One of the keys to managing the issue of growing complexity in DC operations can be found in understanding the implications of operational changes and how the addition of new equipment, systems and software will impact the productivity and effectiveness of the DC.

You can now gauge your DC’s relative complexity by using the newly developed Supply Chain Digest DC Complexity Calculator™. Free to our readers, this easy to use tool will provide a numerical value for comparison purposes.

Understanding Complexity Through Simulation

The only practical way to understanding what’s going on relative to operational complexity, is to get your arms around what the data is telling you. Many experts agree that the best way to accomplish that is through computer simulation. However, simulation is probably not the right tool for DCs with straightforward picking and sorting processes; shipping volumes less than 10,000 cases per day; no timing issues; no new equipment being introduced or equipment being used differently; or when the DC’s processes are not being changed.

A very good example of how and when simulation should be considered can be found at Ingram Books.

Ingram Books is the world’s largest wholesale distributor of books, managing over 1 million titles and servicing tens of thousands of retail customers.

Ingram’s DC operations have some inherent challenges, given that almost all of the volume is “piece pick” based, with same-day-order-ship policies, and some significant peaks and valleys of order flow. It also had to manage significantly increased levels of value-added services, and huge increases in consumer direct shipments. The consumer direct shipments not only drove up the total volume of work substantially, but significantly drove down the average number of lines per order, which in turn led to greater use of batch picking and downstream sortation.

As the scope and needs of these customers advanced, Ingram found the work in its four U.S. distribution centers was growing increasingly complex. To manage all the unique fulfillment scenarios, Ingram had developed a slew of different “pick wave” types to meet ever more precise customer order profiles and DC processing needs.

Sound Familiar?

• Provide insight into dynamics of a complex operation, and what the real bottlenecks and constraints were?
• Improve staff utilization and scheduling.
• Better manage flow of work through the DC.
• Optimize use of sortation equipment (e.g., a tray sorter), and improve batching rules and sizes.
• Create a test-bed for evaluating order processing strategies without adversely impacting operations.

Ingram hired a consulting firm to develop a simulation tool, which would basically ride on top of the company’s existing, tier 1 WMS.

Ultimately, the tool enabled Ingram to do several things:

• Get a better handle on what was really happening with order volumes by type, customer, seasonality, etc.
• Understand what the cost and processing times were for different wave types and scenarios under current practices.
• Improve those practices based on understanding the data.
• Simulate what the effect of changes in wave practices and policies would be before actual implementation.
• Give wave planners better real-time tools to understand how the wave would flow through the DC and to better balance the work load for optimal results.

Like many companies, for example, Ingram sometimes found that completing the last few percent of a wave could take a very long time, leading to operational complexity. The simulation tool could help them better understand what was causing the end of wave issues, and present new approaches to mitigate the problem.

Through use of the simulation tool, Ingram was able to make a number of operational improvements to reduce picking costs and streamline order and material flow. They also used the tool to confirm prior to deployment the positive impact of some new picking strategies in one DC, and significantly improve the actual order wave building and release process by giving planners better data about how the wave will impact various processing areas.

In summary - the main benefits were found in the ability to review DC processes, and to better understand how specific decisions impacted operating results.

Top Five Reasons For Using Simulation Software

The following was summarized from an industry related article written by Trommer & Associates, Inc. and Automation Associates. Both companies have been providing MHA simulations for many years.

1. Proof of Concept

 

Simulation is well suited for showing how a material handling automation (MHA) system will operate and for determining throughput rates and staffing levels. Once a model is made, it is easy to play “what if” games. Different variables, like labor inputs, can be added to the model. Changing this variable can show the optimal number of employees needed to increase the number of orders processed each day.

 

Simulations find flaws in designs that may only appear when the system is used over an extended period of time. For example it might take a week's worth of data running though a model of a random putaway system before a flaw appears. Because this type of analysis takes only a few minutes of computer run time, multiple “experiments” can be run in order to discover the optimum solution.

2. Executive and Employee Buy-In

 It is much easier to sell an idea or concept when it can be visualized. Therefore, simulation is a good way to show management how adding a conveyor system and software would improve the business. Also showing the project's simulations to doubtful employees will increase buy-in when they realized they have a part to play in the development of the project.

 

A lot of data is collected to create simulations. This data is very useful when selling a concept to executives. But, the right data needs to be collected and presented, because the success of the project depends on those figures. Executives will want to know about line counts, capacities, throughputs, rates, and dollar values. A simulation can provide these.

3. Optimize Operational and Business Rules

 Just simulating the equipment and the material flow rates has nothing to do with companies' real business requirements. Simulation can be taken to the next level by overlaying operational procedures and business rules over equipment simulations. This type of simulation shows companies how and if DC designs are in line with their business requirements. Running experiments with the model show what the rules will actually do. However, this type of simulation requires more expertise, time and involvement.

4. Optimize the Control System

 The value of simulation modeling comes when companies model the business rules that are built into the WMS that controls their processes. Sometimes the flaws that simulation reveals are actually in the control systems or operational procedures. This part of the design process is generally not considered as carefully as the layout is before startup. Companies should think about and define their operational rules and control processes before creating a model that incorporates those rules. The result is more useful and realistic and can be used to simulate the impact of their WMS.

 

For example, while a WMS makes decisions about grouping and releasing items - these decisions can be reduced to a relatively simple set of control system rules that can be implemented in a model that can show what the rules will do to the operational throughput and productivity.

 

Companies implementing ERP systems are concerned about how it will impact their WMS. Many companies don’t realize that that impact can be simulated. It all depends on the operational rules that the WMS will implement. It's really straightforward to simulate and has potentially huge impact in terms of the way the system operates.

 

5. Revalidate the Design

 A warehouse simulation is often used once and thrown away. They are much more valuable if they are resurrected and used by managers on an occasional basis. After all, facilities and businesses change. Changes that occur after a simulation can cause bottlenecks and reduce productivity and capacity. Companies should go back often and reanalyze what the impact of change might be. In order to be able to do this, companies should request to have a simulation-based tool delivered to them with a friendly user interface that would let them make updates to double check if adding new equipment will have an impact.

Final Thoughts

The popularity of fully animated system simulations has grown to the point where many of the top tier MHA providers have the internal capability to quickly develop the model from AutoCAD layouts and run experiments. This is a valuable tool that helps a company manage complex operations while improving overall performance. From the vendor’s point of view, it helps them to “get it right the first time”, and as a result, lower project risk for both parties.

Agree or disagree with Holste's perspective? What would you add? Let us know your thoughts for publication in the SCDigest newsletter Feedback section, and on the website. Upon request, comments will be posted with the respondent's name or company withheld.

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