improving order picking response time in mondelez warehouse

Improve Order Picking Response Time in Mondelez Warehouse 1

Improving Order Picking Response Time

in Mondelez Warehouse

by

Mohsin Tasawar (15442),

Mohammad Rehan (15458),

Muhammad Salman (15464),

Noman Ahmed (15466)

A Project Report submitted for the

PRJ-701 as partial fulfillment of the requirements for Post-Graduate Diploma in

Supply Chain Management at the Center for Executive Education, IBA Karachi

Karachi Pakistan January

2019


SPECIAL CIRCUMSTANCES

In our study, we faced special circumstances when we

visited the warehouse. We find some difficulties in gathering the

data during the interview phase as people are reluctant to share the

real information which is necessary for obtaining the

understanding of critical gaps of warehouse operations. We

ensured them that the data will only be used for research and

educational purpose.


ACKNOWLEDGEMENT

Our special thanks to our project supervisor Assistant

Professor Dr. Rameez Khalid, Program Director, PGD-SCM,

Institute of Business Administration (IBA) Karachi. He was

inspirational in setting our direction and steering us to right course

for achievement of our project objectives. We also extend our

gratitude to Mondelez, Pakistan Karachi, for giving us the

opportunity to visit their warehouse and allow us to interview their

warehouse staff.

We are also thankful to Institute of Business

Administration Karachi, Pakistan for giving us this platform to

express and explore ourselves in the field of Supply Chain

Management. We stand much educated on the upstream,

downstream and all related functions of supply chain through this

one-year PGD Supply Chain program.


EXECUTIVE SUMMARY

This study proposes an improvement plan for improving

efficiency of the order picking process in the Mondelez. Mondelez

is facing problems in the warehouse management such as space

congestion issues, lack of storage assignment policies, no proper

visualization of inventory, lack of material routing policies etc,

these issues are affecting the profitability of the business.

The order picking is one of the most labor intensive and

costly warehouse operations and is a great place to improve

efficiency and look into a possibility to increase profitability.

This study is conducted by using qualitative data

gathering, and it involves the key stake-holders of the order

picking process by conducting interviews. The selected research

approach is a case study, and the study strives to find the starting

point for the efficiency improvements by conducing the current

state analysis of its existing picking process. When the problems

are identified, the study looks into the available knowledge and

best practice on warehouse process improvements within the

company. Ideas from best practice are then applied to formulate

the proposal. The outcome of this study is an improvement plan for

the improved order picking process.

The proposed improvement plan will help Mondelez to

improve efficiency of its picking order process by introducing:

item classification, removing the excess items from the inventory,


and rethinking its picking routing. By using the popularity based

item locations, coupled with optimal picking routing, Mondelez

could increase efficiency of the picking process.


ABSTRACT

Order picking has long been identified as the most labor-

intensive and costly activity for almost every warehouse. Any

underperformance in order picking can lead to unsatisfactory

service and high operational cost for the warehouse and

consequently affect the profitability of the company. In order to

operate efficiently, the order- picking process needs to be robustly

designed and optimally controlled. We focus on optimal (internal)

layout design, storage assignment methods, routing methods, order

batching and zoning.

Keywords: Order picking; Warehouse management;

Logistics


TABLE OF CONTENTS

SPECIAL CIRCUMSTANCES .......................................................................................................................... 2

ACKNOWLEDGEMENT ................................................................................................................................... 3

EXECUTIVE SUMMARY .................................................................................................................................. 4

ABSTRACT ....................................................................................................................................................... 5

TABLE OF CONTENT ...................................................................................................................................... 6

LIST OF FIGURES ........................................................................................................................................... 8

LIST OF TABLES ....................................................................................................................... ……………….9

CHAPTER-1: INTRODUCTION ....................................................................................................................... 10

CHAPTER-2: LITERATURE REVIEW ............................................................................................................. 12

Layout Design ............................................................................................................................................... 13

Storage Assignment ...................................................................................................................................... 14

Forward – Reserve Allocation ................................................................................................................... 14

Storage Assignment Policies ..................................................................................................................... 14

Class Based Storage ................................................................................................................................. 16

Family Grouping ........................................................................................................................................ 17

Zoning ............................................................................................................................................................ 18

Batching ......................................................................................................................................................... 20

Routing Methods ............................................................................................................................................ 21

Routing Heuristics ..................................................................................................................................... 22

Other Routing Issues ................................................................................................................................ 25

CHAPTER-3: METHODOLOGY .................................................................................................................... 27

Research Design ........................................................................................................................................... 27

Research Approach ....................................................................................................................................... 27

Deductive Approach .................................................................................................................................. 28

Inductive Approach .................................................................................................................................... 29

Sampling & Sampling Method ....................................................................................................................... 29

Software Employed ........................................................................................................................................ 30

Measurements / Instrument Selection ........................................................................................................... 30

Plan of Analysis ............................................................................................................................................. 31

CHAPTER-4: INDUSTRY BACKGROUND ................................................................................................... 34

Bench Marking ........................................................................................................................................... 34

Picking Routing ...................................................................................................................................... 35

Item Management ................................................................................................................................. 35

Lean Concept ........................................................................................................................................ 35

CHAPTER-5: RESULTS……………………………………………………………………………………………...38

CHAPTER-6: DISCUSSIONS & RECOMMENDATIONS…………………………………………………………41


CHAPTER-7: CONCLUSION & FURTHER STUDY………………………………………………………………..47

APPENDIX .........................................................................................................................................................

Appendix 1 .................................................................................................................................................... 50

Appendix 2 ..................................................................................................................................................... 51

Appendix 3 ..................................................................................................................................................... 52

Appendix 4 ..................................................................................................................................................... 53

REFRENCES ................................................................................................................................................. 58

SUPERVISOR LOG ...........................................................................................................................................


LIST OF FIGURES

Figure Numbers Figure Description

Figure # 1 Typical Layout Decisions in order picking

system design

Figure # 2 Illustration of 2 common ways to implement

class based storage

Figure # 3 Illustration of an order picking system

Figure # 4 Number of routing methods for a single block

warehouse

Figure # 5 Research design steps & outcome with data

inputs

Figure # 6 Deductive approach of study

Figure # 7 Inductive approach of study

Figure # 8 Assessment for Questioner with respect to

order picking methodology

Figure # 9 Conceptual framework for improving the order

picking

Figure # 10 & 11 Picture of spare parts store

Figure # 12 Observations & findings of store

Figure # 13 Initial Proposal

Figure # 14 Within aisle policy

Figure # 15 Across aisle policy

Figure # 16 Diagonal storage policy

Figure # 17 Perimeter storage policy


LIST OF TABLES

Table Numbers Table Description

Table # 1 Summary of interview data

Table # 2 Phase 1 – Data collection 1



Table # 5 Industry targeted for questionnaire

Table # 6 Designation of Respondents


The study is based on qualitative approach so the focus is on analyzing the operation with

respect to operational efficiency in terms of warehouse layout and its storage assignment

and as the benchmark Mondelez Store Spare Parts are also a helping criteria in

understanding and creating the initial proposal which help in setting the activities within

the respective manners. The tools that are applied are lean management in keeping and

reduce the inventory as the capital tied up with high inventory and applying the model of

5S that is connected with lean management. The item classification and routing of

picking the order are identified as studying the current analysis of overall picking model

and improvement areas are highlighted based on the best practices adopted in different

studies and methodologies.

The evaluation of research and the managerial decision to be taken in this research that

how to react and take action when dealing with warehouse operation. The high target for

the warehouse is the picking time of orders as more cost involved process if conditions

and layout of order setting and placing, its routing and inventory replenishment cycle are

more organized then the reaction time of delivering the orders are more effective and

profitable to business.


Interview Form for Order Pickers/ Data 1 Collection

1. What do you think about order picking response in general?

➢ Pickers General Response: - The orders that need to pick as of demand from its FIFO

requirement.

➢ Warehouse Lead: - The orders that are effectively picked with complete visibility and routing

criteria are defined to ensure orders are picked from right direction and within right time.

➢ Replenishment Lead: - The order picking need to be more transparent to each stakeholder so

to avoid the shelf-life of picking the wrong orders with more life criteria.

➢ IL6S Lead: - Orders are picked with true visibility so the handling cost can be reduced without

back tracking the orders.

➢ Planning Lead: - The order picking if more systematic then it will be effective and more

profitable to business.

➢ PPL Manager: - In opinion of PPL Manager the order visibility and order placement both are

the critical source that needs to be defined to react to demand with in the desired period of

time.

2. What things do you think are working well in current scenario of order picking process?

➢ Pickers General Response: - The orders are picked with respect to tagging of material on basis

of its receiving date so they are following the FIFO.

➢ Warehouse Lead: - The materials are traceable on basis of its lot# so they followed that order

for picking.

➢ Replenishment Lead: - The first and the important step that help in picking are the traceability

they followed.

➢ IL6S Lead: - Quality review check is strong that also a control which supports the picker to

identify the material for picking.

➢ Planning Lead: - As the activity of tagging is followed so one step help in identifying the

material.

➢ PPL Manager: - The first step on receiving the material that lot# issued to product so this help

in identifying the material for picking the right order but this process is not efficient enough.

3. What things are not working well enough?

➢ Pickers General Response: - Space congestion is one of the matters that are not working well

in picking the order.

Appendix 1


➢ Warehouse Lead: - No any routing defined with respect to picking the orders as no proper

storage policies are defined, no zoning criteria is defined.

➢ Replenishment Lead: - Materials are not segregated with respect to ABC classification.

➢ IL6S Lead: - Skill inventory of material need to be integrated with SAP that is missing in current

perspective.

➢ Planning Lead: - Excessive inventory might be a reason that good and bad inventory are mixed

which results in under producing the demand numbers.

➢ PPL Manager: -The challenge is high inventory leads to number of issues that are:

▪ Excessive Inventory

▪ No lean Management is followed

▪ No 5S Implementation

▪ No optimal routing criteria

4. What parts of order picking feels hard and difficult?

a. When collecting the right order as of FIFO

b. When traceability seems missing

c. When the routing of material not track easily

d. Choosing the correct quantity

e. Locating correct picking address

5. What else would bring up in this interview?

The general observation of Data Collection-1 picking criteria need to be efficient enough by

optimizing the areas of improvement where the gaps relatively increasing the cost of handling

the items twice and picking the wrong orders multiplying the cost of handling.

There is a need to have item classification of material to be integrated with SAP to improve

the picking and reduce the distance by applying best practices.

Pickers Warehouse Lead

A,B,C A,B,C

PPL Manager IL6S, Replenishment

A,B,C A,B,C


1. What do you think that will help in picking efficiency of the material?

▪ Inventory Reduction

▪ Optimal Routing

▪ 5S Implementation

▪ Lean Management

2. Which sort of the storage policy will help in picking the right order in right time?

• The storage assignments that help in improving the picking of material and reduce the

backtracking of orders are within Aisle-Storage Policy, Across Storage Policy.

3. Which method of picking methodology will best fit to identify the material?

• The picking methodologies that will support in the warehouse are the Zone wise picking with

complete traceability of allotting bin allocation to each rack.

4. Which area is more concern in relation to optimal routing of material?

• The routing of material can be enhanced if color coding to defined to each SKU on basis of its

segregation of Allergens and Non-Allergens material.

Summary of Improvement Areas:-

▪ Inventory Reduction: - Replenishment strategy to be revised to control the inventory.

▪ 5S Implementation a tool of lean management to execute to identify the unnecessary material

in stock by proper sorting.

▪ Optimal routing need to be identified

▪ Traceability need to be enhanced on basis of identification of Zone and Bin Wise.

▪ Material classification to be improved on basis of ABC Analysis.

▪ The storage assignment needs to be implemented to identify the routing criteria to avoid

backtracking of material.

▪ The visibility board of inventory needs to be checked and implemented to improve the picking

efficiency.

▪ The damage material need to be slot on hold area dedicated area to avoid the mixing of

material that can be improved through 5S.

▪ Complete visibility of inventory will reduce the cost of material handling.

▪ Improvement in picking will reduce the other costs utility cost, overtime cost, material

handling cost.

Appendix 2


Summary on Feedback on Final Proposal:-

In opinion of PPL Manager the real challenge in adopting the improvement areas are the high

inventory and the space congestion that’s a barrier in bringing the improvement in warehouse

picking efficiency.

The areas that are highlighted are the main improvement methods to be implemented and

executed that will support the business and will be profitable in the business as a whole. As

we are running in the journey of IL6S so on top priority we have to avoid the loss making areas

and put a gap analysis that help in reach to a conclusive approach of making efficiency in our

process of operations. The more the response time in picking the orders is effective more we

can react to the demand quickly.

Appendix 3


Questionnaire

A. Design Perspective

1. Which is the best source for warehouse and DCs serve as a key connection between

manufacturing and finished products.

A. Layout Diagram B. Space Dynamics C. Material Specification D. Material Handling

2. In your opinion what major problems addressed by the warehouse layout strategy is?

A. Addressing trade-off between space and material handling

B. The movement of material to the limited storage areas around the site

C. Requiring frequent contact close to one another

D. Minimizing difficulties caused by material flow varying with each product

3. In your opinion what support a good layout design that requires in determining the control

in improvement in picking of orders?

A. Capacity and space

B. Environment and aesthetics

C. All of these

D. Material handling requirements

B. Time Perspective

4. Which is the best way for stocking the fast moving items on aisles.

A. Forward Aisles

B. Backward Aisles

C. Outside Aisles

D. Inside Aisles

5. In your opinion which module system helps in improving the picking order time?

A. Items Classified on ABC Analysis

B. Systematic Segregation

C. Paper based Tagging System

Appendix 4


6. Do the shape of warehouse be specifically be designed to improve the per unit picking time?

7. Which is the best way for stocking the slow moving items on aisles.

A. Forward Aisles

B. Backward Aisles

C. Outside Aisles

D. Inside Aisles

C. Technology Perspective

8. In today's modern warehouses and DC's, how WMS/ SAP are providing the best outcome in

identifying the items among the multiple SKU's?

9. Which of the following are not examples of advanced technologies supported by WMS to

improve warehouse efficiency?

A. Barcode scanners B. Mobile computers C. Pick-to-voice D. Forklifts

D. Picking Methodologies

10. Which Order picking strategy involves picker taking one order and travels through the

warehouse either on foot with a trolley or with a pallet collecting item until the whole order is

picked.

A. Cluster Picking

B. Pick to Order

C. Zone Picking

D. None of these

11. What document is used by receiving personnel to obtain information about the contents of a

delivery

being received and in addition how SOP's defined the segregation of material in terms of good

and bad stock which support in identifying in picking the right stock?

A. Quality Report B. Packing List C. Driver’s Log D. Claim Report


12. Which Principle in warehouse activities does not include the process that impact the

improvement condition?

A. Storage

B. Product Design

C. Shipment

D. Order Picking

13. Which order picking strategy involves products being picked from defined areas in the

warehouse.

A. Cluster Picking

B. Pick to Order

C. Zone Picking

D. None of these

14. Which picking is involved in the process where multiple orders are picked that minimizes

repeat trips, where there is a dense concentration of SKUs.

A. Batch Picking

B. Zone Picking

C. Wave Picking

D. Piece Picking

15. Which order picking strategy involves picker taking a number of orders out into the

warehouse and pick into individual compartments on their trolley.

A. Cluster Picking

B. Pick to Order

C. Zone Picking

D. None of these

16. Does 5S play a vital role in the identification and marking of different space utilization?

A. Yes B. No


E. Productivity

17. There is a need to create zones in the warehouse for fast moving items that result in

higher pick productivity.

A. Agree

B. Disagree

C. Strongly Agree

D. Strongly Disagree

18. In which area productivity depends on the type of material equipment handing used, the

location and accessibility of stock, warehouse layout, stock location system, and the order

picking system used?

A. Equipment

B. Picking

C. Material

D. Labor

19. Does the order picking directly correlate in increasing the cost of warehouse?

A. Yes

B. .No

20. Do the replenishment plays an important role in controlling the cost and excessive inventory

storage and support the cycle of supply chain?

21. In your opinion what are the critical factors that are involved in the order picking are?

A. Warehouse Location

B. Warehouse Infrastructure

C. Warehouse Storage Layout

D. Existing Picking Arrangements

E. Available Order Picking Machinery

F. All of These

G. Option C,D,E

22. Do you think in picker to parts system for low level OP, labor intensity bring higher cost in

the operation cycle?


23. In your opinion which of the assignment reduce the space utilization significantly?

A. Class based Storage assignment

B. Volume based Storage Assignment

C. Random assignment

24. In inventory control, which is the best way for dividing items into classes based on

popularity.

A. 80/20 Rule

B. Pareto Method

C. Lean Method

D. Six Sigma

E. Poka Yoke

25. In picker to parts system the high level OP system, the lifter automatically stop in front of

appropriate location and improve the picking time and reduce the cost by other mean?

A. Agree

B. Disagree

C. Strongly Agree

D. Strongly Disagree


References

De Koster, Rene; Le-Duc, Tho; Roodbergen, Kees Jan. 2007, Design and control of

warehouse order picking: A literature review, European Journal of Operational Research,

501 pages.

Frazelle, Edward; Sharp, Gunter. 1990. Correlated assignment strategy can improve

order-picking operation. Industrial Engineering, Journal, 47 pages.

Heskett, John. 1964, Putting the cube-per-order index to work in warehouse layout.

Transportation and Distribution Management, p.13-26

McDowell, E.D., Optimal product layout in an order picking warehouse. IIE

Transactions, 1991. p. 93-102

Petersen, C. G., Aase G. R., & Heiser, D. R. (2004). Improving order-picking

performance through the implementation of class-based storage. International Journal of

Physical Distribution & Logistics Management 34(7), 534-544.

Rouwenhorst, B., Reuter, B., Stockrahm, V., van Houtum, G. J., Mantel, R. J., & Zijm

W. H. M. (2000) Warehouse design and control: Framework and literature review.

European Journal of Operational Research, 122, 515-533.

Jarvis, J.M., & McDowell E.D. (1991). Optimal product layout in an order picking

warehouse. IIE Transactions 23(1), 93-102.

Roodbergen; Kees Jan, De-Koster, Rene. 1999, Routing order pickers in a warehouse.

Erasmus University Rotterdam. Available from:

http://www.roodbergen.com/warehouse/background.php Accessed 5.9.2017.

Apte, U.M. and Viswathan, S., Effective cross docking for improving distribution

efficiencies. International Journal of Logistics: Research and Applications, 2000, 3(3),

291-302.


Ashayeri, J. and Gelders, L.F., Warehouse design optimization. European Journal of

Operational Research, 1985, 21, 285-294. Bartholdi, J.J., Balancing two-sided assembly

lines: a case study, International Journal of Production Research, 1993, 31(10),

2447-2461.

Bartholdi, J., Bunimovich, L.A. and Eisenstein, D., Dynamics of two- and three-worker

“bucket brigade” production lines.

Operations Research, 1999, 47(3), 488-491.

Bassan, Y., Roll, Y. and Rosenblatt, M.J., Internal layout design of a warehouse. AIIE

Transactions, 1980, 12(4), 317-322.

Bozer, Y.A., and Cho, M., Throughput performance of automated storage/retrieval

systems under stochastic demand, IIE Transactions, 2005, 37(4), 367-378.

Brynzér, H. and Johansson, M.I., Storage location assignment: using the product structure

to reduce order picking times.

International Journal of Production Economics, 1996, 46, 595-603.

Caron, F., Marchet, G. and Perego, A., Routing policies and COI-based storage policies

in picker-to-part systems. International Journal of Production Research, 1998, 36(3),

713-732.

Caron, F., Marchet, G. and Perego, A., Optimal layout in low-level picker-to-part

systems. International Journal of Production Research, 2000, 38(1), 101-117.

Chen, M.C., Huang, C.L., Chen, K.Y., and Wu, H.P., Aggregation of orders in

distribution centers using data mining, Expert Systems with Applications, 2005, 28(3),

453-460.

Chew, E.P. and Tang, L.C., Travel time analysis for general item location assignment in a

rectangular warehouse. European Journal of Operational Research, 1999, 112, 582-597.


Choe, K., Sharp, G.P. and Serfozo, R.S., Aisle-based order pick systems with batching,

zoning and sorting, in Progress in Material Handling Research: 1992, 1993, 245-276.

Cormier, G., A brief survey of operations research models for warehouse design and

operation, Report, Bulletin, CORS-SCRO, 1997.

Daniels, R.L., Rummel, J.L. and Schantz, R., A model for warehouse order picking.

European Journal of Operational Research,

1998, 105, 1-17.

De Koster, R. and Van der Poort, E.S., Routing order pickers in a warehouse: a comparison between optimal and heuristic solutions.

IIE Transactions, 1998, 30, 469-480.

Drury, J., Towards more efficient order picking, IMM Monograph No. 1, Report, The

Institute of Materials Management, Cranfield, U.K., 1988.

ELA/AT Kearney, Excellence in logistics 2004, 2004, (Brussels: ELA)..

Elsayed, E.A., Lee, M.K., Kim, S. and Scherer, E., Sequencing and batching procedures

for minimizing earliness and tardiness penalty or order retrievals. International Journal

of Production Research, 1993, 31(3), 727-738.

Frazelle, E.H. Hackman, S.T., Passy, U., and Platzman, L.K., The forward-reserve

problem, in: T.C. Ciriani, R.C. Leachman (eds),

Optimization in industry 2, 1994, 43-61 (Wiley: New York).

Frazelle, E.A. and Sharp, G.P., Correlated assignment strategy can improve order-picking operation. Industrial Engineering, 1989,

4, 33-37.


(De Koster, Le-Duc, & Roodbergen, 2007)

improving order picking response time in mondelez warehouse

Documents