Improving Order Picking Response Time in Mondelez Warehouse
Transcript of Improving Order Picking Response Time in Mondelez Warehouse
Improve Order Picking Response Time in Mondelez Warehouse 1
Improving Order Picking Response Time
in Mondelez Warehouse
by
Mohsin Tasawar (15442),
Mohammad Rehan (15458),
Muhammad Salman (15464),
Noman Ahmed (15466)
A Project Report submitted for the
PRJ-701 as partial fulfillment of the requirements for Post-Graduate Diploma in
Supply Chain Management at the Center for Executive Education, IBA Karachi
Karachi Pakistan January
2019
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SPECIAL CIRCUMSTANCES
In our study, we faced special circumstances when we
visited the warehouse. We find some difficulties in gathering the
data during the interview phase as people are reluctant to share the
real information which is necessary for obtaining the
understanding of critical gaps of warehouse operations. We
ensured them that the data will only be used for research and
educational purpose.
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ACKNOWLEDGEMENT
Our special thanks to our project supervisor Assistant
Professor Dr. Rameez Khalid, Program Director, PGD-SCM,
Institute of Business Administration (IBA) Karachi. He was
inspirational in setting our direction and steering us to right course
for achievement of our project objectives. We also extend our
gratitude to Mondelez, Pakistan Karachi, for giving us the
opportunity to visit their warehouse and allow us to interview their
warehouse staff.
We are also thankful to Institute of Business
Administration Karachi, Pakistan for giving us this platform to
express and explore ourselves in the field of Supply Chain
Management. We stand much educated on the upstream,
downstream and all related functions of supply chain through this
one-year PGD Supply Chain program.
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EXECUTIVE SUMMARY
This study proposes an improvement plan for improving
efficiency of the order picking process in the Mondelez. Mondelez
is facing problems in the warehouse management such as space
congestion issues, lack of storage assignment policies, no proper
visualization of inventory, lack of material routing policies etc,
these issues are affecting the profitability of the business.
The order picking is one of the most labor intensive and
costly warehouse operations and is a great place to improve
efficiency and look into a possibility to increase profitability.
This study is conducted by using qualitative data
gathering, and it involves the key stake-holders of the order
picking process by conducting interviews. The selected research
approach is a case study, and the study strives to find the starting
point for the efficiency improvements by conducing the current
state analysis of its existing picking process. When the problems
are identified, the study looks into the available knowledge and
best practice on warehouse process improvements within the
company. Ideas from best practice are then applied to formulate
the proposal. The outcome of this study is an improvement plan for
the improved order picking process.
The proposed improvement plan will help Mondelez to
improve efficiency of its picking order process by introducing:
item classification, removing the excess items from the inventory,
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and rethinking its picking routing. By using the popularity based
item locations, coupled with optimal picking routing, Mondelez
could increase efficiency of the picking process.
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ABSTRACT
Order picking has long been identified as the most labor-
intensive and costly activity for almost every warehouse. Any
underperformance in order picking can lead to unsatisfactory
service and high operational cost for the warehouse and
consequently affect the profitability of the company. In order to
operate efficiently, the order- picking process needs to be robustly
designed and optimally controlled. We focus on optimal (internal)
layout design, storage assignment methods, routing methods, order
batching and zoning.
Keywords: Order picking; Warehouse management;
Logistics
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TABLE OF CONTENTS
SPECIAL CIRCUMSTANCES .......................................................................................................................... 2
ACKNOWLEDGEMENT ................................................................................................................................... 3
EXECUTIVE SUMMARY .................................................................................................................................. 4
ABSTRACT ....................................................................................................................................................... 5
TABLE OF CONTENT ...................................................................................................................................... 6
LIST OF FIGURES ........................................................................................................................................... 8
LIST OF TABLES ....................................................................................................................... ……………….9
CHAPTER-1: INTRODUCTION ....................................................................................................................... 10
CHAPTER-2: LITERATURE REVIEW ............................................................................................................. 12
Layout Design ............................................................................................................................................... 13
Storage Assignment ...................................................................................................................................... 14
Forward – Reserve Allocation ................................................................................................................... 14
Storage Assignment Policies ..................................................................................................................... 14
Class Based Storage ................................................................................................................................. 16
Family Grouping ........................................................................................................................................ 17
Zoning ............................................................................................................................................................ 18
Batching ......................................................................................................................................................... 20
Routing Methods ............................................................................................................................................ 21
Routing Heuristics ..................................................................................................................................... 22
Other Routing Issues ................................................................................................................................ 25
CHAPTER-3: METHODOLOGY .................................................................................................................... 27
Research Design ........................................................................................................................................... 27
Research Approach ....................................................................................................................................... 27
Deductive Approach .................................................................................................................................. 28
Inductive Approach .................................................................................................................................... 29
Sampling & Sampling Method ....................................................................................................................... 29
Software Employed ........................................................................................................................................ 30
Measurements / Instrument Selection ........................................................................................................... 30
Plan of Analysis ............................................................................................................................................. 31
CHAPTER-4: INDUSTRY BACKGROUND ................................................................................................... 34
Bench Marking ........................................................................................................................................... 34
Picking Routing ...................................................................................................................................... 35
Item Management ................................................................................................................................. 35
Lean Concept ........................................................................................................................................ 35
CHAPTER-5: RESULTS……………………………………………………………………………………………...38
CHAPTER-6: DISCUSSIONS & RECOMMENDATIONS…………………………………………………………41
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CHAPTER-7: CONCLUSION & FURTHER STUDY………………………………………………………………..47
APPENDIX .........................................................................................................................................................
Appendix 1 .................................................................................................................................................... 50
Appendix 2 ..................................................................................................................................................... 51
Appendix 3 ..................................................................................................................................................... 52
Appendix 4 ..................................................................................................................................................... 53
REFRENCES ................................................................................................................................................. 58
SUPERVISOR LOG ...........................................................................................................................................
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LIST OF FIGURES
Figure Numbers Figure Description
Figure # 1 Typical Layout Decisions in order picking
system design
Figure # 2 Illustration of 2 common ways to implement
class based storage
Figure # 3 Illustration of an order picking system
Figure # 4 Number of routing methods for a single block
warehouse
Figure # 5 Research design steps & outcome with data
inputs
Figure # 6 Deductive approach of study
Figure # 7 Inductive approach of study
Figure # 8 Assessment for Questioner with respect to
order picking methodology
Figure # 9 Conceptual framework for improving the order
picking
Figure # 10 & 11 Picture of spare parts store
Figure # 12 Observations & findings of store
Figure # 13 Initial Proposal
Figure # 14 Within aisle policy
Figure # 15 Across aisle policy
Figure # 16 Diagonal storage policy
Figure # 17 Perimeter storage policy
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LIST OF TABLES
Table Numbers Table Description
Table # 1 Summary of interview data
Table # 2 Phase 1 – Data collection 1
Table # 3 Phase 2 – Data collection 2
Table # 4 Phase 3 – Data collection 3
Table # 5 Industry targeted for questionnaire
Table # 6 Designation of Respondents
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The study is based on qualitative approach so the focus is on analyzing the operation with
respect to operational efficiency in terms of warehouse layout and its storage assignment
and as the benchmark Mondelez Store Spare Parts are also a helping criteria in
understanding and creating the initial proposal which help in setting the activities within
the respective manners. The tools that are applied are lean management in keeping and
reduce the inventory as the capital tied up with high inventory and applying the model of
5S that is connected with lean management. The item classification and routing of
picking the order are identified as studying the current analysis of overall picking model
and improvement areas are highlighted based on the best practices adopted in different
studies and methodologies.
The evaluation of research and the managerial decision to be taken in this research that
how to react and take action when dealing with warehouse operation. The high target for
the warehouse is the picking time of orders as more cost involved process if conditions
and layout of order setting and placing, its routing and inventory replenishment cycle are
more organized then the reaction time of delivering the orders are more effective and
profitable to business.
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Interview Form for Order Pickers/ Data 1 Collection
1. What do you think about order picking response in general?
➢ Pickers General Response: - The orders that need to pick as of demand from its FIFO
requirement.
➢ Warehouse Lead: - The orders that are effectively picked with complete visibility and routing
criteria are defined to ensure orders are picked from right direction and within right time.
➢ Replenishment Lead: - The order picking need to be more transparent to each stakeholder so
to avoid the shelf-life of picking the wrong orders with more life criteria.
➢ IL6S Lead: - Orders are picked with true visibility so the handling cost can be reduced without
back tracking the orders.
➢ Planning Lead: - The order picking if more systematic then it will be effective and more
profitable to business.
➢ PPL Manager: - In opinion of PPL Manager the order visibility and order placement both are
the critical source that needs to be defined to react to demand with in the desired period of
time.
2. What things do you think are working well in current scenario of order picking process?
➢ Pickers General Response: - The orders are picked with respect to tagging of material on basis
of its receiving date so they are following the FIFO.
➢ Warehouse Lead: - The materials are traceable on basis of its lot# so they followed that order
for picking.
➢ Replenishment Lead: - The first and the important step that help in picking are the traceability
they followed.
➢ IL6S Lead: - Quality review check is strong that also a control which supports the picker to
identify the material for picking.
➢ Planning Lead: - As the activity of tagging is followed so one step help in identifying the
material.
➢ PPL Manager: - The first step on receiving the material that lot# issued to product so this help
in identifying the material for picking the right order but this process is not efficient enough.
3. What things are not working well enough?
➢ Pickers General Response: - Space congestion is one of the matters that are not working well
in picking the order.
Appendix 1
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➢ Warehouse Lead: - No any routing defined with respect to picking the orders as no proper
storage policies are defined, no zoning criteria is defined.
➢ Replenishment Lead: - Materials are not segregated with respect to ABC classification.
➢ IL6S Lead: - Skill inventory of material need to be integrated with SAP that is missing in current
perspective.
➢ Planning Lead: - Excessive inventory might be a reason that good and bad inventory are mixed
which results in under producing the demand numbers.
➢ PPL Manager: -The challenge is high inventory leads to number of issues that are:
▪ Excessive Inventory
▪ No lean Management is followed
▪ No 5S Implementation
▪ No optimal routing criteria
4. What parts of order picking feels hard and difficult?
a. When collecting the right order as of FIFO
b. When traceability seems missing
c. When the routing of material not track easily
d. Choosing the correct quantity
e. Locating correct picking address
5. What else would bring up in this interview?
The general observation of Data Collection-1 picking criteria need to be efficient enough by
optimizing the areas of improvement where the gaps relatively increasing the cost of handling
the items twice and picking the wrong orders multiplying the cost of handling.
There is a need to have item classification of material to be integrated with SAP to improve
the picking and reduce the distance by applying best practices.
Pickers Warehouse Lead
A,B,C A,B,C
PPL Manager IL6S, Replenishment
A,B,C A,B,C
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1. What do you think that will help in picking efficiency of the material?
▪ Inventory Reduction
▪ Optimal Routing
▪ 5S Implementation
▪ Lean Management
2. Which sort of the storage policy will help in picking the right order in right time?
• The storage assignments that help in improving the picking of material and reduce the
backtracking of orders are within Aisle-Storage Policy, Across Storage Policy.
3. Which method of picking methodology will best fit to identify the material?
• The picking methodologies that will support in the warehouse are the Zone wise picking with
complete traceability of allotting bin allocation to each rack.
4. Which area is more concern in relation to optimal routing of material?
• The routing of material can be enhanced if color coding to defined to each SKU on basis of its
segregation of Allergens and Non-Allergens material.
Summary of Improvement Areas:-
▪ Inventory Reduction: - Replenishment strategy to be revised to control the inventory.
▪ 5S Implementation a tool of lean management to execute to identify the unnecessary material
in stock by proper sorting.
▪ Optimal routing need to be identified
▪ Traceability need to be enhanced on basis of identification of Zone and Bin Wise.
▪ Material classification to be improved on basis of ABC Analysis.
▪ The storage assignment needs to be implemented to identify the routing criteria to avoid
backtracking of material.
▪ The visibility board of inventory needs to be checked and implemented to improve the picking
efficiency.
▪ The damage material need to be slot on hold area dedicated area to avoid the mixing of
material that can be improved through 5S.
▪ Complete visibility of inventory will reduce the cost of material handling.
▪ Improvement in picking will reduce the other costs utility cost, overtime cost, material
handling cost.
Appendix 2
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Summary on Feedback on Final Proposal:-
In opinion of PPL Manager the real challenge in adopting the improvement areas are the high
inventory and the space congestion that’s a barrier in bringing the improvement in warehouse
picking efficiency.
The areas that are highlighted are the main improvement methods to be implemented and
executed that will support the business and will be profitable in the business as a whole. As
we are running in the journey of IL6S so on top priority we have to avoid the loss making areas
and put a gap analysis that help in reach to a conclusive approach of making efficiency in our
process of operations. The more the response time in picking the orders is effective more we
can react to the demand quickly.
Appendix 3
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Questionnaire
A. Design Perspective
1. Which is the best source for warehouse and DCs serve as a key connection between
manufacturing and finished products.
A. Layout Diagram B. Space Dynamics C. Material Specification D. Material Handling
2. In your opinion what major problems addressed by the warehouse layout strategy is?
A. Addressing trade-off between space and material handling
B. The movement of material to the limited storage areas around the site
C. Requiring frequent contact close to one another
D. Minimizing difficulties caused by material flow varying with each product
3. In your opinion what support a good layout design that requires in determining the control
in improvement in picking of orders?
A. Capacity and space
B. Environment and aesthetics
C. All of these
D. Material handling requirements
B. Time Perspective
4. Which is the best way for stocking the fast moving items on aisles.
A. Forward Aisles
B. Backward Aisles
C. Outside Aisles
D. Inside Aisles
5. In your opinion which module system helps in improving the picking order time?
A. Items Classified on ABC Analysis
B. Systematic Segregation
C. Paper based Tagging System
Appendix 4
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6. Do the shape of warehouse be specifically be designed to improve the per unit picking time?
7. Which is the best way for stocking the slow moving items on aisles.
A. Forward Aisles
B. Backward Aisles
C. Outside Aisles
D. Inside Aisles
C. Technology Perspective
8. In today's modern warehouses and DC's, how WMS/ SAP are providing the best outcome in
identifying the items among the multiple SKU's?
9. Which of the following are not examples of advanced technologies supported by WMS to
improve warehouse efficiency?
A. Barcode scanners B. Mobile computers C. Pick-to-voice D. Forklifts
D. Picking Methodologies
10. Which Order picking strategy involves picker taking one order and travels through the
warehouse either on foot with a trolley or with a pallet collecting item until the whole order is
picked.
A. Cluster Picking
B. Pick to Order
C. Zone Picking
D. None of these
11. What document is used by receiving personnel to obtain information about the contents of a
delivery
being received and in addition how SOP's defined the segregation of material in terms of good
and bad stock which support in identifying in picking the right stock?
A. Quality Report B. Packing List C. Driver’s Log D. Claim Report
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12. Which Principle in warehouse activities does not include the process that impact the
improvement condition?
A. Storage
B. Product Design
C. Shipment
D. Order Picking
13. Which order picking strategy involves products being picked from defined areas in the
warehouse.
A. Cluster Picking
B. Pick to Order
C. Zone Picking
D. None of these
14. Which picking is involved in the process where multiple orders are picked that minimizes
repeat trips, where there is a dense concentration of SKUs.
A. Batch Picking
B. Zone Picking
C. Wave Picking
D. Piece Picking
15. Which order picking strategy involves picker taking a number of orders out into the
warehouse and pick into individual compartments on their trolley.
A. Cluster Picking
B. Pick to Order
C. Zone Picking
D. None of these
16. Does 5S play a vital role in the identification and marking of different space utilization?
A. Yes B. No
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E. Productivity
17. There is a need to create zones in the warehouse for fast moving items that result in
higher pick productivity.
A. Agree
B. Disagree
C. Strongly Agree
D. Strongly Disagree
18. In which area productivity depends on the type of material equipment handing used, the
location and accessibility of stock, warehouse layout, stock location system, and the order
picking system used?
A. Equipment
B. Picking
C. Material
D. Labor
19. Does the order picking directly correlate in increasing the cost of warehouse?
A. Yes
B. .No
20. Do the replenishment plays an important role in controlling the cost and excessive inventory
storage and support the cycle of supply chain?
21. In your opinion what are the critical factors that are involved in the order picking are?
A. Warehouse Location
B. Warehouse Infrastructure
C. Warehouse Storage Layout
D. Existing Picking Arrangements
E. Available Order Picking Machinery
F. All of These
G. Option C,D,E
22. Do you think in picker to parts system for low level OP, labor intensity bring higher cost in
the operation cycle?
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23. In your opinion which of the assignment reduce the space utilization significantly?
A. Class based Storage assignment
B. Volume based Storage Assignment
C. Random assignment
24. In inventory control, which is the best way for dividing items into classes based on
popularity.
A. 80/20 Rule
B. Pareto Method
C. Lean Method
D. Six Sigma
E. Poka Yoke
25. In picker to parts system the high level OP system, the lifter automatically stop in front of
appropriate location and improve the picking time and reduce the cost by other mean?
A. Agree
B. Disagree
C. Strongly Agree
D. Strongly Disagree
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