Supply Chain Management (SCM) 101: Warehouse and Distribution - Picking Methods, Zone, Wave, Batch, Piece, Automated ASRS, AGV

What This Is

Picking methods are strategies used to select and retrieve products from a warehouse or inventory storage area. Effective picking methods can significantly impact warehouse efficiency, reduce labor costs, and improve customer satisfaction. For example, Amazon uses a combination of wave and batch picking methods to fulfill online orders, ensuring timely and accurate delivery to customers.

Key Frameworks & Formulas

• Zone Picking: A method where products are stored in designated zones, and pickers retrieve items from a specific zone based on the order requirements.
• Wave Picking: A method where orders are grouped into waves, and pickers retrieve items from the entire warehouse based on the wave requirements.
• Batch Picking: A method where multiple orders are grouped together, and pickers retrieve items from the entire warehouse based on the batch requirements.
• Piece Picking: A method where each order is picked individually, and pickers retrieve items from the entire warehouse based on the order requirements.
• Automated Storage and Retrieval System (AS/RS): A system that uses automated machinery to store and retrieve products from a warehouse.
• Automated Guided Vehicle (AGV): A vehicle that uses sensors and navigation systems to move products around a warehouse.
• Pick Rate: The number of items picked per hour, typically measured in pieces per hour (PPH).
• Pick Frequency: The number of times a picker visits a storage location to pick an item, typically measured in visits per hour (VPH).
• Safety Stock: The additional inventory held to mitigate stockouts and meet customer demand, calculated as Safety Stock = Z ×-× ?L, where Z is the Z-score,-is the standard deviation, and L is the lead time.
• Economic Order Quantity (EOQ): The optimal order quantity that minimizes the total cost of inventory, calculated as EOQ = ?(2DS/H), where D is the demand, S is the ordering cost, and H is the holding cost.

Step-by-Step Application

1. Determine the picking method: Based on the warehouse layout, product characteristics, and order requirements, determine the most suitable picking method (zone, wave, batch, piece, or automated).
2. Design the warehouse layout: Design the warehouse layout to optimize picking efficiency, considering factors such as storage density, aisle width, and picker traffic flow.
3. Implement the picking method: Implement the chosen picking method, including training pickers on the new process and providing necessary equipment and technology.
4. Monitor and adjust: Monitor the picking process and adjust the method as needed to optimize efficiency and reduce costs.
5. Consider automation: Consider implementing automated systems, such as AS/RS or AGV, to improve picking efficiency and reduce labor costs.

Common Mistakes

• Mistake: Assuming a single picking method is suitable for all products and orders.
• Correction: Different products and orders may require different picking methods, and a combination of methods may be necessary to optimize efficiency.
• Mistake: Failing to consider the warehouse layout and picker traffic flow when designing the picking process.
• Correction: A well-designed warehouse layout and optimized picker traffic flow can significantly improve picking efficiency and reduce costs.
• Mistake: Not providing adequate training and support for pickers when implementing a new picking method.
• Correction: Proper training and support are essential to ensure pickers can effectively use the new method and make adjustments as needed.

Exam / Certification Tips

• Be prepared to explain the advantages and disadvantages of each picking method.
• Understand the key factors that influence picking efficiency, including warehouse layout, picker traffic flow, and product characteristics.
• Be able to calculate safety stock and EOQ using the formulas provided.
• Recognize the importance of automation in improving picking efficiency and reducing labor costs.

Quick Practice Problem

A warehouse has a daily demand of 100 units, a lead time of 5 days, and a service level of 95%. What is the safety stock?

Answer: 15 units Explanation: Using the safety stock formula, Safety Stock = Z ×-× ?L, and assuming a Z-score of 1.65, standard deviation of 10 units, and lead time of 5 days, we can calculate the safety stock.

Last-Minute Cram Sheet

• Zone Picking: A method where products are stored in designated zones, and pickers retrieve items from a specific zone based on the order requirements.
• Wave Picking: A method where orders are grouped into waves, and pickers retrieve items from the entire warehouse based on the wave requirements.
• Batch Picking: A method where multiple orders are grouped together, and pickers retrieve items from the entire warehouse based on the batch requirements.
• Piece Picking: A method where each order is picked individually, and pickers retrieve items from the entire warehouse based on the order requirements.
• AS/RS: An automated system that stores and retrieves products from a warehouse.
• AGV: A vehicle that uses sensors and navigation systems to move products around a warehouse.
• Pick Rate: The number of items picked per hour, typically measured in pieces per hour (PPH).
• Pick Frequency: The number of times a picker visits a storage location to pick an item, typically measured in visits per hour (VPH).
• Safety Stock = Z ×-× ?L: A formula to calculate the additional inventory held to mitigate stockouts and meet customer demand.
• EOQ = ?(2DS/H): A formula to calculate the optimal order quantity that minimizes the total cost of inventory.
• "Postponement" delays final configuration, not production – it's a push-pull boundary strategy.