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About the Author

Cliff Holste is Supply Chain Digest's Material Handling Editor. With more than 30 years experience in designing and implementing material handling and order picking systems in distribution, Holste has worked with dozens of large and smaller companies to improve distribution performance.

Logistics News

By Cliff Holste

July 25, 2012

Building and Maintaining A Comprehensive Database Is Essential For DC System Planning Purposes

Do You Know What An Item Master Is and Why You Need It?

Most small to medium size logistics companies have little or no idea of the amount of operational data that is required for planning a mechanized or automated material handling system. Consequently, when they finally decide to move forward with a project, they do not have sufficient data to support the planning stage. Worse yet, there is often an unrealistic expectation of how long it takes to design and implement a typical DC order fulfillment system.

Distribution Digest recently had a conversation with executives of a wholesale/retail parts distribution operation who would like to “automate” their existing DC order fulfillment operation within the next 6 months. The main driver appears to be the need to process more orders, pick and ship more products.

Holste Says:

Companies that are in the early stage of considering upgrading their existing DC operations to incorporate material handling automation - need to recognize that this is the time to build a historical database.
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This company’s executives know what their current average daily order processing and shipping volume/capacity is and what it needs to be in order to support future growth. However, the first challenge they (and many other companies just like them) face is the lack of a database on which to create and build the system framework. For example: there is no Item Master; nor is there any documentation relative to order profiles. Surprisingly, they have a pretty good idea of what an automation project of their required size and scope would cost.

The company’s lack of historical operational data is not unusual. Unfortunately, many logistics companies wait until they are pressured into upgrading or expanding their DC operations before considering what supporting date will be needed. Preparation time for planning a DC system project can involve several weeks or months depending on how much operational data is available.

Form Follows Function

The phrase “form follows function” is a principle associated with modern architecture and industrial design. The principle is that the shape of a building or object should be primarily based upon its intended function or purpose. Applying this principal to DC logistics systems - Form (the material handling system configuration) comes after Function (interpretation of sales, operational and performance data).

There is substantial risk involved in changing the way an existing operation does business. Having accurate data on which to base critical design decisions reduces the need to make assumptions and greatly increases the chances of satisfying project planning objectives while staying within a realistic budget.

It can take several months to develop a comprehensive project planning data base and to put together preliminary plans and specifications. This process is unavoidable. Even if the company was to hire a Systems Integrator at the get-go, that SI would first have to develop the database in order to provide the appropriate system solution.

If a company already has the basic planning data available, it’s possible that a small scale DC project could be undertaken and completed in 6 months. Unfortunately, without the basic operational data, meaningful planning discussions cannot take place. Fast-track decisions based on assumed data could produce a solution that either falls short of requirements, is not cost effective, or both. Without taking into consideration the specific business data, the solution cannot be tailored to the businesses requirements.

What Are The Minimum Data Requirements for System Planning?

There are 3 pieces of critical planning information without which serious planning discussions are dubious and most likely a waste of time and resources. They are: Item Master, SKU Velocity Report, and Customer Order Profiles. Of course, there is a large amount of additional data specific to the company’s business model and strategic plans that also needs to be taken into considered. In the course of assembling the following reports, these details will be exposed.

Item Master Report

Before system planners can begin to determine what type of material handling equipment and systems will be needed, they need to know the characteristics of the pallets, cartons, and individual pieces being handled.

The Item Master is a report that lists the characteristics of all active SKUs. The typical report contains SKU ID Number, Item Description, Length, Width, Height, Cube, and Weight. When individual items are being sold, a photograph of each item should be included.

To facilitate collecting and electronically recording all this data, many companies (especially those with 1000s of SKUs) invest in automated cubing/weighing equipment as manufactured by Cubiscan and ExpressCube.

SKU Velocity Report

Understanding the general flow of products through the DC is critical to configuring the material handling system. Flow charts are often helpful in this process. However, system planners must also know the sales history (velocity) of each SKU listed in the Item Master.

The SKU Velocity Report is a spreadsheet (Excel) that summarizes the movement of each SKU by month over a specific period of time, usually 12 months. It also ties SKUs to orders relative to how each SKU is being sold, i.e., pallet load, full case, and or by the piece.

The typical report includes (but is not limited to) the following header columns:






Row Number


Cases Picked (Max)


SKU Number


Orders Picked Full Pallet


Item Description


Orders Picked Full Cases




Individual Cases Picked


Total Orders


Pallets Consumed Per Week


Total Cases Sold


Cases Picked (Avg.)


Cases Picked (Min)


Velocity Rating

Once this report is completed the data can be sorted based on analysis and planning objectives.

Customer Order Profiles

By providing insight into specific customer ordering patterns, system planners can develop solutions that are more tailored to the customer’s needs.

Order profile data is critical in determining the application of appropriate picking technologies as well as the design of the various processing, value-added, and shipping systems. For most companies capturing this data is a simple matter of accumulating and segregating pick tickets over a substantial period of time usually 6 months to a year. The following categories are suggestions and should be adjusted and expanded to suit the specific business and project requirements.

Daily pick tickets are collected and segregated as follows:

  • Orders for one line item only
  • Orders for 2 to 5 line items
  • Orders for 6 to 12 line items
  • Orders containing more than 12 line items


Note: Orders consisting of more than one pick ticket should have all of the tickets stapled together.

System planners will study and analysis these order profiles in order to develop a realistic understanding of customer ordering characteristics and patterns which can then be applied to the development and testing of various order picking strategies.

Final Thoughts

Companies that are in the early stage of considering upgrading their existing DC operations to incorporate material handling automation – need to recognize that this is the time to build a historical database. Don’t delay. Not having a comprehensive database to support planning efforts is not only reckless it may be a show stopper.

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