Design Layout of Warehouse and Distribution Centre

This report presents the proposed design layout of the warehouse/distribution centre and other key elements that facilitate its operations. The warehouse has 18 SKUs and its expected customer service level is high. The key factors considered when designing the layout are available space, SKUs, accessibility, flow and throughput.

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WAREHOUSE AND DISTRIBUTION CHANNELS
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EXECUTIVE SUMMARY
This report presents the proposed design layout of the warehouse/distribution centre and other
key elements that facilitate its operations. The warehouse has 18 SKUs and its expected
customer service level is high. The key factors considered when designing the layout are
available space, SKUs, accessibility, flow and throughput. The design layout enables safe,
efficient, fast and cost-effective operations at the warehouse. Key operations at the warehouse
include: receiving, put-away, picking, packing, dispatching, returns and value-added services
and dispatch. A wide range of storage and materials handling equipment systems have been
identified. The warehouse also has an integrated WMIS and it is highly automated using
state-of-the-art software technologies. The contact between human operators and products is
minimized. The warehouse is also expected to be world class by considering the element such
as legislation, safety/security and sustainability.
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TABLE OF CONTENTS
Executive Summary.................................................................................................................2
1. Introduction.......................................................................................................................4
2. Customer service levels.....................................................................................................4
3. Layout of the warehouse..................................................................................................5
4. Key warehouse/distribution centre operations...............................................................7
5. Types of storage systems...................................................................................................9
6. Picking operations...........................................................................................................10
7. Materials handling equipment systems.........................................................................11
8. Level of warehouse management information systems...............................................12
9. Level of automation in the warehouse operations.......................................................13
11. Conclusion....................................................................................................................13
References...............................................................................................................................15
Appendix ………………………………………………………………………………….17
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1. INTRODUCTION
The purpose of this report is to establish the most suitable design layout of a
warehouse/distribution centre that will be used to store, manage and supply products offered
by Electrolux – a leading electronics retailer, to dedicated stores in different parts of
Australia, such as The Good-Guys and Harvey-Norman.
Electrolux is a Swedish multinational manufacturer of home appliances. The company offers
a wide range of home (Electrolux, 2019). The main categories and types of products offered
by Electrolux include the following: refrigeration equipment (include refrigerators, freezers
and water coolers), cooking appliances (include cookers, cooktops, ovens, microwave ovens
and rangehoods), laundry (washing & drying) equipment (include washing machines,
dishwashers, drying cabinets, vacuum cleaners, drawers, washer dryers and clothes dryers),
heating and cooling equipment (include water heaters and air conditioners or ventilations)
and filters and accessories (including kitchen, laundry and cleaners accessories) (Electrolux,
2019). Therefore, the warehouse/distribution centre should be designed so as to accommodate
all these products. The SKU list is provided in Appendix 1.
The size of the empty space available for the establishment of the warehouse/distribution
centre is 20,000 m2. The design layout established should facilitate fast, safe and efficient
operations of the warehouse/distribution centre.
2. CUSTOMER SERVICE LEVELS
The warehouse/distribution centre is designed to ensure that all orders are delivered as
promised. The aim is to help the company meet or exceed customer expectations so that
customers can always be delighted and amazed by the products and services they receive.
There are different ways of describing customer care levels. The target customer care level
for the warehouse design layout in this report is most advanced and world class. This means
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that the customer service level would be beyond satisfactory (excellent), so that customers
can see the company’s efficiency and compare it with other reputable companies in the
industry. After some time, the layout will be improved for the customer service level to reach
trademark, also referred to as unbelievable (Kaufman, 2011), where the company will
become a benchmark in the industry regarding warehouse operations and the awesome
customer services offered.
3. LAYOUT OF THE WAREHOUSE
There are several factors that must be considered when designing the layout of a
warehouse/distribution centre. Some of the key factors include: space, accessibility, flow, and
throughput (Onstein, et al., 2019). The key objectives of the design layout of the
warehouse/distribution centre are: maximize space utilization; minimize non-productive and
administrative activities; reduce internal travelling distances; ensure minimum handling of
products by using the most efficient materials handling systems; avoid wasteful activities;
achieve maximum flexibility; provide the highest customer service levels (CSL); reduce cost
of operations; and allow future expansion.
The layout design of the warehouse/distribution centre is presented in Figure 1 below
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Figure 1: warehouse design layout
The legend for the layout is provided in Table 1 below
Table 1: Legend
The layout of the warehouse is rectangular in shape and it is designed such that each
operation is within a specific area. The 18 SKUs are sub-divided into three storage or
inventory areas depending on the storage systems: mezzanine flooring storage, shelving and
pallet racking storage. Each operation has been allocated adequate space and there is also
adequate space between different operation areas to reduce safety risks and increase
productivity and efficiency of materials handling systems and human operators.
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The general operations of the warehouse based on the design layout in Figure 1 above is as
follows: products will be received at the inbound area. They will be checked, selected
conveyed to the put-away and reprocessing areas. The products will then be distributed to
their respective storage areas. Depending on the order received, individual products will be
selected from the storage areas and conveyed to the dispatch area where they will be packed
and loaded onto waiting trucks at the exit gate. Finally, the trucks will leave the warehouse to
their respective destinations. Most of these operations will be done using automated systems.
It is also important to note that the parking lot is only for the employees’ and visitors’
vehicles but not the trucks.
4. KEY WAREHOUSE/DISTRIBUTION CENTRE OPERATIONS
The key operations at the warehouse/distribution centre include the following:
Receiving – this will be done using an Advance Shipping Notice (ASN). It involves scanning
the consignment barcodes so as to establish if the ASN matches the delivery.
Put-away – this involves confirming identity of the products received and delivering them to
the relevant storage area.
Replenishment – this involves moving inventory from reserve or upstream storage areas to
primary or downstream storage, picking and delivery areas.
Picking – this is involves collecting products from different storage locations depending on
the order) and taking them to the packing or staging area.
Sortation – this involves selecting products and arranging them in different categories based
on characteristics such as model, size or SKUs.
Packaging – this is where picked products are combined and packed according to their type,
value, quantity, size, fragility and statutory requirements.
Dispatching – this is where packed products are released and loaded into trucks for delivery
to the stores.
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Returns – this where products returned by customers are received, inspected and a decision
made on where they should be taken – taken back to stock, repaired, recycled, discarded,
destroyed or returned to the manufacturer (Walker, 2018).
Value-adding – this is where products are modified to make them ready for sale. It can
involve furnishing, fixing up, assembling or relabelling.
The above operations are summarized in Figure 2 below
Figure 2: Key operations at a warehouse/distribution centre (Wheeler, 2014)
5. TYPES OF STORAGE SYSTEMS
Different types of storage systems will be used to store products at the warehouse/distribution
centre. The storage systems will be both manual and automated. Some of these systems
include the following:
Shelving or cabinet storage system – this is where products are stored in shelves or
cabinets, which can be static or mobile (Stazzone, 2019). Shelving will be used to store filters
and accessories.
Pallet racking system – this is where products are stored in pallets and stacked on racks.
There are different types and designs of pallet racking systems, which can be made of metals,
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wood or plastic. The height of the system varies, and the pallets can be placed on the system
using an automated system or a forklift. Different types of pallet racking systems suitable for
the warehouse/distribution centre include cantilever, multi-tier, carton flow, drive-through,
vertical and mobile racking systems. The pallet racking system will be used to store cooking
appliances, and heating and cooling equipment.
Mezzanine flooring – this is the storage system where extra space is created above the
existing floor space. The mezzanine can have one, two or three levels integrated with lift
systems, light fixtures, fire safety systems, and conveyers. The mezzanine flooring will be
used to store refrigeration equipment and laundry equipment.
A combination of the above storage systems will have the following benefits: make the
warehouse/distribution centre to be more organized thus making it easier to manage and
maintain the centre; improve safety of workers and products at the centre; save time and
effort of managing operations at the centre; and save space thus increasing the storage
capacity of the centre.
6. PICKING OPERATIONS
Picking operations are one of the essential order processing activities. These operations
involve finding or selecting and retrieving specific products from their storage locations and
taking them to the packing area. There are different methods used in picking operations,
including: single order picking, batch picking, multi-batch order picking, zone picking, and
pick and pass (APS Fulfillment, Inc., 2018). Considering the types and categories of products
supplied by Electrolux and the number of SKUs, the most suitable picking operations
methods for the proposed warehouse/distribution centre are zone picking and pick and pass.
Zone picking: in this method, the warehouse will be divided into different zones, depending
on the categories or type of products (SKUs), then workers are assigned to work within
specific zones (Khanzode & Shah, 2017). Every zone has its own storage and materials
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handling system and technology. Products are picked from different zones (depending on the
order items) and conveyed to the packing area for processing before being shipped to various
stores.
Pick and pass: this method is like zone picking but it is more linear. All products from one
zone are picked and then passed to the next zone. The process is repeated until all products in
the order are selected after which they are conveyed to the packing area.
The two methods have three main elements: storage system, picking area and material
handling system, and they use picker-to-part and part-to-picker techniques. In picker-to-part
technique, picking systems select products from the storage areas and takes them to the
packing area. In part-to-picker technique, products are selected from the storage areas and
conveyed to picking areas from where picking system collect and deliver them to the packing
area (Murray, 2019). Most of the picking operations will be automated to increase speed,
efficiency and accuracy of order processing (Ong & Joseph, 2014).
7. MATERIALS HANDLING EQUIPMENT SYSTEMS
Materials handling equipment systems are systems that are used to help in the movement,
storage, control and protection of products in a warehouse (Kamble, 2019); (Mohsen &
Hassan, 2010). The focus in this section is on the equipment systems used for transporting or
retrieving products because storage systems have already been discussed above. The
following materials handling equipment systems are suitable for use in the
warehouse/distribution centre:
Industrial trucks: These are vehicular devices that are used for moving products from one
location to another within the warehouse/distribution centre. They are also used for loading
and offloading the products onto and from delivery trucks. The industrial trucks will be used
to perform receiving, replenishment and picking operations.
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Automatic sortation system: It is used to sort products into discrete entities before they are
stored, packed, loaded, conveyed or shipped. It includes tilt tray sorters, diverter, sliding
shoe, cross belt or quad sorter. The system will be used in sortation operation.
Automated storage and retrieval system (ASRS): It is an automated organizational
structure comprising of shelves, aisles and racks that are reachable by a shuttle retrieval
system, which is basically a computerized cherry picker with automated functions or can be
used by a worker to locate the storage location of a product and retrieve it quickly (Ekren,
2011). The ASRS will be used to perform picking operations.
Conveyor system: It is an automated conveyor system that can carry a large volume of heavy
products from one location to another using live rollers, flexible chain or belts (Koke
Incorporated, (n.d.)). The conveyor system will be used in put-away, replenishment and
picking operations.
Robotic delivery system: It is an automated system that is programmed to transport products
through all the necessary locations in a warehouse/distribution centre. This system will be
used in picking, sortation and packing operations.
Bulk material handling equipment system: It is used for the transportation, storage and
control of large quantities of products at one time. Examples of these equipment are:
conveyor belts, stackers and reclaimers. The system will be used in receiving, replenishment,
picking and dispatching operations.
8. LEVEL OF WAREHOUSE MANAGEMENT INFORMATION SYSTEMS
Management efficiency of operations at a warehouse/distribution centre has a significant
impact on the costs and overall productivity of the centre (Fumi, et al., 2013). The centre can
only be managed efficiently if there is seamless flow of information between all stakeholders
along the supply chain. This requires use of advanced warehouse management information
systems (WMIS) that ensures all stakeholders share and receive accurate and complete
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information in a timely manner. The WMIS helps in controlling and managing all operations
(both internal and external operations) of the warehouse, including shipment and inventory.
The WMIS used should be able to automatically track all information about the services and
products used, received, stored and distributed by the warehouse. This includes information
about sourcing, workflows, inventory, replenishment, stocking (inventory counts, reorder
quantities and reorder points), financials (pricing and costing), picking (pick lists and
location), packaging, shipping and other documents (purchase & sale orders, order statuses,
and shipping notices), among others. The WMIS to be used in the proposed
warehouse/distribution centre is basically an advanced warehouse management software
(WMS) application that has been designed to enhance functionality and efficiency of a
warehouse. The main functions of the WMIS are: planning, organizing, staffing, directing
and controlling.
Therefore, the WMIS to be used will be a highly advanced and integrated system designed to
facilitate and improve efficiency of all operations of the warehouse/distribution centre. The
system will be managed by experienced professionals and updated frequently to ensure that it
has the latest features. Some of the WMIS that can be used include: 4SIGHT WMS, Mobec3
WMS, Robocom WMS, Oracle WMC, Dematic iQ, 3PL Warehouse Manager, Manhattan
Associates Warehouse Management System, and NetSuite ERP Warehouse and Fulfilment,
among others (Saha, 2019).
9. LEVEL OF AUTOMATION IN THE WAREHOUSE OPERATIONS
Automation has become a very essential element in the operations of modern
warehouses/distribution centres mainly because it increases operational flexibility of
warehouses (de Koster, et al., 2017). Other key benefits of automation include: optimizes
warehouse operations, increases efficiency of operations, increases productivity of materials
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handling equipment systems, minimizes errors and increases accuracy, increases speed of
selecting and retrieving products, maximizes space, reduces operational cost, and reduces
safety risks of workers (Granlund & Wiktorsson, 2014).
10. CONCLUSION
Design layout has a significant impact on the operations of a warehouse/distribution centre.
The warehouse in this report will have a total of 18 SKUs. The layout of the warehouse has
been designed by considering several factors such as space, type of products, SKUs,
accessibility, flow and throughput. The proposed design layout will enable safe, efficient, fast
and cost-effective operations at the warehouse. The main operations at the warehouse are
receiving, put-away, picking, packing, dispatching, returns and value-adding. The warehouse
will also have a variety of storage systems including cabinets, pallet racks, wire partitions and
mezzanine flooring.
Picking operations will be done by zone picking and pick & pass methods. The various
materials handling equipment systems to be used at the warehouse include industrial trucks,
automatic sortation system, ASRS, conveyor system, robotic delivery system, AGV, and bulk
material handling equipment system. The warehouse will also have an integrated WMIS to
ensure seamless flow of information throughout the supply chain.
The warehouse is highly automated using state-of-the-art software technologies. This means
that there will be very minimal human-products contact. To make the warehouse world class,
the company will ensure that all operations are in accordance with applicable legislations;
ensure safety & security of workers, customers and all operations; and include sustainability
elements in all warehouse operations. Therefore, the proposed design layout and all storage
and management systems will enable the company to distribute products to all destination
stores in a more efficient, safe and cost-effective manner.
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REFERENCES
 APS Fulfillment, Inc., 2018. What Are the Different Types of Order Picking Methods in
the Warehouse?. [Online]
Available at: https://www.apsfulfillment.com/warehousing-solutions/what-are-different-
types-order-picking-methods-warehouse/
[Accessed 26 April 2019].
 de Koster, R., Johnson, A. & Roy, D., 2017. Warehouse design and management.
International Journal of Production Reserach, 55(21), pp. 6327-6330.
 Ekren, B., 2011. Performance evaluation of AVS/RS under various design scenarios: A
case study. International Journal of Advanced Manufacturing Technology, 55(9), pp.
1253-1261.
 Electrolux, 2019. About Us. [Online]
Available at: https://www.electrolux.com.au/
[Accessed 26 April 2019].
 Fumi, A., Scarabotti, L. & Schiraldi, M., 2013. Minimizing Warehouse Space with a
Dedicated Storage Policy. International Journal of Engineering Business Management,
5(1), pp. 1-8.
 Global Industrial, 2019. 6 Types of Warehouse Storage. [Online]
Available at: https://www.globalindustrial.com/warehouseStorage
[Accessed 26 April 2019].
 Granlund, A. & Wiktorsson, M., 2014. Automation in Internal Logistics: Strategic and
Operational Challenges. International Journal of Logistics Systems and Management,
18(4), pp. 538-558.
 Kamble, A., 2019. Selection of material handling equipment: classifications & attributes.
International Journal for Innovative Research in Science & Technology, 5(8), pp. 21-26.
 Kaufman, R., 2011. The Six Levels of Customer Service. [Online]
Available at: https://www.bloomberg.com/news/articles/2011-10-25/the-six-levels-of-
customer-service
[Accessed 26 April 2019].
 Khanzode, V. & Shah, B., 2017. A comprehensive review of warehouse operational
issues. International Journal of Logistics Systems and Management, 26(3), pp. 346-362.
 Koke Incorporated, (n.d.). 4 Types of Materials Handling Equipment. [Online]
Available at: https://www.kokeinc.com/material-handling/general/4-types-materials-
handling-equipment/
[Accessed 26 April 2019].
 Mohsen & Hassan, M., 2010. A framework for selection of material handling equipment
in manufacturing and logistics facilities. Journal of Manufacturing Technology
Management, 21(2), pp. 246-268.
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 Murray, M., 2019. Order Picking in the Warehouse. [Online]
Available at: https://www.thebalancesmb.com/order-picking-in-the-warehouse-2221190
[Accessed 26 April 2019].
 Ong, J. & Joseph, D., 2014. A review of order picking improvement methods. Journal of
Industrial Engineering, 9(3), pp. 135-138.
 Onstein, A., Tavasszy, L. & van Damme, D., 2019. Factors determining distribution
structure decisions in logistics: a literature review and research agenda. Transport
Reviews, 39(2), pp. 243-260.
 Saha, V., 2019. Warehouse Management Software: The 52 Best Tools and Systems to
Improve Warehouse Efficiency, Reduce Overhead and Boost Profits. [Online]
Available at: https://www.camcode.com/asset-tags/warehouse-management-software/
[Accessed 26 April 2019].
 Stazzone, S., 2019. 6 Types of Warehouse Storage Systems. [Online]
Available at: https://www.camcode.com/asset-tags/types-of-warehouse-storage-systems/
[Accessed 26 April 2019].
 Walker, M., 2018. Spotlight on: 7 Key Warehouse Processes. [Online]
Available at: https://www.logisticsbureau.com/spotlight-on-7-key-warehouse-processes/
[Accessed 26 April 2019].
 Wheeler, C., 2014. The 8 Best Order Picking Methods (Including Batch Picking).
[Online]
Available at: https://www.newcastlesys.com/blog/bid/348476/order-picking-methods-
and-the-simplest-ways-to-minimize-walking-infographic
[Accessed 26 April 2019].
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APPENDIX
Appendix 1: SKU List
Considering these product categories and types, the warehouse/distribution centre has a total
of 18 stock keeping units (SKUs): refrigerators, freezers, water coolers, cookers, cooktops,
ovens, microwave ovens, rangehoods, washing machines, dishwashers, drying cabinets,
vacuum cleaners, drawers, washer dryers, clothes dryers, water heaters, air conditioners or
ventilations, and accessories.
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