10.8 Tools: Facility Layout

Once you have decided where to locate your warehouse, you need to design a facility that you can operate efficiently and effectively. Your goal is to provide excellent service at the lowest possible cost. To obtain this operating performance, you need to consider two interrelated issues: layout and level of automation. Keep the following design principles, which are listed in Table 10-3, in mind:

  1. Minimize Distances: Inside every refrigerator door, you find a rack for milk. Why? Refrigerator designers know that you use milk a lot. So, they designed the refrigerator to give you quick and easy access. You want to remember this when you design your warehouse. Place fast moving items closer to the docks and at heights that make them easy to reach. The Pareto principle applies here. Dedicate rack space to your 10% highest-volume, fastest-moving items. You can store less-frequently moved (B and C) items in . This decision rule will help you balance distances moved with the total amount of rack space required.

  2. Create a Smooth Flow: Think in advance about the logical flow of materials. Design the facility so that you can move product in and out in a straight line: receive at one end, store in the middle, and ship from the other end. You want to avoid bottlenecks and cross traffic so that you can minimize congestion.

  3. Minimize Aisle Space: Although you enjoy wide aisles when shopping, you want to minimize aisle space in a warehouse, especially for a highly automated warehouse. You can then install more racks for storage or provide space for other purposes.

  4. Use a Single Story: Moving product from one floor to the next is expensive, slows service, and creates congestion. Whenever possible, you want to build single-story warehouses. This concept may not be viable in metropolitan areas like Tokyo where land prices are sky high.

  5. Maximize Use of Height: Remember, as a rule, it costs you more to build horizontal storage space than vertical storage space. Modern materials handling equipment can easily stack product on racks 20-100 feet high. Remember to store lighter pallets on higher racks.

  6. Use Efficient Materials Handling Equipment: Your options for material handling equipment (e.g., conveyors, fork lifts, hand trucks, carousels) are almost limitless. To pick the right equipment, you need to know what you will be storing, what the volumes will look like, and what your service targets (picking and ) will be. You don't want to invest in an AS/RS system if a conventional racking system will get the job done.

Table 10-3
General Principle of Warehouse Layout and Design
  • Use one-story facility
    		•
  • Use straight line or direct-flow of goods
    		•
  • Use efficient material handling equipment
    		•
  • Use effective storage plan
    		•
  • Minimize aisle space (but do not constrain flow)
    		•
  • Make maximum use of facility height

    • Once you get your warehouse up and running, the trick is to keep it running efficiently over time as your business changes. For example, as customers, suppliers, and product mix change, your "optimal" warehouse you designed will no longer be optimal. You have to look for opportunities to streamline day-to-day operations. To do this, you can apply lean principles. In fact, will help you make better use of your warehouses. You may even be able to do less warehousing overall.

    As with all lean principles, creating visual management is critical. refers to your effort to "see" and make sense of an activity or process. Your goal: Find and fix problems. For example, if you see inventory levels rising, you want to find out why. If the process is visible, you can get to the root cause quickly. It's been said that, "when we see as a group, then we know as a group, and we then act as a group." 1 Visual management can help you find easy fixes. For example, the Japanese poka-yoke concept is a simple tool that can help you detect, prevent, or control defects. A defect is simply an abnormality or something that isn't quite right. So, what is a poka-yoke? Maybe you have tied a tennis ball to a string, hanging the ball from the garage ceiling to show you exactly how far you should pull into the garage and park your car. When the ball touches your windshield, you know you've got clearance to close the door and you avoid hitting the wall. The hanging tennis ball is a device. Simply put, a poka-yoke is a simple tool that helps you avoid a costly mistake. You should encourage warehouse workers to come up with creative defect-prevention measures that improve productivity and safety. Let's explore two visibility-enhancing tools that will help you keep your warehouses running smoothly.

    5S Methods

    The 5S methodology is very applicable to warehousing. Table 10-4 describes the 5 "Ss." You might summarize the 5S philosophy using the old saying, "A place for everything and everything in its place." Intuitively, you know that a safe, neat, and orderly work environment is a more productive environment.

    Table 10-4
    The 5S Philosophy
    Japanese Term English Translation Definition
    Seiri Sorting Clearly separate necessary items from unnecessary; abandon the unnecessary.
    Seiton Set in Order Neatly arrange and identify things for ease of use.
    Seiso Shine Always maintain tidiness and cleanliness. Regularly scheduled clean-ups.
    Sediketsu Standardizing Constantly maintain the 3S’ mentioned above.
    Shitsuke Sustaining Create vehicles to enforce the above rules.

    Clearing the clutter (i.e., sorting) is the first step in implementing the 5S philosophy. You can conduct a to get started. You simply invite every member of your team to go through the facility and apply a red tag to anything in the workplace that nobody uses or, perhaps, no one should use—e.g., an unused storage rack or an old palletizing machine. Once the tags have been applied, you debate whether to keep or remove each tagged item. If someone feels an item is necessary, they explain why. If no one can justify keeping the item, you dispose of it. At its core, a red tag initiative is house cleaning. As a kickoff event, red tagging gets everyone involved, giving you an opportunity to encourage your entire team to start looking for problems to discuss and resolve. Once the clutter is removed, you can move on to the remaining four "Ss." Your biggest challenge is to instill the discipline to stay true to the 5Ss. The natural tendency is for you to sidestep the rules when things get hectic. Measuring how well each member of your team adheres to the 5S principles can help them become habits.

    Six Sigma

    Wherever you find process variation, you can apply quality practices to improve the process. The most popular approach to quality today is 6σ (six sigma). Why did Motorola call its quality program 6σ? Managers wanted to distinguish their efforts from existing, which had become associated with fad management. So, they looked for a new, catchy name. They chose Six Sigma (6σ). A process that achieves 6σ quality produces only 3.4 defects per million parts—in essence, zero defects. Six Sigma has been the quality gold standard ever since.

    Six Sigma uses the —to identify and remove the causes of defects in value-added processes. By applying statistical tools like process control charts, you can identify and remove sources of . The outcome: Quality and productivity continuously improve. Motorola documented more than $16 billion in process savings as a result of Six Sigma. Why do you need to know about 6σ in a warehouse? Answer: Many warehouse processes are routine and standardized. Thus, 6σ is an ideal tool for understanding and improving them. Jeffrey Immelt, General Electric's CEO, has said that Six Sigma is "the common language at GE." Because quality is important everywhere, everyone from the loading dock to the C-suite is expected to speak the language of Six Sigma.

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