In my last post, I talked about the Pareto Principle, or the 80-20 Rule, and of falling into the trap of a single-technology system for the entire SKU base. In this installment, I want to talk about the fast-moving SKUs and how dealing with them can make your distribution center more efficient.
The fastest-moving SKUs in the distribution center are the top 20% of the SKU base. These SKUs generate, around 80% of your volume.
Now, the ratio of 80-20 is not always exact; nor is it proportional to 100%. For example, some companies have an 80-30 relationship meaning that 80% of their volume is generated by 30% of their SKUs.
That’s OK.
It just means that the slope of the curve for your operation is not quite as steep as Mr. Pareto would suggest. What is important is that you identify the group of SKUs that do generate 80% of your volume, and focus on these. These make you money!
The principle of efficiency is to concentrate the fast-moving, frequently-touched SKUs in single area. “Pull the weeds” – eliminate all other slower–moving SKUs, so you can efficiently service the 20% of your product base that generates 80% of your volume. By pulling the weeds, you can make even more money because you will generate business with less effort.
Now, the top 20% really has two sub-sets: the top 2% (AA-movers), and the next 18% (A-movers).
The top 2% have wings. They practically fly out of the distribution center by themselves. If you run a distribution center, you know right now which these products are in your gut. Your employees all talk about them.
Remember when the iPod Nano® came out? The cartons practically came with retro rockets to move them faster through the supply chain. Distribution centers couldn’t keep them in stock.
And that’s the problem with these SKUs; replenishment. The most difficult part of managing these SKUs is not picking them – you can do that with snow shovels. The difficulty is keeping up with the replenishment tasks.
When you think about technologies for the top 2%, think in terms of replenishment. How do I replenish the pick location with as little movement as possible?
Specific technologies will vary, of course, upon the SKU or carton size. The principle is to replenish the largest unit practicable. In full-case picking, the replenishment unit is always a unit-load, or pallet.
When the Nano came out, we were suggesting this product be replenished by the pallet-load as well. The picking was done by a pick-to-light display over a set of pallet locations for the AA movers. Think about it; if you were to replenish those Nanos at the case-level, how many man-hours per day would you spend replenishing the pick slot? You would be back every 15 minutes with more cases. For the AA-movers, tackle the replenishment tasks first.
The next 15% — the A movers — require that you “pull the weeds.”
Think about how many products your selectors have to walk past to get to the products they need to fill an order. If 80% of your volume is done by the top 20%, it stands to reason that you need to get the other SKUs out of the way.
Now that you have this 18% concentrated in one area, what can you do?
Technologies to consider:
Automated picking systems (A-frames) – these systems automatically pick the order for you. They can generate as much as 2,400 32-piece orders per hour! The drawback of A-frames is that they are form-factor specific; they require small, lightweight cuboid-shaped or stackable products.
They are ideal for pharmaceuticals, cosmetics and office supplies. They are off the table for apparel, poly-bagged items or irregular shapes. There are automated machines for all three bandwidths of the Pareto curve, so if you have these types of products, they are something to consider.
Mini-load-replenished put-to-light or batch-picking systems – most people are well-familiar with pick-to-light technology. The following application may also be done with pick-to-voice. The new twist here is to glue the pick-to-light locations onto the side (the long, down-aisle side) of a mini-load. What you have now is an automatically-replenished pick-to-light location.
What is so special about this?
You get the picking efficiency of pick-to-light (250 lines/hr +) and no people required for replenishment. All of the replenishment stock is in the air above your head (nobody can get to it to cause shrinkage or inventory changes), and the control system tells the mini-load crane when to bring down more stock. But wait! That’s not all! You can also use the crane to swap out SKUs no longer needed during the picking shift to condense your pick zone even further. (Be careful – this must be carefully engineered – do not try this at home!)
Pick-to-light with zone-bypass conveyor systems – This technique embeds the conveyor system into the flow-rack and consists of two conveyors: a transport conveyor (the highway), and the picking spur. The transport conveyor is closer to the back of the rack, and the picking spur is on the pick-aisle. This arrangement allows the conveyor system to bypass pick zones the order tote does not need to visit, and only visit the ones it needs.
This is, of course, not an exhaustive list, but merely some examples to get the juices flowing. I would be interested to hear some examples of how your company concentrated your A-movers and pulled the weeds. Have a clever use of technology to solve this problem? Let us know! Learn more about new ideas in distribution; Download abco AUTOMATION’s whitepaper!