When I talk to logistics and supply chain managers about their products moving through their supply chain, I usually refer to something called The Happy Flow. For those that don’t know this term, I will quickly explain it.
What is a Happy Flow?
There is a Happy Flow if there is maximum efficiency in the logistics process from order to delivery. This means that customer service will urge customers to change ordered quantities (if needed) in such a way that full boxes and full pallets can be shipped, preferably in full truckloads. This can also be done in the inquiry / quotation phase of the ordering process. This minimizes the logistics cost by minimizing handling in the warehouse and minimizing the loading meters needed. You create optimized loads, on box, pallet, truck and shipment levels.
Sooner Means happier!
The earlier in the Order-To-Cash process optimized loads are created the happier the flow is. Orders sized to exactly fill a pallet, or a truck can’t be improved on further in the process in the warehouse. When item or box picking is involved there is room for improvements in the warehouse.
Usually in the Warehouse
When sales orders arrive at the warehouse, they are generally exactly that – orders. It’s basically a list of items that need to be collected. The warehouse management system may provide optimized picking routes and sizing information to estimate as to how many boxes or pallets are needed. The boxes and pallets are usually filled and stacked based on the experience of the people doing it, and with the boxes at hand. There is quite often no overview of the full order.
If the Flow is Happy
So, orders sized to exactly fill a pallet or fill a truck cannot be improved upon in the warehouse – no discussion there. But if there is loose item or loose box picking these items need to fit in boxes and the boxes need to fit on pallets. This is where load optimization comes in.
With load optimization items and boxes of a full order can be analyzed to create optimized pallets. Pick sequences can be adjusted accordingly, considering warehouse layout. Items are combined so they fit well together in boxes and full pallets are built. This is done based on the instructions coming from the load optimization software. Full boxes, full pallets, full trucks.
But, But, But… in the Warehouse
When discussing this process with customers or potential customers I often get asked this:
“‘If we improve one part of the order to cash flow will we then degrade another part down the line – or just cannot do what was theoretically calculated and therefor be unable to reap the expected benefits?”
The main concern usually is that the productivity of warehouse staff will go down. You will hear things like: “‘If somebody in the office tells us exactly how to build a pallet based on some theoretical calculations we will lose all gains because it will take a long time to gather all the articles and build the pallet as specified!” or “Spending time looking at a picture how to build the pallet is better spent actually building it” or “That doesn’t make sense, I know better than some computer how to do this, I’ve been doing this for years”.
Custom Fit for All
The answer to the question on reaping the benefits is simple: Yes! You can do both, but there is no one size fits all approach. Custom fit is how it works. Each supply chain and logistics operation is different, which means that the 3D load planning techniques used should be based on the specifics of your operation.
How Others Have Solved It
What I would like to share are the multitude of approaches and process optimizations we encounter at the customers we have worked with and currently are working with together. I want to give an impression how companies solve the inherent tradeoffs in optimizing in a complex and multi-facetted world.
Load Building at a Global Food Manufacturer with Palletizing and Truck Loading
A well-known food manufacturer uses the 3D load building calculations to optimize pallet and truck fill both for replenishment and customer orders. This works in two ways. The approach lowers transportation spend, as less trucks are needed to transport the same volume. The manufacturer also has seasonality. In the high season the total volume that they can ship is constrained by the number of trucks available. With 3D load building, the manufacturer has been able to increase the fill rate of the trucks, which has results in a greater volume shipped out in the high season with the same maximum truck capacity. Revenue in the high season is now significantly higher.
Meanwhile at the Warehouse
The order pickers in the manufacturers warehouse are guided with instructions on their mobile devices on the bin they need to go to and the number of layers and or cartons they must pick. Pickers pick straight to the pallet. When the picker is done the pallet is ready to be shipped. Warehouse staff simply follows the orders, and do not influence the way pallets are built.
Pick efficiency is maintained by allocating the products to bins along the lines of preferred stack order, so pickers can pick the heavier items first and end with the items that need to go on the top layer of the pallet.
In my next blog I’ll share more examples of how other companies have lowered cost and increased revenue through 3D load building.