1. Managing Warehouse Receiving and Storing Operations

1.1 Learning Outcomes Learning Outcomes Assessment Criteria

The learner will: The learner can: 01.01. Be able to produce a plan for 01.01.1. Describe the relative quantities

the daily receipt and storage of and mix of goods and explain inbound goods why these vary on a daily and

weekly basis

01.02. Be able to allocate the necessary labour and other resources to meet the requirements defined in the above plan

01.02.1. Describe the methods of evaluating necessary labour and other resources required and explain how these resource requirements might be met

01.03. Be able to describe how this plan may need to be modified at a short notice to meet contingencies

01.03.1. Explain the factors that may arise that may require the plan to be amended

01.03.2. Explain how the plan would be amended in order to meet these requirements

01.04. Know the factors which effect the correct positioning of goods warehouse, and the information needed to position them correctly

01.04.1. Explain picking frequency and type of goods and how they indicate the optimum storage criteria

01.05. Understand the controls that are needed to ensure that goods are stored safely and securely

01.05.1. Explain what conditions affect safe and secure storage

01.05.2. Diagnose the controls that are needed to preserve the goods condition, and security in the warehouse

01.06. Understand the controls that are 01.06.1. Give examples of put away needed to ensure that goods methods in the warehouse are stored safely and securely 01.06.2. Explain how different methods

of put away are selected

AO/QUA/0047 - V1 15

1.2 Why Warehouses?

Have you wondered why there are so many warehouses around the

country, many of which are extremely large and with thousands of pallets in

store?

Warehouses exist because there is a need to satisfy demand from

customers further down the supply chain; notably, this demand cannot

always be satisfied direct from the factory in time without a buffer.

Essentially, there is a difference between the time that customers demand

products and the time that it takes to manufacture and supply the

products.

A warehouse is a temporary storage location for inventory, which

ultimately acts as a buffer to smooth out differences between the supply and

demand for goods and services. The storage of inventory is one of the major

purposes of a warehouse—although it is not the only purpose today as we

shall find later in the unit. Warehouses can also act as ‘hubs’ where goods can

be received, sorted and subsequently directed to the next stage in the supply

chain.

1.2.1 Warehouse Location

There are several factors that influence the decisions concerning where to

locate a warehouse facility. These include:

The geography of the country,

The positioning of the major towns and cities, which is a key driver in the

location of many warehouses, and

The need to reduce transportation costs—and therefore carbon

emissions—as much as possible with the use of bulk transport to a

centralised location and then smaller and shorter loads to the local

areas.

16 AO/QUA/0047 - V1

Another factor that may influence the location is closeness or nearness

to customers or suppliers. An organisation wishing to provide a high

service level to the market will consider locating warehouses as close to

the market as possible so as to reduce the lead times. Similarly a

manufacturing organisation may consider locating as close to supply

sources to ensure a continuous flow of raw materials into the production

process.

Warehouses are a key link in the supply chain’s ability to perform many

essential functions to facilitate efficient service levels to the customer.

We are now going to analyse the different variables that drive the supply

side of the supply chain and the demand side, and compare them in an

attempt to gain a further understanding of why warehouses are needed in

this way.

Task 1.1:

The transport network is composed of various different modes of

transport. List the major 6 modes of transport. AO/QUA/0047 - V1 17

1.2.2 Supply Variables

These relate to receipts or goods coming into the warehouse, and depend on

the inventory policy of the organisation. The policy may involve the

purchase of goods in bulk to take advantage of discounts, and to reduce

purchasing costs. Each purchase has a cost of raising the order, and

therefore the number of orders should be kept to a minimum.

A key driver of supply is the cost of storage, which must be balanced

against the availability and size of discounts.

Storage periods and lead times must take into consideration seasonal

variations in supply, and the extended length of lead time from global

supply chains. Many agricultural products are only available at certain

times of the year, and must therefore be stored when they are not

available.

Many manufactured products are now made in the Far East, and the

length of supply lead-time for such products to get to the market in

Europe. Africa or the USA is therefore long—particularly if it has to come by

sea, as is the case for most non-high

value goods. Importantly, only light and

relatively high-value products are shipped by

air freight, and so the inventory policy has to

take this into account.

Task 1.2:

For a warehouse of your choice, identify and explain the supply

variables of the business.

18 AO/QUA/0047 - V1

1.2.3 Demand Variables

Demand Variables relate to despatches or goods going out of the

warehouse. Understanding these variables is a complex process which is

worked out by analysing customer order patterns and the service level

required from the warehouse.

Seasonal changes in demand are common; you may be familiar with the huge

seasonal increases in demand for all types of consumer goods in the weeks

running up to festive periods and New Year periods. This also includes

the seasonal nature of the demand for certain products, such as ice cream,

drinks and summer or winter wear.

Some demand variables are artificially introduced by an industry, such as the

motor industry, which may introduce new models at certain times of the year,

and also having registration plates changes twice a year. This tends to even

out demand, and therefore does not create a huge wave of demand around

the launch of the new models.

Furthermore, a warehouse could be used to store bulk purchases which

have been made to effect reduced prices, or goods that are being

accumulated to meet seasonal demand, such as ‘spring fashions’ or the

festive periods throughout the year, so as to make sure that, when the

customer wants it, the item is available. This is what is known as the

‘service level’, and we measure this element on the basis of the

percentage of when demand is fulfilled upon request. A typical retail

warehouse will work towards a 98-99% service level for DC

replenishments to shop.

Task 1.3:

For a warehouse of your choice, identify and explain the demand

variables of the business.

AO/QUA/0047 - V1 19

1.2.4 Trans-Shipment

The primary purpose of a warehouse is to act as a location where

transshipment can occur; that is, goods being received and despatched

as rapidly as possible. The major objective in the management of any

warehouse is to ensure inventory levels are kept as low as possible whilst still

providing the required service level to the customer (as previously

explained above).

1.2.5 Consolidation

A warehouse is often used to balance the conflicting requirements of the

customer and the economic advantages of the suppliers’ transport

network. Most warehouses are part of a distribution network, which is

designed to reconcile the mix of products supplied by each supplier with

the products required by the customer for the next step in the supply

chain.

Suppliers will often deliver quantities of most of their product range into

National Distribution Centres or a number of Regional Distribution

Centres. These products will then be sorted for the customer warehouse,

and accordingly distributed as bulk loads with other suppliers’ products in

the mix required by the customer. This enables both parties to maximise

the use of bulk shipping and therefore benefit from lower transportation

costs.

1.2.6 Strategic Stock and Risk Management

Warehouses also exist to provide storage for safety stock to cover planned

or unforeseen risk of breaks in the supply chain. Examples of a planned

risk might be the annual factory shut-down period for holidays and the

maintenance of machinery, or annual stock-taking. Unforeseen risks may

arise owing to many and varied events, ranging from social unrest to

vehicles breakdown, a fire at the factory or delay in receiving components.

20 AO/QUA/0047 - V1

To summarise, warehouses are needed to store inventory in order to:

provide a suitable buffer to smooth variations between supply and

demand,

enable Economies of Scale in manufacturing,

enable procurement savings through large purchases,

cover seasonal fluctuations and peaks,

provide a wide range of different products from different suppliers and

locations in one central location, and

cover for planned or breakdown supply situations.

Task 1.4:

A Warehouse Operation involves the management of inventory or stock. The

management of stock may be decentralised to the Warehouse Manager

or centralised away from the warehouse to headquarters. Either way, a

Warehouse Manager must understand inventory management issues. With

this in mind, what are the objectives of inventory or stock management?

1.2.7 Other warehouse functions

Warehouses are also used to break bulk loads into smaller orders,

tranship, consolidate and complete order activities for other locations. The

role is to marshal orders for stock units that have been supplied from

several locations or suppliers into a load that meets the customer’s order.

Accordingly, warehouses can therefore be viewed as a bridge between

supply and demand, and the location of the warehouse will also be driven

by the influence of these various factors in a geographic context.

AO/QUA/0047 - V1 21

Essentially, a major factor is to reduce delivery vehicle mileages so as to

reduce ‘carbon footprint’, but also to reduce costs.

Task 1.5:

Log on to the following website:

www.businesslink.gov.uk

After navigating around this website, list and explain four reasons for the

removal of goods from an excise warehouse.

Once a geographical location has been established, the next step is site

selection.

What drives the locations of sites?

access to transport network;

availability of labour;

availability of suitable buildings in the geographic area selected;

availability of funding (grants or supported loans);

supply/demand variables and transport costs;

destinations of loads; and

demands on the warehouse layout

Access to the Transport Network

You will notice that many warehouses are located close to the main

motorway corridors, and increasingly, also near airports, railports and

seaports. This is to provide easy access to the transport modes for

onwards supply, and is driven by reductions in fuel costs.

22 AO/QUA/0047 - V1

Availability of Labour

Most warehouses are located close to large towns where there is a

population of people who can work in the warehouse.

Availability of Suitable Buildings

Planners zone areas for warehouse developments, and there tends to be

properties of this nature available to meet the other criteria specified, as

developers know that it is likely that warehouses will be required in these

locations. The actual detailed location may be driven by what is vacant or

available at the time of need.

Availability of Grants

Some countries and some areas are regarded by governments as

‘distressed’ and in need of stimulation with new employment, and so

grants are offered for businesses—either building warehouses or starting a

new business in the area—which may reduce the capital or the running costs

of the warehouse for a time.

Supply/Demand Variable and Transport Costs

A central location in a country will always be cheapest in terms of transport

costs in fulfilling supply and demand balancing owing to the fact that its

location will usually mean that transport is the shortest length in most

cases.

Destinations of Loads

The location of the warehouse will be determined by the destination of most

loads. The most popular destination areas may justify the creation of a regional

distribution centre to improve transport efficiency.

AO/QUA/0047 - V1 23

Demands of the Warehouse Layout

What is inside the warehouse in terms of the height required and the type of

warehouse may have an effect on the location. High Bay Warehouses, for

example, tend not to be permitted in rural areas.

Task 1.6:

For any warehouse or National Distribution Centre (NDC) that you are

familiar with, outline the main reasons for its geographical location.

Case Study

The new Bodleian library Storage facility in Swindon, costing £26m, will

ultimately store over 8 million volumes of books and maps for Oxford

University’s world-renowned library. The 127,900 sq. ft. warehouse has 31

aisles of shelving providing over 153 miles of storage capacity. Over the

next year, nearly 6 million books and more than 1.2 million maps will be

transferred from Oxford to the facility. The Bodleian is one of 4 institutions

around the UK that is registered with Stationer’s Hall as copyright

agencies and receiving a copy of every published book in the UK, which daily

adds 40,000 books to the collection.

The new store comprises a high-rise, high-density, narrow-aisle shelving

structure 11.4 metres high, and 3,224 bays and 247,000 linear metres of

shelving. The 15 metre-high building—of which 90% of the cube is

utilised—also houses a multi-tier walk-on racking structure supporting 600

tailor-made steel cabinets, holding over 1.2 million maps and large-format

items. 24 AO/QUA/0047 - V1

With 38 shelf levels from the ground up, the system provides over 690,404

storage tray locations that are 1283 mm wide. All items are individually

barcoded and put into 5 different sized cardboard trays, double- and

tripledeep, that fit into the locations.

The air conditioners ensure that the correct humidity and temperature is

maintained constantly so as to provide optimum conditions to protect the

invaluable collection.

Task 1.7:

The location of a warehouse—much like the location of any business— is

carefully analysed before a decision is made. Like moving a family home,

there are many issues that have to be researched and ‘tradeoffs’ made,

as there is no such place as the perfect place. List as many questions as

you can that should be included on a checklist for location researchers to

get appropriate answers. Remember: location options could be

international as well as regional.

1.3 Managing Receiving and Storing Operations

1.3.1 Introduction

The first point at which goods are the responsibility of the warehouse is

usually the receiving yard or the receiving dock.

Typically, vehicles arrive at the security

gatehouse to be checked in by the security

staff. They want to verify that the vehicle has

come to the right destination and, by

AO/QUA/0047 - V1 25

checking the driver’s manifest and their own computer system, that the

goods are due for delivery at this time. If the delivery is expected, the

vehicle will be checked in, the warehouse informed, and the driver will be

instructed to proceed to an unloading area, or a receiving dock.

Sometimes, this is displayed by an illuminated sign—particularly when the

warehouse is busy and vehicles are obliged to queue for processing.

Task 1.8:

When a container arrives from China full of goods for festive period gifts,

what 6 basic conditions do you check for? Condition 1 is ‘the right goods’;

what are the other 5?

1.3.2 Receiving goods

Upon arrival of a vehicle delivering goods, receiving staff should check the

driver’s despatch note or advice note to ensure that the goods are

described as on the documents, and then the staff will check against the

despatch or advice note supplied by the driver that the description of the

goods matches the types and quantities of cartons, pallets or containers to

be received.

In this instance, suitable arrangements should be made to unload the

vehicle based on whether it is small cartons, pallets, containers, or other types

of packaging. It is normally the responsibility of the receiving area staff to

unload the vehicle—either mechanically, by driving into the trailer with trucks

or loaders, or by hand.

Goods are normally unloaded to a holding area where they can be further

checked. This should be carried out as quickly as possible in order to

release the driver, and also for the loading bay to be cleared for other

vehicles waiting to be unloaded. 26 AO/QUA/0047 - V1

In some cases, the purchase order will be checked or matched with the

goods received note (GRN) to ensure that the goods that have arrived are

being delivered to the terms and conditions outlined by the order. A visual

inspection for damage should also be carried out. This inspection is

normally carried out in relation to the packaging of the product, with any

damage found further investigated to consider whether the product itself is

damaged. Importantly, any goods found to be damaged should be moved

to a quarantine area, where the following actions should be taken:

further inspection as necessary;

notification of the supplier;

the return of goods to the supplier; and

the disposal of damaged goods in accordance with the organisation’s

procedures if the supplier instructs this action to be taken.

The quantities of the receipt should be amended to take account of this

damage, prior to further processing of the receipt.

It is possible that a delivery has been prior notified to the warehouse

receiving section either by the supplier or electronically as a due delivery for

today, and may be a delivery scheduled for a small time period so that

receiving can balance their workload throughout the day.

On some sites, deliveries will arrive without prior notification and may

consequently cause bottlenecks whilst waiting to be unloaded. This

adversely affects the ability of the warehouse receiving area to plan

workload; however, delays can occur to planned deliveries owing to traffic

problems or supply difficulties resulting in similar peaks at receipt and

unloading—even with realistic planned delivery schedules.

Organisations have various different procedures (whether electronic or

paper methods) for the advice of goods; however, best practice is to:

check the goods against the order or transportation documents,

notify Procurement of the receipt,

place the goods in a holding area prior to any physical inspection,

AO/QUA/0047 - V1 27

document any discrepancies identified, and

quarantine goods with discrepancies or damage to a quarantine area

whilst awaiting further action.

Different warehouses adopt slightly different procedures owing to the

nature of the loads and products, as well as the space constraints in the

warehouse. The principles that should operate are clear definitions of the

areas, and the status of the goods and the goods identification of each

consignment prior to it being allocated into the warehouse.

Stock records will be updated to advise that receipt has been made and

goods are awaiting placement.

Goods may be unloaded in a number of different ways and in different

locations depending on the size and nature of the consignment. Goods may

be unloaded in a dock by fork lift trucks driving into the trailer, or unloaded

by hand if cartons in a container. Furthermore, other methods could be

used.

Pallets, for instance, may be unloaded in the yard or the receiving bay by

fork lift truck and subsequently deposited in the holding area for further

operations to be carried out, such as decanting cartons from the pallet.

Hazardous goods will be isolated in special areas where precautions can be

taken against the hazard.

High-value or bonded items may be unloaded to a

special secure compound so as to ensure their

security or to otherwise meet the requirements of

customs and excise.

Outsize or awkward shapes may require special handling prior to storage,

such as protective packing or mounting on a wooden tray.

All of these methods are recommended. Essentially, the principle is that the

receiving area needs to consider each type of product and accordingly devise

the most cost-effective and secure way of processing it into the warehouse.

There is never one solution—there is a right solution. 28 AO/QUA/0047 - V1

Other activities that may be performed in the receiving area may include:

decanting pallets/roll cages into individual cartons prior to storage;

separating stock-keeping units into items that are not going into

storage, and those that are;

separating units into storage areas; and

accepting and checking returned goods rather than receipts from

suppliers.

Decanting pallets

Unitising loads by gathering them into cubes on pallets, or otherwise

towing individual product containers in roll cages, is an efficient method of

maximising space on a lorry, and making unloading fast and efficient.

However, this may not be the way in which items will be stored in the

warehouse, and indeed some of the load may be for immediate despatch;

this requires the unitised load to be split in the receiving area and then

moved to the despatch area or the storage areas, as required.

Separating units

Units may be further labelled and sorted prior to storage in accordance with

the stocking policy within the warehouse.

Returned goods

Goods returned from customers need to be processed in a different way

from new stock since they have already been accepted and registered into

the company stock systems. Returns need to be inspected, and the

reasons for returns analysed. Good stock can be returned into the stores

following inspection, but its shelf life may have to be considered. Re-

packing may also be required to return some of the goods to ‘as new’

condition. Standard practice is that warehouse management will have

created a separate area in the warehouse for such activities to be carried

out, away from the fast-track functions of the receiving area.

When inspection at the receiving area is complete, goods will be marked

with a location label and will await movement to the next location, i.e. a

AO/QUA/0047 - V1 29

storage location or a marshalling location if the goods are to be

despatched immediately.

We will look at the storage in another section to follow later.

1.3.3 Challenges and priorities for the receiving function

Challenges for you, as the Warehouse Manager, in terms of the receiving

activity relate to the planning of receipts to ensure that there is no

congestion in the receiving areas. Deliveries are normally planned with the aim

of ensuring an even load, and coordinating this with outbound deliveries

so as to minimise handling and storage.

However, even with good planning, delays in transit may occur, which may

result in deliveries being received late and subsequently causing an

unbalanced and additional workload. These imbalances and additional

workloads have a ‘knock on’ effect for goods which are planned to be

shipped out directly, as they may not be available for consolidating with

other goods picked on time.

Essentially, the prime objectives of the receiving area are to unload the

vehicle quickly, check the goods, and then make the goods available for

issue from the warehouse as soon as possible.

Labour can be planned for this activity based on the expected volume and mix

of deliveries; however, unplanned deliveries owing to lateness, or loads

received early, can disrupt the plan and subsequently cause either shortfalls

or surplus staff.

Factors affecting the amount of labour required include:

the frequency of deliveries expected;

volumes of product to be unloaded;

types of loads;

receiving methods—booking in, security checks, driver briefing, dock

safety; and 30 AO/QUA/0047 - V1

the degree of use of MHE for the procedures.

Frequency of Deliveries

If deliveries occur at regular intervals throughout the day, it is possible to

maintain a constant team of people to perform the unloading task all day, one

vehicle after another. Other team members can then sort goods, decant

the pallets, label and marshal goods for the next step. In the instance

that deliveries are irregular, the team must be multi-skilled in order to allow

the time between deliveries to be utilised for other activities other than

unloading

Volumes of Product

Volume is often linked to the size of vehicle, with vans delivering small

loads of individual cartons and small pallets, and articulated trailers

delivering as many as 22 pallet loads. This volume will influence the labour and

equipment required for this activity.

Unloading 20- or 40-feet ISO containers of individual cartons tends to be the

most time-consuming activity for receiving areas.

Types of Load

Bulk loads can be decanted directly into a storage area, but are a small

number of most movements. The major variations are single or multi-drop

loads, where the warehouse receives only part of the vehicles’ contents.

These require different procedures from single loads where the whole

contents of the vehicle are delivered. AO/QUA/0047 - V1 31

Receiving Procedures

Complex receiving procedures sometimes cause delays in some cases, and

certainly require more labour overall; however some of these

procedures may result in savings in terms of costs in the receiving area and

overall service improvement, as some of the administration is carried out by

others. Cost trade-offs have to be considered carefully when planning

any warehouse activity in order to generate the maximum overall efficiency

and lowest cost.

Materials Handling Equipment (MHE)

The value of using MHE is linked with improvements in the productivity of

the labour. Notably, receiving areas that plan to use it must provide

sufficient trained labour to operate it or the benefits will not be realised.

Returns

Returns require special procedures as they may need detailed

inspections, and are outside the normal receiving system as there is not a

purchase order for them. They may be removed to another location

immediately after unloading.

General Principle

Goods should be booked immediately, or as soon as possible, after

unloading so as to ensure that the stock records can be updated

immediately, notifying the system of the availability of stock due in.

Importantly, this may induce various cost implications if time is being

added to lead times as a result of delayed goods in processing.

32 AO/QUA/0047 - V1

1.4 Sorting Goods for Storage

Reference has previously been made to this issue, with consideration to the

segregation of goods that are to be despatched immediately and which

therefore do not require storage. Such goods will be moved to the

marshalling area and accordingly consolidated with the other goods that will

form a delivery consignment from the warehouse.

Other goods will be sorted for storage based on the allocation given by the

Warehouse Manager or otherwise as a result of the parameters of the

computer system, which allocates locations.

The primary driver for this activity is whether the goods are in the form that

they are stored, or whether further processing is required prior to the put

away stage. The most likely processing required is to break packaging

down so that individual cartons, cases, bottles, etc. can be stored or

divided into manageable pack sizes to suit customer requirements. Some

of these operations may be carried out prior to storage, rather than upon

despatch.

For example, if an organisation advertises products in quantities of 10, 20

or 100, the receiving procedure will then require the repacking of the

AO/QUA/0047 - V1 33

product into these stock-keeping units (SKUs) prior to the put away stage.

Furthermore, it may be necessary to pack these into another suitable

carton prior to storage.

Other organisations may be able to simply store whole pallet loads or

cartons without any processing being required.

1.5 Storage Locations

There are generally two approaches to the selection of stock locations in

warehouses:

Fixed location, and

Random location.

It is possible that both of these types of location systems will be utilised for

storing different stock within the same warehouse.

Fixed

A fixed system means that all stock for a particular SKU is stored in the

same location, and overflows are stored together. In the case of manual

picking environments, pickers learn where the locations are to be found and

can pick faster.

Random

A random system means that the computer allocates the storage location

based upon maximising space, and the type of product. With a fixed

system, it is commonly assumed that only 50% of space utilisation can be

achieved, whereas it is possible to achieve 85% if adopting a random

system. Notably, however, there is much industry debate concerning such

statistics. Nevertheless, warehouse management is required to select the

most appropriate method or combination of method to suit their

operational needs.

34 AO/QUA/0047 - V1

Most warehouses identify the storage locations by reference to a stock

location number. These alphanumeric codes are often a combination of

letters and numbers corresponding to geographical areas in the

warehouse, broken down into bays and according to level.

Generally in warehouses, the drivers locating where a product is stored will

be assigned in consideration of:

pick frequency, i.e. slow- or fast-moving;

type of storage equipment required, i.e. bin, shelf, pallet rack, bulk;

weight, i.e. heavy items in lower locations;

whether they are hazardous;

outsize; and

exterior.

Pick frequency

Fast-moving stock will be stored nearest to the despatch area in order to

minimise the physical movement distance required, as this happens

frequently.

Slow-moving stock will be located to the rear of the warehouse or in the top

locations of the racking.

Type of storage equipment

This will be dependent on the type of goods to be stored.

Adjustable Pallet Racking (APR) for whole pallets and the bulk storage of

any goods.

Plastic or steel bins for small parts—with or without dividers.

Shelves for cartons, cans and bottles.

Stillages for production storage. AO/QUA/0047 - V1 35

The details of these types of equipment are discussed in a later section.

1.6 Characteristics of Goods and Storing

The characteristics of goods to be received will affect decisions relating to

storage systems. Below is a brief discussion of some key product

characteristics and their influence on storage requirements.

1.6.1 Hazardous

Hazardous goods are goods that present a danger of injury or harm to the

environment, to buildings or to people. They are generally classified and

regulated by law, which also states how they should be handled and

stored. Manufacturers of the goods are required by law under the COSHH

regulations in Europe to provide written information on these procedures.

Hazardous goods should always be stored in a suitable location where

precautions have been taken, and where they are isolated and secure.

1.6.2 Non-standard sized goods

Non-standard sizes goods may include, for example, exhaust systems or long

lengths of steel, normally stored in bespoke racking, cantilever, or block

stacked on the floor. In addition, these may be goods which require special

temperature conditions, and will therefore be located in the area with the

suitable conditions. Such goods may include:

frozen foods,

chilled, e.g. dairy, and

bread. 36 AO/QUA/0047 - V1

Frozen foods

Normally stored in cartons and on pallets, but in a relatively small chamber

which is maintained at a temperature of -25°C, operators in this

environment require Personal Protective Equipment (PPE) and are limited in

terms of the hours they can work in such conditions. The environment has

to be monitored and temperatures recorded owing to the fact that most

frozen goods are in the food supply chain products, and records have to

be kept in order to comply with food safety regulations.

Chilled

This is an area of the warehouse in which the temperature must be

maintained at below 4°C in order to protect the shelf life of the products.

These products are often dairy or meat products, but may also be certain

pharmaceuticals. As with frozen products, the regulatory demands are

onerous, with records having to be kept. The labour requirements are less

challenging, although most staff do wear some form of PPE, limited to a

warm fleece and light gloves.

Other products

Certain other food products are kept fresher and with an extended shelf life

if the ambient temperature does not exceed 15°C in the warehouse. An

example of this is bread, which has been manufactured in a factory

bakery, and is therefore supplied through a retailer’s warehouse.

1.6.3 High-value goods

Goods of high value (i.e. small electronic consumer products) or goods

under legal constraints (such as cigarettes or alcohol) are stored in

suitable storage equipment, but are additionally segregated from the rest

of the warehouse within a securely fenced compound. Access to this

compound is normally restricted to authorised personnel only, and may AO/QUA/0047 - V1 37

therefore be monitored by additional security measures, such as CCTV, and

random searches of operatives.

1.6.4 Returns

Returns have their own procedures for storage, and are typically

segregated from standard product until they have been processed in

accordance with warehouse procedures.

1.7 Location Numbering (Coding Systems)

The main purpose of any location numbering system is to identify stock in a

particular location both easily and logically. The methodology used is

similar to an address. For example: Location 4 C 12 A 1

where

4 = zone (town)

C = aisle (street)

12 = bay (apartment block)

A = level (floor)

1 = position on pallet or on shelf if sub-divided (flat).

Alphanumeric numbering systems are normally used, and this example

would allow 4.5

million separate

location

combinations.

Numerical systems

can also be used but

are less common.

Zoning of the

38 AO/QUA/0047 - V1

warehouse allows staff to gain familiarity concerning where stock is likely to

be, but is only a common sense check.

Case Study

Historically, the distribution centre of Moss Bros was located in Stratford,

East London, but the Olympic Park development necessitated the move to

a new site in Barking, which subsequently provided the opportunity to

redesign the warehouse to more closely fit the needs of the business.

The Moss Bros business comprises two main fashion products: the retail

sales of clothing, and hire. Both of these were allocated separate areas

within the warehouse owing to their different needs.

Importantly, the warehouse comprises a 96,000 sq. ft. shell into which a

55,000 sq. ft. mezzanine floor has been erected, thereby creating a total of

152,000 sq. ft. of warehouse space, in addition to space for offices.

The storage in the warehouse was split between hanging garments, on the

upper floor of the mezzanine, split 50/50 between the retail and the hire

businesses, and further split into zones dedicated to specific types of

product. The total storage space accommodates 232,000 hanging

garments on two or three levels of hanging rails. A conveyor system

connects all the principle hanging storage zones on the mezzanine, with

goods inwards, buffer storage and despatch areas on the ground floor.

Everything is transferred by the conveyor, which has two circuits running

in parallel: one for retail items, and one for hire products. This enables

Moss Bros to run systems separately but with a certain degree of

flexibility.

Hanging retail products arriving at the warehouse are placed on to the

conveyor, and subsequently transferred to the mezzanine for storage in

one of the zones. Returned hire items are checked in the ‘laundry’ area AO/QUA/0047 - V1 39

before being transferred to storage by conveyor. Moreover, those items

requiring cleaning or mending are sent out to subcontractors for the work,

before being returned to stock. Stock is handled by the warehouse staff, who

slide them onto hangars at the end nearest the conveyor, which are then

transferred to the conveyor in batches by hand.

The ground floor incorporates a storage area at the rear for plat-packed

items, including boxed garments, such as shirts, accessories, such as

cufflinks and braces. The front part of the ground floor is used for order

assembly, despatch and receipts. Two doors are used for hanging

garments—one for despatch and the other for receipts—each with

extendable booms to fit into the trailers to enable efficient loading. Two

further doors are used for the receipt of flat-pack items, whilst the other

three are used for the despatch of the same. There is also a goods

receiving buffer, which can hold up to 18,000 garments on the ground

floor, and a further capability of storing 17,000 on the mezzanine.

All items are given a unique and readily identifiable label upon arrival at the

warehouse, which makes it easier for staff to distinguish between retail and hire

products. Picking is managed with the use of conventional printed lists with

items placed on the inner or outer track depending on whether they are hire

products or retail products. The conveyor then transfers these to the ground

floor despatch and order assembly areas dedicated to each operation. There

is capacity in these areas to hold up to 25,000 hanging garments awaiting

loading and despatch.

1.8 Picking Frequency

One of the key drivers in the location for storing goods is the picking

frequency of a particular stock item (SKU). This is simply described as

how often an item appears on a pick list. It is standard practice that SKUs with

frequent pick rates should be located closest to the despatch area, as this will

minimise travel time between picks.

40 AO/QUA/0047 - V1

Conversely, SKUs which have a lower pick rate may be stored in locations

furthest from despatch or otherwise on high levels of the racking in the

warehouse.

The driving principle behind all the warehouse processes is efficiency, i.e. the

minimum usage of labour and equipment resources, and allocating the

locations and positioning of stock in such a way so as to minimise

movement, which is a key principle to good warehouse design.

Such picking frequency dynamics need to undergo periodic review as

products move through their lifecycle. Essentially, products’ popularity and

picking frequency may decline over a time period, and may be replaced by

other SKUs, the frequency of which increases and therefore requires the

repositioning of the goods in order to maximise efficiency.

1.9 Staff Training and Skills

Skilled and well-trained staff are a vital component of the receiving and

storage process. Staffing levels will be planned to reflect the levels of

planned deliveries to be received during the next shift, and should there be

delays or unplanned arrivals, it may be necessary to move labour

resources around the warehouse in order to balance the various

requirements. Accordingly staff who are experienced and who have been

trained to use different pieces of equipment, i.e. those who understand the

procedures associated with carrying out multiple tasks in the receiving and

storing function (multi-skilled operatives), are often preferred. They may

command premium pay to reflect their flexibility. Normal planned levels of

labour will be a balance of permanent, well-trained multi-skilled staff, as

well as a temporary agency staff, who can be used as a balancing

resource at short notice to cover sickness, holidays and temporary

shortfalls in labour. All staff need the required induction and safety training

in order to ensure staff are utilised effectively in their respective work

environments. Notably, training on the various types of MHE is essential,

which must include updates to procedures, warehouse design or

equipment or other safety issues. Furthermore, operators’ competencies

must be maintained at all times, with language and communication skills

AO/QUA/0047 - V1 41

also deemed to be vital in a dynamic warehouse environment. In addition, the

ability to understand the common language of use in the warehouse is a vital

component of warehouse staff competence, which ensures that staff can

understand each other when communicating.

1.10 Safe and Secure Storage

As a Warehouse Manager, you must ensure that all inventory is stored

safely and held in adequately secure areas of the warehouse. Accordingly,

your warehouse should operate a level of physical security, which may

ultimately involve closed access to the site, e.g. fencing, with entry point to the

site through a security gate for vehicles, and a secure reception entry for staff

and visitors.

Warehouses that store goods that are particularly vulnerable to loss

through theft—such as high-value electronic goods, jewellery, alcoholic

beverages—will require additional levels of security. This may involve staff

and vehicles being randomly searched upon exit, and secure areas within

the main site where these goods are stored in a compound with access

limited to authorised staff only. In some warehouse environments, closed

circuit monitoring technologies are in use to minimise the risk of theft. 42 AO/QUA/0047 - V1

Furthermore, all inventory needs to be maintained in a good condition and

stored in appropriate racking and shelving so as to facilitate life and quality

preservation. Items with a limited shelf life, such as perishable products,

must be stored in accordance with the principle of First In First Out (FIFO), so

that an appropriate stock rotation is maintained. FIFO minimises the risk of

stock reaching the end of its shelf life prior to despatch. Stock control

systems will record the batches and the expiry dates, and appropriate

picking systems will be applied so as to avoid the risk of any waste as a result

of expired stock.

The processes in the receiving and put away of goods expose goods to both

safety and security risks. As a manager responsible for overseeing such

processes, you should ensure that the movement of stock is always minimised

to reduce the risk, as well as to improve efficiency.

Importantly, double handling should be avoided where possible.

1.11 Stocktaking

Traditionally, stocktaking involved the complete shutdown of operations,

and all staff being involved in the counting and checking of current stocks.

This would be followed-up by staff reconciling the count, and subsequently

recording and investigating discrepancies, which takes a long period.

Task 1.9:

What do you think are the disadvantages of an annual stocktake

involving a complete shutdown of potentially one whole week? AO/QUA/0047 - V1 43

With good ICT Warehouse Management Systems, automatic handling,

and automatic stock identification, stocktaking is enhanced by such

technologies as barcoding and Radio Frequency Identification (RFID)

systems. All stock levels should be maintained correctly at all times on the

Warehouse Management System stock records on the computer system,

as there is no room for human error in the process. In reality, however,

most warehouses do not operate completely automated systems, and

there is therefore a combination of mechanical handling and human

processing involving the identification, counting and recording of stock.

Consequently, as part of the process of secure storage and maintaining

correct stock records, most warehouses continue to carry out stocktaking

activities on a regular basis.

Task 1.10:

Explain the possible consequences of stock records being incorrect: for

example, the WMS record on the computer states that there are 100 in stock

of SKU XYZ, but the actual physical stock is 10.

1.11.1 Full counts

In the case of manual counts, goods are identified via a two-piece ticket, one

part of which remains with the stock to identify visually that it has been counted,

the other part comprising a figure of what has been counted and which is

subsequently returned to a stocktaking office where the amount is recorded on

the computer. These counts are compared with stock records and

discrepancies identified.

Standard practice is that small discrepancies are accepted and the stock

amended as necessary, but management will set a quantity or a value (or

44 AO/QUA/0047 - V1

both) point, which will require a re-count in an attempt to ensure the first

count was accurate; otherwise, an investigation may be carried out by

experienced warehouse staff, which may reveal the misplacement of

goods in a different location or a stock loss (i.e. shrinkage).

Once this reconciliation phase has been completed, the warehouse can then

move again whilst the stock records are further investigated and updated.

This was traditionally followed-up by staff investigating discrepancies,

which often took a long period.

1.11.2 Partial count

Another method traditionally adopted involved closing off isolated areas of the

warehouse—for example, a product category or a location area—and

counting only this particular area. This sort of stocktake took place when the

warehouse was not required to make deliveries, perhaps overnight, at

weekends or in holiday periods. Procedures implemented are similar to

those for a full count.

In order to maintain service level, most warehouses do not shut down for

stocktaking, and the counting of stock is carried out by a Perpetual

Inventory System. This involves cycle counting products, enabling a

certain number of SKUs to be checked by a dedicated team each day.

Using this method, it is possible that the frequency of counting is varied

when SKUs are deemed to be at greater risk than others. Cycle counts

can also give an indication of the overall integrity of the stock records by

flagging up whether or not full stock-taking is necessary. Alternatively, if

the cycle counting provides good verification of the records, this may

indicate that it is possible to use the stock records for the annual financial

stock valuation, without the need for another count.

Some Warehouse Management Systems facilitate the verification by the

picker of remaining stock in a location that can fulfil the same function.

The best practice in handling discrepancies involves:

identifying the error,

AO/QUA/0047 - V1 45

investigating and identifying how the errors arose,

recommending appropriate action(s),

taking appropriate action(s),

updating records, and

implementing systems to ensure errors are minimised in future

stocktaking.

1.12 Put Away Methods

Each part of each consignment of stock will need to be moved from

receiving to the appropriate storage area prior to it being picked for

despatch.

A number of different options are available, which will be decided by the

nature of the SKU and the demand.

1.12.1 Cross dock or direct to marshalling area

Products are required for immediate

despatch and are therefore delivered

directly to the marshalling area for

delivery as soon as the next transport is

scheduled. This is a method commonly

used for parcels and regional distribution

centre operations.

Task 1.11:

Explain why, if cross-docking is a useful solution to some warehouses,

every item in a warehouse is not cross-docked, thereby eliminating the need

for a conventional in/store/out warehouse.

46 AO/QUA/0047 - V1

1.12.2 Stow in rack

Products are moved to a storage location appropriate to their picking

frequency and zone. They are then stored securely and safely in a rack,

on a shelf or in a bin for picking later; this is either a manual operation or

carried out using appropriate MHE to move it where possible. This can be

combined with a two-bin stock system, where some items are stored in a

reserve location, with a limited amount of stock held at a location that is

used for picking (the pick face) for immediate use. Stock is then

replenished to the pick face from the reserve as required.

1.12.3 Manual stowage

Products are put away on a shelf or in a bin

manually for storage. Notably, the same

constraints apply as for MHE stow.

1.12.4 Bulk

Bulk products are those which are stored in-bulk, in

tanks, silos, bays or block stacked in the warehouse

Various measurement systems, i.e. gauges, red lines,

weight and kanban systems, are used to measure the

re-order points for the stock.

The method of put-away will be selected by the operator based on the

nature and type of the product to be stored, and the demand

characteristics for this SKU. The WMS will subsequently direct the

operator to the marshalling location if it is to be cross-docked, and may

direct the operator to which location stock is to be stored. AO/QUA/0047 - V1 47

Task 1.12:

Have a look at the following website:

http://www.metacafe.com/watch/265696/emma_maersk/.

The Emma Maersk is a container ship which can hold 11,000 containers.

You are the Harbour Master responsible for loading this huge ship. Each

container takes 5 minutes to load. There are 5 cranes, and Crane

Operators work 2 shifts a day (i.e. 2 x 8 hours, breaks covered by standin

crane operators) and 5 days per week. How long will it take to load the

containers? How could you reduce this time?

48 AO/QUA/0047 - V1

2. Managing Order-Picking

and Despatching Goods AO/QUA/0047 - V1

50 AO/QUA/0047 - V1

2. Managing Order-Picking and Despatching Goods

2.1 Learning Outcomes Learning Outcomes Assessment Criteria

The learner will: The learner can: 02.01. Know how to produce a plan for 02.01.1. Describe the relative quantities

the daily order picking and and mix of goods and explain despatch of out-bound goods why these vary on a daily and

weekly basis

02.02. Be able to allocate the necessary labour and other resources to meet the requirements defined in the above plan

02.02.1. Summarise the methods of evaluating necessary labour

and other resources required

02.02.2. Explain how these resource requirements might be met

02.03. Understand how this plan may need to be modified at short notice to meet contingencies

02.03.1. Summarise the factors that may arise that may require the plan to be amended

02.03.2. Explain how the plan would be amended in order to meet these requirements

02.04. Know the factors which affect how goods are to be despatched

02.04.1. Explain picking frequency and type of goods

02.04.2. Explain how these various factors indicate the optimum method of controlling the despatch of the goods

02.05. Know the performance measures that are needed to ensure that goods are despatched to meet customer requirements at optimum cost

02.05.1. Explain the factors affecting picking and despatch performance

02.05.2. Explain how these factors can be effectively measured and reported to ensure maximum efficiency against service levels

02.06. Understand the physical organisation of the despatch function and how this impacts on safe and efficient picking and despatch of goods

02.06.1. Explain how the physical organisation of despatch operations impacts on efficiency, security and accuracy

02.06.2. Explain the different methods of despatch and how these impact on the organisation of the despatch area in the warehouse plan

AO/QUA/0047 - V1 51

2.2 Order Assembly

Despatch from the warehouse is always to order. An order consists of a list

of line items describing the products, and the quantities of each required

by the customer. Prior to despatch, it is standard practice to assemble

the items to be despatched into a physical location, where the goods can

then be marshalled and prepared for despatch. The process of gathering the

items is order assembly.

This activity is essential for order-picking, as the operator can physically

inspect the goods for the assembled order and check the quantities and the

products against the order prior to despatch.

2.3 Picking Goods

Picking activities involve order assembly by picking the goods from

storage and marshalling the consignment. There are two main methods of

picking: picker to goods, and goods to picker. Each of these is described

below.

Picker to goods

The picker moves along the storage aisles, working at floor level or

using steps to pick at a higher level, selecting items from a pick list

using a trolley or a Powered Pallet Truck, if picking to a pallet, or using a

truck picking a pallet, carton or tote from storage.

Goods to picker

In this scenario, the goods move along a conveyor or are delivered by a

carousel system to the picker, who picks from the bin presented in front of

him/her. 52 AO/QUA/0047 - V1

Task 2.1:

List and explain the advantages and disadvantages associated with both the

‘picker to goods’ and ‘goods to picker’ processes.

The aim is to maximise the efficiency of the process by achieving the best

balance so as to minimise the travelling time between operator picks and time

spent picking.

Basic order-picking principles that apply are:

Speed

Accuracy

Security

Damage protection

Customer service level.

Task 2.2:

If the average picking time for a warehouse manual picking operation is 2

minutes per SKU, how many pickers will be needed to pick 10,000 SKUs

each day on a single shift for each day operation? (Notably, a shift is 7.5

hours; an allowance of 15% is made for personnel equipment checks and

administration.) AO/QUA/0047 - V1 53

2.3.1 Speed

The key drivers of speed are the distance the picker has to travel between

picks, and the ease of access to the goods; this is the concept behind the

principle of zoning, where the most popular lines are located together and

closest to the marshalling area. This will assist pickers in terms of

minimising the distance travelled.

However, this can lead to congestion and multi-level picking, which may be

a better solution for providing more than one pick face whilst still

maintaining the proximity to the despatch area.

2.3.2 Accuracy

The simplicity of paperwork or screen display is important for ensuring that

the operator knows and understand what to pick and from where. Systems

will provide support, if available, by confirming barcodes on the location

and on the product, and confirming the pick quantity. Some WMSs require

remaining bin counts, and may use a pick-by-light system to achieve

99.99% accuracy, as required in Pharmaceutical applications. Pick by

voice may also be used to replace codes, and still provide equal levels of

accuracy; suppliers of this claim that is more accurate as the operator is

obliged to check visually and then speak the part/location and quantity

rather than just use a barcode.

Case Study

Goodyear Dunlop, and its associated companies, are all a part of

Goodyear—the world’s largest tyre producer—which employs

approximately 86,000 people globally and over 3,000 in the UK.

54 AO/QUA/0047 - V1

Their warehouse, located by the MP at Tyrefort in Birmingham, has a

footprint of 500,000 sq. ft., and is the largest tyre warehouse and

distribution centre in the UK. It employs over 150 people and operates on a

24 hours a day, 7 days a week basis. Tyrefort can store over a million tyres,

and the warehouse has a fast turnaround environment, handling up to 60,000

tyres in every 24-hour period.

Moreover, goods are organised in the warehouse in accordance with their

turnover rate; the faster moving tyres are stored in stillages in 60 runs of

APR. Moreover, tyres are ‘ricked’ in the stillages, therefore enabling the

storage of up to 140 tyres in each one depending on the size of the tyres.

Slower moving, low-volume tyres are housed in stillages, enabling them to

be stored upright in rows. These stillages are then stored in Very Narrow

Aisle (VNA) racking at one end of the warehouse. There are 12 runs of

racking configured into an installation 7 bays high and 28 bays in length.

During the day, tyres are delivered in, sorted and placed into stillages—

many of which will be subsequently transported the next day. Orders are

received in the distribution centre until 5 pm, at which point picking lists are

created, with picking scheduled to begin at 7pm.

Picking is carried out during the night from ground level so that fast-

moving tyres are kept in the bottom bays with the same product stored

above. As the bottom bays empty, the stillages above can be lowered by

truck, as required. At 7am—twelve hours from the commencement of

picking—lorries set off from the 47 loading bays, delivering up to 35,000

tyres to garages and retail outlets throughout the UK on a next-day service

basis.

2.3.3 Security

The maintenance of the security of the goods in picking systems is vital

when striving to ensure that pilferage and stock losses are minimised. This

AO/QUA/0047 - V1 55

can be done by balance remaining checks on picking to verify remaining stock

is correct at the time of the pick.

2.3.4 Damage protection

Operators can check for damage on a manual pick—both of picked stock and

remaining stock. Every time a location is accessed, if members of staff are

briefed, observant checks can be made. Operators should be briefed to

take care when picking and handling so as to ensure that no damage to

stock occurs.

2.3.5 Customer service level

Correct and accurate picking is a key factor of customer service level, and may

be used as a performance target for the warehouse. The picking method

should be selected carefully in order to yield the most appropriate method to

deliver the service level required by the customer.

2.4 Labour Planning

Labour represents a high proportion of warehousing operational costs,

with picking considered to be a labour-intensive activity. As a Warehouse

Manager, it is important to understand the key drivers of this key resource

in order to manage, control and improve productivity and performance.

Drivers of the labour requirements:

positioning of picking areas;

pace of picking required to meet demand;

flow and pattern of work needed to meet deadlines;

manual or mechanical pick methods; and

travel distance to retrieve goods from locations.

56 AO/QUA/0047 - V1

2.4.1 Positioning

Warehouse layout and stock location are clear drivers of efficiency in

picking, with minimising travel time as a major concern; therefore, it is

clear in warehouse design that the positioning of the picking areas is a key

issue. The picking area or pick face must be as close as possible to

despatch in order to minimise movements.

2.4.2 Pace of picking

The aim is to achieve a balanced rate of picking throughout the working

day, with shifts divided into ‘picking waves’ in an attempt to meet delivery

schedules that mesh with transport plans and schedules. Picking waves are

patterns of order-picking which are organised to meet specifically timed

despatches as part of the working day.

2.4.3 Flow and pattern of work

This leads to the

planning of picking to

ensure a smooth, even

flow. This is often used

to achieve a balance in

terms of the labour with

the use of additional

part-time staff that work

a partial shift but

supplement the

workforce during the

critical pick periods.

AO/QUA/0047 - V1 57

2.4.4 Manual vs. mechanical pick methods

The rate of picking will be affected by the degree of mechanisation, with

labour requirements varying accordingly. Mechanical methods are

normally ten times faster than manual methods (please see the table at

the end of this section). Mechanisation means that there must be skilled

labour available to use the equipment, which may be an additional

complication to the planning process. The warehouse layout therefore

needs to be designed to cater for the equipment with appropriately sized

aisles, including areas for parking and charging the MHE.

2.4.5 Travel distance from locations

Another key element of warehouse design layout and planning is to

minimise the travel distance from the pick location to despatch, and from pick

location to the next pick location.

2.5 Key Tasks for Warehouse Pickers

Below is a list of the key tasks to be carried out by the Warehouse Picker:

Collect picking documentation and/or Radio Data Terminals (RDTs);

Collect the MHE for the picking task;

Locate the correct picking face;

Verify the correct location and SKU to list;

Pick and verify the right quantity;

Travel to the next picking face;

Advise supervisor of any discrepancies;

Travel to the consolidating, sorting or marshalling area;

Advise the supervisor if a pick face requires replenishment; and

Complete and pass the documentation, and or printing tickets, for the

consignment. 58 AO/QUA/0047 - V1

2.5.1 Collecting documentation or RDTs

The operative has to collect the pick list from the office or the printer

before commencing the pick; this might be read out on a radio data

terminal (RDT), which also needs to be collected at the start of the shift. This

assigns and describes the pick requirement to the operator.

2.5.2 Collecting correct MHE

By viewing the pick location, or from experience, the operator will know what

MHE is required to affect the pick efficiently. The warehouse system may then

be organised and allow the operator to conduct a pick using the same piece

of equipment throughout, or it may otherwise require different methods to be

adopted in order to complete the order.

2.5.3 Verifying location and part

A key aspect of accurate picking is to verify the pick location and item

number against the pick list. In manual systems, this is done by the

operator by eye, using his/her experience as a check. In the case of more

automated systems, barcodes can verify both of these aspects, thus

leaving the operator to simply pick the correct quantity. Importantly, pick

errors can be reduced by up to 70% with the use of this type of

technology.

AO/QUA/0047 - V1 59

Task 2.3:

RFID stands for Radio Frequency IDentification.

Go to: http://www.youtube.com/watch?v=Zg1VKJUrxi4.

The video has more information about this recent technological

development in stock control. After researching this and other RFID

websites, what do you consider to be the advantages of RFID over

conventional barcoding?

2.5.4 Picking quantity

Picking quantity is often carried out by operators without checks, giving

typically up to 95% accuracy. Pick-by-light systems—where the operator is

given the quantity to pick visually and has to confirm picking to the system

dynamically—can typically achieve 99.9% levels. However, costs

associated with these systems can rarely be justified, except in high-value or

risk picks, such as those associated with pharmaceuticals.

2.5.5 Travelling to the next pick face

Distance should be minimised for maximum picking efficiency.

2.5.6 Advise supervisor of discrepancies

Any stock discrepancies should be communicated to the supervisor or

direct to inventory control for investigation, as soon as possible, so as to

maintain correct stock levels.

60 AO/QUA/0047 - V1

2.5.7 Travelling to despatch bay

Again, the distance to the despatch area from the last pick should be the

shortest and therefore the quickest possible so as to minimise stock

movement and thus operator time.

2.5.8 Picking location replenishment

Primary picking locations may become exhausted and require

replenishment from bulk or back-up locations. Identification of this

occurrence may require advice from the supervisor or the office—even if this

is flagged up automatically by the WMS.

Upon arrival at the despatch bay, documentation verifying despatch may

need to be raised and labelling affixed accordingly to the consignments.

2.5.9 Picking layout and methods

In the case of either manual or low-bay picking, the reserve stock is best held

above the picking face so that it can be easily decanted to the picking face with

minimal travel.

In the case of high-bay or multi-level picking, on the other hand, only small

amounts of reserve stock are held in the picking area, with the trade-off

against congestion versus travel time for replenishment.

2.5.10 Equipment selection

As the Warehouse Manager, you must consider what equipment is best to use

for each picking consignment, which should be determined by

considering the physical constraints of the product and the locations and

accessibility of the pick faces. AO/QUA/0047 - V1 61

Method Equipment Approx. Speed Order picks lines

per hour

Picker to goods Hand pallet truck 150 Medium Large Low level or roll cage

Picker to goods Powered Pallet 200 Fast Large Low level Truck

Picker to goods Man-up riser 100 Slow Small High level Picking truck

Pallet to picker, PPT CBT or FLT 150-250 Med All types then packer to Open floor level To pallet HPT PPT or roll Fast

Cage

Goods to picker Carousel 100-300 Fast Large

Picker to goods Conveyor/sorted 300-500 Fast Large or goods to picker

Picker to goods Sorter 500- Fast Large or goods to 1000 picker Table 2.1 Methods of picking and pick speeds

Pick faces in aisles

Bulk pre-pick

Automated

2.6 Picking Methods

There are two major categories of picking methods: picker to product, and

product to picker.

2.6.1 Picker to product

U-path picking

Up one side of the aisle and down the other, picking at the indicated

locations.

Potential for congestion when pickers overtake.

62 AO/QUA/0047 - V1

Snake-path picking

Zigzagging across the aisle moving in a forward direction.

Potential for congestion when pickers pass.

2.6.2 Pallet to picker—‘pick by line’ or ‘batch picking’

A fork truck operator delivers a full pallet to the picker, who picks from the

pallet to a number of other pallets or roll cages until the pallet is exhausted or

the order is complete. The fork truck operator is then required to bring the next

product pallet, and the process is repeated.

The key when adopting the picker to product picking approach is the

design of the pick list reflecting the picking method to be used and being in

the correct order. When locations are amended physically, the WMS must

be updated so as to ensure the pick lists are produced in the right order.

2.6.3 Product to picker

The nature of these systems is that they are

heavily mechanised, capital intensive, and

usually require either very accurate picking or

fast speeds. Sortation equipment and

materials flows will be complex and often

involve high-bay box-stacking, accessed by

computer controlled cranes.

Carousels

Products are preloaded into vertical or

horizontal carousels.

Carousels usually comprise many rows

of shelves or bins, usually for small

items, which are fixed to chains or

conveyors, which thereby make the AO/QUA/0047 - V1 63

rows revolve. The apparatus is enclosed for safety, and only a lot is open to

the picker to pick from the bin or shelf presented.

The process is referred to as station picking, as the operator remains

static. The operator will either enter the SKU number into the machine and

wait for delivery, or the machine will otherwise work to a pre-coded pick

schedule, which the operator will then check. Each pick involves the

operator decanting from the presented location the correct quantity of

product for the pick, and accordingly placing this in the consignment bin or

box.

Conveyors/sorters

The product is

preloaded into

shelving (from the

rear).

The picker then

travels through

the shelving,

placing orders

onto a conveyor.

This delivers

orders to a sorter, who delivers the individual orders through chutes into

packing. Barcode technology will normally drive this process.

Auto-sortation

Bulk loads of product are loaded into the sorter, and the

machine automatically sorts them, delivering the order

through chutes to the despatch location. An example

would be letter and parcel sortation.

2.7 Improving Picking Efficiency

Above, consideration has been given to travelling time as a key driver of

picking efficiency. 64 AO/QUA/0047 - V1

Example of times include:

Walking speed, i.e. 60 metres per minute

Walking with pallet truck, i.e. 30 metres per minute

Riding on a fork truck or stacker, i.e. 120 metres per minute

Picking speed at face, i.e. 150 pieces per hour.

With the aforementioned in mind, picking activity must be planned to take

place in an orderly and sequenced fashion.

Moreover, we have also considered the importance of grouping together

popular product lines, and good planners will continually monitor this to

observe changes. They will want to review the warehouse layout and

make changes that support the evolving product lines and demand

patterns. This is the medium-term response to changing patterns.

Unplanned events may happen at any time, and will disrupt the flow of

product through the picking area. In such an instance, you—as a

manager—must be prepared to respond to this by flexibility to meet these

demands.

There are 5 key ways in which picking efficiency can generally be

improved; these are listed below to serve as a summary.

Travel faster, i.e. use powered trucks rather than walking

Travel less, such as through the segregation of products and zoning Pick

several orders at once, i.e. batch picking

Simplify or remove paperwork, such as through the use of RDT,

barcodes and RFID

Bring goods to the operator by utilising carousels or conveyors.

2.8 Marshalling and Despatching Goods

Marshalling is the activity of collating goods for dispatch near the dispatch

dock. Orders can be placed in numbered lanes or numbered locations,

indicating the despatch locations or transport routes. AO/QUA/0047 - V1 65

Most WMSs will create a despatch list which is sorted according to the

priority of loading for dispatch.

Objectives of the despatch area include:

to ensure all customer orders have been consolidated and packed

correctly;

to use roll cages and pallets, if required; and to

marshal for despatch.

2.8.1 Consolidation and packing

Consolidation and packing ensures that all the items on a despatch note

are ready for despatch and in the correct sequence prior to loading the

vehicle. It is also concerned with making sure they are packed and

protected for product security and operator safety prior to loading.

2.8.2 Using unitisation equipment

This refers to palletising despatches and film-wrapping, or correctly

loading and securing roll cages ready for loading, as required by

procedures or customer instructions.

2.8.3 Marshalling in order

Ensuring that all customer orders are held in correct sequence for loading in

relation to the timings and routes. The methods of marshalling used will

depend on the nature of the deliveries to be made.

Single loads will be marshalled into a numbered lane, or may otherwise be

loaded directly into a trailer, as the order that the pallets, roll cages or cartons

is loaded onto the trailer is of little importance as the entire load is to be

delivered to one location.

66 AO/QUA/0047 - V1

Multi-drop loads require the marshalling area to ensure that the loads are

sorted into the correct order for despatch so that they can be unloaded in

reverse order once on the vehicle.

Vehicle sizes for the routes may be determined by a transport planner or by

the WMS; either way, however, vehicle availability may require changes

to be made to plans so as to ensure that customer service levels are

maintained. This may involve the use of larger than optimum vehicles to be

used for a delivery.

Congestion is a major risk in the despatch area, and blocks, lines or runs,

must be clearly marked and segregated to ensure that goods are

despatched correctly. With this in mind, straightforward location notices are

often utilised to indicate destinations, therefore making it easy for all to

acknowledge the product destination. This is preferable to destination

codes which may not beclear to untrained staff.

The control of waiting vehicles and trailers also requires careful planning

so as to ensure that bays are cleared as quickly as a trailer is loaded. This

enables the freeing up of space in the marshalling and despatch areas.

The major tasks performed by the marshalling and dispatch functions are

summarised below:

Random checks of pick quantities and items for dispatch; Re-

pack and palletise for a route;

Record batch/serial numbers and prepare documentation;

Label consignments;

Compile load in vehicle body footprint (note weights);

Check load documentation;

AO/QUA/0047 - V1 67

Ensure the load vehicle is in the correct sequence for unloading en

route;

Seal vehicle;

Arrange for trailer to be moved from dock using a shunter; and

Arrange for vehicle movement from the dock and prepare for dispatch.

All of the aforementioned tasks require little further explanation, but all are

nevertheless vital for the correct and efficient operation of the dispatch

function in modern warehouses.

2.9 Labour Requirements

Labour requirements in the despatch area are influenced by a number of

factors, namely:

The volume of deliveries,

The rate of deliveries,

Transport route timings,

The frequency of despatching vehicles, and

The method of loading vehicles and MHE, if any.

2.9.1 Volume of deliveries

This is the underlying driver of warehouse manning matched against the size

of the vehicles making the deliveries. Deliveries in retail are typically

organised in waves so as to maximise the spread of the load over a shift, and

to emphasise the predictability to stores of the expected arrival of

replenishment stocks. 68 AO/QUA/0047 - V1

2.9.2 Rates of deliveries

Reflected in the space required to store products awaiting despatch. If

deliveries are not made on a daily basis, it is assumed that space will be

necessary in-between deliveries to allow the marshalling of cross-docked

goods awaiting picked products being made ready for later despatch.

Essentially, the impact of this is upon storage capacity rather than labour,

although fewer despatches mean less despatch staff may be needed.

2.9.3 Transport route timings

These will be drivers for the warehouse in terms of loading schedules and

deadlines. The planning of deliveries and routings in terms of driver

availability, driver hours, customer requirements and routings all place an

additional burden on the warehouse to have loads ready by the deadlines.

2.9.4 Methods of loading vehicles

Mechanical methods of loading are inherently more

efficient than manual methods, although both may be

necessary during delays so as to ensure products are

loaded as quickly as possible.

2.9.5 Planning and contingencies

Planning ensures smooth flow and accordingly enables the labour and

equipment to be in place prior to the start of the working day.

However, planning cannot take into account disruptions to the schedule

caused by delayed deliveries to the marshalling area owing to shortages or

late arrivals from inbound deliveries. Shortages of vehicles, traffic

congestion or staff shortages owing to illness or unplanned leave may also

disrupt the planned schedules.

As a result, contingency plans can be made so as to cover various events;

however, not all events can be foreseen—and the skill of the manager is AO/QUA/0047 - V1 69

required to respond to these unusual circumstances, both quickly and

efficiently. This may require either overtime, adding more resources from

other parts of the warehouse, or employing agency staff. Schedules may have

to be revised or delayed, and overtime scheduled.

2.9.6 Space

Space requirements for the despatch area may be driven by the following

factors:

The area required for assembling and marshalling orders;

The degree of quality control or inspection checking required;

Vehicle sizes, i.e. larger vehicles will require a bigger footprint;

Consideration as to whether trailers be loaded directly as products

become available;

Flexibility to be able to load cages and pallets in the marshalling area;

and

Secure areas may be required for high-value or controlled products.

The area for marshalling will fundamentally depend on the number of

allocated despatch bays, and whether or not the partial or full loading of

trailers can take place directly.

The calculation of required usable space is a complex task, which requires

consideration of the variables listed above. There must be room for flexible

aisles to enable the safe transit of people and MHE, and access to the

loads. Peaks and troughs in terms of deliveries need to be considered

ahead, and plans must be made to cover the

availability of additional space if there is a backlog in

despatches.

As the manager, your aim is to schedule deliveries

throughout the day to balance the workload,

although delays in receipt of product to the marshalling area can cause

considerable congestion in a very short time.

70 AO/QUA/0047 - V1