Introduction to the Lean Warehouse Management System

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Contents
1 2 Introduction ...................................................................................................... 3 Section 1: Standard Features .......................................................................... 3 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 3 3.1 3.2 3.3 3.4 4 Receiving .................................................................................................... 3 Put-away and Storage ................................................................................. 5 Replenishment/Placement .......................................................................... 5 Order Processing ........................................................................................ 6 Task Interleaving ......................................................................................... 7 Shipping ...................................................................................................... 8 Integration with Automated Material Handling Equipment. .......................... 9 Cycle Counting. ........................................................................................... 9 OPEN ARCHITECTURE ........................................................................... 10 MANAGEMENT REPORTING .................................................................. 10 LWMS: A Pull (event driven) System......................................................... 11 Enhanced performance when combined with ERP functionality ................ 11

Section 2: Special Features ........................................................................... 10

Conclusion ..................................................................................................... 13

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1 Introduction
The Lean Warehouse Management System (LWMS) is not a tool neither a software. It is a conceptual approach that deploys a certain philosophy in smoothing the flow of events in a warehouse. This effect is materialised abiding the basic principles of the lean philosophy that are minimizing waste and utilising a pull system rather than a push one. It could be considered as the ancestor of the Just In Time (JIT) approach. The basic highlights are being presented in the following. The functionality of the LWMS includes: warehouse automation, minimisation of stock volumes, optimisation of vehicle and staff mobility, optimisation of and interoperability with shop floor, effective and vast interface with Radio Data Terminals, effective space management and control, detailed job description effective use of functional areas minimisation of human intervention and therefore mistakes and detail monitoring of cost of each items transaction in terms of purchases, movements, issues, sales and cycle counts, etc The optimal target is rapid return on investment (ROI) through minimisation of items stock cycle times, detailed traceability and discrete monitoring of stock movements and maximisation of resources performance.

2 Section 1: Standard Features

2.1 Receiving

Receiving functions can be performed from either LWMS directly, hand-held RF mobile computers or any combination of the two simultaneously and/or sequentially. Breakdown and consolidation of incoming products are bar-coded for put-away. It can generate and print any industry-standard bar codes. For demonstration reasons

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a number of software screens have been prepared to illustrate the described functionality. Highlights of LWMS receiving capabilities include: Real-time link to the ERP, accommodating PO verification changes, introducing additional functionality towards different expiration dates over different lots but FOR THE SAME QUANTITY RECEIVED, which, in any ERP is performed in two different receipts. In addition, locations capacity becomes a constraint during putaway procedure. It is possible to manage the expiration date according to the attributes of each unit received by inserting as many different lots, references, locations and expire dates as necessary. Note that, the lot, quantity per and expiration date has been modified to reflect the correct receipt: Product immediately available for order at the receiving dock. Electronically handle warehouse transfers via remote data terminals (RDT) in three scans. The user is being notified for the existence of a pending pallet transfer, via an asterisk that appears automatically after the receiver has been printed, as shown below:

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All transactions are tracked and recorded to monitor errors and accountability as shown below: Bar code creation and printing. Opportunity and planned cross-docking in case of just-in-time warehouse operation.

2.2

Put-away and Storage

Since every warehouse task is performed in real time, slotting for put-away can be assigned as soon as a product is lifted from a location. Storage parameters will be assigned based on zone designations, cube size and weight, equipment assignments and other criteria such as: Environmental properties such as secure or hazardous material handling, Rate of each locations accessibility in terms of ABC analysis, Items ABC analysis, Items stacking factor, Locations capacity, etc.

2.3

Replenishment/Placement

RF directed replenishment tasks are routed and dispatched by equipment characteristics and forward pick area demand. Let-downs are timed based on pick rates against actual inventory flow of the primary pick locations. Special features of the replenishment function include: Changes to wave picking will automatically change replenishments Pick zone replenishment Emergency replenishments

This functionality is included in one selection under the RF menu:

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2.4

Order Processing

LWMS allows for multiple wave picking to be easily constructed by the warehouse manager, based on the changing priorities and demands of his/her customer. Waves can be constructed on various criteria such as: pick-by-order, by shipping route, by customer, by shipper, or by rules built to suit a companys business procedures. Some unique features of order processing include: Order consolidation, sequencing and verification via a user-friendly screen: Paper picking, which can be parameterised with respect to the columns presented. Quantities are consolidated per pallet, location, item, load, etc. in order to achieve wave picking. A sample of a picklist is presented below: RF picking, or any combination of the two simultaneously

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Task management on all pick functions: Assignment of stacking factor per location: Interface to carousels and other material handling automation

Lot control, product rotation, and serial number tracking as per standard ERP functions. Continuous monitoring for order shorts offering the user the opportunity to cancel the line of the order, which includes the item of which the warehouse is short. It is also possible to cancel the whole order if this is necessary at any time before printing the invoice: Even after the invoice print and post, the system allows the user, by entering a small amount of information like the load number, shit-to address, customer, effective date, etc., to backwards balance all inventory transactions automatically.

2.5

Task Interleaving

LWMS includes functionality that mixes dissimilar tasks such as picking and putaway to obtain maximum productivity. For instance, it will direct a lift truck operator to

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put away a pallet on his/her way to the next pick. In large warehouses this can greatly reduce travel time not only increasing productivity but also reducing wear on the lift trucks and saving on energy costs by reducing lift truck fuel/battery consumption. This function is built into tasks like put-away, replenishment, order picking, inventory control, etc. to maximize worker productivity and minimize "deadheading". Unless the worker completes all tasks the system will direct the operator to perform a different task in his area as workers can login to different warehouse zones or areas such as a let down, consolidation, pick, load, etc. Task Interleaving eliminates workers cruising down the aisles with "empty forks". Therefore, depending on each companys allocation of resources with respect to different tasks, the system can be further parameterised to reflect each warehouse needs.

2.6

Shipping

The primary purpose of LWMS shipping function is to verify the accuracy of the picking process and to manifest orders to be shipped. Accuracy of picked orders is confirmed by scanning bar codes with either RF mobile terminals or workstations at the shipping/packing stations.

Some other shipping features are: Bill of lading creation Shipping label generation upon verifying the contents of each load. Repacking

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Interfaces with the ERP.

2.7

Integration with Automated Material Handling Equipment.

LWMS supports the use of automated material handling equipment such as carousels, ASRS units, AGVs, pick-to-light systems, or sorting systems. Since these types of automation are very expensive and are usually a core component of an LWMS was primarily developed to interface in real time with such equipment.

2.8

Cycle Counting.

LWMS includes a cycle counting functionality. Cycle counting can be performed using RF or other wireless terminals and devices, directly into the system, or use ERP functionality towards this procedure. A typical cycle count can be performed using RF as shown below:

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3 Section 2: Special Features

3.1 OPEN ARCHITECTURE

LWMS was developed with an open architecture that allows the application to interface not only with ERP but also with a number of ERP systems, transportation management systems, or other supply chain applications. In addition, it can easily interface with all major RF mobile terminals and input devices like bar code scanners and voice recognition products. Of course, all costs involved in any transaction are recorded to the ERP accounting and financial module.

3.2

MANAGEMENT REPORTING

LWMS monitors and tracks all of the activities in the warehouse. Apart from standard ERP reports there is a large number of reports designated to cover all warehouse as well as shop floor activities and turn these data into valuable performance reports. LWMS management reporting capability offers the tools needed to attain and maintain optimum performance in a warehouse and inventory accuracy. A short set of reports that LWMS is capable of producing is: The most important ones, excluding those who are similar to ERP reports with only minor alterations, are: Movements of a pallet since its entrance in the warehouse. Empty storage locations. Storage locations with remaining space. Quantity on hand per item, per lot and per status in all locations. Pallets per location. Outstanding inventory movements e.g. receipts not registered at storage locations. Re-print Goods Received Note. Re-print receipt labels. Expired pallets. Pallets period of residence in warehouse. Changes in pallets inventory status. Split pallets using systems resources, Pallet and Location label and barcode re-print.

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3.3

LWMS: A Pull (event driven) System

LWMS introduces a true flow business strategy. It supports event-driven manufacturing and warehouse management and adjusts easily to changes in demand, new product introductions or any change in the external environment that directly or indirectly affects the entropy of the system. LWMS is standardised with strategies developed on the basis of DFT. It therefore formalises with the principles of flow manufacturing, which are focused on eliminating waste, streamlining processes, building according to demand, and continuous improvements. By properly designing production lines and balancing the mix of products to a daily demand rate in the ERP, quality goods can be produced as ordered, at a rate that falls within the required order-to-delivery response cycle time. As a result, the entire supply process is pulled and sequenced from actual demand. Regardless of industry, type of manufacturing environment, or product volumes, LWMS can be implemented successfully. It is most challenging to deploy its modules in a shop that does highly configured or engineer-to-order products, yet they are equally well with high-volume, more repetitive make-to-demand operations.

3.4

Enhanced performance when combined with ERP functionality

LWMS, as mentioned above, utilises information entered into the ERP. This means that the characteristics of each item and location are maintained either at a detail level or by grouping similar items and locations into categories. An example of item characteristics at the detail level would include exact dimensions and weight of each item in each unit of measure the item is stocked (each, cases, pallets, etc) as well as information such as whether it can be mixed with other items in a location, whether it is rackable, maximum stack height, maximum quantity per location, hazard classifications, finished goods or raw material, fast verse slow mover, etc. Depending on the structure of items as well as their diversity towards their product mix it appears that in most cases the operations will be benefit by creating groups of similar products in the ERP. After setting up the physical characteristics of products and locations we need to specify the relationships between the locations, i.e. which location to pick from, replenish from/to, and put-away to, and in what sequence these events should occur (LWMS is all about directed movement). This is done by assigning specific logic to the various combinations of item/order/quantity/location information that will occur. Some of the logic that can be used in LWMS in determining actual locations and sequences follows:

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Location Sequence. We can define a flow through the warehouse and assign a sequence number to each location. In order picking this is used to sequence the picks to flow through the warehouse. In put-away the logic would look for the first location in the sequence in which the product would fit.

Zone Logic. By breaking down the storage locations into zones there is the ability to direct picking, put-away, or replenishment to or from specific areas of the warehouse.

Fixed Location. This logic can be implemented using predetermined fixed locations per item in picking, put-away, and replenishment. Fixed locations are most often used as the primary picking location in piece pick and case pick operations, however they can also be used for secondary storage. Fixed location for an item is predefined in item master files in MFG/PRO.

First-in-first-out (FIFO). First-expired-first-out (FEFO) Last-in-first-out (LIFO). Pick-to-clear. LWMS has the ability to implement this logic in which the forklift workers are directed to pick from locations with the smallest quantities in hand, i.e. pallets that are not full, etc. This logic is used for increased space utilisation.

Reserved Locations. This is used when you want to predetermine specific locations to pick from/put-away to. An application for reserved locations would be cross-docking where you may specify that certain quantities of an inbound shipment be moved to specific outbound staging locations or directly to an awaiting outbound trailer. Other application would be the reservation of a specific dock for an inbound quantity shipment before putting-away to inner warehouse locations.

Pallet Exchange: LWMS offers the possibility to the RF user to pick a pallet other than that reserved by the system for a specific order, so long as the parameters that define the specific inventory expire date, item number, lot, inventory status, pallet number, etc. are either identical for the alternative pallet or within a range specified for each item by the warehouse manager. This is extremely useful in warehouses that operate under the physical constraints generated by a Drive-In system, in which the forklift user would not want to pick the pallet that lies at the back of the rack but, alternatively at the front, expecting all phantom inventory movements to take place automatically and unnoticeably.

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In LWMS it is possible to combine logic methods to determine the best location. For example, the warehouse manager may chose to use pick-to-clear logic within first-infirst-out logic when there are multiple locations with the same receipt date. Depending on the functional as well as business operation of the warehouse it is also possible to change the logic based upon current workload. During busy periods the warehouse manager may chose logic that optimises productivity while during slower periods he/she switches to logic that optimises space utilization.

4 Conclusion
The effects of implementing LWMS are profound. In addition to the direct and measurable results, such as cost savings and error reduction, the system also generates a number of positive side effects. The main results include:

A significant decrease in errors on invoices and despatch notes. Due to the high complexity of individual shipments (each consisting of modest quantities of many products) and the large number of product codes, the procedure of issuing invoices and despatch notes is highly error prone. This in turn leads to high error correction costs. With the installation of the system, the errors are virtually eliminated.

Improved accuracy in customer order execution. Just as with invoices and despatch notes, there are frequent errors in the execution (preparation, packaging and shipment) of customer orders. This generates considerable costs (for the replacement of mistakenly shipped items, re-shipment of omissions and so on). These errors that can cause customer dissatisfaction are eliminated.

Greater accuracy in data acquisition, improved overall inventory monitoring and a considerable reduction in inventory losses. The streamlined operation of the warehouses eliminates the need for a large number of administrative staff. Warehouses can operate with just one instead of many employees, thus slashing a major overhead. Similarly, the total operating costs of the warehouses can be reduced.

The lead-time for preparing and shipping a customer order can also be reduced. The system ensures that strict FIFO priorities are kept, so that only fresh products (where applicable) are shipped and products with expiry dates (e.g. pharmaceuticals) do not remain in the warehouse for long.

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Accurate lot tracking is possible, allowing the efficient withdrawal of a defective lot. This enables the rapid recall of any defective product batches, which previously was almost impossible because of the administrative overheads.

The implementation of such a system is an example of how a single technology can effectively enable the redesign and streamlining of a core business process. Ultimately, it is a real time data acquisition system that embraces flow manufacturing, allowing radical change to the whole process.

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