10.5 Warehouse Operations

The technological wizardry actually begins before the truck backs up to the dock door. Your modern warehouse is equipped with a warehouse management system (WMS). A WMS is the all-seeing, all-knowing "brain of the operation." Your WMS software choreographs (controls) the movement and storage of materials within your warehouse. It also processes all of transactions associated with day-to-day warehouse operations. Simply put, your WMS:

1. automates warehouse paperwork, like order receipt and order processing,

2. Directs work activity, like inventory put-away, order picking and packing ( Figure 10-4 shows a WMS screenshot for an emplyee utilization dashbaord)

3. Helps you optimize space utilization and minimize labor costs by directing work like put-away as well as order picking and packing,

4. Tracks inventory ( Figure 10-4 shows a WMS screenshot for an inventory list).

5. Communicates with all of your other IT systems, including your firm's enterprise resource (ERP) system.

Figure 10-6 summarizes how a WMS supports the activities performed in your warehouse. The reality is that without your WMS, you struggle to find the inventory you need to fill an order. Quite often, if your WMS crashes, your warehouse shuts down.

Now, let's follow the physical path of a case of one of your products, say, Adidas running shoes. First things first, your product arrives by truck to the warehouse. Most likely, your case is palletized; that is, it is stacked with other product on a 4-foot-by-4-foot wooden pallet. Of course, it could be floor stacked (i.e., not using pallets), but floor stacking is very manual and our focus is on automated operations. So, from this point on, we will not refer to manual alternatives. A warehouse worker opens the dock and trailer doors to find freight is stacked from floor to ceiling and front to back—after all, you order in TL quantities to save money. The forklift operator collects a pallet load and takes it to a nearby conveyor. A barcode reader scans the pallet, registering the pallet and its contents—including the case of Adidas running shoes—as "received" in the WMS. The WMS verifies that each case matches an outstanding invoice; i.e., that you actually ordered it.

Figure 10-7 shows the layout for a high-volume case pick warehouseFacilities where cases of items are stored and picked for customer orders. The picked cases are arranged on pallets before they are shipped. that is set up for two types of operations. Reserve storageAn area in a warehouse that holds caseloads of product in reserve until they are needed for picking to fill daily orders. holds caseloads of product "in reserve" until they are needed for picking to fill daily orders. Forward, or active, storageThe act of picking individual cases or items to fill specific orders. is where individual cases—or items—are picked to fill specific orders. The relative size of each area is based on volumes demanded and the tradeoff between inventory holding and transportation costs. The WMS checks inventory levels. As enough Adidas running shoes are currently in active storage, the WMS assigns the entire pallet to an empty slot in the automated high-rise (reserve) pallet storage area. Automated forklifts move up and down each aisle putting pallets in assigned racks. The forklift reads the rack barcode to verify that the pallet is being stored in the right location. For the return trip, the forklift retrieves a pallet that is needed for active case picking. We call this technology anis where individual cases—or items—are picked to fill specific orders. The relative size of each area is based on volumes demanded and the tradeoff between inventory holding and transportation costs. The WMS checks inventory levels. As enough Adidas running shoes are currently in active storage, the WMS assigns the entire pallet to an empty slot in the automated high-rise (reserve) pallet storage area. Automated forklifts move up and down each aisle putting pallets in assigned racks. The forklift reads the rack barcode to verify that the pallet is being stored in the right location. For the return trip, the forklift retrieves a pallet that is needed for active case picking. We call this technology an automated storage and retrieval system (AS/RS)Computer controlled equipment system that stores and retrieves cases or pallets from specified storage racks. . Since "robots" don't need light to see, these systems can operate in complete darkness, saving you money on your energy bill.

When active-storage inventory for the Adidas running shoes begins to run low, the WMS sends a signal to transfer the pallet with the running shoes from the AS/RS to the forward picking area. That is, the same robot that put the pallet away retrieves it and takes it to a depalletizerA machine that uses vacuum force to remove the cases layer by layer from the pallet. , which uses vacuum force to remove the cases layer by layer from the pallet. The cases of shoes ride a conveyor to the forward picking area so that they can be picked to fill an order. In some instances, individual items, called eaches, may also be picked. The WMS makes sure the cases are arranged first-in first-out (FIFO)Items, cases, or pallets that are received first are the first to be shipped for the purpose of rotating inventory, minimizing the risk of owning out of fashion merchandise. so that inventory is rotated, minimizing your risk of owning out-of-fashion merchandise.

When an order arrives for which the case of Adidas running shoes is needed, a robot picks the case, scans its barcode, and sends it by conveyor to an order building machine that gathers and stacks the ordered cases on a pallet. Advanced systems build the pallet to protect the integrity of the products; that is, they make sure to stack product based on packaging and weight to ensure that nothing gets crushed. The WMS may also know the layout of individual stores. If so, it can stack the items on the pallet so that your retail customer can break it down (i.e., unload it) in the optimal sequence. The store employee can go up and down the aisles unloading the pallet layer by layer in the same order the product is found on the shelf or rack—that's efficient and smart!

Once the pallet is built, a stretch wrap machine secures the load by wrapping the pallet in plastic. The pallet is then staged (placed) at the designated shipping dock to await loading. When the entire shipment is ready, a forklift driver loads the truck, which departs to the customer. Figure 10-8 summarizes the flow of a product in a highly automated warehouse. Now, think back to the beginning of this warehouse tour. Did you notice that no hands ever actually touched the case of Adidas shoes? Everything is automated. Such warehouses exist today—and they are not just for high-end merchandize. Target's 425,000 square-foot DC for refrigerated and frozen grocery items in West Jefferson, Ohio uses the exact automation we just described. Your key takeaway: You need to have high, relatively stable volumes to justify the fixed costs of automation.

In most warehouses, you see people performing many of the activities just described. That is, instead of sending signals to machines, the WMS instructs people where to put or pick items. The people doing the work are called "pickers." PickersWarehouse workers that pick individual cases or items from the warehouse shelves to fill orders. typically use tablet computers—or they may wear a headset—to know what to pick. The WMS will prepare an optimized route that the picker follows as he goes up and down aisles building the "ideal" pallet. Every time a picker takes something off a rack, she scans it with a hand-held radio-frequency-enabled (RF) scannerA hand-held device used by pickers to scan cases or items while taking them off a rack. . The WMS verifies that the picker has "picked" the exact right item. When the wrong item is selected, the WMS sends a warning message. A "smart" WMS won't let the picker move to the next item until the mistake has been corrected. For smaller items—especially when picking "eaches" (individual items like shirts or socks)—you can use a pick-to-light system to guide product selection. As the name implies, pick-to-light uses small, flashing lights on shelf locations to help an order picker quickly identify the items to pick.

Of course, you'll find more people in a warehouse than the pickers. Talented managers are needed to direct and motivate the warehouse team. As a warehouse manager, your job is to achieve safe, productive, and always improving operations. You also have to resolve problems when they inevitably arise. When people and technology interact—especially to meet customer needs—problems always show up. Warehouse management is not an easy task. Thus, warehouse operations are a great place to showcase your management skills. Besides management, someone has to program the WMS to make the right decisions. Likewise, smart people are needed to design the warehouse layout for optimal efficiency.  Warehousing is still a people business.