyers
Warehouse Layout
Optimization
Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers

Systems
A+ Movers
in Flow Rack
2
Cs
Bs
As
1
Packing
Shipping
Stations
Order
Completion
Zone
44
Building Length to Width Ratio

22.8%
Building Length to Width Ratio
35.0%
1.5
14.6%
3
3.5
4
Average = 2.1
Median = 1.7
9.8%
2.5
5.7%
4.9%
5.7%
5 0.8%
6 0.8%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
% of Buildings
30.0%
35.0%
Right Sourcing/ESPs
Analysis
Dock Management
Flexible Flyers
Metamorphic Material
Handling Systems
Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers
Metamorphic Logistics
Logistics Systems
Systems
Metamorphic
Right Sourcing/ESPs
Analysis
Dock Management
Flexible Flyers
Systems
Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers
Pen
Pencomputers
computersare
are
especially
especially
appropriate
appropriatefor
for
form-based
form-based
warehousing
warehousing
tasks.
tasks.
(true)
(true)
PenComputing
Computing
Pen
Pick-to-LightSystems
Systems
Pick-to-Light
Pick-to-light
Pick-to-lightsystems
systems
commonly
use
commonly uselights
lights
totoindicate
the
indicate the
correct
correctpicking
picking
location
locationand
andlighted
lighted
displays
displaystotoindicate
indicate
the
correct
picking
the correct picking
quantity.
quantity.
(true)
(true)
Pick-to-Light Systems
Voice
Voiceheadsets
headsets
allow
an
allow anoperator
operatortoto
talk
talkthrough
throughaaseries
series
ofofwarehousing
warehousing
transactions
transactions- instructions
instructionsspoken
spoken
by
a
synthesized
by a synthesized
voice
voice(heard
(heardininaaset
set
ofofearphones)
earphones)
verified
verifiedcomplete
complete
back
backby
byhuman
human
voice
into
voice intoaaheadset
headset
microphone.
microphone.
(true)
(true)
Voice Headsets
Virtual
Display
Virtual
Warehouse Displays

www.vrwarehouse.com
Warehousing Network
Network
Paperless
K ingWay
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P ick-to-Light
RF Hub
Cycle Counting
Wireless Pen
Voice
Headsets
T
X
E
N
22
Productivity
Reporting
Warehouse Data Highway

Warehouse
Simulator
Warehouse
Operations
Controller
Warehouse
Satellite
Communications
Mobile Receiving
Stations
Cross Docking
Conveyor
Controller
ASN Generation
Warehouse
Decision
Support
Copyright:
Edward
Network
H. Frazelle, Ph.D., Page 53
Right Sourcing/ESPs
Analysis
Dock Management
Flexible Flyers
Systems
Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers
RF Tags in Distribution
Apply tag to unit.
Apply tag to case.
Scan tag on receipt.
ID for putaway.
Electronic Product Code
Ping for check-out.
Ping for replenishment.
Source: Auto-ID Center - MIT

Ping for picking.
Container Management
WMS: Perpetual, Managed

To-Do List w/Event Triggers
WMS
To-Do List
Location
Goes Empty
Order Release
to DC Floor
Receipt
On Premises
Replenish
Location
Pick
Putaway
Order Picking
Complete
Packing
Right Sourcing/ESPs
Analysis
Dock Management
Flexible Flyers
Systems
Warehouse Data Mining

& Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers
Web-Based
Profiling & Optimization
Clients
Clients
Server
Server
Customer
Customer
ActivityProfile
Profile
Activity
Inventory
Inventory
ActivityProfile
Profile
Activity
Item, Customer,
Item, Customer,
Supplier, Carrier
Supplier, Carrier
Master Files
Master Files
Customer
Customer
Orders
Orders
Supply
Supply
ActivityProfile
Profile
Activity
Purchase
Purchase
Orders
Orders
Transportation
Transportation
ActivityProfile
Profile
Activity
SKUlytics.com
Warehouse
Warehouse
ActivityProfile
Profile
Activity
59
Sample Item-Order
Completion Profile
Demand Correlation Profile

I te m
N u m be r
I tem
N um b er
P a ir
F requ ency
1 8 9-2 -4
1 8 9 -2-1
58
4 9 3-2 -1
4 9 3 -2-8
45
0 0 7-3 -3
0 0 7 -3-2
36
1 1 9 - 2 -1
1 19 -2 -7
30
9 9 9-1 -8
9 9 9 -1-6
22
2 0 7-4 -2
2 0 7 -4-4
15
6 6 2-1 -9
6 6 2 -1-1
12
3 3 9-7 -4
8 7 9 -2-8
1 1 2 - 3 -8
1 12 -3 -4
Warehouse Data Mining

Order by Cube/Lines
12.00%
10.00%
8.00%
%Orders
6.00%
4.00%
2.00%
<1
-5
<1
30
0+
20
030
0
Lines per Order
Cube per Order

10
020
0
150 - 500+
5 - 14.99
51
-1
00
90 - 149.99
10
-5
0
60 - 89.99
-1
0
30 - 59.99
30 - 59.99
6
15 - 29.99
5 - 14.99
90 - 149.99
0.00%
1
1 - 4.99
Simulation Animation
Right Sourcing/ESPs
Analysis
Dock Management
Flexible Flyers
Systems
Simulation
Warehouse
Optimization Service
Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers
Logistics & Supply Chain Master Planning (LSCMP)

Supply Chain Intelligence, Optimization & Planning Suite (SCIOPS)
Purchase
Orders
EHF1
Customer
Activity
Profile
Supplier
Master
Customer
Orders
Customer
Master
Shipment
Manifests
Logistics
Data
Mining
System
Inventory
Activity
Profile
Supply
Activity
Profile
Inventory
Scoreboard
Inventory
Optimization System
Inventory
Practices Audit
Supply
Scoreboard
Supply
Optimization System
Supply
Practices Audit
Transportation
Activity
Profile
Transportation
Scoreboard
Transportation
Optimization System
Transportation
Practices Audit
Warehouse
Activity
Profile
Warehouse
Scoreboard
Warehouse
Optimization System
Warehouse
Practices Audit
Carrier
Master
Item
Master
Customer Response
Scoreboard
Customer Response
Optimization System
Customer Response
Practices Audit
Customer
Response
Master Plan
Customer Response
Metrics & Benchmarks
Customer Service Policy
Optimization
Customer Satisfaction Analysis
CRMS Requirements & Selection
Inventory
Master Plan
Inventory
Forecast Optimization
Inventory Level Optimization
Safety Stock & Fill Rate
Optimization
Deployment Optimization
IMS Requirements & Selection
Supply
Master Plan
Supply
Supplier Service Policy
Sourcing Optimization
Supplier Rationalization
SRMS Requirements & Selection
Transportation
Master Plan
Transportation
Network Optimization
Routes & Schedule Optimization
Mode & Carrier Optimization
Carrier Bid Optimization
TMS Requirements & Selection
3PL Requirements & Selection
Warehouse
Master Plan
Warehouse
Flow & Process Optimization
Layout Optimization
MHS Requirements & Selection
WMS Requirements & Selection
3PL Requirements & Selection
Slide 65
EHF1
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Edward H. Frazelle, Ph.D., 9/4/2003
Service Providers (WOSP)
Warehouse Application Service Providers
On-Line Warehouse Performance
Measurement
On-Line Warehouse Data Mining
On-Line Storage Mode Optimization
On-Line Slotting Services
Right Sourcing/ESPs
Analysis
Dock Management
Flexible Flyers
Systems
Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers
91.57%
25%+
93.57%
10% to 25%
95.44%
5% to 10%
97%
95%
94%
93%
92%
91%
Warehouse Quality Index
96%
96.08%
Less than 5%
90%
Workforce Turnover
Workforce Turnover vs.

Warehouse Quality
It pays to pay!
Pay Scales for Survey Warehouses

The average Warehouse Quality Index
for Above Average Pay = 98.3%.
The average Warehouse Quality Index
for Average Pay = 90.3%.
1 .4 %
F a r B e lo w A ve ra ge
4 .1%
B e low A ve ra ge
4 7 .6 %
A ve ra ge
42 .2%
A b o ve A ve ra ge
4 .8%
F a r A b o ve A ve ra ge
0.0%
5 .0%
1 0 .0 %
1 5 .0 %
2 0 .0 %
2 5 .0 %
3 0 .0 %
3 5 .0 %
4 0 .0 %
4 5 .0 %
5 0 .0 %
Operator to Supervisor Ratios

%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Average = 11.3
Median = 10.2
Productivity Best = 12
Quality Best = 8
0.7%
0.7%
1.5%
2.2%
0.7%
2.9%
0.7%
3.6%
0.7%
4.3%
2.9%
7.3%
0.0%
7.3%
2.9%
10.2%
0.7%
10.9%
0.0%
10.9%
4.4%
15.3%
2.2%
17.5%
4.4%
21.9%
4.4%
26.2%
7.3%
33.5%
5.1%
38.7%
4.4%
43.0%
5.1%
48.1%
3.6%
51.8%
6.6%
58.4%
9.5%
67.9%
5.8%
73.7%
8.0%
81.7%
3.6%
85.4%
8.8%
94.1%
2.2%
96.3%
3.6%
100.0%
100.0%
Cum%
30 29 28 26 25 24 23 22 21 20 19 17 16 15 14 13 12 11 10 9
Operator to Supervisor Ratio
6 5
WarehouseWorkforce
Workforce
Warehouse
Optimization
Optimization
Right Sourcing/ESPs
Analysis
Dock Management
Flexible Flyers
Systems
Simulation
Service Providers
Warehouse Workforce
Optimization
Human Friendly
Warehousing
Remote Warehouse
Management
Wise Warehousers
Waist Level
Transactions
Waist-Level
Picking
Right Sourcing/ESPs
Analysis
Dock Management
Flexible Flyers
Systems
Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers
Remote Warehouse
Management
Right Sourcing/ESPs
Analysis
Dock Management
Flexible Flyers
Systems
Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Waste-Free
Warehousing
Wise Warehousers
Reusable Containers
C.Collapsible
CollapsibleRoll
RollCages
Cages
C.
A.Plastic
PlasticPallets
Pallets
A.
D.Multi-use
Multi-useCorrugated
CorrugatedCarton
Carton
D.
B.Plastic
PlasticTotes
Totes
B.
Reusable
Unitization
Right Sourcing/ESPs
Analysis
Dock Management
Flexible Flyers
Systems
Simulation
Service Providers
Warehouse Workforce
Optimization
Remote Warehouse
Management
Wise Warehousers
The Perfect Warehouse

A building 671 feet long, 447 feet wide, 30 feet clear with 300,000
square feet in a rapidly appreciating area inside a free trade zone
within 24 hour delivery of all U.S. zip codes and in close proximity to
a highly skilled and motivated workforce.
The building is 80% occupied during normal inventory levels and
90% occupied during peak inventory levels.
The operation is a hybrid insource-outsource model with the perfect
outsource provider(s) chosen to perform those activities inside the
warehouse that SHOULD BE outsourced.
The operation is supported by a WMS provided by an ASP enabling
all world-class warehousing practices and integrating with a wide
variety of paperless communication devices chosen perfectly to
meet the unique needs of each activity within the warehouse.
The Perfect Warehouse

The workforce is cross-trained with an operator to supervisor ratio
of 12 where QUALITY is the key success driver and 8 where
PRODUCTIVITY is the key success driver and where operators are
delighted with average to above-average pay.
The SKUs would be highly active, yielding 1000+ hits per year on
average.
An APPROPRIATE level of material handling technology is in place,
each device chosen to perfectly match the handling requirements of
the task.
A holistic set of financial, productivity, quality and cycle time metrics
work together to motivate and maintain world-class warehouse
performance.

World Class Warehousing

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World-Class Warehousing & Material Handling

Copyright: Edward H. Frazelle, Ph.D., Page 1

Buying & Payment

The Plight of the

Copyright: Edward H. Frazelle, Ph.D., Page 3

Copyright: Edward H. Frazelle, Ph.D., Page 5

Copyright: Edward H. Frazelle, Ph.D., Page 6

Copyright: Edward H. Frazelle, Ph.D., Page 7

Copyright: Edward H. Frazelle, Ph.D., Page 8

Copyright: Edward H. Frazelle, Ph.D., Page 9

Copyright: Edward H. Frazelle, Ph.D., Page 10

Copyright: Edward H. Frazelle, Ph.D., Page 12

Copyright: Edward H. Frazelle, Ph.D., Page 13

FALLS FAR BELOW

Copyright: Edward H. Frazelle, Ph.D., Page 15

Copyright: Edward H. Frazelle, Ph.D., Page 16

SKU Flow Optimization

Copyright: Edward H. Frazelle, Ph.D., Page 18

SKU Activity Profile

SKU Threshold Analysis:

Copyright: Edward H. Frazelle, Ph.D., Page 21

Issue Pack Optimization

Issue Pack Optimization

Copyright: Edward H. Frazelle, Ph.D., Page 23

Copyright: Edward H. Frazelle, Ph.D., Page 25

Warehouse Performance Index

Logistics & Supply Chain

Customer Service &

Total Response Cost

Total Logistics Cost = ICC

Logistics Hours per Order

Perfect Order Percentage

Damage Free Order Percentage

O rder In-T ransit

Copyright: Edward H. Frazelle, Ph.D., Page 26

O rder Entry Tim e

Total Logistics Cycle Tim e

Copyright: Edward H. Frazelle, Ph.D., Page 27

Copyright: Edward H. Frazelle, Ph.D., Page 28

Copyright: Edward H. Frazelle, Ph.D., Page 29

Warehouse Financial Performance Total Warehousing Costs and Cost Ratios

Copyright: Edward H. Frazelle, Ph.D., Page 31

368.63 $ per line

Warehouse Quality Index

Warehouse Quality Index =

Copyright: Edward H. Frazelle, Ph.D., Page 32

Inbound Dock Assignment

Copyright: Edward H. Frazelle, Ph.D., Page 34

Unload & Putaway

Pickup and Load

Copyright: Edward H. Frazelle, Ph.D., Page 36

Copyright: Edward H. Frazelle, Ph.D., Page 40

Copyright: Edward H. Frazelle, Ph.D., Page 42

Metamorphic Material Handling

Building Length to Width Ratio

Building Length to Width Ratio

Copyright: Edward H. Frazelle, Ph.D., Page 45

Copyright: Edward H. Frazelle, Ph.D., Page 47

Copyright: Edward H. Frazelle, Ph.D., Page 48

Copyright: Edward H. Frazelle, Ph.D., Page 50

Copyright: Edward H. Frazelle, Ph.D., Page 52

Warehouse Data Highway

H. Frazelle, Ph.D., Page 53

Copyright: Edward H. Frazelle, Ph.D., Page 54