Delft University of Technology
Faculty Mechanical, Maritime and Materials Engineering
Transport Technology / Logistic Engineering

A.J.B. van Roermund Improving and measuring warehouse efficiency.
Literature survey, Report 2002.LT.5595, Transport Technology, Logistic Engineering.

Running a successful warehouse today is a great challenge. The ever-increasing requirements have placed a tremendous emphasis on the ability to establish smooth and efficient logistic operations. Order picking, the activity by which a number of goods are retrieved from a warehousing system to satisfy a number of customer orders, is an essential link in the supply chain and is the major cost component of warehousing. The critical issue is to simultaneously reduce the cost and increase the speed of the order picking activity. This essay's main objective is to examine the possibilities of optimising the order picking system. This can be achieved by choosing the optimal storage strategy, by choosing the optimal routing procedure, or by optimising the warehouse layout. Since performance measurement is an important aid to making decisions, methods for measuring warehouse performance are discussed in this essay.

A storage strategy assigns a stock-keeping unit to a specific location in the warehouse. Roughly, random and flow-based storage strategies can be distinguished. Random strategy appears especially useful when the range of products is too large for the number of product locations. The disadvantage is the possibility of large travel times from having to traverse the entire warehouse. For flow-based storage, fast moving products are stored at pick height and at the front end of the warehouse closest to the depot to minimize picker travel. However, aisle congestion and an unbalanced utilization of the warehouse can be the result. In practice however, many warehouses use random storage.

Routing policies determine the sequence in which the items are picked on an order picking tour. Roughly, routing heuristics and optimal routing procedures can be distinguished. Optimal routing procedures generate routes that are as short as possible; heuristics create a route with an easy-to-understand structure. Experiments show that the solution gap between routing heuristics and optimal routing is highly dependent on the storage policy and on the number of picks. Overall the savings of an often-confusing optimal routing procedure are not as large as one might expect, especially not for larger pick list sizes. Managers must analyse the trade-off between the efficiency of the optimal routine and the ease of implementation and use of heuristic procedure.

For optimising the warehouse layout, a choice has to be made between a one-block, and a multiple-block warehouse layout. Experiments, testing the routing policies in these two layout alternatives, show that for all pick list sizes the layout with a middle aisle gives considerable lower average travel times for the order pickers. As an alternative for these experiments, a formula can be obtained to compute the average travel distance in a multiple-block warehouse. The results from the formula follow the results of the simulation very closely, therefore the formula can be used to determine the average route length, instead of developing a simulation model for the order pick area. The location of the depot also influences the average travel time. From results of simulation, its clear that a depot in the middle of the front cross aisle is the best option.

Performance measurement is an important aid to making judgements and to making decisions. In order to compare and measure the level of efficiency in production systems, the so-called "zero-based analysis" can be used. The basic idea of this analysis is to divide the resource consumption into three parts: the resource consumption in an ideal production system without waste of any kind, loss inefficiencies and system costs. The benefits of such an analysis are that value-adding activities are focused on and losses can be directly compared. Another measuring technique is time study. Time study is the direct observation of work with a time standard for the work being derived by converting the observed time through performance rating of the worker carrying out the work.

Reports on Logistic Engineering (in Dutch)
Modified: 2002.08.02; , TU Delft / 3mE / TT / LT.