Stocking policy for an item dictates the location and
desired inventory levels in the pick face. If you think about it, where you store an
item in the warehouse can actually make a profound impact on warehouse efficiency. Just imagine, if a
frequently picked item is stored in a location that is further along from the
shipping area, how much time would be spent in a non-valude added activity such as extra travel time. How about placing a frequently ordered heavy item in a lower rack where the operator needs to bend down and physically pick?
Most warehouse pick faces have so called "golden" zones. As you can guess, these are the "sweet spots" for picking. Typically these bins are closest to the end of picking line and usually at a level that is most convenient for picking. Alas such bins in the warehouse are few! They
have to be; otherwise the pick face itself would become large and unmanageable.
How then does one choose locators for an item with a view to the maximum
impact in boosting productivity? Naturally you would want to slot your most active items to be placed in most convenient locations.
A distribution center typically consolidates demand across customers and then fulfills this demand using bulk sourcing. Bulk sourcing implies that items will be received in Pallets and master cases and later shipped to customers as eaches or inner packs. To handle this need, you need a pick face optimized for picking eaches (or another lower UOM) and a reserve area in the warehouse that is optimized for bulk storage. You also need to setup replenishments from reserve area to your pick face. The inventory levels to maintain in the pick face are also equally important. The minimum and maximum quantity to store in the pick face should be optimized to avoid stock outs as well prevent frequent replenishments from the reserve area to the pick face.
In order to determine an appropriate stocking policy for your pick face, you need to analyze the demand pattern of the item from the pick face and determine the location based on other constraints such as locator capacity. The parameters to be looked into are specifically the demand pattern and constraints. The demand pattern could be based on historically data or based on forecasts.
Demand Pattern
Horizon: This is the time period in future for which you want to analyze the demand and determine the stocking policy. The demand for items is dependent on a number of factors such as seasonality, external events, promotions and stages in the product life cycle. To determine stocking policy you need to have a clear idea for item demand during the period e.g. if you want a stocking policy for holiday season, you need to know the time horizon during which this policy will be in effect and demand pattern expected for an item within this horizon.
Pick Frequency: If the pick frequency is higher you would want to place the item in a convenient location to pick regardless of the quantity ordered for each pick. What this means is that you would place an item with 10 picks of 1EA at a favorable location as compared to say another item with 2 picks of 5 EA even though the net demand for each individual item is the same.
Pick Demand: The order quantity for each item determines the stocking levels for that item in the pick face. If the demand is high, you would want to keep a high "Maximum" quantity so that frequent replenishments are avoided.
Variability of frequency and demand: Does the item exhibit an irregular demand pattern during the time horizon? Is it likely to have a much higher pick frequency on a given day and no activity on some other day? This factor would determine if you want to dedicate a locator for an item in the pick face.
Constraints
Item Dimensions: Item dimensions are an important factor in identifying pick face locations where the maximum replenishment quantity for an item can fit. You would also want to maximize the cubic volume available to you in the pick face.
Item Attributes: These are factors such as crushability, weight, etc. If an item is crushable you would want this item to be picked up last. Similarly if an item is heavy you would want to pick this item towards the end of picking. Some warehouses also store items that are similar in appearance further apart to minimize the possibility of pick inaccuracies. For the same reason, it's never a good idea to commingle items in the same bin.
Standard Packs: Most warehouses typically replenish in integer quantities of UOM (e.g. cases, pallets) to minimize material handling. Therefore standard packs determine the replenishment lot size.
Storage Attributes: These are attributes that dictate locator capacity i.e. if the locator can hold the weight, has enough cubic volume to store the item and has dimensions to fit the item.
In the Part-2 of this post, I will discuss process that can be used to formulate the stocking policy in the warehouse. All that is fine and good but how can Oracle WMS help? That is a good question and will be addressed in Part -3 of this post. So stay tuned!
