Contents Contents v List of Figures xi List of Tables xv Acknowledgements xvii Introduction 1 What is a warehouse? 1 01 5 The role of the warehouse 5 Introduction 5 Types of warehouse operation 7 Why do we hold stock? 12 Warehouse location 16 Number of warehouses 20 Supply chain trends affecting warehouses 21 The growth of e-fulfilment and its effect on the warehouse 22 Specialized warehousing 24 Summary and conclusion 34 02 36 Role of the warehouse manager 36 Introduction 36 Warehouse trade-offs 38 The warehouse manager’s challenges 39 Lean warehousing 43 People management 47 People challenges 47 Attracting and retaining warehouse employees 51 An ageing and constantly changing workforce 52 Operating hours 53 Training 55 Warehouse audit 56 Quality systems 56 Summary and conclusion 57 03 58 Warehouse processes: receiving and put-away 58 Introduction 58 Receiving 60 Pre-receipt 60 In-handling 66 Preparation 66 Offloading 67 Checking 70 Cross docking 73 Recording 74 Quality control 74 Put-away 74 Summary and conclusion 76 04 77 Warehouse processes: pick preparation 77 i Introduction 77 Preparation 79 Warehouse pick area layout 90 Summary and conclusion 93 05 95 Picking strategies and equipment 95 Introduction 95 Picker to goods 98 Goods to picker 103 Types of automated picking 105 Examples of automated picking systems 106 Handling equipment 119 Storage equipment 124 Summary and conclusion 132 06 138 Order-picking methods 138 Introduction 138 Paper pick lists 138 Pick by label 139 Pick by voice 139 Barcode scanning 146 Radio frequency identification 151 Pick by light/pick to light 152 Put to light 156 Comparisons 157 Cost of errors 160 Deciding on type of picking system and equipment 165 Summary and conclusion 167 07 168 Warehouse processes from replenishment to despatch and beyond 168 Introduction 168 Replenishment 168 Value-adding services 169 Indirect activities 170 Stock management 171 Stock or inventory counting 173 Cycle counting or perpetual inventory counts 174 The count itself 175 Security 176 Returns processing 177 Despatch 181 Role of the driver 186 Summary and conclusion 187 08 188 Warehouse management systems 188 Introduction 188 Why does a company need a WMS? 189 Choosing a WMS 191 Warehouse The process 191 Selecting the right WMS 192 What to look for in a system 195 Selecting a partner 197 Before the final decision 198 Implementation 198 Software as a service 199 Cloud computing 200 Summary and conclusion 201 09 203 Warehouse layout 203 Introduction 203 Management Data collection and analysis 205 Space calculations 207 Aisle width 213 Other space 214 Warehouse layout examples 215 Finding additional space 217 Summary and conclusion 219 10 220 Storage and handling equipment 220 Introduction 220 Storage equipment 220 Storage options 221 Shuttle technology with a difference 231 Very high bay warehouses 232 Other storage media 236 Warehouse handling equipment 239 Vertical and horizontal movement 242 Automated storage and retrieval systems (AS/RS) 250 Specialized equipment 252 Recent technical advances 253 Summary and conclusion 254 11 255 Resourcing a warehouse 255 Introduction 255 Processing activities 256 Other factors 274 Summary and conclusion 275 12 276 Warehouse costs 276 Introduction 276 Types of costs 277 Return on investment (ROI) 280 Traditional versus activity-based costing systems 280 Charging for shared-user warehouse services 285 Logistics charging methods 290 Hybrid 292 Summary and conclusion 292 13 293 Performance management 293 Introduction 293 Why do we need to measure? 294 What should we be measuring? 294 How to choose the right performance measures 299 Traditional productivity measures 301 New performance metrics 304 Hard and soft measures 306 Integrated performance models 307 Benchmarking 309 Balanced scorecard 312 Summary and conclusion 315 14 316 Outsourcing 316 Introduction 316 The outsourcing decision 317 Core activity/core competence 320 Improvement in customer service 321 Cost reduction 321 Labour relations 321 Financial strategy 322 Flexibility 322 Role of third-party contractors 323 Preparing to outsource 323 Choosing the right partner 325 The transition 328 Managing a third-party relationship 328 Why contracts fail 328 The future of outsourcing 331 Summary and conclusion 337 15 338 Health and safety 338 Introduction 338 Risk assessments 341 Layout and design 345 Fire safety 349 Slips and trips 351 Manual handling 352 Working at height 352 Vehicles 353 Forklift trucks 354 Warehouse equipment legislation 356 First aid 357 Summary and conclusion 357 16 359 The warehouse and the environment 359 Introduction 359 Legislation and other pressures 361 Warehouse energy usage 361 Energy production 367 The environment and waste 369 Packaging 370 Pallets 371 Stretch wrap 372 Cartons 372 Labelling 372 Product waste 373 Waste disposal 373 Hazardous waste 373 Forklift trucks 373 Summary and conclusion 374 17 375 The warehouse of the future 375 Introduction 375 Context 375 Views of the future: the landscape 377 Views of the future: the warehouse 380 Other advances 384 Summary and conclusion 385 Appendix I 387 Further information 402 References 402 Appendix 2 403 For further information 405 Reference 405 References 406 Useful websites 411 Glossary 413 INDEX 419 ii THIS PAGE IS INTENTIONALLY LEFT BLANK iii SECOND EDITION Warehouse Management A complete guide to improving efficiency and minimizing costs in the modern warehouse Gwynne Richards iv Publisher’s note Every possible effort has been made to ensure that the information contained in this book is accurate at the time of going to press, and the publishers and author cannot accept responsibility for any errors or omissions, however caused. No responsibility for loss or damage occasioned to any person acting, or refraining from action, as a result of the ma terial in this publication can be accepted by the editor, the publisher or the author. First published in Great Britain and the United States in 2011 by Kogan Page Limited Second edition 2014 Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licences issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned addresses: 2nd Floor, 45 Gee Street 1518 Walnut Street, Suite 1100 4737/23 Ansari Road London EC1V 3RS Philadelphia PA 19102 Daryaganj United Kingdom USA New Delhi 110002 www.koganpage.com India © Gwynne Richards, 2011, 2014 The right of Gwynne Richards to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. ISBN 978 0 7494 6934 4 E-ISBN 978 0 7494 6935 1 British Library Cataloguing-in-Publication Data A CIP record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Richards, Gwynne. Warehouse management : a complete guide to improving efficiency and minimizing costs in the modern warehouse / Gwynne Richards. – Second edition. pages cm Includes bibliographical references and index. ISBN 978-0-7494-6934-4 – ISBN 978-0-7494-6935-1 (ebk) 1. Warehouses–Management. 2. Business logistics. 3. Materials management. I. Title. HF5485.R53 2014 658.7’85–dc23 2013050663 Typeset by Graphicraft Limited, Hong Kong Printed and bound in India by Replika Press Pvt Ltd v CONTENTS List of figures xi List of tables xv Acknowledgements xvii Introduction 1 01 The role of the warehouse 5 Introduction 5 Types of warehouse operation 7 Why do we hold stock? 12 Warehouse location 16 Number of warehouses 20 Supply chain trends affecting warehouses 21 The growth of e-fulfilment and its effect on the warehouse 22 Specialized warehousing 24 Summary and conclusion 34 02 Role of the warehouse manager 36 Introduction 36 Warehouse trade-offs 38 The warehouse manager’s challenges 39 Lean warehousing 43 People management 47 People challenges 47 Attracting and retaining warehouse employees 51 An ageing and constantly changing workforce 52 Operating hours 53 Training 55 Warehouse audit 56 Quality systems 56 Summary and conclusion 57 vi Contents 03 Warehouse processes: receiving and put-away 58 Introduction 58 Receiving 60 Pre-receipt 60 In-handling 66 Preparation 66 Offloading 67 Checking 70 Cross docking 73 Recording 74 Quality control 74 Put-away 74 Summary and conclusion 76 04 Warehouse processes: pick preparation 77 Introduction 77 Preparation 79 Warehouse pick area layout 90 Summary and conclusion 93 05 Picking strategies and equipment 95 Introduction 95 Picker to goods 98 Goods to picker 103 Types of automated picking 105 Examples of automated picking systems 106 Handling equipment 119 Storage equipment 124 Summary and conclusion 132 06 Order-picking methods 138 Introduction 138 Paper pick lists 138 Pick by label 139 Pick by voice 139 Barcode scanning 146 Radio frequency identification 151 Pick by light/pick to light 152 Put to light 156 Contents vii Comparisons 157 Cost of errors 160 Deciding on type of picking system and equipment 165 Summary and conclusion 167 07 Warehouse processes from replenishment to despatch and beyond 168 Introduction 168 Replenishment 168 Value-adding services 169 Indirect activities 170 Stock management 171 Stock or inventory counting 173 Cycle counting or perpetual inventory