Week 6

Fixed location storage

• Also known as assigned location storage, or dedicated location storage

• Each SKU gets its own location(s), and no other products may be stored in those locations under any circumstance

• Fixed location storage requires more space, since locations are “reserved” also if the location is not needed at some point in time

Random location storage

• Also known as floating location storage

• Any SKU may be assigned to any location, and that may change each time

• Best for space utilization

Put products with higher demand at better locations (see example on following slides).

Almost always used in combination with fixed location storage (after all, if you fix the product location anyway, then why not assign the most appropriate product to it).

What are the best locations?

• Locations that are easy and quickly accessible.

• Typically, close to the dock doors or depot (i.e., starting point of a route).

A frequently requested product with a large storage volume, should not be put in the best locations if there are slightly less requested products with a significantly smaller storage volume.

Often an incoming shipment contains several units of the same product.

Activity-based storage rules would assign all units to the same activity class.

If we have 5 loads that will be sold in a period of 25 days, then the first pallet will be sold within 5 days, but the last pallet will be empty after 25 days.

Looking at this, the first pallet may classify as a fast mover and the last pallet as a slow mover.

Time-in-residence assignment involves estimating the duration of storage for each incoming unit and making appropriate assignments.

Class-based storage

Combines advantages of fixed location storage and random storage.

That is, high(er) space utilization, with low(er) space utilization

Commonly known as: ABC storage

Approach

• Divide all products into a number of categories (often: three),

• The A-products are the most requested items; the B-products are the second most requested products, etc.

• Assign locations to classes.

• Do not distinguish within classes; so within a class storage is random.

Product demand may change over time.

Keeping the storage assignment up-to-date is a non-trivial task.

Need to relocate products (reslotting).

Two options:

1. When a location is depleted, put the replenishment at a more appropriate location.

2. Move products from their current location to the new location.

First option is preferred, but will not always be sufficiently effective (mostly for rapidly decreasing demand).

The simplest way of storing products is to use block stacking.

Pallets are placed on the floor and on top of each other. No racks are needed.

Layout

Interior blocks should be flexibly configured to allow different lane depths from each side. For example a slot may contain 2 pallets of product A accessible from one side and 3 pallets of product B accessible from the other side. Or 1 of A and 4 of B and so on.

Picker to part

Part to picker

Part-to-picker systems

More mechanization + automation

The products move to the picker

The employee stays at a stationary workstation

Separate area for verification of returns.

Then:

• Return to supplier

• Put back in stock

• dispose

When putting back to stock

• Add to stock at the products regular location

• Put in a special returns area – requires “mixed storage locations”

Or you allow the customer to keep the product, but still pay back the purchase price (logistics can be more expensive than the product!!!)

Convert, for example, to picks per hour

The storage system can influence layout. Equipment used (like crates) can make accumulation redundant.

First determine the amount of workers needed and you can make zones

First step: determine current occupancy. Should ideally not exceed 85%. Therefore, if you need 40%, calculate 0.4/0.85=0.47.

Furthermore, in the final design we do not want flows of the two operations to be crossing. No forklift trucks with computers should be cutting through areas with CDs, for example. That would be confusing for workers, probably adds unnecessary distances, and increases chance of errors.