KEY CONCEPTS OF PHYSICAL

DISTRIBUTION
CHAPTER 1
Different names of logistics and distribution:
• physical distribution; • logistics; • business logistics; • materials management; • procurement
and supply; • product flow; • marketing logistics; • supply chain management; • demand chain
management;
Logistics is a diverse and dynamic function that has to be flexible and has to change according to
the various constraints and demands imposed upon it and with respect to the environment in
which it works.
Key relationships in logistics:
• Logistics = Materials Management + Distribution
• Supply Chain = Suppliers + Logistics + Customers
Supply and materials management represents the storage and flows into and through the
production process; while distribution represents the storage and flows from the final production
point through to the customer or end user.
Logistics and the supply chain are concerned with information flows and storage.

Reverse logistics – the flow of used products and returnable packaging back through the system.
Different definitions of logistics:
• Logistics is... the management of all activities which facilitate movement and the
coordination of supply and demand in the creation of time and place utility.

• Logistics is the management of the flow of goods and services between the point of origin
and the point of consumption in order to meet the requirements of customers.

• Logistics management is that part of supply chain management that plans, implements,
and controls the efficient, effective forward and reverse flow and storage of goods,
services and related information between the point of origin and the point of consumption
in order to meet customers’ requirements.

• Logistics is... the positioning of resource at the right time, in the right place, at the right
cost, at the right quality
Logistics concerns the efficient transfer of goods from the source of supply through the place of
manufacture to the point of consumption in a cost-effective way while providing an acceptable
service to the customer.

CHAPTER 2
The total logistics concept (TLC): It is a recognition that the interrelationships between
different elements need to be considered in a supply chain.
Cost trade-offs: may entail additional cost in one function but will provide a greater cost saving
in another.
Different levels of trade-off:
1.Within logistics components: this refers to the trade-offs that occur within single functions
2. Between logistics components: occur between the different elements in logistics.
3. Between company functions.
4. Between the company and external organizations: there may be opportunities for a trade-off
between two companies that are directly associated with each other.
Planning for logistics:
• Planning is about ensuring that the operation is set up to run properly.
• Control is about managing the operation in the right way.
Strategic Tactical Operational
• Medium- to long-term • Short- to medium-term • Day-to-day decision
horizon horizon making
• One- to five-year (plus) • Six-months to one-year • Operations controlled
time span (plus) time span against the standards
• Overall ‘structural’ • Subsystem decisions are and rules.
decisions made should not impose • Control via
• Trade-offs between on other logistics weekly/monthly reports
company functions components. • The implementation of
• Trade-offs with other • Annual budgets provide the operational plan.
organizations finance/cost basis.
• Corporate financial plans • The strategic plan detail is
and policies made into an
• Policy decisions operational plan
developed into a
strategic plan

Main logistics elements in different time horizons

They are subject to continual change, as both demand and supply of goods and products
regularly vary according to changes in customer requirements for new products and better
product availability.
Control cycle
1. ‘Where are we now?’: regular information feedback procedure.
2. To determine the objectives of the logistics process, to identify what the operation should
be trying to achieve.
3. The third stage is the planning process that spans the strategic and operational levels.
4. Monitoring and control procedures to measure the effectiveness of the distribution
operation compared to the plan.

Financial impact of logistics

• Return on investment (ROI): the ratio between the net profit and the capital employed in
the business.
 Returnoninvestment

Profit Capitalemployed

+ Cashand +
Sales Costs Inventory Fixedassets
receivables

OTIF Inventory-holding Rawmaterials Cash-to-cashcycle Warehouses

Servicelevels Storage Components Ordercycletime Depots
Customerrelationships Transport WIP invoiceaccuracy
Transport
After-sales Labourefficiency FG MHE
Depotlocation Stocklocation Networkoptimization
Obsolescence Outsourcing
Inventorycontrol
Inventoryturn

E0Q
Systems

One of the aims of many service level agreements is to try to achieve OTIF (on time in full)
deliveries – a key objective of many logistics systems.

Globalization and integration

Globalization almost certainly leads to greater complexity, which leads to significant
implications:
• extended supply lead times;
• production postponement with local added value;
• complicated node management;
• multiple freight transport options;
• extended and unreliable transit times;
• the need for greater visibility in the supply chain.
Integrated systems
Direct product profitability (DPP): is a technique of allocating all of the appropriate costs and
allowances to a given product.
Materials requirements planning (MRP) and distribution requirements planning (DRP): Planning
tools that aim to make the necessary materials or inventory available when needed. Originated
with materials requirements planning, an inventory control technique for determining dependent
demand for manufacturing supply.
Just-in-time (JIT) eliminates all activities that neither add value to the final product nor allow for
the continuous flow of material. It has many objectives: the production of goods the customer
wants; the production of goods when the customer wants them; the production of perfect-quality
goods; the elimination of waste (labour, inventory, movement, space, etc).
Competitive advantage through logistics
Service leader, where the company is trying to gain a value advantage over its competitors by
providing a number of key service elements to differentiate its product.
A cost leader where it is trying to utilize its resources so that it offers the product at the lowest
possible cost, thus gaining a productivity advantage.
Logistics and supply chain management
1. Supply chain is viewed as a single entity rather than a series of fragmented elements such
as procurement, manufacturing, distribution, etc.
2. Supply chain management is very much a strategic planning process.
3. Supply chain management provides for a very different approach to dealing with
inventory - aims to alter this perspective so that inventory is used as a last resort.
4. Supply chain management is the use of integrated information systems that are a part of
the whole supply chain rather than merely acting in isolation for each of the separate
components.
A company with
limited integration
will hold stocks in
many parts of its
operation. A highly
integrated company
will hold very
limited stocks

CHAPTER 3
The importance of customer service
The core product concerns the item itself: the technical content, the product features, the ease of
use, the style and the quality. The service elements, which can be called the ‘product surround’,
represent the availability of the product, the ease of ordering, the speed of delivery, and after-
sales support.
Pareto 80/20 rule, it is estimated that product surround or logistics elements represent about 80
per cent of the impact of the product but only represent 20 per cent of the cost.
The seven rights of customer service
These elements
should become
the basis of the
key
measurements
that are used to
monitor
operational
The components of customer service
success or
Direct transaction-related elements Indirect support failure.
where the emphasis is on the specific physical (e.g non-transactional, or pre- and post-
service provided, such as on-time delivery transactional) attributes that are related to overall
aspects of order fulfilment, such as the ease of
order taking.
Three categories of customer service
Pre-transaction elements Transaction elements Post-transaction elements
Customer service factors that Elements directly related to the Involve those elements that
arise prior to the actual physical transaction occur after the delivery has
transaction taking place. and are those that are most taken place.
commonly concerned with
distribution and logistics
–written customer service –order cycle time; – availability of spares;
policy; – order preparation; – call-out time;
– accessibility of order – inventory availability; – invoicing procedures;
personnel; – delivery alternatives; – invoicing accuracy;
– single order contact point; – delivery time; – product tracing/warranty;
– organizational structure; – delivery reliability; – returns policy;
– method of ordering; – delivery of complete order; – customer complaints and
– order size constraints; – condition of goods; procedures;
– system flexibility; – order status information. – claims procedures.
– transaction elements.
Logistics customer service elements can also be classified by multifunctional dimensions. The
intention is to assess the different components of customer service across the whole range of
company functions, to try to enable a seamless service provision.
The four main multifunctional dimensions are:
1. time – usually order fulfilment cycle time;
2. dependability – such as guaranteed fixed delivery times of accurate, undamaged orders;
3. communications – such as the ease of order taking or effective queries response;
4. flexibility – the ability to recognize and respond to a customer’s changing needs.

Two conceptual models of service quality

Service quality is a measure of the extent to which the customer is experiencing the level of
service that they are expecting.
Basic service model: the match between what the customer expects and what the customer
experiences. (Perceived quality is always a judgement that the customer makes).

Extended service model: Helps to identify and measure the critical elements of service for key
customers. The aim of this approach is to identify the various different service gaps that can or
might appear throughout the customer service process.
The service gaps
Developing a customer service policy
1. Identify the main elements of service and identify suitable market segments: identify
those elements of service that are most highly rated by customers.

2. Determine the relative significance of each service element: A rating table or repertory
grid can be used for considering and measuring the relative importance of different
combinations of service components.

3. Establish company competitiveness at current service levels offered: measure how well
the company is performing for each of these key components. This can be achieved using
the questionnaire. This will provide an indication of where the company is both
underperforming and overperforming and where it has got it about right.

Respondents can be asked to rate each competing company in a similar way as a part of
the questionnaire. The company’s performance can then be compared to the
competition’s performance.
 4. Identify distinct service requirements for different market segments: Once different
market segments have been identified, a number of specific customer service policies can
be developed, each of which should suit the relevant groups or segments.

This is achieved by using the survey results to identify the major performance gaps for
each market segment or customer group that is being considered. The key customer
service elements should be ranked in order of importance to the customer.

5. Develop specific customer service packages: The implementation phase will depend on
the results obtained.

6. Determine monitoring and control procedures: It’s the measurement of the service
provided. First, identify the factors that need to be measured, then produce a measure or
series of measures to evaluate them.

Levels of customer service

Balance the level of customer service with the cost of providing that service: additional revenue
for each increment of service is equal to the extra cost of providing that increment.
1) a cost minimization approach where specific service objectives are laid down and met at a
minimum cost; 2) a service maximization approach where a distribution budget is fixed, and the
‘best’ service supplied within this cost constraint

Measuring customer service

Whatever measures are used, they must reflect the key service requirements for the customer in
question. One example is that of order fulfilment. It is possible to measure this in a number of
different ways:
• The number of orders completely satisfied, the number of lines delivered from a single
order, the number of line items or cases delivered from a single order, the value of the
order completed.
• Or the order cycle time: delivered complete to the quantities ordered; delivered exactly to
the customer’s requested date and time; no delivery problems (damage, shortage, refusal);
accurate and complete delivery documentation.
OTIF, which measures orders that are delivered both ‘on time’ and ‘in full’

The customer service explosion

Service, nowadays, is the key factor of differentiation in a customer’s decision to buy one brand
rather than another.
• the growth in customer expectations
• the growing professionalism of buyers
• markets have become increasingly service-sensitive
• the diminution of brand loyalty, particularly with respect to fast-moving consumer goods
(FMCG), where immediate product availability is the vital factor.
• the development of new ideas such as relationship marketing where fulfilling service
• expectations is the key and customer retention is a priority.

Chapter 4
Physical distribution channel: the method and means by which a product is physically
transferred, or distributed, from their point of production to the point at which it is made
available to the final customer.
The trading channel is also concerned about the fact that it is being transferred from the point of
production to the point of consumption, but with the non-physical aspects of this transfer. These
aspects concern the sequence of negotiation, the buying and selling of the product, and the
ownership of the goods as they are transferred through the various distribution systems.
 Retailstore

Retailstore Retailer's Retailstore

warehouse
Parcels
Broker
carrier

Cash& directdelivery
•Retailstore
collect
carry
Retailstore
Production

Manufacturer's
Wholesale warehouse
warehouse
3PL
service

Retailstore Retailstore

Retailstore

Manufacturer direct to retail store The manufacturer or supplier delivers direct from the
production point to the retail store, using its own vehicles.
Manufacturer via manufacturer’s The manufacturer or supplier holds its products in a finished
distribution operation to retail store goods warehouse, a central distribution center (CDC) or a
series of regional distribution centers (RDCs).
Manufacturer via retailer Manufacturers supply their products to national distribution
distribution center to retail store centers (NDCs) or RDCs for final delivery to stores/ or
supply them to consolidation centers, where goods from the
various manufacturers and suppliers are consolidated and
then transported for final delivery.
Manufacturer to wholesaler to Wholesalers have acted as the intermediaries in distribution
retail shop chains for many years, providing the link between the
manufacturer and the small retailers’ shops.
Manufacturer to cash-and-carry Cash-and-carry businesses, which are usually built around a
wholesaler to retail shop wholesale organization and consist of small independent
shops collecting their orders from regional wholesalers,
rather than having them delivered.
Manufacturer via third-party Has grown very rapidly due to the extensive rise in
distribution service to retail store distribution costs and the constantly changing and more
restrictive distribution legislation that has occurred.
Manufacturer via small parcels These companies provide a ‘specialist’ distribution service
carrier to retail shop where the ‘product’ is any small parcel.
Manufacturer via broker to retail A broker is similar to a wholesaler in that it acts as
store intermediary between manufacturer and retailer. It is often
more concerned with the marketing of a series of products,
and not necessarily with their physical distribution.
Channel alternatives: direct deliveries
Channels for industrial products and for the delivery of some consumer products that bypass the
retail store, often referred to as business to consumer (B2C):
Mail order: Goods are ordered by catalogue and delivered to the home by post or parcels carrier.
Factory direct to home: It can occur by direct selling methods, often as a result of newspaper or
magazine advertising. Products that are specially made and do not need to be stocked in a
warehouse to provide a particular level of service to the customer.
Internet and shopping from home: The move to internet shopping for grocery products has led to
the introduction of third-party companies.
Factory to factory/business to business (B2B). it includes all of the movement of industrial
products. This may cover raw materials, components, part-assembled products, etc.
Channel alternatives: different structures
The main differences are: the types of intermediaries, the number of levels of intermediaries, the
intensity of distribution at each level.
Channel objectives
• To make the product readily available to the market consumers at which it is aimed.
• To enhance the prospect of sales being made - The product should be ‘visible, accessible
and attractively displayed’.
• To achieve cooperation with regard to any relevant distribution factors - include minimum
order sizes, unit load types, product handling characteristics, materials handling aids,
delivery access.
• To achieve a given level of service
• To minimize logistics and total costs
• To receive fast and accurate feedback of information
Channel characteristics
Long channel - several different storage points and a number of different movements for the
product.

Product characteristics
• High-value items are more likely to be sold direct via a short channel.
• Complex products often require direct selling
• New products may have to be distributed via a third-party channel
• Time-sensitive products need a ‘fast’ or ‘short’ channel
 • Products with a handling constraint may require a specialist physical distribution channel.
Competitive characteristics
• Typical decisions are whether to sell the product alongside these similar products, or
whether to try for different, exclusive outlets for the product in order to avoid the
competition and risk of substitution.
• Of particular significance is the service level being provided by the competition – to give a
better service than the competition.
Company resources - the size and the financial strength of the company that is most important in
determining channel strategy.
Designing a channel structure

Opportunities for outsourcing

Additional notes
Receiving Picking Shipping
Input: Raw material Activities: pick order, sort, pack. Activities: prepare orders for
Output: Storage inventory Triggered by the customer order. transportation and loading the
Input: Storage inventory merchandise, labelling for
Output: Sorted orders. transportation.

1 Party logistics: The company moves its products.

2 Party logistics: The company hires another company to transport its products (the other
company owns the trucks or vehicles).
3 Party logistics: The hired company doesn’t own the services they offer (they outsource). They
can also help with storage and transport.
4 Party Logistics: The hired company move things and control inventory, they can handle
production lines and they have internal visibility in the company that hired them.
5 Party Logistics: The hired company has a full control of the company’s operations. (Lenovo
uses this). It’s not commonly used in Mexico.
6 Party Logistics: Implementing AI in operations. Companies in Europe are beginning to use
this.
*Cross-docking is offered by 3PL companies.

Chapter 16
Types of classification of warehousing
by the stage in the supply materials, work-in-progress, finished goods or returned goods
chain
by geographic area Whole world, regional, local, one country
by product type small parts, large assemblies, frozen food, perishables, security
items and hazardous goods;
by function inventory holding or sortation
By ownership owned by the user or by a third-party
by company usage a dedicated warehouse for one company, or a shared-user
warehouse
By area 100 sq meters to 100,000 sq meters
By height Ranging from 3 to 45 meters
By equipment Manual or automated

The role of warehouses - Facilitate the movement of goods through the supply chain to the end
consumer.
Techniques to reduce the hold of inventory - just-in-time (JIT), efficient consumer response
(ECR) and collaborative planning, forecasting and replenishment (CPFR), but still the following
two conditions apply:
• The demand for the product is continual.
• The supply lead time is greater than the demand lead time.
Inventory is beneficial to smooth variations between supply and demand.
Decoupling point - optimum point to hold it in the supply chain.
Strategic inventory is held to enable ‘lean’ manufacturing.
‘Agile’ response may be given to volatile downstream marketplaces. Holding the inventory
downstream is often necessary to be able to respond rapidly to customer demands.
Holding inventory upstream enables the form and location of goods to be postponed as long as
possible.
Roles of a warehouse
• Inventory holding point
• Consolidation center: Customers often order a number of product lines rather than just
one, and would normally prefer these to be delivered together - may perform the function
of bringing these together,
• Cross-dock center: This means that the goods are transferred directly from the incoming
vehicle to the outgoing vehicle via the goods-in and -out bays, without being placed into
storage.
• Sortation center: tends to be used for parcel carrier depots, where goods are brought to the
warehouse specifically for the purposes of sorting the goods to a specific region or
customer.
• Assembly facility: involving activities such as kitting, testing, cutting and labelling.
• Trans-shipment point: orders would be picked at a national distribution center and
transported to a ‘stockless’ trans-shipment depot - may be small warehouses that are used
just for sortation purposes.
• Returned goods center: driven both by environmental legislation and by the growing use
of internet shopping.
• Strategic issues affecting warehousing
• Market/industry trends
• Corporate objectives
• Business plan - expansion potential that needs to be incorporated into the warehouse and
the degree of flexibility that should be allowed for.
• Supply chain strategy - will determine factors such as the roles, location and size of each
warehouse.
• Other related strategies - Many of these will affect the warehouse design, incoming batch
sizes from production or from suppliers, customer order characteristics, available
information technology and financial restrictions.
 • Customer service levels
• External factors - including laws in such areas as construction, health and safety, manual
handling, working hours, the environment, fire precautions, equipment, hazardous
substances, food safety, and packaging waste, etc.

Warehouse operations

Receiving physical unloading of incoming transport, checking against purchase orders

and recording the incoming goods into the computer system - also include
such activities as unpacking and repackaging and quality control checks.
Reserve storage Taken to the reserve or back-up storage area, which holds the bulk of
warehouse inventory in identifiable locations.
Order picking Goods need to be retrieved from the warehouse in the correct quantity and
in time. An order will frequently contain a number of order lines. if the
order line is for less than a unit load, then the goods will normally be
retrieved from the picking location.
Sortation it is sometimes appropriate to batch a number of orders together and treat
them as ‘one’ order for picking purposes.
Collation, added Unless the goods are picked directly into the dispatch containers, they will
value services and be assembled or packed together after picking.
packing
Marshalling and Goods are marshalled together to form vehicle loads in the dispatch area
dispatch and are then loaded on to outbound vehicles

Functional areas of a cross-dock operation

• Receiving. Goods may be ready for immediate dispatch to the customer or may require
labelling
• Sortation. Goods need to be sorted to their destinations manually or by the use of high-
speed sortation equipment.
• Marshalling and dispatch. The goods are then marshalled into vehicle loads and loaded on
to the vehicles.
Costs
• staff – 45 to 50 per cent
 • building – 25 per cent
• building services – 15 per cent, including heat, light, power, building maintenance,
insurance and rates
• equipment – 10 to 15 per cent, including rental or depreciation, equipment maintenance
and running costs
• information technology – 5 to 10 per cent, including systems and data terminals.
Packaging and unit loads
Directly enclosing the product (primary packaging), containing a number of primary packages
(secondary packaging), or some form of outer packaging (normally to facilitate transport and
handling).
Most supply chains are structured around the unit load concept, whereby goods are transported,
stored and handled in standard modules.
Pallets raised flat platforms, on which goods can be placed, and into which truck forks
can be inserted to lift and move them. Most are made of wood, although some are
constructed of plastic or fiberboard. These variations can cause problems both in
terms of international transport and in the design of racking equipment to hold
various size pallets that may occur in a particular warehouse
Cage and box These are used to contain goods that may otherwise fall off a standard pallet.
pallets They have solid or mesh sides and may be constructed of, for example, steel or
plastic. They can be picked up by a fork-lift truck and can often be stacked on top
of each other.
Roll-cages These are normally constructed of steel and often comprise mesh bottom, sides
and shelves. Wheels are fitted to each corner so that the roll cages can be pushed.
Tote bins Plastic tote bins are used in many warehouses for the storage and handling of
small parts
Dollies Bases fitted with wheels, on which plastic trays and tote bins may be stacked.
Intermediate storing and transporting liquids and solid particulate products in unit loads of
bulk about one or two tons. IBCs may be rigid (stainless steel containers for holding
containers liquids) or may be flexible (bulk bags for granules).
(IBCs).

Chapter 19

Order picking - to extract from inventory the particular goods required by customers and bring
them together to form a single shipment (accurately, on time and in good condition). Order
picking typically accounts for about 50 per cent of the direct labor costs of a warehouse,
pallet quantities - goods can be extracted from the reserve storage areas.
cases may be picked from pallets - for specific customer orders or individual units may be picked
from plastic tote bins held on shelving.

Order picking concepts

Pick-to-order a picker takes one order and travels through the whole warehouse (eg on foot
or on a truck) until the entire order is picked. Another type of pick-to-order
pickers have separate compartments or containers for a number of orders on
their trolley or roll-cage pallet. They may then pick-to-order for a number of
orders simultaneously, placing goods for each customer into a specific
compartment.

Batch picking It’s common for small orders, to batch these together and pick the total
requirement of all the orders for each SKU on a single picking round.
Pick-by-line or Exact numbers of cases or items are presented for picking. brought forward
pick-to-zero from the reserve storage area or they may be specifically ordered from
suppliers for cross-docking.

A number of factors that need to be considered in determining which to use: the product range,
the size of order, the picking equipment, and the size of unit load or container.
Popular products near the dispatch area to minimize movement, with the less popular products,
further away.
Zone picking
The warehouse management system (WMS) would typically examine each order line (ie SKU)
on the order and identify in which zone the picking face for that SKU is located. The WMS
would then issue separate picking instructions to each zone.
This method may be appropriate where different equipment is used for picking different types of
product, where a single order would be too great a quantity for one picker to pick, or where the
dispatch times mean that all the order lines must be picked quickly.
It is also used where there are different physical zones for products, for example where products
are separated for reasons of security, hazard or temperature regime.
Another way of doing this is with a receptacle (eg a tote bin on a conveyor) from one zone to
another. A picker would just pick the items required for an order from that zone and then pass the
receptacle to the next zone.
Wave picking
Orders may be released in waves (for example, hourly or each morning and afternoon). The
timing of the waves is determined by the outgoing vehicle schedule, so that orders are released to
allow enough time to meet this schedule. The use of waves allows for close management control
of operations such as sorting and marshalling.
Order picking equipment
Picker to goods - order picker travelling to the goods in order to pick them.
Trolleys and roll-cage pallets - the picker pushes the trolley (or roll-cage pallet) between
shelving or pallet racking in order to access the goods. Roll-cage pallets may form a common
unit load for both picking and transport.
Powered order picking trucks - electrically powered trucks that have forks, often carrying two
wooden pallets or three roll-cage pallets, on to which picked goods may be placed a.k.a low-level
order picking trucks (LLOPs).
Free-path high-level picking trucks - Goods may be picked from upper levels of racking. These
trucks have an elevating cab position so that the picker is lifted to the ideal height for picking.
Fixed-path high-level picking trucks - they run on a bottom rail and are also guided by a top rail -
tend to be faster in operation than free-path trucks.
Pick cars - a special fixed-path high-level picking truck that straddles a horizontal conveyor
running the length of the aisle.
Conveyors - Systems are often classified as ‘pick-to-tote’, whereby the goods are placed in
plastic tote bins on the conveyor, or ‘pick-to-belt’, where the goods are placed directly on to the
conveyor belt.
Goods to picker - are normally computer controlled so that the precise SKUs are presented to
the picker.
Horizontal and vertical carousels - These are often arranged in modules of two or three carousels
so that the picker can pick from one carousel while the other(s) is, or are, rotating
Miniloads - These may be used for full carton picking or for presenting cartons, or tote bins, to a
picker for the picking of individual units.
Totes-to-picker systems - These are often linked to miniload storage systems, with tote bins being
extracted automatically by the miniload crane. They are are then routed by complex conveyor
systems to the individual picker requiring that SKU. These tote bins are presented on a conveyor
at the pick station for that picker, who will then take the number of items required and place
them in a tote bin on a conveyor below.
Pallet-to-picker system - that pallets are presented to the picker.
Shelf modules-to-picker systems - A further system available is one that brings complete shelf
modules to the picker. At the pick station, the picker will extract the required goods and place
them into one of a number of cartons or tote bins each representing separate customer orders.
Dynamic pick face (hybrid method) - This is a ‘goods-to-aisle’ system, combined with a picker-
to-goods method. The basis of a dynamic pick face is that only those goods that are required.
Miniload systems may be used to pick the required tote bins and bring them forward to a pick
face ready for picking.

Automated systems
Layer pickers - Cases are normally stacked on to pallets in layers. A pallet is brought forward
from the reserve pallet store to a layer picking machine. This machine would lift off the top layer
and place it on to a pallet that is being assembled for the customer order.
Dispensers -The items may be dispensed automatically from the magazines into a tote bin as it
passes on the conveyor below.
Robotic applications - to stack cases on to pallets in line with designated patterns that maximize
the pallet space and provide good stability during transit.
Sortation
This may be undertaken manually (eg sorting to pigeonhole or to roll-cage pallet) or by
automated sortation equipment. Mechanized sortation can be undertaken as an integral part of
conveyor systems.
Sliding shoe sorters. There are ‘shoes’ located at the edge of the conveyor. When the goods reach
the appropriate destination point, the shoes slide across to divert the goods down that spur.
Bomb-bay sorters. These hold goods in receptacles that have opening bottoms releasing the
goods in the same way as a ‘bomb-bay’ on an aeroplane - suitable for goods that may be dropped
vertically, for example, small packages into mailbags for postcode sortation.
Tilt-tray sorters. Tilting conveyors are usually laid out in horizontal carousel configuration, with
a series of tilting trays or slats fitted to a conveying chain, and capable of tipping loads off to left
or right to branch conveyors or to off-take chutes. They are used for parcel distribution, and for
some cross-docking installations.
Cross-belt sorters. These comprise a series of mini conveyor belts aligned at 90 degrees to the
direction of travel.
Picking area layout
The layout of the picking area is critical to achieving high levels of productivity. One of the first
decisions that needs to be taken is whether to have separate reserve inventory and picking
locations for individual SKUs or to combine all the inventory into a single location. This will
largely depend on the total amount of inventory for an SKU.
The general principle is that picking stock should be concentrated into the smallest feasible area,
so as to minimize travelling time between the SKUs. One approach to minimizing the pickers’
travelling time and, at the same time, reducing the replenishment workload is to use flow racks,
so that a good depth of inventory can be held within a small picking face.
The separation of reserve and picking inventory may be vertical - pick from racking at ground
floor level with reserve stock on the higher racking levels, or horizontal, with reserve stock in
one area and picking in another.
Another approach is to construct ‘pick tunnels’ with, for example, two-deep pallet flow racks on
either side (or a number of levels of carton flow racks) at ground level.
Slotting
The ‘slotting’ of inventory is a term used for identifying the individual SKUs that should be
found in each location. In picking, a very common approach is to use the Pareto principle
(ranked by units sold or, more normally, for picking, ranked by the number of order lines for an
SKU during a set period).
Another, more sophisticated, method is to consider the ‘value’ of a pick face run and to try to
calculate how to make best use of the most valuable runs of shelving or racking by calculating
the ‘cube per order index’ (COI) of each SKU and then ranking these in order. The calculation is
basically the ratio of an SKU’s storage space requirement at the pick slot to the frequency of pick
accessions.
Ex. SKU 1 COI = 1 cubic metre of pick slot space: 100 pick accessions per day = 0.01
The most valuable picking area is often referred to as the ‘golden zone’. This may be the area
nearest the start and finish of the picking run, or locations at the ideal picking height.
*Other slotting approaches include location by weight and location by store layout.
Pick routes
Specific route options include:
• Transversing the entire pick face in a ‘snake’ pattern, going up one aisle, down the next, etc,
picking from both sides.
• Approaching all aisles from the same end, travelling up the aisle until all goods are picked and
then returning to the same end.
• Picking all goods as far as the mid-point of the aisle and then returning to the same end
•Proceed down an aisle picking all required items until it would be shorter to approach from the
far end than to proceed to the next item.
Information in order picking
This may comprise reading which location to go to, reading how many items to pick, confirming
that the picker is at the right location and/or picking the correct goods, and advising the system
of any shortages at the pick face.
• Paper pick lists. These are printed by the computer system and list all of the SKUs to be
picked, together with their location and the number required.
 • Pick by label. The pick list comprises a series of gummed labels on a backing sheet,
printed in the sequence that the items need to be picked. The picker sticks a label on to
each item and returns any unused labels to the pick station in order to record any
shortages.
• Bar codes. the most common method to confirm pick accuracy. the picker then scans this
label to confirm that he/she is at the correct location prior to commencing a pick.
• Radio data terminals. These can provide online communication between designated

warehouse workstations and warehouse management systems. They are often combined
with bar-code scanners.
• Pick by light. Every picking location is fitted with an LED, a common application is for a
plastic tote bin, representing a customer order, to be taken by conveyor to a specific zone
of the warehouse. The bar code on the tote bin is read, and the appropriate LED panels
illuminate, showing the quantities of items to be picked for all SKUs required for that
order.
• Put to light. used in the sortation process. A picker may undertake a batch pick and then
return to an area of pigeonhole shelving, with each pigeonhole representing a customer
order.
• Radio frequency identification (RFID). The accuracy of the pick can be confirmed by
these tags being read at the time of picking.
• Voice technology. The picker can hear voice instructions from the computer through a
headset. The picker then selects the required items and speaks through a microphone to
confirm the pick.
• Vision technology. order pickers to wear headsets incorporating a heads-up display. This
can provide basic information as to the next pick and can direct the picker to the exact
location by means of arrows on the display.
E-fulfilment
For low-throughput operations, this may involve the use of multiple order picking using
pigeonhole trolleys, or trolleys containing a number of tote bins.
For high-throughput operations, zone picking may be conducted with tote bins (each
representing an order or batch of orders) being circulated on conveyors to each zone that holds
goods for that order (or orders).

Picking productivity
It may be measured in quantity terms (eg the number of cases or units picked per person per
hour) or in terms of the number of locations visited (eg the number of SKUs or order lines picked
per person per hour). Pick rates may vary according to many factors, such as:
Operational requirement: – size of item or case;
– number of items/cases per order line;
– number of order lines per order;
– product range, number of SKUs;
– specific requirements, labelling, batch number checking;
– scale of operation.
Equipment: – category, picker-to-goods or goods-to-picker;
– height, ground-level or high-level picking;
– type, trolley or electrically powered order picking truck.
Management: – motivation, industrial relations, incentive schemes;
– work processes, batch picking, slotting and pick route methods;
– workload balancing, between warehouse zones;
– replenishment and stock accuracy.
Information technology: – technology aids, pick by light, voice picking

Replenishment
Replenishment is the activity of transferring goods from reserve stock to the picking face. It is
often triggered when the pick face only has a certain quantity of goods left. Uncertainty can be
minimized by the use of real-time computer systems to issue replenishment instructions.
Methods to overcome this problem include: Setting out separate replenishment and picking
aisles, undertaking the replenishment and picking tasks at different times of day, having multiple
locations for fast-moving goods.
Packing
Labelling, testing, kitting, final assembly or cutting be may required. Goods are picked in
parallel in different zones of the warehouse and are then sorted in order to bring them together
for packing. Various forms of automated equipment are used for packing, such as labelers,
closing machines, sealers and banding machines.