Order-Fulfillment and Across-the-Dock Concepts, Design, and Operations Handbook

David E. Mulcahy, John P. Dieltz

• Publisher: CRC Press
• Year: 2003
• ISBN:
  9781135459635
• Edition: 1
• Topic: Business
• Subtopic: Operazioni
• Index: Business

Order-Fulfillment and Across-the-Dock Concepts, Design, and Operations Handbook provides insights and tips that warehouse and distribution professionals can use to make their order fulfillment or across-the-dock operations more efficient and cost effective. Each chapter focuses on key aspects of planning and managing, making it easy to find information quickly. The text includes guidelines for development and projection of accurate facility, inventory, SKU, and transaction data, as well as design factors. Filled with illustrations, forms, and tables, this handbook helps readers develop the skill and knowledge required to design, organize, and operate a productive order fulfillment or across-the-dock operation.

1 Order-Fulfillment and Across-the-Dock Strategic Considerations

INTRODUCTION

This introductory chapter will:

• Identify key order-fulfillment and across-the-dock functions
• Look at piece and information flows
• Define terms used in the distribution industry to describe order-fulfillment and across-the-dock operations
• Outline the objectives of distribution operations
• Note the trends that are shaping order-fulfillment and across-the-dock operations and facilities

Order-fulfillment operations are similar across industry groups, whether the operation handles small items, flat wear, garments on hangers (GOH), cartons, or pallets. Each order-fulfillment operation performs most or all of the basic distribution activities. These activities include receiving operations, put-away and storage, order-fulfillment, shipping, and returns. Each activity can be broken into more specific tasks.

Receiving operations consist of unloading vendor or customer delivery trucks and receiving, checking, and marking inbound merchandise. Put-away entails internal horizontal and vertical transportation to the storage/pick area, work station, or outbound staging area. Storage includes deposit, withdrawal, and replenishment transactions. Order-fulfillment consists of order picking or distribution, sorting and checking, packing, and sealing. Shipping operations comprise weighing, manifesting, loading, and shipping. Returns processing involves handling of returns, out-of-season pieces, and customer transfers.

Across-the-dock operations are also similar in all industry groups. Most, whether for small items, flat wear, GOH, cartons, or pallets, include the following components:

• Controlling vendor or customer truck movement in the yard
• Unloading, counting, and (as required) checking and marking the merchandise
• Applying a sorting label (as required)
• Internal horizontal or vertical piece transportation from the inbound dock area to a work station or sorting area
• Sorting onto the dock staging area or directly into the customer delivery vehicle
• Completing the manifest
• Performing the various store and hold activities for the residual inventory
• Performing maintenance, sanitation, and loss-prevention activities

PIECE AND INFORMATION FLOWS

Piece and information flow patterns in order-fulfillment are similar to water flowing through a large funnel. The funnel’s mouth is wide and accepts a very large piece quantity and a great deal of information. Over several days or weeks a broad mix of pieces in various storage quantities from numerous vendors is delivered to your distribution facility on various delivery vehicles.

The customer information flow for storage pieces or customer orders occurs on a daily basis (more frequent than the piece receipt) along with the piece receipt information that is sent to the distribution operation. These storage pieces are placed into the company’s inventory files along with the customer orders. The time frame for an order-fulfillment operation to complete a customer-order and delivery cycle is generally short — less than 24 hours for most operations. The time frame of the customer-order and delivery cycle is determined by top management, based on customers, geographic location, and customer delivery address.

As pieces flow through the funnel, various value-added distribution activities are performed to ensure that the items satisfy customer needs and earn a profit for the company. With an increase in customers, orders, and value-added activities, the time available to perform these activities becomes increasingly shorter; this represents the funnel’s mouth.

The funnel for across-the-dock piece and information flow is more streamlined because the across-the-dock operation does not enter pieces into inventory. Instead, the pieces inventory passes through the distribution facility to the customer. If there is a residual inventory after the across-the-dock operation, it is noted in the facility’s warehouse management system (WMS) inventory files and placed in the storage area. If customers require additional pieces, the customer orders are completed from this residual inventory and conventional store and hold flows apply to the inventory and information.

With an across-the-dock operation, pieces arrive at the facility and are released to customers daily. This fast piece-flow, or non-store-and-hold, style of inventory management gives the piece and information flow a smaller funnel mouth.

Another characteristic of the across-the-dock piece flow funnel shape is that the size of the funnel’s middle section is similar to that of the mouth and exit opening. This similar dimension is a result of the fact that pieces are constantly flowing through the funnel. At some across-the-dock operations where the customer delivery vehicle is held at the shipping dock until it has a full load, the funnel exit has a wider opening than the funnel mouth.

The customer information flow for across-the-dock pieces or customer orders occurs on a daily basis as pieces arrive at the facility. When a vendor piece arrives at the receiving dock, the customer-order information is released — or has already been released — to the across-the-dock operation. This action allows pieces to flow from the receiving dock through the sorting system and onto the customer delivery vehicle.

ECONOMIC VALUE

An order-fulfillment or across-the-dock operation has an economic value in a company. The operation ensures that the stock-keeping unit (SKU) inventory, or the flow through the supply-chain logistics system, receives time and place value. The value is summarized in the following statement: “Your order-fulfillment or across-the-dock operation ensures that the right piece is in the right condition, at the right place (work station or customer location), at the right time, in the right quantity, and at the right cost.” Order-fulfillment or across-the-dock operations contribute to company profits by reducing operational costs and by satisfying your customers.

ORDER-FULFILLMENT OR ACROSS-THE-DOCK OPERATION SERVES YOUR COMPANY

Your order-fulfillment or across-the-dock operation helps your company achieve its objectives by performing the following services. First, it consolidates customer demand for pieces to achieve economies of scale. With today’s communication systems, your order-fulfillment or across-the-dock operations and customer delivery system can handle more customers and reduce the cost per piece. Second, it provides geographic piece distribution to your customers. The service ensures that your customer is receiving the best delivery cost per piece. Third, it provides the means for your company to flow pieces through its supply-chain logistics system. These pieces are produced throughout the year to accommodate seasonal demand. This service allows your company to reduce costs by purchasing large-scale piece quantities, providing your customers with the lowest piece cost and allowing for year-round demand.

ORDER-FULFILLMENT OR ACROSS-THE-DOCK OPERATION RESOURCES

You can maximize your order-fulfillment or across-the-dock operation and customer delivery by efficient use of scarce resources, which in turn help you meet strategy objectives in the company supply chain. Available resources include facility layout; order-fulfillment systems; employees; land; owned or leased buildings; your management team; computers and software; piece vendors; customers; consultants; and order-fulfillment vendors, industry groups, and associations.

COMPANY ORDER-FULFILLMENT OR ACROSS-THE-DOCK OPERATIONAL OBJECTIVES

The objectives of order-fulfillment or across-the-dock operations are to improve profits and provide customer service. To achieve these objectives, an order-fulfillment or across-the-dock operation tries to:

• Maximize facility use and customer carton or delivery vehicle space utilization
• Maximize order-fulfillment or across-the-dock system utilization
• Maximize employee utilization
• Reduce SKU handlings
• Maintain SKU accessibility
• Maintain the designed SKU rotation, also known as “inventory turns”
• Minimize logistics operational expenses
• Ensure company asset protection
• Ensure customer satisfaction

IMPORTANT ORDER-FULFILLMENT OR ACROSS-THE-DOCK TRENDS AND ISSUES

The important order-fulfillment or across-the-dock operational trends and issues are:

• New technologies and computer controls
• Automatic identification
• Pick position just-in-time replenishment
• Equipment and labor flexibility
• Maintenance of smaller inventories with material requirements planning (MRP) and distribution requirements planning (DRP)
• Use of mechanized or automatic machines
• Contract or third-party operations (3P)
• Customer-order mix and size changes with the increasing use of E-commerce

These factors have had an increasing impact on today’s order-fulfillment or across-the-dock operations, and will affect new operations and facilities planned for the year 2010. These new operations and facilities are designed to provide on-time and fast-response customer-order deliveries, handle a wide piece mix and SKU quantity, handle a smaller customer-order size or SKU quantity, and meet a high requirement for accurate order-fulfillment or across-the-dock sorting with minimal errors and damage.

E-COMMERCE AND THE INTERNET

E-commerce and the Internet have dramatically changed the order-fulfillment or across-the-dock customer-order profile. These new technologies have increased the number and frequency of customer orders, the importance of accurate order entry, and the piece mix. They have also decreased the order size (in pieces) per customer order and reduced the order/delivery cycle time.

OVERVIEW

The purpose of this book is to provide the reader with equipment applications, procedures, practices, tips, and insights to consider implementing in an order-fulfillment or across-the-dock operation. The book will also provide readers with an opportunity to maximize their company’s profits by reducing logistics operating costs, and maximize customer service with on-time and accurate deliveries.

2 Order-Fulfillment and Across-the-Dock Objectives and Their Impact on Your Company’s Profit and Customer Service

INTRODUCTION

This chapter defines the order-fulfillment and across-the-dock operation objectives of your company and customers. The chapter objectives are (1) to list and review order-fulfillment and across-the-dock activities, and (2) to provide techniques for design, facility construction, equipment installation, planning, and control.

ORDER-FULFILLMENT ACTIVITIES

In most small-item, flat wear, garments on hangers (GOH), master carton, or pallet order-fulfillment operations, the same activities occur, regardless of the size of the distribution operation or whether the operation involves manual, mechanized, or automatic pick processes. The distribution activity groups are (1) preorder pick activities, (2) order pick activities, and (3) postorder pick activities.

ACROSS-THE-DOCK ACTIVITIES

The same distribution activities occur in most small-item, flat wear, GOH, master carton, or pallet across-the-dock operations. These include vendor control, unloading, sorting, and loading.

Specifically, these activities involve (1) fulfilling vendor packaging specifications, applying a customer-discrete identification to each piece exterior, and, in the retail industry, attaching a price ticket to each piece; (2) unloading, counting, labelling and receiving; (3) sorting; (4) creating the manifest; (5) transferring any residual inventory to a store, hold, and pick area; (6) loading and shipping; and (7) fulfilling customer delivery.

PIECE-HANDLING CHARACTERISTICS

As pieces flow through a company’s supply chain, there is a good possibility that there will be a change to the piece characteristics. This is particularly the case during order-fulfillment or across-the-dock operation activities with their associated piece flow patterns. Changes might include:

• A small-item order-fulfillment operation receives stock-keeping units (SKUs) on pallets or master cartons and sends individual pieces and master cartons to your company’s customers.
• A GOH order-fulfillment operation receives large SKU quantities and sends individual and multiple GOH pieces to your company’s customers.
• A carton order-fulfillment operation receives pallets or cartons and sends individual cartons or several cartons or pallets to your company’s customers.
• A pallet distribution order-fulfillment operation receives pallets and sends one or several pallets to your company’s customers.

A characteristic of order-fulfillment operations is that the piece flow is defined as a store and hold product flow method. With the store and hold product flow method, pieces are transferred through the piece facility storage and pick positions. With each customer order, pieces are withdrawn from the storage or pick position and sent to the customer dock staging area or are loaded directly onto a customer delivery truck. In an order-fulfillment operation, the piece flow pattern steps are (1) from the receiving area to the storage area; (2) from the storage position to a pick position; and (3) from the pick position into a customer shipping carton or into a captive container through the pack area, to the manifest area, and into a customer staging area or directly onto a customer delivery truck.

With an across-the-dock operation, as a piece flows through the distribution operation, there is a slight possibility of a change in the piece handling characteristics. In most across-the-dock operations, if the piece is received as a pallet, the piece shipped to the customer is a master carton or pallet. With a small-item, flat wear, or GOH across-the-dock operation, the operation receives master cartons, flat-pack GOH SKUs, or a large GOH quantity. The operation then sends individual or multiple small items, flat wear, or GOH SKUs to customers.

The across-the-dock operation characteristic is that the pieces are not entered into the distribution facility inventory. All vendor pieces for an across-the-dock operation are customer-ordered SKUs. These SKUs are separated into individual customer orders from a mix of customer-ordered pieces. After the sorting activity, the individual customer pieces are quickly consolidated into a shipping container, staged in the customer-assigned location on the shipping dock, or sent directly onto the customer delivery truck. Any residual piece inventory is placed according to a store and hold method.

ORDER-FULFILLMENT OPERATION OBJECTIVE

The order-fulfillment operation objective is to ensure that SKUs meet company quality standards, which require that the correct SKU is transferred from the storage position to the correct pick position, in sufficient quantity and at the appropriate time. Standards furthermore require that SKUs are withdrawn in the right quantity, in the correct condition, and on schedule; they must have a packing list, be packaged in a protective and labeled shipping container, be properly manifested, and be delivered to a customer delivery location within the customer-order and delivery cycle time. These order-fulfillment activities, successfully completed, satisfy your customer-order requirement at the lowest possible operating cost.

ACROSS-THE-DOCK OPERATION OBJECTIVE

The across-the-dock operation objective is to ensure that (1) each piece meets company standards, (2) each piece is properly packaged and labeled with a customer discrete identification, (3) each piece is unloaded at the proper time and sorted or separated by customer identification, (4) the total piece count matches the vendor manifest, and (5) the purchase order (PO) piece quantity is sent either to the customer-assigned staging area or directly to the customer delivery truck. A customer delivery truck ensures that customer-ordered pieces arrive at the customer delivery location at a specific time that satisfies your customer demand at the lowest operating cost.

ORDER-FULFILLMENT AND ACROSS-THE-DOCK OPERATION ACTIVITIES

To achieve these order-fulfillment or across-the-dock operational objectives, you must design your facility and equipment layout and piece and information (or customer order) flow patterns to minimize piece handlings, ensure an efficient and cost-effective operation, ensure accurate and on-time piece and information flows through your company supply chain, and complete operational transactions that satisfy your customer’s orders.

Order-fulfillment operation activities may be categorized as follows:

• Preorder pick activities
  • Vendor or customer delivery truck yard control
  • Unloading and palletizing pieces
  • Receiving and SKU quality and quantity check
  • Ensuring that a discrete identification is placed on each piece or SKU
  • Packaging, labeling, and placing a price ticket on each SKU for some small-item, flat wear, or GOH SKUs
  • Internal transport activity
  • Depositing in a storage position
  • Inventory control
• Order pick activities
  • Information management system (IMS) customer-order entry and download to print order pick documents and order pick labels, or, for paperless pick, download to the pick area or to an automatic pick machine microcomputer
  • Carton makeup, labeling, and packing list (attached or inserted into a pick container)
  • Manual order pick or computer impulse to release a SKU...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Preface
• Authors
• 1 Order-Fulfillment and Across-the-Dock Strategic Considerations
• 2 Order-Fulfillment and Across-the-Dock Objectives and Their Impact on Your Company’s Profit and Customer Service
• 3 Order-Fulfillment Systems
• 4 Garment-on-Hanger Order-Fulfillment Operations
• 5 Planning a Carton or Full-Case Order-Fulfillment Operation
• 6 Pallet Order-Fulfillment Operations
• 7 Single-Item, GOH, Carton, or Pallet Across-the-Dock Operations