Month: January 2013

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In our industry (distribution) we are seen as primarily providing a “necessary” service to our organizations. We exist mostly out of necessity. More often than not, top management would like us to be “invisible”. They would like to have us deliver, without a hitch, whatever volume of product instantly and seamlessly. We need to deliver at a constant predictable cost—regardless of the volume. If you asked top management of companies that have distribution operations to list the “core competencies” of their organizations, it is doubtful that over 15% would include in the list “distribution services”. If you are one of the lucky ones whose organization views distribution as a “core competency” you have either done a great job and/or your management clearly understands the necessity of distribution and has provided equitable resources to make distribution core to the organization.

In nearly every financially “visible” change in distribution we are rightly asked to “cost justify” the change. The objectives of “changes in distribution” are normally related to: 1) increase in capacity, 2) increase productivity, or 3) reduction in the fulfillment time (life cycle). Capacity, productivity and fulfillment time have a unique relationship. The clarification of that relationship and its association with justification or return-on-investment (ROI) is the purpose of this paper. The paper primarily focuses on the “fulfillment” end of distribution rather than the “storage” or “inventory” end of distribution. The principles and techniques presented here are generally applicable to all distribution activities.

An increase in “capacity” in the context of this paper is defined as the ability of a distribution system to deliver more volume per time period. An increase in productivity is defined as an increase in the delivery of product per operational dollar. Capacity is delivery volume as a function of time; productivity is delivery volume as a function of cost. Many times the terms “capacity” and “productivity” are used synonymously. This is common because normally an increase in productivity yields an increase in capacity. However, an increase in productivity does NOT always yield and increase in capacity. Likewise, an increase in capacity can be achieved independently of an increase in productivity. A couple of examples are in order. Example 1: A completely manual system with one worker operating in a single area can achieve a capacity increase by adding an additional worker. The second worker, although adding to the total system capacity, reduces the efficiency of the first worker in the same, and now more congested, area. In this example a capacity increase yielded a productivity decrease. Example 2: A system where workers deliver product to a sorting system with insufficient capacity. The “operation” can be modified to increase productivity by immediately moving workers to another area once the shipping system backs up the work (rather than having them stand idle waiting for the sorter to clear out). This change can increase productivity (by using previously unused worker idle time) but will not increase capacity. Example 3: Carrying example 2 further, the “system change” in moving an idle worker does not move the resource back until the shipping sorter is completely cleared out. This change, while increasing productivity, would reduce system capacity by have the shipping sorter idle for a period of time.

Here are two basic rules concerning capacity and productivity increases. 1) A beneficial capacity increase will yield a greater delivery volume as long as the change is accompanied by consumption of additional resources that are proportionally less than or equal to the increased capacity. 2) A beneficial productivity increase is one, which yields a greater efficiency in the use of a resource and does not decrease capacity.

A quick note on fulfillment time or fulfillment life cycle: Although fulfillment life cycle is certainly effected by both productivity and capacity, the life cycle is more a function of the amount of work in-process in the facility. To reduce the fulfillment life cycle a focus must be made to reduce the work in process. Merely prioritizing work, while reducing some fulfillment times will increase others. The net effect of which (prioritization of specific fulfillment requirements) is normally a reduction in the overall productivity and capacity.

Beneficial fulfillment time reductions are usually associated with a reduction in WIP and do not adversely affect either productivity or capacity. Fulfillment life cycle improvements are normally justified by changing business requirements or by space utilization reduction.

Now to the meat of the discussion, how are change requests justified. Change requests for productivity are normally justified by a reduction in the cost of the operation. Productivity is a function of dollars. Such changes may also result in an increase in capacity and that benefit may be additional in-direct justification.

Capacity itself is not a function of cost; it is a function of time. The old saying “time is money” may be true but what is the equation? Justification for changes (increases in) capacity must be evaluated using a different technique. Capacity increases are justified in terms of identifying the alternatives. For example, how does a company “justify” the building their initial “distribution system”? If they do not build it they are not able to deliver product and they are not a company! That is all the justification it takes—the alternative! It is “justifiable” in some cases that adding capacity will actually reduce productivity. This situation is found many times in very seasonal businesses. In these cases, during peak season, additional less efficient resources are used to increase the capacity. This is justified by the alternative of adding capacity through additional capital expenditure that is not needed for a large part of the year.

Pretty simple, the hard part in justifying capacity increases is the willingness to take the effort to identify the cost of the alternatives!

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Distribution centers often increase the productivity of labor-intensive piece-picking operations by clustering (or batching) multiple orders and picking them together. As the number of clustered orders increases, pickers become more productive because they spend less time walking between picks. The size of these order batches can be greatly increased through the use of a secondary sort using devices such as a tilt tray or Bombay sorter.

Sorter-based operations cluster orders using two different kinds of processes: Batch processing and continuous processing. This paper describes the differences between the two processes.

Application Example

The application case to be presented in this paper is a distribution center servicing a retail chain of 3,000 stores. Replenishment orders are available daily from store’s cash registers. Replenishment to the retail chain stores is mainly in less than full-case quantities (eaches or pieces). The distribution center operation uses a tilt tray sorter with 1,000 chutes. Each chute is assigned to a particular store for the duration of the fulfillment of that store replenishment order. Items are picked using printed pick lists and delivered to the sorter in pallets, cases or as individual pieces to fill the 1,000 clustered orders.

Batch Processing and “Waves”

The most common way to operate sorter-based systems is to create batches or waves. The work is organized in waves where:

Wave Orders = Number of Sorter Chutes

Day Waves = Day Orders / Wave Orders

In this type of operation waves are very well differentiated. The next wave may not start processing until the previous wave is completed. In theory, the number of clustered orders is equal to the number of sorter chutes; however, as a wave approaches completion, individual orders start completing and the actual number of clustered orders decreases.

Straggler items are a major problem in batch processes. As the next wave cannot start until the previous wave completes, a large number of pickers could be idle waiting for the stragglers of the previous wave to reach the sorter. While sorter utilization can reach almost 100% during the sorting of the initial portion of the wave, during wave transitions the utilization can drop to almost zero. This situation is like the old elementary school math problem asking for a solution of how fast a car must travel to make an average speed of 60 miles per hour over a distance of 30 miles if during our journey we stop for 15 minutes for a break.

The net effect of wave transitions can reduce the effective utilization of the sorter to 60% or 70%. With a device as expensive as a piece sorter such a low utilization is a serious problem.

Batch Processing Implementation—living with wave transition

In this example, daily delivery to each of the 3,000 stores requires that the sorter operate with at least 3 waves since the number of stores is 3 times the number of sorter chutes. To minimize the effect of wave transitions it may be possible to create queues where work continues during transitions or to organize work such that staff is either reduced or re-assigned to other functions during idle times. Minimization efforts of the effects of wave transition are normally accompanied with double handling and inefficiencies of their own. In the end, wave transition low sorter utilization is normally accepted as just a “fact of life”.

Batch Processing Implementation—living with limited sorter chutes

Many sorter systems were initially designed to have a sufficient number of chutes to allow all daily orders to be picked in one single batch. Although this method did not eliminate the wave transitions, staff could be released as the daily work subsided leaving only a reduced staff to deal with handling the end of wave stragglers. This situation works perfectly in situations where there are a sufficient number of available chutes. However, in our example, since the number of stores is three times the number of chutes, the use of this solution requires limiting the delivery to only 1,000 stores daily. The stores receive a delivery once each three days. This method eliminates the issue of low sorter utilization, but accepts limited delivery cycles as a “fact of life”.

Continuous Processing Implementation

• There is a permanent pool of orders (stores) pending to be processed.
• Orders can be pulled from stores as often as needed. Pulled orders are added to the existing orders in the order pool.
• There is a circular list of stores indicating the sequence in which orders are processed.
• The sorter processes 1,000 stores simultaneously. Every time that a chute is freed the current order for the next store in the list is assigned to that chute.
• Every time that a store is assigned to a chute, inventory allocation is re-calculated.
• Every time that a picker drops product (pallet, cases, or pieces) a new pick list is printed in real-time based on the last inventory allocation. If picking zones are falling behind the other zones, the software identifies the unbalancing and relocates pickers to correct the problem.
• All 3,000 stores can be serviced every day.

The main difference between continuous and batch processing is the absence of waves in a continuous process. In a continuous process as soon as an order completes and frees its chute a new order is assigned to the chute. This means that in a continuous process the number of clustered orders is always equal to the number of sorter chutes.

Straggler items do not go away in a continuous process. However, a continuous process can handle stragglers a lot better than a batch process. In a continuous process, straggler items only affect the orders they belong to and the chutes where those orders are assigned, while the other chutes can continue working without any interruption. Pickers never become idle waiting for other pickers to catch up with them. A smooth continuous process should allow the sorter utilization to reach a steady-state utilization close to 100%, allowing the distribution center to maximize the benefit of the device and its investment.

Conclusion

Distribution centers have used piece sorters to cluster large number of orders for a long time. When the practice started, pickers used pick lists printed in batches long before the actual transactions were executed, dynamic allocation of sorter chutes was not feasible, and inventory allocation for orders could not be executed in real-time as transactions were executed. Batch processing should be considered a remaining trace from those old times.

Continuous processing is far superior to batch processing. With today’s existing resources there is no need to continue using batch processing. Low productivity wave transition times can be eliminated, idle workers waiting for others to catch up can become productive, customers (stores in our example) can be serviced better.

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Batch picking orders is an efficient way to reduce walking in a distribution center. Piece sorters (tilt tray, cross belt, bombay) allow maximizing the number of orders to pick as a batch. Unfortunately, piece sorters are very expensive devices. The larger the number of orders to batch with a piece sorter, the longer the sorter has to be, and the more expensive it gets.

Double sortation is an approach that allows piece sorters to increase the number of orders to batch without requiring the single sortation length.

Conventional Double Sort Process

Sorter prices have a strong linear dependency on the sorter length. The chute section of a sorter is normally its longest section.

In a conventional single sort process, a sorter chute is required for each order in the batch to pick. A system designed for 1,000-order batches needs to have 1,000 chutes. At 3 ft. of sorter for each couple of chutes, the chute section of the sorter is 1,500 ft. long.

If a double sort process were used items are first sorted into waves and the then each wave is sorted into orders. The total number of sorter destinations could be reduced to as few as 68: 34 for the initial wave sort and 34 for the secondary order sort. There are other configurations of sorter destinations; however, the closer the primary and secondary sorts have equal number of destinations the fewer total sorter destinations are required.

Let us consider a system for 10 waves of 100 orders each, not as optimum as the one with the 34/34 configuration, but easier to visualize. The sorter needs 100 order chutes and 10 wave chutes. If wave chutes were 5 ft. of sorter for each couple of chutes, the chute section of the sorter would be only 175 ft. So, for the same number of orders to pick as a batch, the required chute section of the sorter using double sortation is less than 12% of the chute section using single sortation.

Normally the 1,000 orders are picked together are called a pick wave, their section of the sorter is called wave sorter. The 100 orders sorted together by the presort process are called a pack wave and their sorter section is called order sorter.

The extra handling of items required in a double sort process is easily justified with the savings on the sorter cost. However, the number of waves to process is rather large. In a traditional sorter process with static waves (next wave does not start until previous wave is fully completed) the inefficient wave transition periods can add up to large reductions in capacity and productivity with long periods of empty trays and idle inductors. What’s more, the transition period is largely independent of the actual size of the pick wave. Small pick waves take nearly the same time to finish the final few units, as do large pick waves.

Continuous Double Sort Process

The ideal solution for wave transition issues is a waveless process. Instead of static pick waves, the system can keep adding dynamically batches of 100 orders to the pickers’ tasks as wave sorter chutes are completing. The new orders are sorted to the chute that just completed. Pickers and inductors do not need to wait at the end of a pick wave for the next wave to start. The long periods with empty sorter trays are eliminated. Picking batches are larger as pickers are continuously picking for 1,000 orders. Utilizing the idle times of the sorter and the workers can increase capacity/productivity by up to 30%.

Real-time RF-directed picking is the best scenario for implementing waveless picking processes. In applications that require labeling of the sorted items, RF picking is still feasible if the label can be done at the packing stations.

Quasi-Continuous Double Sort Process

Due to labeling requirements, some applications do not allow the implementation of a complete waveless process. However, if label generation is dynamic and is printed at multiple stations along the pick path and completed pick assignments can be dropped off at these points a quasi-continuous waveless process is possible.

Some operations may require well defined pick waves and dynamically created pack waves are not an option. Such operations can also have continuous waveless presort operations by utilizing only half of the wave sorter destinations for each pick wave. Wave sort uses alternate destinations every other pick wave. The negative effect of this approach is the reduction of the pick wave size by half. Often, people try to alleviate this disadvantage using more than half of the chutes, hoping that some of them will be completed by the start of the next wave. The mathematics of probability quickly dispels any such hope.

In most operations there is flexibility regarding specifically what orders go to each pack wave. Taking advantage of software that supports dynamic chute allocation, it is possible to create a continuous presort operation where there are no wave transition periods and where pick waves actually have a proportionally longer time to complete. This technique takes advantage of the fact that not all the wave sort destinations are required from the beginning of a new pick wave.

Continuous waveless processing of the order sort process is also possible using similar techniques through the use of dynamic optimization. Double sort operations may be truly become waveless operations.

Conclusion

Double sort processing is an excellent approach to get the benefits of large picking batches without having to pay the full price of the required sortation equipment to support it. Double sort processing can be enhanced further with software that can support non-conventional operations.

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To help you and your business keep your production systems running in top condition and minimize any down time, VAS offers several support options. VAS provides A+++ 24X7 support to major clients systems that are directly responsible the delivery of many billions of dollars of product annually. In addition to VAS provided Annual Service Contracts, source code licenses and training are offered to those customers that prefer internal or self-support. In these situations, transitionary support contracts are also available. Our Annual Service Contracts are offered in three levels for you to select the type of support best suited to your operations and business needs. These service levels are:

Basic Support

• Technical Support via the web (No Phone Support)—Requests for support are to be submitted via an automated web interface. A response will be generated within two business days (Monday through Friday).
• Return for Replacement Hardware Support—In the event of failure on supported hardware, VAS will issue a return material authorization (RMA). The defective unit must be shipped to VAS and upon verification of defect, a replacement unit will be shipped.
• Software bug fixes—Bug fix releases of software are made available to Basic Support customers free of charge [1].
• INITIAL RESPONSE TIME: As shown in RESPONSE and RESOLUTION TIMES table at the end of this document.
• TARGET RESOLUTION TIME: As shown in RESPONSE and RESOLUTION TIMES table at the end of this document.

Advanced Support

All the benefits of Basic Support plus…

• Technical Phone Support 10×5—Support hours would be based on Time Zone of SUPPORTED SOFTWARE and are defined in the Software Support Contract. The technical support and information relates to software use, configuration, maintenance, error correction, and troubleshooting.
• Advance Hardware Replacement—In the event of failure on supported hardware, Vargo will ship a replacement unit before receiving the defective unit. The defective unit must be received two (2) weeks to prevent charges from being assessed for the replacement unit.
• Software Updates—Periodic maintenance releases of software are made available to Advanced Support customers free of charge.
• INITIAL RESPONSE TIME: As shown in RESPONSE and RESOLUTION TIMES table at the end of this document.
• TARGET RESOLUTION TIME: As shown in RESPONSE and RESOLUTION TIMES table at the end of this document.

Premium Support

All the benefits of Advanced Support plus…

• On-Call Pager Support 24×7—An alphanumeric paging system that may be accessed via a toll free 800 number or through regular email services. An on-call support engineer will return the page within 1 hour of receipt—24 hours per day, 7 days per week!
• Software Updates and Problem Escalation—Periodic software updates of the supported software will be provided free of charge.
• Availability of an on-site support engineer to provide assistance with configuration, maintenance, or general troubleshooting [2].
• INITIAL RESPONSE TIME: As shown in RESPONSE and RESOLUTION TIMES table at the end of this document.
• TARGET RESOLUTION TIME: As shown in RESPONSE and RESOLUTION TIMES table at the end of this document.

RESPONSE and RESOLUTION TIMES

1 Excluding charge for Service Contract

2 This service is available at an additional charge to be agreed upon between Vargo and the supported customer

3 Vargo BUSINESS HOURS as defined in Standard Support Contract except for Premium Support Contracts

4 Excludes In-transit shipping times for replaceable hardware covered under Support Contract

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MandateIP® Real-Time Optimization Solutions

VAS provides real-time optimization solutions that deliver both greater productivity and greater capacity. These systems are custom configured to exactly meet operational and informational requirements. VAS provides service to both identify the opportunity and quantify the benefits of workflow optimization. Workflow optimization reduces peak demands and opens production bottlenecks. VAS solutions can normalize work and allowing individual system elements to work more asynchronously. In practice such solutions have proven to increase capacity and productivity by greater than 20% in systems that used best-of-breed highly effective static optimization.

SOFT™ High Productivity Order Fulfillment Systems

VAS specializes in low capital expenditure piece picking (split case) systems, and we are experts in batch pick operations, both for new systems and for upgrading existing paper-based systems. VAS implemented the largest known batch picking system (2600 simultaneous orders on a ½ mile long tilt tray sorter), Bombay sorters, RF directed picking, pick and pack to light systems, full-case pick and palletization systems, man-to-goods and goods-to-man systems order selection systems.

Smart Order Fulfillment Technology or SOFT™ includes complete turnkey installations of high productivity picking and packing systems. SOFT systems can be integrated into any legacy information system or any WMS. One of our integration options requires absolutely no modifications to the host system software. SOFT is applicable to all pick and pack technologies and allows multiple technologies to be seamlessly coupled in an operation.

SOFT Systems are normally comprised of:

• SOFT Master Administrator (SMA)
  • Computing Hardware
  • Host interface
  • Master Communication Network
  • SOFT Site Software
• One or more SOFT Order Fulfillment Workstations
  • Computing and SMA communication hardware
  • User interface equipment
  • Order Fulfillment carts, modules, and automated workstations
  • SOFT Workstation Software
• One or more process control and monitoring workstations
  • Computing and SMA communication hardware
  • SOFT Administration Software

Mandate® Adaptive Warehouse Management System (AWMS™)—upon which SOFT is based—provides a foundation of dynamic real-time optimization features as well as the adaptive WMS features that allow SOFT to organize the fulfillment process to peak efficiency and maximum productivity.

We offer a full line of SOFT-based Order Fulfillment modules and workstations:

• Fork Mounted Front or Back Load Order Fulfillment Modules
• Fork Mounted Gather and Drop Modules
• Purpose built Carousel and Stacker batch pick workstations
• Pick from pallet, pick from rack (pick to light) workstations
• Audit/QA, shipping and zone transfer workstations
• Induction workstations for tilt-tray and other order fulfillment sorters

Mandate® Adaptive WMS (AWMS)™

The Mandate® AWMS is a high end WMS for operations requiring features that are not available in other WMS packages. Due to its adaptive nature and the great diversity in the handling rules necessary to “dynamically optimize” an operation, Mandate® is the WMS of choice for systems requiring some very specialized features, but not as suitable for a low cost more generic WMS. Mandate® AWMS features are also ideal for SOFT™ systems that require a limited set of WMS features such as inventory management and EDI interfaces. The Mandate® AWMS is also the perfect selection for systems requiring the integration of many separate sites.

Mandate® Specialized Equipment Controls

Vargo provides controls systems for specialized equipment. The control systems are based on off the shelf Intel® compatible computing hardware. The control systems support distributed I/O sub-systems, allowing less expensive installation and minimized wiring requirements. Analog, digital, synchro, servo, tachometer, closed loop, PID, SSI, VFC’s, VFD’s, field busses of all types, industrial ethernet, sensors and actuators of all types, electrical, pneumatic, and hydraulic are all supported. Vargo controls equipment that manipulates items from priceless aircraft to baby food bottles. Normally stateless designs are used which allows operational recovery under any conditions.

Custom Specialized Automated Workstations

Vargo provides purpose-built automated workstations and productivity enhancement tools and equipment. Examples of equipment or workstations would be devices that may require specialized manipulators, conveyor to workstation interfaces, pushers, pullers, rotators, carton and tote queues, stepper articulators, re-sequencers, and specialized sortation devices. Built in identification devices may also be required such as built in scanners or RFID devices. The equipment may be either mobile or stationary. Mobile equipment can be specified to include power sources and power conversion equipment to support attached devices and equipment. Actuators, articulators, sensors and control systems may be provided. Actuation means may be any combination of electrical (both low and high voltage), pneumatic and hydraulic. VAS is expert in both ergonomic and ADA requirements.

Operations Engineering, Analysis, Design, Modeling and Support Services

VAS Engineering Group has designed both small and large distribution centers with capital investments ranging from under a million dollars to hundreds of millions of dollars. These facilities are currently responsible for delivering billions of dollars of product annually. VAS engineering services include observation and analysis, design and modeling.

Vargo provides a range of support service agreements for any of our installations. We also provide training for customers that wish to do internal support. Training and support agreements are available for any period of time.

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This document identifies the suggested steps for those that would like to upgrade their operations to take advantage of batch picking and its resulting productivity improvements. Most of the preliminary steps are up to you, the potential customer, to complete. VAS will provide estimated costs of a “straw man” SOFT installation during the preliminary phases, however an accurate fixed price cannot be provided until a requirements document has been completed by Vargo and approved. The role of VAS begins only when your have obtained approval to have Vargo prepare the requirements document. In preparation of that document, VAS will have a systems engineer visit your site and meet with you to establish the requirements. Once you have obtained approval to create the requirements document and get a fixed price and delivery schedule, the rest of the process is mostly the responsibility of VAS.

Where To Start

The following outline identifies the basic steps in starting a project to initiate the implementation of a SOFT system. In some organizations the process may vary but normally the information identified in the outline will be necessary in order for the project to be approved.

• Identify the objectives of making a change at all’increased productivity, better accuracy, increased flexibility, extending life of a facility, customer service improvement, freight reduction, incremental implementation, etc.
• Identify alternative systems that could meet objectives within cost constraints
• Identify a configuration of a “straw man” system and obtain an initial rough estimate of the cost of the system.
• Estimate transitional expense’Insure that you identify “disruption” costs and “training” costs for users and management.
• Estimate operational savings resulting from proposed change’this is really best done by you. This is NOT hard! VAS has some easy to use calculation tools to help make the estimates. Use worst case conditions. You do not want to set expectations that can not be realized.
• Analyze both operational and economic risks. Operational risks are difficult to quantify. However, identify how the facility will operate if, at the worst possible time, a catastrophic failure were to occur’remember Murphy rules!
• Using information gathered, request approval to obtain a fixed price quotation.
• Define an internal “requirements team” within your organization that is empowered to make the operational decisions for the system. Setup a meeting with Vargo to prepare for the creation of the VAS requirements document.
• Once VAS completes the document, setup a meeting with the “requirements team” for approval of the document.
• Gain approval of the implementation schedule and project price and see that a purchase order is generated.

Project schedule sample