warehousing & performance measurment
TRANSCRIPT
Hotrodding the
Conventional Warehouse
Track 4 Session 5
2 0 0 5 M A T E R I A L H A N D L I N G & L O G I S T I C S C O N F E R E N C E S P O N S O R E D B Y H K S Y S T E M S
Steve TippmannTippmann Group / Interstate Warehousing
2 0 0 5 M A T E R I A L H A N D L I N G & L O G I S T I C S C O N F E R E N C E S P O N S O R E D B Y H K S Y S T E M S
Abstract
In today’s third party logistics environment,successful providers must balance thedemands of multiple customers’ businessprofiles, oftentimes within the confines of theirfour walls. Facilitated by a 3PL owner-operator, this session will focus on labor costdrivers, facility layout and designconsiderations, utilization of new technologiesand master site planning all presented from afirst-hand perspective. This fast paced andinteractive discussion is focused on theflexibility required for success in the 3PLenvironment.
2 0 0 5 M A T E R I A L H A N D L I N G & L O G I S T I C S C O N F E R E N C E S P O N S O R E D B Y H K S Y S T E M S
FLEXIBILITY –The Key to Success in a 3PL Environment
1 – Multiple business profiles
2 – Labor cost drivers
3 – Facility layout & design considerations
4 – Master site planning
5 – Utilization of new technologies
2 0 0 5 M A T E R I A L H A N D L I N G & L O G I S T I C S C O N F E R E N C E S P O N S O R E D B Y H K S Y S T E M S
1 – Multiple Customer BusinessProfiles
Variables that Determine Difficulty ofBusiness
– Product turnsRange from 3.5 to 120 per year
– Case pick percentageRanges from 0 – 100%
– Term of contractApprox. 70 % of contracts are 30-day contracts
Less than 2 % of contracts are 5 years or longer
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2 – Labor Cost Drivers
Labor is One of 3 Primary Cost Drivers inWarehousing
– Labor = 33% of Revenue
– Capital = 15% of Revenue
– Utilities = 4% of Revenue
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2 – Labor Cost Drivers
Labor Cost Drivers– Who pays for the Start-up “Curve”?
– Start-up curve (runs approx. 1 year)Customer either has to pay that curve, or the margin on the handling andterm of the deal must make up for the start-up cost
– Example: 4,000 pallets of storage 20 man operation
Excess labor associated with the start-up $600,000 +# of Employees
Months During Start-up
Labor Cost for 20 Employees
True Cost w/Start-up Curve
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2 – Labor Cost Drivers
Labor Cost Drivers not Normally Includedin Fixed Handling Cost
– Inaccurate truck info on shipments
– Freight consolidation / order changes
– Cut-off times
– Catch weights
– Add ons
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3 – Facility Layout & DesignConsiderations
Construction and Utility Costs are DrivenMostly by Square Footage– Energy cost in region & how are those costs made up
No off-peak cost in some areas
– Cost per kilowatt hourRanges from 2.5 cents per hour to 11 cents per hour
– Labor cost - determines amount of automation paybackRanges from $12.00 per hour to $40.00 per hour
– The higher you go, the better off you areMaterial handling equipment, along with insurance/codecompliance are the limiting factors in a conventional warehouseceiling height
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3 – Facility Layout & DesignConsiderations
Automation in a Manual (Hybrid) Warehouse
– Why automate a facility? – Stop & Shop Case Study
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3 – Facility Layout & DesignConsiderations
Automation in a Manual (Hybrid) Warehouse
– Why automate a facility? – Stop & Shop Case StudyLabor availability & cost
Accuracy
Multi-VelocityWarehouse
Product turns(26 turns per year)
– Challenges
Cost justification– Ratio of reserves
to pick facingsdrove it to asingle-deepracking layout
2 0 0 5 M A T E R I A L H A N D L I N G & L O G I S T I C S C O N F E R E N C E S P O N S O R E D B Y H K S Y S T E M S
3 – Facility Layout & DesignConsiderations
Automation in a Manual (Hybrid) Warehouse
– Why automate a facility? – Stop & Shop Case Study
2 0 0 5 M A T E R I A L H A N D L I N G & L O G I S T I C S C O N F E R E N C E S P O N S O R E D B Y H K S Y S T E M S
3 – Facility Layout & DesignConsiderations
Automation in a Manual (Hybrid) Warehouse
– Why automate a facility? – Stop & Shop Case StudySlow-Movingproducts go incenter bay
Fast-MovingSKUs stayon 110’ Dock
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3 – Facility Layout & DesignConsiderations
Automation in a Manual (Hybrid) Warehouse
– Why automate a facility? – Stop & Shop Case Study
Safety (actually safer than conventional warehouse)– Netting on pick aisle to prevent falling cases
– Laser beams on crane to detect foreign objects in crane aisle
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3 – Facility Layout & DesignConsiderations
Automation in a Manual (Hybrid) Warehouse
– Why automate a facility? – Stop & Shop Case Study
– Another challenge – wet produce cooler with mistersspraying
GalvanizedRacking
Floor Drains
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3 – Facility Layout & DesignConsiderations
Fire Suppression
– In-rack sprinkler systems are traditionally the most codecompliant, but not necessarily the best option
– As many as _ of the sprinkler systems installed inwarehouses operated below 32° F are not operational
Advantages of in-rack sprinkler system– Insurance/code compliance
– Only option for high density storage
Disadvantages– Maintenance nightmare
– Loss of flexibility on rack layout/beam height
– No long-term viability as a fire suppression system that can becounted on
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3 – Facility Layout & DesignConsiderations
Alternate Fire Suppression Option # 1
– No sprinkler system in Warehouse
Variance process
Required to pay more attention to Life Safety details– Early detection (smoke & temperature)
– Additional egress
– Enhanced fire fighting design / access
Advantages– Maximum flexibility
– Reduced maintenance
– Reduced capital
Disadvantages– Insurance issues
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3 – Facility Layout & DesignConsiderations
Alternate Fire Suppression Option # 2
– Ceiling-only sprinkler systems
– Large Drop
– Potassium Lactate
Variance process
Advantages– Maintenance
– Flexibility to change rack layout/beam height to maximize thecube
Disadvantages– Capital cost
– Large volume of water needed can require on site waterstorage tank and water pump
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3 – Facility Layout & DesignConsiderations
Other Considerations
– Related to Business ProfileDedicated facility
– 250-300 foot deep warehouse / suitable for varyingproduct turns
Dock depth
– Low-turn business – 35 foot docks
– High-turn / high labor business – 85+ foot docks
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3 – Facility Layout & DesignConsiderations
Dock Equipment
– Dock doors / open truck doors from inside
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3 – Facility Layout & DesignConsiderations
Dock Equipment
– Continuous pit vertical dock plates
» Better seals
» Improved ability to clean / sanitation
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3 – Facility Layout & DesignConsiderations
Other Considerations
– Refrigeration systemsPenthouse vs. Long-Throw Adapters
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3 – Facility Layout &Design Considerations
Other Considerations
– Refrigeration systemsInfrastructure of systemdesigned for max-build onsite
Design system for theminimum amount ofrefrigeration chargefrom a safety standpoint(tapered vessels)
Temperature & humidity systems control
No valves inside therefrigerated space
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3 – Facility Layout & DesignConsiderations
Other Considerations
– Safety / interior designMachine room
– Separate structure
– Only place in the building where we have refrigerationvalves
Ballard protected walkways
Shipping / receiving office locations
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4 – Master Site Planning–KeyConsiderations
Site Selection
– Size (acres)
– Location (population, Interstate access, laborconsiderations, quality of life, growth trends)
– Not just one dedicated customer for the facility
– Is the site consistent with the image desired?
– Market saturation / competition
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4 – Master Site Planning–KeyConsiderations
Rule of Thumb for Size of Site:
– 700 feet deep & as long as you need itProvides enough room for:
– Truck traffic
– Staging across from docks
– Set backs
– Facility itself
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4 – Master Site Planning–KeyConsiderations
2 0 0 5 M A T E R I A L H A N D L I N G & L O G I S T I C S C O N F E R E N C E S P O N S O R E D B Y H K S Y S T E M S
4 – Master Site Planning–KeyConsiderations
Traffic / People – Separate Car & PedestrianTraffic from Truck Traffic– Trucks & truck drivers
– Office & warehouse associates
– Visitors
– Customers
– Overall traffic flows
State & Local Incentives
Ability to get Sprinkler Variances
Availability of Utilities
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4 – Master Site Planning–KeyConsiderations
Community Support
Zoning Issues / Timing on the Project– Is the zoning appropriate?
Site Development Cost
– Land cost
– Access to utilities
– Soil conditions
– Road development / infrastructure
Understand Business, Growth &Operations needs BEFORE Selecting a Site
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5 – Utilization of NewTechnologies
Material HandlingEquipment– Battery technology
Battery charging room– Automated or manual
Opportunity charging ondocks
– Lift height continuallyincreasing
WMS Technologies– Online customer access
Inventory reviews
– Directed put-aways– Voice pick
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Key Takeaways
Be Flexible in Design
– Allows for more options when business profileschange in the future
– The only thing we know about the future is thebusiness model we know today will be different inthe future
Questions?