Hardware warehouse optimization

Abstract

Wispeco is a growing company and has reached the point where their GS (Gauteng Stockist) storage warehouse does not possess enough storage space to keep up with the growing demand for Wispeco products. They have now acquired an additional storage warehouse, where all their hardware products will be stored. The processes in the hardware warehouse (or GC warehouse) is currently relatively unstructured, with no standard operating procedures, information management systems or warehouse management systems in place. In order to improve the operations of this warehouse, an analysis of the current operations have been done, along with an investigation of the current available best practices for similar warehouses. In the investigation of available best practices the following warehousing techniques were investigated: Setting up stock levels, ABC analysis, flow within a warehouse, order picking techniques, layout design, and storage assignment. From the investigation of best-practices the techniques that will best fit the goals of the GC warehouse are a picker-to-part system, with a forward-reserve storage allocation approach. The GC warehouse already operates with a forward-reserve storage allocation approach and picker-to-part system, but the current location of the main areas in the warehouse, namely the small store, bulk store, receiving and dispatch areas, are increasing the average travel distance of pickers. These areas need to be located according to the amount of movement between the areas. The best storage policy for the GC warehouse is a combination of dedicated storage and full-turnover storage, items with a high turnover rate are located in dedicated location close to the dispatch area. When conducting an ABC analysis it was found that locating items according to their relative impact on sales value, will be the best strategy for reducing the average picking distance. The relative impact of an item is determined by multiplying the value of an item with the annual number of sales. When drawing a Paretograph for the relative impact of sales it was discovered that roughly 16.07 % of the items are responsible for 80% of GC warehouse’s value of sales. The following 15% of the sales value is comprised from the next 20.54% of items. The final 5% of sales value is from the final 63.39% of items. These three groups will be known as groups “A”, “B” and “C”. The proposed receiving process, along with the use of an inspection sheet will ensure that incorrect products or in accurate quantities are not accepted into the warehouse. The proposed dispatch process, along with a picking slip, which indicates the product code, quantities and location of the item that needs to be picked, the amount of incorrect picks will decrease, along with inaccurate shipments to customers. It was determined that proposed layout 3 is the best layout for the GC warehouse, because It fulfils the most important criteria of the warehouse. When comparing the available storage space in the GC warehouse with the required storage space, it was determined that the warehouse does consist of sufficient space for all the Hardware products.