Storage and warehousing

Techniques
Warehouse processes Chapter 3
Pick Prepairation

Introduction
Order picking is the most costly activity within today’s warehouses. Not only is it labour intensive, but
it is challenging to automate, can be difficult to plan, is prone to error and crucially has a direct
impact on customer service. Typical errors include omitting items from the order, sending the wrong
item and sending the wrong number of items.

The picking operation has changed significantly over the past 20 years. Previously, full-case and pallet
picks tended to be the norm. Today, concepts such as just in time, the growth in online shopping and
significant reductions in order lead times have resulted in smaller order quantities and more frequent
deliveries.
Warehouse processes Chapter 3
Pick Prepairation

There are many interrelated decisions that

need to be made and aligned for
companies to be effective in picking area.
Figure 4.1 shows the interrelationship
between labour, technology, equipment
and warehouse layout.
Warehouse processes Chapter 3
Pick Prepairation

Pick prepairation
According to Frazelle (2002), less than 15 per cent of SKUs within a warehouse are assigned to the
most efficient location, resulting in a 10 to 30 per cent cost increase in travel time and underutilized
locations.

Prior to laying out a warehouse, deciding on the most appropriate handling equipment, installing
storage systems and deciding on which form of picking system to introduce, a full ABC analysis of
stock movements and stock held should take place.
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( ABC CLASSIFICATION)

Understanding ABC classification begins by understanding Pareto’s Law or the 80/20 rule. This states that roughly
80 per cent of effects come from 20 per cent of causes. This rule is not universal but it is surprising how often it can
apply. The idea therefore is to concentrate time and resources on the important 20 per cent or the ‘vital few’.
Examples of the 80/20 rule in relation to the warehouse include the following:
● 80 per cent of sales come from the top 20 per cent of the product lines;
● 80 per cent of sales come from 20 per cent of the customers;
● 80 per cent of profits come from 20 per cent of the customers – not necessarily the same customers as above;
● 80 per cent of profits come from the top 20 per cent of products;
● 80 per cent of the cube usage within the warehouse comes from 20 per cent of the products;
● 80 per cent of the inventory value is in 20 per cent of the products;
● 80 per cent of problems come from 20 per cent of your suppliers;
● 80 per cent of complaints come from 20 per cent of the customers; and
● 80 per cent of staff problems come from 20 per cent of your workforce.
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( ABC CLASSIFICATION)

Pareto’s Law is widely used in logistics and is an excellent method for categorizing items. This is normally termed ABC
classification.
In terms of sales, under this classification, ‘A’ is the most important, with 20 per cent of products producing 80 per cent of
sales, ‘B’ is of medium importance with say 35 per cent of items producing 15 per cent of sales, and the remaining
45 per cent being ‘C’ items producing only 5 per cent of sales.
The precise classification of items will vary between companies and market sectors. However, in broad terms they are very
similar.
Many companies will use an ABC analysis to produce an effective warehouse layout. However, the traditional single ABC
analysis will only provide a snapshot of the current situation based on one parameter – the level of sales by
product, the idea being that the A items, as the highest sellers, are placed at the front of the warehouse, closest to the
despatch area.
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( ABC CLASSIFICATION)

The next analysis we carried out was based on frequency of pick per product line. Here we found that 80 per cent of picks
came from 15 per cent of the product lines. In fact the top 20 most popular lines by order frequency made up 35 per cent of
the total picks.
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( ABC CLASSIFICATION)

It is our contention that the picking area layout should be based on the number of pick-face visits taking into account size
and weight of the product and any special circumstances such as high security items. a double ABC categorization
For those who want to take quantity into account as well as pick face visits allows you to combine these two factors into
one – in this case volume and frequency. This can be done by producing a nine-box
grid as shown in Figure 4.4.
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( ABC CLASSIFICATION)

In this example, AA products are those that generate the most sales and are sold most frequently. CC products on the other
hand are defined as slow movers in that they sell the least and move less frequently.

In terms of picking, the more frequently you visit a pick location the more labour intensive it is likely to be. Products in
position AA will generate, on average, 50 per cent of your sales yet will only be 8 per cent of your product range.
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( ABC CLASSIFICATION)

In this example, AA products are those that generate the most sales and are sold most frequently. CC products on the other
hand are defined as slow movers in that they sell the least and move less frequently.

In terms of picking, the more frequently you visit a pick location the more labour intensive it is likely to be. Products in
position AA will generate, on average, 50 per cent of your sales yet will only be 8 per cent of your product range.
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( ABC CLASSIFICATION)

Figure 4.5 shows
the relationship
between the
frequency of sales
and the value of
the product.
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( ABC Analysis)

In Table 4.3, the annual demand is multiplied by the
number of times the product appears on a pick list to
give a weighted volume.
Why not only Volume taken for analysis
If we had used the volume figures alone the top two
products in terms of pick-list frequency would have
ended up much further away from the dispatch area,
thus increasing travel time appreciably.

It is likely, for example, that product codes 85866,

77577 and 77212 are sold in full-pallet quantities and
can be stored in and picked directly from the pallet
racking away from the forward pick faces.
This also reduces the requirement for replenishment
for these particular products.
The more times you visit to pick face the higher labor
cost you will bear
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( ABC Analysis)

In Table 4.3, the annual demand is multiplied by the
number of times the product appears on a pick list to
give a weighted volume.
Why not only Volume taken for analysis
If we had used the volume figures alone the top two
products in terms of pick-list frequency would have
ended up much further away from the dispatch area,
thus increasing travel time appreciably.

It is likely, for example, that product codes 85866,

77577 and 77212 are sold in full-pallet quantities and
can be stored in and picked directly from the pallet
racking away from the forward pick faces.
This also reduces the requirement for replenishment
for these particular products.
The more times you visit to pick face the higher labor
cost you will bear
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( Slotting)

Another part of the preparation process is slotting.

This is a tool that calculates the optimum location for products within a warehouse.
The tool is used to reduce the amount of travel time for operators by not only placing fast-moving products close to
dispatch but also places items that frequently ship together next to each other in the pick-face area

Example nut and bolts

Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( Slotting)

Another part of the preparation process is slotting.

This is a tool that calculates the optimum location for products within a warehouse.
The tool is used to reduce the amount of travel time for operators by not only placing fast-moving products close to
dispatch but also places items that frequently ship together next to each other in the pick-face area

Example nut and bolts

Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( Slotting Analysis)

Table 4.4 is an example of a simple slotting
analysis carried out for a client recently which
shows how often the same products appear on
a pick list.
This only looked at pairs of items.

More sophisticated software can look at

multiple items.
The system can also identify small groups of
products that can complete a large number of
orders. By examining the popularity of the
items combined with the orders that they
complete, these items can be identified and
stored within a specific area in the warehouse.
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( Slotting Analysis)

Slotting can also determine how many and what size of pick face is required for each product line. Very fast-
moving lines will require multiple faces to avoid a bottleneck at a single location. These need to be spread
efficiently across the front of the racking nearest the start and finish of the picking run.

Slotting will also take into account seasonality and suggest product transfers such as moving garden
furniture from the front of the warehouse, where it is stored during spring and summer, to the rear of the
warehouse during winter..

The system can also take into account other parameters such as value, cube, weight and crushability.
Retailers can also set up the system to pick in sequence tailored to store layout, thus minimizing the time
spent handling the product at store.
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( Slotting Analysis)

This software is integrated within many of today’s WMSs but can also be sourced separately; payback is
normally less than one year.

By profiling the activity of items and orders received into the warehouse, we can determine which pick
method to use, how much space to allocate and therefore where and how to store the product.
The idea is to place the most popular items in terms of pick frequency in the most accessible warehouse
locations.
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( Slotting Analysis)

This software is integrated within many of today’s WMSs but can also be sourced separately; payback is
normally less than one year.

By profiling the activity of items and orders received into the warehouse, we can determine which pick
method to use, how much space to allocate and therefore where and how to store the product.
The idea is to place the most popular items in terms of pick frequency in the most accessible warehouse
locations.
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( Order analysis)

We can analyse orders in a number of different
ways. One of the most common is lines per order.
This examines how many different product codes
make up an order, and as a result we can
calculate how many pick locations we will visit for
each order.

Table 4.5 shows the number of lines (SKUs) per

order on average for different family groups and
also the average number of units per line for a
manufacturer in the fast-moving consumer goods
(FMCG) sector.
As can be seen in Table 4.5, the family groups of
products have different profiles. Family groups 8
and 9 have full-carton picks; however, the other
family groups are predominantly item picks.
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( Order analysis)

This information can help in determining the type
of pick operation and also the type of storage
medium to be used.
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( Order analysis)

We can also drill down further into this information to determine the number of lines per order by family group.
If we take family group 6 as an example, we can see in Figure 4.6 that there are a larger number of single-line orders
together with some large orders with multiple lines. Using averages in these circumstances can therefore be misleading.
With such a large number of single-line orders we also need to determine whether these are standard orders or possibly
back orders.
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( Order analysis)

If they are standard orders then a batch pick (discussed later) is probably the most suitable method of picking. Examples of
this type of order profile include internet sales, small-parts distribution and engineering spares.
Where items are picked from cases, this suggests that the items could potentially be decanted into smaller receptacles and
placed in a specific area within the warehouse where picking operations can be consolidated.
Warehouse processes Chapter 3
Pick Prepairation

Pick preparation ( Order analysis)

If they are standard orders then a batch pick (discussed later) is probably the most suitable method of picking. Examples of
this type of order profile include internet sales, small-parts distribution and engineering spares.
Where items are picked from cases, this suggests that the items could potentially be decanted into smaller receptacles and
placed in a specific area within the warehouse where picking operations can be consolidated.
Warehouse processes Chapter 3
Pick Prepairation

Product Cube Picked ad Dispatched Per Month

Why do we do this Analysis?
In order to decide on the method of storage
for individual product lines we
need to examine the cube movement
distribution. By detailing the items that
fall into specific cube movement ranges we
can decide on the most appropriate
storage mode.
Warehouse processes Chapter 3
Pick Prepairation

Product Cube Picked ad Dispatched Per Month

Figure 4.7 shows an example of cube
movement distribution. Approximately
15 per cent of the total items ship less than
0.5 cubic metres per month, which
suggests bin, shelf, flow rack or carousel
storage, whereas 12 per cent of the
items ship in excess of 50 cubic metres per
month. This would point in the
direction of some form of pallet storage.
Warehouse processes Chapter 3
Pick Prepairation

Product Cube Picked ad Dispatched Per Month

Figure 4.7 shows an example of cube
movement distribution. Approximately
15 per cent of the total items ship less than
0.5 cubic meters per month, which
suggests bin, shelf, flow rack or carousel
storage, whereas 12 percent of the
items ship in excess of 50 cubic meters per
month. This would point in the
direction of some form of pallet storage.
Warehouse processes Chapter 3
Pick Prepairation

Demand variation distribution

How can we use Demand variation distribution?

Demand variation distribution enables you to determine the size of the pick face and the quantity held
for each type of product, the idea being to limit the number of replenishments that take place during a
day. The ideal is not to replenish but have sufficient stock in situ to cover demand over a shift.
An approximate figure can be derived by calculating the average daily demand and the standard
deviation for each item.
Warehouse processes Chapter 3
Pick Prepairation

Pick face analysis

Table 4.6 is an example of a client’s pick
operation that utilizes flow racking
and has a mixture of full carton and item
picks from carton.
As can be seen from this example, the
number of cartons stored in the pick
faces is nearly optimum providing there is
no significant deviation from the
average.
Warehouse processes Chapter 3
Pick Prepairation

Pick face analysis

The issue arises when there is a significant
daily deviation in the number of
items picked. For example, if we take
product code 989533 with daily pick
quantities of 11, 13, 19, 5 and 7, although
the average pick per day is 11 there
is a wide variation across the week.
In order to accommodate an average day’s
demand with a low possibility of
replenishment, we need to store the
average number of cartons picked plus
two standard deviations for a 5 per cent
chance of replenishment and three
standard deviations of demand for a 1 per
cent chance of replenishment during
the day. This suggests the pick face should
contain either 21 or 26 cases for this
product.
Warehouse processes Chapter 3
Pick Prepairation

Pick area layout

The issue will be whether there is sufficient space available to accommodate this amount of stock in the picking
area.
The amount of space made available to the pick operation will very much depend on the total available cubic
capacity of the warehouse, the floor space and the amount of reserve stock needing to be stored.
This takes us into the next section, which examines the pick area layout.
Warehouse processes Chapter 3
Pick Prepairation

Pick area layout

The issue will be whether there is sufficient space available to accommodate this amount of stock in the picking
area.
The amount of space made available to the pick operation will very much depend on the total available cubic
capacity of the warehouse, the floor space and the amount of reserve stock needing to be stored.
This takes us into the next section, which examines the pick area layout.
Warehouse processes Chapter 3
Pick Prepairation

Pick area layout

Warehouse pick area layout
Having produced a comprehensive profile of the products and orders, we are ready to tackle the layout.

Figure 4.8 depicts a very basic layout that has used an ABC analysis based on the frequency of pick-face visits.
The next step is to minimize the amount of travel through the warehouse when picking an order.
The route followed by the picker when assembling the order needs to take
into account the following:
●● The pick instruction will have each pick sequenced as per the most effective route beginning at the front of
the racking nearest the dispatch bays.

●● Heaviest items are picked first.

●● The picker should be able to pick from both sides when moving up and down the aisles. See Figure 4.9
below. In this example the aisles are numbered, not the rows of racking which means that the picker can move
from side to side as opposed to travelling up the length of the racking and back down the other side.
Warehouse processes Chapter 3
Pick Prepairation

Pick area layout

Warehouse pick area layout
●● Shortcuts are programmed into the system to minimize travel. For example, a break in a long length of
racking (as shown in Figure 4.8) enables the picker to shorten the travel distance but allows the storage
of reserve product above the pathway.

●● The picker ends up as close to the despatch area as possible. If the picker is not operating in real time the
picker may need to return to the start point to pick up a new assignment. This is not ideal.

●● Multiple pick locations for the most popular items need to be set up to avoid congestion at the pick bays.
Warehouse processes Chapter 3
Pick Prepairation

Pick area layout

Warehouse pick area layout
Having produced a comprehensive profile of the products and orders, we are ready to tackle the layout.

Figure 4.8 depicts a very basic layout that has used an ABC analysis based on the frequency of pick-face visits.
The next step is to minimize the amount of travel through the warehouse when picking an order.
The route followed by the picker when assembling the order needs to take
into account the following:
●● The pick instruction will have each pick sequenced as per the most effective route beginning at the front of
the racking nearest the dispatch bays.

●● Heaviest items are picked first.

●● The picker should be able to pick from both sides when moving up and down the aisles. See Figure 4.9
below. In this example the aisles are numbered, not the rows of racking which means that the picker can move
from side to side as opposed to travelling up the length of the racking and back down the other side.