data, but says there are exceptions. “Sometimes, [the
client] may say we’ve been growing drastically. Then we
might use six months.”
CRUNCH THE NUMBERS
All this can add up to a lot of information, as informed
decisions require looking at each of perhaps thousands
of SKUs. A typical SKU analysis breaks down inventory into segments from fast movers to slow movers
(Fortna ranks them A through D, plus an E category
for idle inventory). “You can look at the number of
SKUs, the number of units, and even how much cube
they are taking up,” Giangrande says.
The analysis also includes what he calls cross profiling—an examination that relates, say, fast-moving SKU
categories with order profiles. Giangrande explains that
such an analysis might look at what percentage of
orders could be picked complete from A-category SKUs
or A and B SKUs.
Major integrators as well as software companies have
developed tools to help deal with the volume.
Benefield says enVista offers a tool that can automati-
cally generate as many as 7,500 charts and tables com-
paring the data in a wide variety of ways. “We look for
spikes during the year or in lines per order, single line
orders—we can break it out in a variety of ways. We
have tables that show how orders break down, the per-
centage of As, ABs, and ABCs. That’s one of the most
valuable charts we generate.”
The detailed look at SKUs and orders can suggest
cost savings in the design through what Fortna calls a
warehouse within a warehouse—clustering the fastest-
moving goods in one segment of the warehouse, which
could limit the amount of automated equipment need-
ed. “When you go to do the design, you can better uti-
lize your capital investment,” Giangrande says.
He describes a project for a customer in the lawn
and garden industry that could complete 71 percent of
its orders from its A and B SKUs. The design consolidated those goods into a 10,000-square-foot area in
the DC, making use of zone routing and a combination of static and flow storage. The company, he says,
can now complete 70 percent of its orders in that area
faster than it could with the previous layout, resulting
in increased throughput and improved labor productivity. “It was not a radical change in how goods were
stored, but a change in how the goods were grouped
together, then adding appropriate material handling to
that and ensuring we did not engineer in any bottlenecks,” he says.
retrofit, it often turns out that DCs can benefit from
implementing tactical changes in processes. He cites
one customer whose data analysis showed that half the
firm’s orders were single-line, single-unit orders. By
switching from discrete order picking to batch picking
those orders in a single wave, the operation reduced
travel time for order selectors dramatically, improving
labor productivity. “When you are looking at the data,
you can find opportunities,” he says.
DRAW THE MAP
With a full understanding of the requirements, it’s time
to move on to the design. Giangrande says the design
should incorporate four major areas: people, processes,
systems, and assets. He treats DC space as a separate
issue, particularly for retrofits in existing buildings.
“Space is the Achilles heel of a design,” he says. “You can
have the best systems and good media, but if you need
200,000 square feet and you only have 150,000, things
are going to suffer. Or if you have 300,000 square feet,
that’s going to be detrimental.”
During the design process, Benefield says, it is crucial
for the design engineers and the DC management to
stay in touch. “Communication is key,” he says. “You
cannot work in a vacuum.”
Ideally, he says, the designers will develop alterna-
tives for DC managers to consider. They can guide cus-
tomers through an economic analysis of each alterna-
tive, comparing crucial factors such as up-front invest-
ment costs, space utilization, labor costs, throughput,
and expected return on investment. The analysis
should also include an evaluation of such qualitative
factors as flexibility, expandability, safety, security,
integration, and ease of implementation, he says.
Ultimately, the design has to incorporate all of the
pieces of the operation—receiving, storage, picking,
areas for value-added services, shipping, etc. The decisions on storage media alone can be complicated,
involving such considerations as cube utilization, level
of automation, forward pick versus reserve requirements, and more. Those decisions will be dictated in
large part by the order profiles and processes. “If you
sell a million units, your storage media are going to
look very different if you sell them one at a time than
if you sell them 100,000 at a time,” Giangrande says.
The completed plan serves as the road map for the
implementation—the selection of appropriate technology, material handling equipment, etc. Developing
such a map requires time and effort, to be sure. But it’s
the single best way to keep the journey from veering
off course. ●
