Page 260 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 11: Supply Chain Logistics Design

Stock Modelling Notes

The dynamic modelling exercises provided flow and stockholding models for the Liege
operation, future planning base using growth forecasts and overall network flow charts
based on product allocations to Leeds and Liege. In addition, modelling provided a stock
allocation and replenishment strategy between the two sites plus centre handling and
storage methods for peak, average, current and forecast volumes. The design evaluation
produced a range of solutions across a number of operational areas. The first stage was
unit load allocation. This optimised the unit load format for each stock keeping unit
(SKU), driving efficiencies for each product's movements through the warehouse. The
analysis provided the basis for modelling all the remaining warehouse functional areas.
Total Logistics consultants also evaluated the receiving, storage, picking, returns processing
and value added activities. These included pre-bagging, ROM programming and
calibration. Within the picking operation, Total Logistics assessed the allocation of products
to picking zones through a number of strategies. Order completion was simulated (with
resultant activity profiles and work content) alongside with calculated pick rates based on
activity profiles and analysed pick zone congestion.

Stock modelling was used to evaluate optimum inventory and replenishment levels and
also addressed network replenishment rules: each option was then detailed in terms of
space requirements, capital and operating costs. Using team workshops, Total Logistics
outlined the options modelled and agreed the preferred technologies for the final scheme
design. This was applied to layout drawings for an 'ideal' greenfield site and evaluated
against the sites already under consideration.
Having evaluated the options, Total Logistics consultants designed the optimum solution
that featured increased pre-bagging, pick handling cut by 20% and counting errors cut by
over 25% using narrow aisle bulk storage. A single level picking area using radio data
terminals (RDT) with zoned picking would despatch product to the conveyor.
Finally, the mechanised packing and a replenishment optimisation strategy included
supplier direct delivery on selected SKUs to reduce network handling costs. Completing
the picture were equipment and manning levels in detail plus full capital expenditure,
annual operational budgets and a project implementation plan.
According to Premier Farnell, the Total Logistics' solution took into account the lowest
cost based on the mix of space, productivity, capital expenditure and operational efficiency.
It also allowed flexibility to allow for day-to-day changes, unplanned operations and
future possible variations to throughput and configuration - all achieved without significant
additional capital investment and allowing for the planned growth strategy.
One specifically important feature of the solution was the conveyor system: the data
analysis revealed a high level of single line and single zone orders in the Premier Farnell
order profile. This meant that significant efficiency gains could be achieved by improving
the current batching process. This was incorporated into the final design by developing a
zoned picking system linked by conveyor.
To maximise benefits, the conveyor had to be as seamless as possible and simple to
operate. In addition, it had to cope easily with volume variations, imbalances and
breakdowns and by incorporating multiple entry and exit routes, downtime was minimised
and no control point was required. Innovatively, orders could be launched at any point
along the conveyor.

In addition to the solution budgets, resource requirement plans and timelines, Total
Logistics developed a complete set of deliverables including: section and elevation
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