Question & Answer

dcm-t05lom: In your opinion, which of the 2 kinds of trends do you prefer? Is it the Past trends or the Current trends. Do support with your answers.

Before answering your question, we will like to have a brief discussion on both the past trends/challenges and the current trends/challenges facing the warehouse/DC.

For the past trends/challenges, warehouse/DC includes many labour intensive activities such as the extensive use of bar-coding - this incurs high overall cost for the warehouse operators. Over the years, technology advancement changes the once inefficient logistics operations, which gradually becomes one of the current trends facing warehouse/DC now. Due to this, warehouse/DC utilises advancing technological equipments such as the installation of RFID, introduction of WMS/ EDI, and the use of material-handling equipments etc. With the ideal application of these various technological equipments, the efficiency and effectiveness of the warehouse/distribution center will certainly improve: enhancing customer satisfaction and assuring accuracy. Another current trend includes the increasing tendency of building warehouse/DC to its height allowance as land is one of the main constraints that warehouse/DC is always facing. Therefore, by adopting high bays, warehouse/DC is able to reduce the land area and maximize the space utilization. Nonetheless, current trends could incur a high operating cost.

Hence, pertaining to your question, we will definitely prefer the current trends facing the warehouse/DC as there are more advantages in the logistical process. However, we would not neglect the past trends since they encourage every influence tending to increase the efficiency of the productive processes. Moreover, the past trends had also directed warehouse operators in overcoming past challenges. As for now, warehouse operators will need to continue stimulating a passion and drive in finding a resolution for the current challenges as stated in our previous entries.

We hope that you are satisfied with our answers. Thank you.

learning-dcm: What would your group recommend to achieve both reduce customer waiting time and operating cost at the same time?

In relation to your question, there had been several points mentioned in our earlier blog entries which can be used as feasible recommendations to achieve both targets.

Firstly, warehouse/DC could consider adopting the cross-dock activity to replace inefficient logistical practices. Cross-docking refers to incoming goods where customer sorts if it is labeled or allocated to customers if it has not been labeled. Goods is then move “across the dock” to get loaded onto the trailer destined for the appropriate customer. Since the goods do no enter the storage area, storage costs will not be incurred.

Secondly, warehouse/DC should consider investing in high technology equipments such as RFID – this would improve warehouse/DC’s efficiency and effectiveness. Therefore, warehouse operators will manage to reduce customer waiting time, and also substaining a lower operating cost in the long run due to the high returns from the investment.

Lastly, as mentioned in our previous blog entry, warehouse/DC could incorporate softwares such as WMS, EDI into the logistical processes. With the implementation of these softwares, inventory accuracy and communication efficiency can be enhanced between the manufacturers, retailers, and customers. In the due course, these softwares can assist in reducing total admin costs and improving customer service levels.

Ultimately, reducing customer waiting time and keeping low sustainable operating cost is the optimal aim of warehouse/DC.

Please do browse through our entries again for a better understanding. Thank you!

Usefulness & Constraints

USEFULNESS
1) Improving the efficiency and effectiveness of WH and DC

Having more awareness about the future trends would significantly reduce potential bottleneck operations. In addition, the challenges faced made us realized that it is essential that a warehouse/DC must keep its overall operating costs at its minimum as the cost of transportation would continue to increase due to the rising price of oil. Furthermore, the stock taking accuracy and efficiency would improve due to use of softwares and computer systems. Thus, learning the trends and challenges would aid greatly in the improvement of the warehouse/DC. In addition, technology such as CCTV camera would greatly enhance security and protection of goods. All in all, these are helping the warehouses/DC to run as smoothly and efficiency as possible.


2) Technology is a vital and useful tool

We learnt that technological advancements would enable a Warehouse/DC to gain competitive advantages over rivals. Furthermore, technology such as RFID and barcodes would improve the identifications and storages of goods in the WH/DC. Less time is required to find the items and the items are easily accounted for, thus reducing theft and pilferages. The time taken to move the goods around the Warehouse/DC would also be considerably reduced due to the use of conveyors and automated guided vehicle (AGV). Lastly, accessibility of goods could be improved with the use of AS/RS system.

Therefore, it is fundamental that we should keep up with technological advancements by constantly upgrading our machines and computer systems, as well as sending workers for upgrading course to improve on their technical skills and abilities.


3) Improving customer satisfaction

Keeping your customer satisfied is the key to success and customer satisfaction is one area that will either kill or excel your business. From our research, we learnt that consumers nowadays are unwilling to wait and therefore lead time must be shortened in order to maximize customer satisfaction. Although technological advancements enables the reduction of customer waiting time, it is crucial that a warehouse/DC should strike the right balance between reducing the waiting time of customers and achieving low sustainable operating cost. Consequently, learning the trends and challenges of warehouse/DC would allow us to have a thorough understanding of what customers really want.



CONSTRAINTS
1) Advancements in Technology can be a hurdle too

Workers must be able to operate the high technological equipments in order to keep up with the changing technology. If the workers are unable to operate the equipments, it may slow down the movement and flow of goods, leading to a decrease in efficiency and effectiveness of the warehouse/DC. Technological equipments are prone to breakdowns - when a breakdown occurs, it will affect the processes of the warehouse/ distribution centres. Therefore, the workers must know what to do which most of the time requires technological knowledge. Hence, when hiring workers, companies when hire workers with technological knowledge, it may also cost more.


2) High Cost

Cost has been increasing with the rising trends. For example, transportation cost. With the increase cost of fuel, it will affect the modes of transportation especially transportation by air-freight, which is an increasing trend. In addition, the trends of globalisation and the different modes of transportation for goods in which customers require would increase the transportation cost further. Customers’ satisfaction is especially important since they have no/little tolerance for errors. Therefore, more time is required for expediting, checking for the accuracy of customer orders with the purpose of ensuring the 3’R’s (Right place, Right time and Right quantity); Doing these, will lead to an increase in administrative cost from expediting, checking for accuracy, providing value added services and to also reconfirming it with the customers. This would not only increase customer satisfaction, but also increase the total cost.


3) High Capital Investment

Although the trend of using high technological equipments enhances the effectiveness and efficiency, it is expensive to implement and requires large amount of capital. Examples of high technological equipments include RFID (Radio Frequency Identification), AS/RS, live storage, conveyor belts etc. These systems and equipments need necessary installation, implementation and maintenance as they are prone to breakdowns, which will affect the management, movement of goods and process in the warehouse/distribution centres. Therefore it is essential to have regular maintenance and services. However, more will have to be spent for this cause.

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!

Past Trends & Challenges of Warehouse and Distribution Center

Warehouse (WH) is a commercial building which is for the storage of goods for varying amounts of times until demanded by customer. On the other hand, Distribution Centre (DC) is a specialized warehouse that caters to rapid movement of goods such as break bulk facility whereby incoming bulk shipments are broken into smaller shipments, then distribute to retailers, wholesalers or directly to consumers. The operations are based on the purpose of the DC – including order fulfillment and cross-docking. A DC normally serves a much larger geographical territory than a warehouse and is used more in the outbound flow of finished products.

In relation to our selected topic, we will be categorizing our elaborations into: the past, as well as the current trends and challenges facing warehouses and DC.

In the past, many old warehouses were built using brick walls as bricks were commonly used in construction. However, this restricted any expansion or structure change in the warehouses. The constant application of traditional warehousing approach had limited the ability to share information such as transportation & shipping, inventory counting and control, as well as performance management solutions. In addition, the old approach had also emphasized on batch shipments – this inevitably lengthened the lead time of the goods to be sent to various customers.

In warehouse and DC, Bar-coding labeling had also been extensively used for identification and picking accuracy of the storage good. However, bar-codes can run the risk of getting wet and scratched due to mishandling or a harsh environment, which prevents accurate reading by the scanner. Human intervention is labour intensive and costly. Manual method could also be a hindrance to ensure if the inventory remains up to date due to oversights, errors, and internal shrinkage. Automated Storage and retrieval systems (AS/RS) in warehouses was introduced in the 1950s to eliminate the walking which accounted for 70% of manual retrieval time, therefore improving productivity and efficiency would result in the reduction of overall cost.

(bar-code technology)

Also, warehousing and distribution centers had to cope with a variety of emerging business trends and forces. Competitive forces have been influencing the operations of a warehouse. The buying habits had dramatically changed for manufacturers, wholesalers, retailers and consumers alike. Service levels had become increasingly more demanding as well. These trends manifested themselves in numerous ways. Distribution operations had been obliged to manage less inventory levels, smaller order sizes, larger SKU, quicker order turnaround, increased customer packaging, and valued-added service requirements.

Additionally, Just in Time (JIT) was introduced to the Distribution Center in the early 1950s to ensure a significant cost-reduction, as well as to improve the returns on the investment of the business by reducing on-hold inventory. For most Distribution Centers, cross-dock has also been a popular system as they are able to achieve economies of scale, thus reducing overall cost.

Traditionally, companies would prefer to own or lease their private warehouses instead of using public warehousing approach. In addition, they would also secure a longer contract relationship with the leaser, resulting in inflexibility in deploying capital and the inability to adapt to the changing market development.

Introduction to our topic

The above video shows the new trends of modern warehousing. It highlights the importance of keeping up with technological advancements by using conveyors, RFID intergration and Automated Storage and Retrieval System(ASRS).

Yi Lin's Reflection

Army Logistics Base (ABL) is a centralised warehouse, developed to produce a seamlessly integrated supply chain and enhance inventory management. Some of the items stored are autospares, general and medical supplies. ABL adopts a Through flow layout. Each warehousing floor has a height of approximately 30 metres. The types of storage system install are pallet/bin ASRS, vertical carousel, narrow aisle and mobile racking.

VNA forklift is used to assist in narrow aisle racking. For small items (medical supplies) that require temperature and humidity control, the vertical carousel system is used. Units of bins are driven electronically to bring the parts to the pickers. It maximises space utilisation, accuracy and safety. If you put your hand at the opening when it is rotating, the machine will stop. At the enlistee equipment warehouse, through flow layout is adopted with live storage system whereby new goods are stored near the inbound and old ones are being stored near the outbound. (FIFO)

In the past, at the outbound, enlistee is to collect their equipments at the counter. Now, there is an E-mart where it pack and deliver. Path for vehicle and human are separated which is a good practice to ensure safety. In the autospare warehouse, it uses the bin ASRS (width 13m, height 9m) which have a capacity of 2900 bins. Cranes are used to move the bins to the location. (1hour: 60bins)

Overall, I think that ALB meets the objectives of warehousing and it is a good role model for other warehouses.

Roland's Reflection

The field trip visit was indeed an eye opener for me. I would never have imagined that Singapore's first centralised logistics base - the Army Logistics Base (ALB) is such an efficient storage facility that saves land and increases storage capacity. In fact, the development of the state of the art ALB has freed up labour, saved land and also allowed quicker retrieval of stocks, thus improving efficiency and effectiveness.

From my observations, I realized that ALB adopts a through flow layout because the incoming and outgoing functions are at opposite ends. Each warehousing floor has a height of approximately 30 metres. Therefore, the storage systems installed are vertical carousel, pallet/bin ASRS (Automated Storage and Retrieval System), high rack narrow aisle racking, mobile racking and shelving.

Vertical carousel system is used to store medical supplies and items. These medical items require temperature and humidity control and therefore are stored in an air conditioned room to ensure goods safety. Vertical carousel system is preferred because it increase cubic capacity of warehouse and provides excellent product security as well as minimizes employee injuries.

In addition, at the autospare warehouse, bin ASRS (width 13m, height 9m) which has a capacity of 2900 bins, is used. Cranes are then used to move the bins to the location at the rate of 60bins per hour. The fully computerized ASRS is easy to operate and allow fast access to materials.

Lastly, I discovered that VNA Truck is used in narrow aisle racking. At the enlistee equipment warehouse, through flow layout is also adopted with live storage system whereby new goods are stored near the inbound and old ones are being stored near the outbound. In this case, First In First Out (FIFO) system is applied.

It was indeed a fun and enriching experience for me. Learning DCM would never be so boring again!