Friday, January 16, 2009

Current Trends & Challenges of Warehouse and Distribution Center

(modern warehouse made up of metal components)

Currently, the majority of storage warehouses are made up of metal components. All of the building's parts like beams, frames, walls, and roofs are made from high quality steel. Using these materials, the structure is more flexible and thus can be modified easily in shorter time compared to traditional warehouses which are made of wood or concrete.


Technology

Bar coding is an optical machine-readable representation of data. It requires all received items to be scanned with their labels clearly visible by workers. It results in much more labour-intensive process.

Till now, bar-coding technology is still commonly applied in warehouse and DC.


(introduction to functions of RFID)


Several warehouses/DC has adopted RFID technology as it has high returns on investment potential when it can make use of its reading characteristic to overcome previous limitations or to enable new business processes. With RFID, inventory traceability could be updated in real time without product movement, scanning or human involvement. RFID can also be used for many operations such as receiving, putaway, picking and shipping. The system allows inventory status to be determined and shipping & receiving documents to be generated automatically. It triggers automatic orders for products that are low in inventory. On top of that, it also prevents errors in the picking and putaway processes and is valuable in selecting situations where they are strong needs for security. Eventually, RFID can reduce inventory levels, storage, handling and logistics expenses, eliminate manual labour requirements, which provide direct cost savings and often improves accuracy, which produces other benefits. However, warehouse and DC must consider whether the cost of implementing the new technology can be offset by the cost saving.

Despite the capability of RFID technology to provide a variety of benefits and advantages over the bar-code technology, the high cost and a number of technical hurdles have prevented RFID from attaining wide use in warehouse and distribution center operations.

(An example of RFID)



Software

Technology advancements in warehouse and distribution centers has managed to counter most of the past trends and challenges. The introductions of soft ware solutions such as warehouse management system (WMS), transportation management (TMS), and Electronic Data Interchange (EDI), have been utilized to reduce costs and improve service levels.

To aid storage, WMS, which is interfaced with Enterprise Resource Planning system (ERP), matches the processed data against customer order to validate that the inventory count is accurate, generating a shipping label and information for the pallet. EDI refers to the transmission of data and information between organizations by electronic means. It basically speeds up the data transmission, as for instance, it can be utilize by a manufacturer to inform a warehouse instantly to distribute a good to a retailer.


(Efficient logistical process with Warehouse management system WMS)

Ideally, with the implementation of these soft wares, companies are able to respond swiftly to changes in inventory demand and supply, virtually eliminating the risk of stock outs, delayed deliveries intelligently, improves the efficiency of the warehouse by directing putaways as well as to maintain accurate inventory by recording warehouse transactions.


Storage system

As most of the warehouses/DC maximizes vertical space as high as 20 meters, high rack very narrow aisle racking (VNA) or high bay racking is preferred over the other storage systems. VNA can operate up to 20 meters high with adjustable pallet racking (APR) by using narrow aisle stacker (turret trucks). Aisles are therefore narrower with sliding pallet handling mechanisms on the mast. High bay racking is pallet racking up to the heights of 30M - 35M. The operation of the racking system is assisted by the means of stacker cranes, giving access to all pallet locations. However, if there are any unpredicted accidents such as a fire, the inaccessibility of the racking system will be a hindrance; in this case, special fire sprinkler systems may be required. Space utilization of the warehouse is good due to the use of height and reduced aisle width for both racking system; but, high set-up costs will be incurred for both storage systems.


(An example of live storage racking)

On the other hand, an increasing number of warehouses have adopted the palletized live storage. Palletized live storage is popular in warehouses and DC because it has unsurpassed storage density, FIFO, and supports high throughput per line item; nevertheless, it is expensive.


Material handling equipments

Many warehouses are still extensively using AS/RS as their optimal choice of material handling equipment to improve productivity of transporting, buffering and sequencing of standard and non-standard loads.

(AS/RS)

The advantages of AS/RS include savings in labour costs, improved material flow and inventory control, improved throughput levels, high floor-space utilization, increased safety and increased stock rotation. Furthermore, some modern warehouses are already completely automated, whereby pallets and goods are moved with a system of automated conveyors and automated storage and retrieval machines coordinated by programmable logic controllers and computers running logistics automation software. Its high-rise storage capabilities make optimal use of available floor space, but if the system failed, the operators may have difficulty accessing to the stock store on the high rack.


Additionally, goods are usually handled by a wide range of equipment. There are the pallet trucks, counterbalance trucks, order picking truck, conveyors and etc. These equipments have speed up the movement of goods in the warehouse, yet incurring high cost for the usage of such equipment.

(conveyors)



Layout Design



The current and future trend and challenges of Warehouses/DC is to ensure that the layout design is effective and flexible for different purposes. The layout is also more sophisticated and user-friendly today.

An effective layout design should facilitate changes in warehouse spaces within the building, accommodating the need for loading docks, and unloading spaces. It should also address material handling practices, such as JIT, which have fundamentally changed the operation of warehouses and distribution centres, and will continue to do so.

(U-flow & Through-flow)

The layout and configuration for the warehouse operation are optimised, with the help of efficient material handling and storage processes. Receiving and shipping bays are best separated to avoid congestion and confusion. The adoption of U-flow or Through-Flow will be determined by the location of the receiving and shipping area. Alternatively, material-handling methods will also determine other building aspects, such as aisle widths, lighting design, need for mezzanine space, fire protection, and egress design.


(functions of cross-dock activity)

Nowadays, cross-dock activity is broadly adopted in distribution centres, so as to be competitive in the most cost-effective and efficient manner possible. Hence, in order to obtain a successful cross-dock activity, it has to involve stringent yet agile quality control (QC) operations to avoid delays, bottlenecks, or the costs associated with shipping of inferior product. The sharing of information, having clear communication, conformance of goods, product availability and establishing good relationships with the supply chain partners are essential for effective cross docking.


Cubic capacity


Most modern warehouses are designed with higher bays to take advantage of vertical storage. Some examples of vertical storages are high rack narrow aisle racking, high bays and vertical carousel. In addition, floor area saving and construction of quality floors have become key considerations in the design of a modern warehouse. Racking heights have increased from eight to fourteen meters, resulting in the increased usage of high reach trucks. This new trend implies that high tolerance concrete floors with a low wear/maintenance resistance with due regard as to where joints are placed, are required for higher floor loadings and increased load as well as trafficking. Presently, warehouses are designed around the handling equipment, with the racking being laid out according to the handling equipment. Therefore, utilization of space is maximized while providing adequate circulation paths for personnel and material handling equipment such as forklift trucks.

(vertical carousel)


Security



Security in the warehouse/DC basically refers to work-related safety and product security. Warehouse/DC operations include the use of trucks, conveyors, materials storage, manual lifting/handling etc which could pose hazardous danger to the workers.

Some serious operational safety problems include inadequate fire safety provisions, improper blocking of exits and egress paths, chemical exposure, improper usage of lockout procedures, lack of ergonomics, and failure to wear personal protective equipment.

Presently, most of the warehouses/DC has incorporated proper signage for personnel to take precaution in view of their workers’ safety. The specific strategy for the warehouses signs must be determined early in the facility design process. Precaution for unexpected accidents such as fire is also essential – this includes engineering fire sprinkler systems to cover the warehouse/DC‘s entire storage configuration.

(CCTV)

Moreover, appropriate security systems are also incorporated into the safekeeping of products in the warehouse. For instance, only authorized personnel are permitted into the facility. Most warehouses/DC has also adopted the swipe card access systems for all staff, and has installed CCTV at some key areas. Full-time RFID monitoring could also be installed for a secure storage area to provide theft detection for high-value goods, because savings from loss or theft of these high value items can offset the higher tag costs. Some warehouses/DC even employs security guards to secure the whole area of the facility.

(use of RFID technology in assuring that the goods are intact)


Proliferation (e.g. increasing number of SKU for the same product) and personalization of products (e.g. customers want their name on the products) have impacted warehouse operations significantly. It results in an increase in the inventory carrying cost, more storage space required, as well as more shelving. Customers have zero-tolerance for errors such as incorrect picking or shipping. In addition, customers also prefer a shorter lead-time for their goods to arrive – this requires immediate allocation, picking, and shipping of goods. Cost in fuel for transportation of goods is increasing drastically. To seek for value-added services in a warehouse, customers expect distributors to perform quality control tasks, (re)packing, fulfillment documentation, and labeling. As a result of stiff competition from other rivals, companies have to control their operational costs and stock turns to achieve a competitive edge.

At the moment, due to the increasing complexity of warehouse and distribution center operations, labour management must be strengthened and improved. For instance, workers are required to upgrade their technical skills through training of standards and performance constantly. In this way, workers would be able to operate different software and machines, but this could incur high overhead cost.

The past emerging trends and forces continues to endeavor changes in warehouse and distribution center. As such, some companies choose to outsource their warehouse operations to public or contract warehouses through 3 PLs as a way to achieve higher flexibility and compete globally with other players. However, due to the gradual implementation of outsourcing, the distance between the manufacturer and retailer grow considerably in many domains where at least a warehouse is needed. This results in a restructuring of the initial JIT concept in the Distribution center.

Executives today are grappling with several challenges in warehousing as they go about their business of satisfying customer demands while remaining competitive in the market. The challenges range from shorter lead times and more demand for value-added services to labor management and keeping up with advances in technology and automation. They will also need to use tools (for example, RFID, direct-store-delivery, consolidation, etc.) to reduce costs to remain competitive. Ultimately, in the future prospect, we would be anticipating more new trends, as well as facing new challenges!

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