A project for S. P. Richards Company

The company and its DC operations

Small parts stored in 18-inch deep shelves.

P. Viehweg, Senior Vice-President for Logistics of S. P. Richards Company (SPR), visited our class on 08 January and described the company and its operating environment. (His presentation is available here.)

Here are highlights from his talk. SPR distributes wholesale office products and most customers order electronically in mid to late afternoon. A typical DC receives product in the morning and puts it away, until early afternoon. Then picking begins in earnest to meet departure schedules of the trucks. The product is delivered overnight.

SPR does not know the customer orders until it is time to pick them. There is huge variance in the demand for even the most popular products.

A typical DC depends on a mostly manual system because it is not clear that capital investment would generate sufficient savings. SPR is in the process of installing a warehouse management system throughout its facilities.

Currently, product is stored in three major zones:

• Small items, such as pens and pencils
• Light, bulky items, such as briefcases or wastebaskets
• Larger items that do not require repackaging to ship, such as copier paper or furniture

The usual design has light bulk on a mezzanine, small items down below, and large items in pallet rack or floor stack.

You can learn about the operations of one SPR DC by examining the 2003 class project.

The project

Light bulk stored in 30-inch deep shelves.

What should a typical SPR distribution center look like? How large should it be? How should it be laid out? How much conveyor and where? Should it have flow rack? Carousels? Other automation?

Note especially that our class guests on 29 January spoke about how to do "greenfield design", which is what this project is about. They generously sketched out the process. Obvious suggestion: Follow this process!

Data

The company data is copyrighted and proprietary. You may use it for the purposes of this course only. (If you would like to use it for something else, please contact me to discuss.)

You will recall that the three main sources of information about a warehouse are as follows.

• Item Master: Extensive descriptions of each sku can be found in this compressed, plain text file (1.7M). There is additional information in the collection of files to be found here. Finally, you can see the average on-hand inventory for each month of 2003 in the following set of Microsft Access database files. Each is about 18MB (Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, Oct, Nov, Dec).
• Order History: This is provided as snapshots of activity during January 2004 in four different distribution centers across a range of sizes. (Remember that January is the peak month!) (DC11, DC16, DC29, DC31).
• Warehouse design: This is your task -- Design one through which the above orders can flow efficiently!

In addition, SPR writes "The month-end files have the on-hand and on-order quantities, along with a field called AvgOH. That is the average on-hand that our inventory management system calculates." And: "We change stock numbers on [some] items. They are in a separate file, with the stock number and an alias. The item probably changed from one to the other in the month-end inventory files at some point, and the sales might have changed as well. Both stock numbers refer to the same items."

Thinking about warehouse design

Here is something to help you get started. It is a design suggested for SPR by an equipment vendor:

• Ground floor: The space on the lower right is for receiving and for staging unit loads to ship. The accumulation spurs coming off the conveyor on the upper right is where it is proposed to conduct pack/ship of small items. On the left, starting from the bottom, you will see these areas: space to floor-stack furniture; three horizontal aisles of pallet rack; seven horizontal aisles of bin-shelving for slow-moving sku's; narrow aisle bin-shelving for faster moving sku's. At the very top is a section of conveyor that takes orders to pack/ship. The sections of rack/shelving that have been X-ed out indicate that there is a vertical aisle there, with overhead storage.
• Mezzanine: This area will hold small parts. It will sit directly above the shipping dock (on the right side of the image of the ground floor). Orders will be started at the top, where boxes are cached to hold the orders, and flow through two aisles of flow rack. Then each box will be pushed down the roller conveyor while product is pulled from the bin-shelving on the right; and back up the roller conveyor while product is pulled from the left. (The middle section of the conveyor is powered and completed orders could be pushed off onto this.) The boxes eventually arrive at pack/ship stations (beside the second, smaller aisle of flow rack, where completed orders are closed. All orders flow down to the ground floor, where they are sorted into the appropriate lane.

Here are some questions to think about:

• In what ways is this a good design? What are its weaknesses?
• How would put-away and order-picking work in each area?
• Why put the fastest-moving light bulk in narrow aisles (at the top of the image of the ground floor)?
• Are there enough accumulation spurs at check/pack/ship? Is there sufficient space to build all the pallets necessary?
• Is there sufficient storage space in the mezzanine?
• What percentage of all orders will be completed entirely within the mezzanine? What percentage require picking in both the mezzanine and in light-bulk?
• How many boxes would flow along the conveyor in the mezzanine? Could the conveyor ever become congested? What would be the result?
• If completed orders are pushed onto the powered conveyor on the mezzanine, what percentage of the boxes travel what distance along the conveyor?