An Overview of Warehouse Optimization: November 2013

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An Overview of Warehouse Optimization

Article · November 2013


DOI: 10.11601/ijates.v2i3.61

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An Overview of Warehouse Optimization
Jan Karásek

Abstract—This paper presents an overview related to ware- II. O PTIMIZATION OF T ECHNICAL S TRUCTURE
house optimization problems. The problems are divided in to
several groups. First, the basic technical structure of warehouse The basic technical structure involves e.g. the layout de-
is described. Second, the standard operational and organizational sign of the logistic warehouse or whole distribution center,
framework of warehousing company is characterized, which the choice and dimensioning of conveyors and warehouse
is in special attention in this work. Third, the coordinating equipment, the design of the physical interfaces to neighboring
and controlling systems for warehouse operations is briefly systems and other attributes related to technical structure.
mentioned, and typical warehousing operations dependent on
technical and operational structure are described. The main
Example of Warehouse with Traditional Layout 2
contribution of this paper is to show the current state of the art
in optimization in mentioned three groups of interest in logistic
warehouses and distribution centers.
Keywords—Logistics, Optimization, Warehouse.

I. I NTRODUCTION
Modern logistic warehouses and distributions centers are
designed on the basis of dozens optimization studies. In con- a)
sequence of that, Warehouse Management Systems (WMS)
become important and more complex and users find it quite c) c) c) c) c)
hard to manage. The software market offers large variety of d)
solutions with different system requirements and possibilities, b) b)

and to choose the suitable system for every company is


not quite an easy task, because it is influenced by many e)
aspects which must be considered, and one of this aspects
f)
are optimization methods based on automated processes for
tasks dynamically changeable in time. The WMSs which drive
logistic warehouses and distribution centers are core elements h) i)
of the material and goods flow in logistic chain and they will
be subjected to further investigation in following text related
to optimization of technical and operational structure. h)
According to the [1] the activities of the warehousing i)
optimization can be divided into three groups. First, the basic
technical structure of warehouse. Second, the operational and
organizational framework, to which a special attention is
paid in this work. Third, the coordinating and controlling
systems for warehouse operations. The main contribution of
this paper is to show the current state-of-the-art in optimization
in mentioned three groups of interest, and to help researchers g)

with orientation in logistic warehouse optimization problems.


The rest of the paper is organized as follows. The second
section gives an overview of optimization related to technical Fig. 1. The Example of Traditional Rectangular Warehouse Layout
structure of logistic warehouses and distribution centers. The
third section is related to optimization of operational structure. The layout design of the warehouse [2] is a key component
The fourth section very briefly describes the WMSs which are of further optimization tasks and has a significant impact
the core of every warehouse. The fifth section describes the on order-picking and traveling distances in the warehouse.
typical warehousing operations which are tightly related to In [3] it was found out that the layout design has more
optimization of technical and operational structure of ware- than 60% effect on the total travel distance, and three basic
houses. The last section gives a conclusion of the paper. types of warehouse layout were presented. In [4] and [5],
the application of parallel cross aisles in the warehouse was
Jan Karásek is with the Department of Telecommunications, Faculty of presented, and it was considered as a significant improvement.
Electrical Engineering and Communication, Brno University of Technology,
Technická 12, 616 00 Brno, Czech Republic, e-mail: [email protected]. The layout is usually of rectangular shape and based on pallet
Manuscript received October 21, 2013; revised October 31, 2013. manipulation [6], see Fig. 1. According to [7] and [8] there is
a few factors to be considered in the layout design, such as: according to the dimensions, but the standardization is mostly
the number of blocks; the length, the width, and the number only for a specific continent. While pallet manipulation is
of picking aisles; the number and shape of cross aisles if demanded in all types of warehouses, conveyors are not used
they are present; the number of rack levels; and the position everywhere. Conveyors divide the warehouse into zones, move
of input and output gates in the warehouse. In [9] has been a material through a given path, and also restricts the move-
presented a new Flying-V and Fishbone design of cross aisles, ment of workers and saves their energy. With the deployment
which offers a 10% – 20% reduction of traveling distance. of conveyors the sortation system is quite often installed.
In [10] has been introduced an analysis of dual-commands Sortation is mostly based on some scanning technology of
and in [11] has been introduced adapted Fishbone design for Bar-Codes, RFID chips, Magnetic strips or Machine vision.
dual-commands. In dual-commands environment the worker The system works on a few common principles, e.g. push
loads the goods in a pickup and deposit location and travels sorter pushes a passing carton to alternative path from the
to a storage location and then travels to another location from main conveyor, tilt-tray sorter works on the principle of tilting
which he picks goods and returns back. In [12] has been a tray and the object slides into the collecting bin, and others.
proposed a more developed Flying-V design of cross aisle Cranes are used to move materials over a variable paths
and Inverted-V design. This improvement brings another 3% in restricted area, e.g. jib crane, bridge crane, gantry crane,
saving of traveling distance. The warehouse layout is also and stacker crane. Positioning equipment is used to handle
connected with the aisle design [13], [14]. The layout is mostly material at a single location, e.g. hoists, balancers, and other
narrow-aisle-like, which increases the space utilization with manipulators. The automation in this area often covers systems
minimal costs, but it can lead to higher operational costs and such as Carousels, A-frames, and Automated Storage and
more congestions among workers. Retrieval System (ASRS).
Carousel is a shelf rotating in the circle. Instead of the
Traditional Layout 1 Flying-V Layout picker traveling, the storage location is moving. A simple
rotation pattern on how to quickly find the shortest way
to pick the order was introduced in [15] and [16]. Large
orders in carousel environment have been studied in [17]. The
carousels with multiple order-picking have been studied in
[18]. Optimal storage locations have been investigated in [19].
An A-frame is an automated dispensing machine dropping
items onto a conveyor. A-frame is used when a product is
picked in very high volumes, the labor is expensive and is
used only to refill A-frames. In-aisle cranes, so called ASRSs,
Traditional Layout 2 Fishbone Layout
replace the humans using trucks with simple robotic devices,
moving in horizontal and vertical direction in the full extent of
aisle. The design and performance of such models as well as
travel time models have been investigated in [20], [21], [22],
and [23]. Despite of all these inventions, the typical model
of warehouse with pickers and various models of trucks are
still quite popular. Other design and performance models are
described in [24], [25], [26].

Traditional Layout 3 Inverted-V Layout III. O PTIMIZATION OF O PERATIONAL S TRUCTURE


The operational and organizational framework combines
different aspects from many areas, e.g. business management,
inventory management, organization management, transporta-
tion management and many other areas of management. There
are two basic slotting strategies (storing assignment policies
[27]): random and dedicated. While random strategy allows
to store a pallet on an arbitrary empty location with the same
probability [28] or on the closest empty location [7], the
dedicated strategy allows to store a pallet only on specified
locations. The storage locations are often organized somehow.
Fig. 2. The Warehouse Layout Examples, see [9] and [12] The organization can be e.g. class-based storage, where the
goods are clustered according to the frequency of orders. This
There are many types of warehouse equipment, especially policy assigns the most frequently requested goods to the best
the equipment which should reduce labor cost and increase (closest) locations from input/output gates. Another possibility
its utilization. Common storage models cover pallet racks, is to use family grouping, where the goods are clustered
cartoon flow racks for high-volume picking, and shelving according to relations or similarities between products or
for lower-volume picking. All this equipment is standardized orders [29], [30].
S-Shape Return
If the order is small and is far from exceeding the picking
capacity, it is possible to pick more orders in a single order-
picking tour. This is known in the literature as order batching
or simply batching. Since this is a job with sub-tasks (a picking
tour with several orders) it is considered a NP-hard problem.
It was proved in [32] that batching has a significant impact
on the performance of order-picking. Therefore, researchers
pay attention to the problem of batching and the heuristic
methods are still under investigation [33], [34]. It is also
possible to divide an order-picking process into zones. Goods
Start Start
belonging to the same product group are stored in the same
Largest gap Composite zone. In comparison with batching, zoning does not have a sig-
nificant impact on the performance of the order-picking system
[35]. The advantage of zoning lies in reducing the congestion
in the aisles and when the goods are really in one small area,
the traveling is also reduced. The main disadvantage is the
consolidation of order when it is completed by more pickers
from different zones.

IV. O PTIMIZATION OF WAREHOUSE M ANAGEMENT

Start Start
The coordinating systems and control are of special impor-
tance. The WMSs are used to control and optimize the ware-
Mid-point Optimal
house and all typical warehousing operations (see section V),
to know every detail about goods and their actual storage
location all the time, the utilization of workforce, orders, and
they also orchestrate the flow of people, machines, and goods.
Such systems have many interfaces to adjacent systems in
a company, e.g. merchandizing systems, information systems,
production and enterprise resource planning systems, material
flow and warehouse controlling systems and other systems
related to a business-to-business or business-to-consumer.
Why is all the optimization being applied? Everything is
Start Start
based on customer demands. The main reasons to optimize
are to increase the performance of the company regarding
the demand-driven production (pull system), to ensure the
productivity (based on just-in-time delivery) and minimize the
Fig. 3. The Common Routing Methods described in [5] stock along the supply chain, provide additional services, and
reduce the transportation costs.
Single order-picking is the strategy where pickers pick
only one order at a time and it is one of the most used V. T YPICAL WAREHOUSING O PERATIONS
picking policies. A Stock Keeping Unit (SKU) is tightly The basic processes in warehouse are receiving, storing,
related to order-picking. SKU represents the smallest physical put-away, picking/retrieving and shipping goods. The ship-
unit of a product with which a company manipulates, e.g. ping operation can also consist of many sub-tasks such as
a box, a kind of case or carton consisting of inner packs and consolidation of goods if the batching, grouping or zoning
individual pieces of product, but it can also be only a pallet is applied, checking the order according to its completeness,
in huge distribution centers. packing and, of course, shipping. The literature also mentions
The routing policies should ensure an optimal travel path cross-docking as a special warehouse operation. The cross-
through the warehouse for order-picking. One of the first docking is described at the end of this sub-section.
algorithms for optimal order-picking path design was intro- Receiving is the first operation in the warehouse. This
duced in [31]. Since the algorithm can be applied only for process starts by notification of the arrival of goods. Then
conventional warehouses, the problem is mostly solved by begins process of unloading, counting, identifying, quality
heuristic methods. The common routing methods, see Fig. control, and goods acceptance (incoming inspection) related
3, described in [5] are: S-shape, Return policy, Mid-point to a type and quantity by unloading staff according to the
strategy, Largest gap strategy, Composite heuristic, Optimal company rules. When the goods are accepted, the receipt is
routing. All the methods were primarily developed for single- issued. The acceptance depends on the delivery status – the
block warehouses. Modified methods for multiple-block ware- delivery date, the quality of delivery, the planned schedule
houses were proposed in [4]. which should also minimize a truck waiting time.
supported by picker routing methods. Basic routing methods
Receiving
are described in [5]. Picking of goods can be done by many
Checking Cross-
Manufacturer
docking ways. The special case of picking is order-picking which
is a consolidation of a customized quantity of one or more
articles related to a specific order. Sharing of order-picking
Returns
is also a quite frequent way of picking. The sharing of
Put-away
Transportation an order is very related to batching, grouping, and zoning.
The order-picking was also designed by algorithm based on
Replenishment Traveling Salesman Problem (TSP) heuristics introduced in
[39], which performs better for multiple picking than routing
methods. In [40] it was discovered that appropriate sequencing
Warehouse
Storing Picking Packing Shipping of picking is one of the crucial factors to achieve a high
efficiency of picking. Since the traveling is the most time-
consuming part of the process, the scientists paid attention
Fig. 4. The Logistic Process Flow in Warehouse
mostly to this part of the problem.
The travel time is an increasing function of the travel
distance, which was investigated in many papers and consid-
The product is then accepted, marked e.g. by a bar code ered one of the primary optimization conditions. In [41] are
and registered in the information system, and staged for put described three analytical models of expected travel distance
away. The receiving process takes about 10% of operating for return policy, traversal policy, and midpoint policy. To
costs [6]. The paper [36] discusses the role of goods receiving allay blocking and/or congestion, the order-picking strategies
and shipping in warehouse environments. A formal notation can be used, or the layout of the warehouse can be adjusted
of schedules is proposed and the specific analytical examples in the meaning of wide-aisles, or zoning can be applied
are shown in this paper. [42]. The congestion has also been investigated in [7] by
Storing operations consist of the distribution of goods waiting time of a picker queuing to enter the warehouse. The
to storage areas (transportation to a storage place or cross- analytical and simulation models of order-picking systems in
docking, which is the transportation directly to the shipping [13] were developed to discover the system behavior with
department), identification (if it was not done during accep- different activity levels. The result was that the congestion
tance), assignment of the storage bin and put-away which is among workers can be a significant issue if the space is
a simple determination of a storage bin concerning the physical highly utilized. In [34] was provided an analytical approach for
dimensions and the weight of goods; storage monitoring is the expected system throughout time approximation. In [43]
also a part of management systems – to know which goods and [44] was determined a relationship between pick density
are available and where. and throughput, which has demonstrated the significance of
Put-away is a process which requires a strictly determined blocking. Inasmuch as the models of picking are mostly
storage location. This is very important, because the informa- investigated only as single-picker operations, and are conse-
tion system has to know all the time what storage locations quently suitable to evaluate the order-picking efficiency by
are available, what is the location of a specific type of goods travel distance, an aisle congestion never takes place in such
and where each particular pallet is stored. This information is models. In real-world situations the congestion is a normal
also used for an efficient design of a pick-list. This process everyday situation in systems with multiple order-picking and
requires about 15% [6] of operating costs, because this covers dozens of workers. The throughput analysis for order-picking
a lot of transfers from the gate to the storage place. with multiple pickers and aisle congestion is investigated in
Picking (also called Retrieval) is a process which covers [45] and [46]. In [47] were investigated heuristic methods
lots of issues. First, a pick-list is given to an employee. The and it was proved that the storage assignment policies in
picking takes about 55% of the warehouse operating costs [6] a multiple picker warehouse environment are outperformed by
(according to [7] it is 50% – 70%) and consists of: Traveling the proposed heuristics policies in this paper.
(55%), Searching (15%), Extracting (10%), and Paperwork The batching in the narrow-aisle order-picking system with
(20%). Picking can be of two types, homogeneous and het- the picker blocking consideration was investigated in [48]. The
erogeneous. Homogeneous picking is quite simple, the picker paper has proposed strategies to control picker blocking with
operates simply with a whole pallet. In heterogeneous picking 5% – 15% reduction in the total retrieval time. In [49] has
the picker is told where and what to pick, in what quantity been proposed an Ant Colony Optimization (ACO) routing
and units. Due to customer needs, the heterogeneous picking algorithm for two order pickers with the consideration of
is logically more frequent. The disadvantage of heterogeneous congestions. The paper analyzes the warehouse layout and its
picking is that a smaller unit means higher costs. The pick-list impact on the order-picking system performance and proves
is still quite often a sheet of paper, but in some warehouses the the good performance in dealing with the congestions if two
pickers use the smart embedded devices such as the Bar-Code pickers are used simultaneously. In [50] has been proposed two
Reader, Personal Digital Assistant etc. The advantage of using new batch construction heuristics called K-means Batching
such equipment is reviewed in [37], [38]. and Self-Organization Map Batching which minimize the total
The planning of the picking process is based on orders and travel distance and the average picking truck utility.
Also the online version of the multiple picking agents for lead time and lower uncertainty of demand, but in general the
the warehouse management has been focused on in [51]. The preference depends highly on business environment [60].
rescheduling of the buffer of orders, to which new orders arrive
randomly while old orders are being picked, was investigated VI. C ONCLUSION
and two real time algorithms were proposed. The solution The optimal operation of a warehouse is achieved when
performs good when dynamism is low or moderate, but when each customer is satisfied completely according to his order,
it is high, the solution tends to fail. The dynamic order-picking in due time and when all warehouse and logistic processes
and cost reduction generated by optimal policies is discussed are done in the shortest possible time, with minimal cost and
in [52]. This research used a Markov Decision Process based optimal utilization of resources under dynamically changing
heuristics which is compared to some naive heuristics and an conditions. The literature presented in this paper gives great
improvement in the range of 7% – 99% is depicted. Other ideas of warehousing optimization, but only some of them are
heuristic for online batching based on offline batching is really applied in real-world warehouses and used. The problem
introduced in [53] and [54]. The algorithms are evaluated of warehouse layout lies mainly in the effective use of space
in a series of experiments and it is shown that the choice so the typical rectangular warehouses with narrow-aisles are
of an appropriate batching method can lead to significant most utilized. There is also a critical pressure on effective
minimization of the maximum completion time. In [55] have utilization of equipment and labor and its minimal quantity in
been proposed A*-algorithm for the routing and Simulated the warehouse, which can also save the costs significantly.
Annealing-algorithm for the batching. For batches of tree The dedicated assignment based on the frequency of ma-
customers, the proposed algorithm produces results with an nipulation with goods is broadly used, but some big and well-
error of less than 1.2% compared to the optimal solution. known companies, e.g. Amazon, use the chaotic assignment
Consolidation of an order is a process of completion of system and it seems to be a good solution as well. The routing
a customer’s order in case that it was picked by more than methods supporting order-picking and picking itself have been
one pickers. The paper [56] has proposed the design and investigated for single picking tours, but the batching seems
the operation of an order-consolidation warehouse. The paper to be standard for many companies. Moreover, the most of the
provides a simulation model and shows its application. When scientific papers do not take into account the real conditions as
the order is consolidated, the process of checking follows. the blocking and congestion are, but there are dozens of work-
Checking of an order is a process that checks if the order ers working simultaneously in the real warehouse or multiple-
is complete and accurate. block warehouse and the congestion or even a collision must
Packing ensures that the picked and consolidated goods, be taken into account in everyday operation.
also checked for the completeness of an order, are packed for The result of this review of warehouse optimization is
transportation and given to the shipping department. Packing that the real-world conditions should be applied instead of
can also be ensured by an autonomous packing department in their relaxation for the sake of application. The work can
the warehouse, then the consolidation and checking are usually be shared by many more employees than two, which was
part of this department. mostly investigated in the papers. The idea of how to apply
Shipping ensures that the packed consignment is provided this optimization is to utilize the shop scheduling techniques
by transport destinations, assigned to the truck and optimally combined with Vehicle Routing Problems solving techniques.
loaded on the truck. The shipping process is ensured by the The shop scheduling techniques can be employed when the
shipping department that can also secure three preceding jobs. work is scheduled in the warehouse, even when the work must
Cross-docking is a process which minimizes the storage by scheduled dynamically. The machines in shop scheduling
and order-picking time while the receiving and shipping op- problem are represented in the warehouse by any equipment
erations are still allowed to a full extent. The basic idea is needed for each job, such as trucks driven by workers (fork-
to transfer goods directly from the incoming to the outgoing lift hand pallet truck, fork-lift low truck, fork-lift high truck),
department without any other warehouse operations in be- checking units (workers), packing units (workers with special
tween. In [57] the problem was handled as a Vehicle Routing equipment) and others. The operations in the warehouse, called
Problem. In [58] have been presented a solution developed jobs in the scheduling, represent a single assignment given to
for multiple delivery centers by many sub-optimizations of the worker by operational manager e.g. the employee has to
single centers based on Neighborhood Search and Tabu Search unload a pallet from a lorry, go through the warehouse and
algorithms. The scheduling of trucks in the cross-docking store it on a shelf. The job is composed of sub-operations
system with five meta-heuristic algorithms (Genetic Algo- called tasks. A task represents a single operation of job, e.g.
rithms, Simulated Annealing, Tabu Search, Electromagnetism- receiving, unloading, put-away, moving and storing etc. The
like Algorithm, Variable Neighborhood Search) with respect tasks can be done by several workers. So, the job is spread
to minimization of the total operation time is described in in few machines working in sequence in the language of shop
[59]. The analytical models for pre-distribution cross-docking scheduling problems. Transports, moving and routing of trucks
(on the side of a manufacturing company) and post-distribution in warehouse could be inspired by Automated Guided Vehi-
cross-docking (on the side of warehousing company) proposed cles (AGV) techniques transformed from open space Vehicle
in [60] had been compared with a traditional distribution center Routing Problem (VRP) techniques to warehouse environment.
system. Analytical results showed a pre-distribution cross- Application of these methods could further reduce the blocking
docking as a preferred solution for centers with shorter supply and congestions as well as collisions of trucks.
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