Integrating Supply Chain Modelling to Deliver Effective Fulfilment

Introduction

Within the overall scope of the supply chain, there are a number of well established techniques and products that address specific areas, but the internal operation of the distribution facility has been a notable omission. This paper explores an approach to optimising the warehouse operation, in terms of product allocation to storage and picking methods and appropriate inventory levels, and identifies some of the benefits that can be achieved through this.

A typical warehousing operation will house a dynamic range of products. As a result of promotions, new product introductions and product deletions, these are constantly changing.

The approach described allows managers to:

• Allocate storage and picking media to best effect across the current product range.
• Understand capacity constraints in terms of their existing layout.
• Understand the “ideal” balance of equipment for their operation.
• Quantify and assess the costs of handling each product code in the warehouse over a given period.

The technique can be applied to existing facilities as well and new site design.

Conclusion

This paper has attempted to highlight the benefits that can be gained through the correct focus on internal distribution centre operations. The development of an integrated supply chain model to address this area has overcome some of the historical barriers to unlocking these benefits.

In developing the model, we have avoided the complexities of optimisation algorithms. Instead, we have integrated the inventory elements and storage design elements using an iterative approach to optimisation, relying on the speed of the model to perform the calculations required for each assessment.

This approach has delivered a number of interesting benefits to the projects we have described:

• Practical recommendations to improve efficiency and productivity within existing operations.
• A clear understanding of the issues amongst the project team allowing implementation plans to be executed effectively.
• Thorough and rigorous assessment of technology options avoids inappropriate capital expenditure.
• An operational tool that can be used by the local management team to optimise performance on a regular basis through reanalysis of the product range against latest data.

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This White Papers article was created on 26th May 2003