Logistics Management Appunti/Notes

Routing Policies for Travel Minimization

PRO: The travel is minimized

CON: A specific picking tour has to be determined per each order

1. Pre-defined policies

A pattern is chosen once for all and is used for all the orders irrespectively of the specific travel-minimizing path

PRO: The routing policy is more stable and easier to memorize

Easier to apply the storage policies

CON: The travel is not minimized

Traversal policy (pragmatic solution): the picker enters the aisle, walks through all its length stopping when requested and gets out of the other side. The route is a sort (picker would never have a U slope)

Return policy: You enter the aisles always from one side and exit always from the same side. The picker enters the aisle, picks on one side first, reaches the farthest requested pick location, then comes back picking on the other side, getting out of the same side he entered.

Mid-point return policy: The picking area is divided into two parts (through the cut of the working aisles). In each area the picker adopts

A return policy. The picking mission is completed by two traversal paths (one in the first and one in the last aisle to be visited)

Largest-gap return policy: For each aisle to be visited the "largest gap" is determined. The "largest gap" is defined as the maximum distance between the following distances:

• from the beginning of the aisle to the first picking location
• between each picking location and the next one
• between the last picking location and the end of the aisle

Assessment of the different routing policies

Traversal same expected travel 70

Return policy: if you just have one pick within the aisle and you assume there is a random storage the more the number of picks per aisle the more the expected travel (percent of the aisle's length).

For the Traversal nothing changed, you have to travel on every aisle.

Return, you are reducing the expected travel.

3. Storage Policies

Principle: Very similar to the batching policy, we increase picking density, but

• Reduce picking mission time
• Travel timeo Retrieval time (you position the items in a position that is better for ergonomics of picking)

• Increase in Operational complexity (Re-allocation of items overtime), this is a costly activity.

• Define what are the Storage Criteria. What are the best criteria to allocate items in the system?

1. Access-Index based storage policy (highest AI in the best position)
2. Correlation between items (locate close together items that will probably be in the same order)

Frequency is how frequent that item is included in an order, while Dedicated space is the picking stock for that item.

Picking frequency = number of order lines of that item divided by the total number of order lines. It is a density of picking frequency, you want to dedicate the best locations do you have to the item with the highest AI.

71ABC curve Picking frequency – Space F% of the total amount of order lines are picked in the S% of the picking space. In that area you are increasing picking density by proximity.

The curve stems by ordering the items according to their AI (from the higher to the lower). The implementation of the AI-based storage depends on the routing policy:

• Traversal policy: the allocation based on the AI aims at reducing the number of aisles to be visited. Hence, the items with high AI are allocated to the aisles closer to the I/O point.
• Return policy: the allocation based on the AI aims at reducing the expected travel within each aisle. Hence, the items

With high AI are allocated to the locations closer to the I/O point of each aisle

AI-based storage with a traversal routing policy

AI-based storage with a return routing policy Class A (with highest AI), placed in the best location for routing policy.

The best location depends on the routing policy you are applying.

2. Correlated storage

The items that are likely to be picked together (correlated items) should be grouped into "clusters". The clusters of the correlated items are allocated on the bases of the average AI.

PRO:

• It reduces the pick stops and as a consequence the picking time (substantial benefit in the part-to-picker system)

CONS:

• Information-intensive approach: a complex correlation analysis is required
• The ABC curve based on the AI is not that marked as the ABC curve of the single items 7216/04 COMIFAR VIRTUAL VISIT Federico Pasquali and Roberto Masciullo

1. Healthcare supply chain

One of the main customers of Artsana, Comifar part of Phoenix

15-20% of your medicines and healthcare products passed through Comifar warehouses. Come in in 2-3 hours and you will receive it, warehouses who deliver to them.

Pharma-Healthcare Supply Chain: Huge Pharmaceutical company, they do research, marketing and they are giving the medicine to the pre-wholesaler. Then there is direct option and indirect. Pre-Wholesaler directly supply hospitals, or the most that go to Pharmacy is coming indirectly. Wholesalers take the risks, specialized on pharmacies. Commercial player. We need to find masks.

2. European Market: We are part of Phoenix group, it is leader in this market and is one of the most important (top 30 in Germany, top 100 in Europe, top 500 in the world). It is located almost everywhere in Europe, we are the leader owner of pharmacies, we own 2500 pharmacies (not in Italy), we serve 70000 pharmacies. Act as pre-wholesaler in other countries, but not in Italy. Up to 140000 references (100000 references in Italy). 163 Distribution Centers (very capillary).

Because proximity is a key part of our role, we need to be fast. Order Cycle Time is 3-5 hours. We receive the order and it is in the pharmacy.

Scandinavian is an extremely different business. There are 30,000 people working in this company. We have a diverse brand portfolio, with well-known brands operating within PHOENIX. Valore salute has a strong collaboration with us, with common initiatives and fidelity cards.

In the Italian market, there are 1,600 producers, with 100 being very concentrated (pre-wholesalers) and 70 wholesalers (top 4 accounting for 50%). There are 20,000 pharmacies in Italy, and the number is increasing.

Valore salute is setting up a chain of collaborative pharmacists. Some medicines are now delivered through wholesalers and pharmacies. There is a red number of references and a blue number of lines/days.

Ethic products make up the majority of lines/days. OTC (Over the counter) products have a huge number of references, but the volume they produce is not that big. Homeopathic products affect complexity in terms of volumes (lines/days). Pharmaceuticals affect complexity in terms of the number of items.

There are 5,000 references, with 83% of them having lines. There are 4 deliveries per day.

with a lot of variability with activity within the warehouse. This variability can't be reducing by decoupling. Because 60% of Pharmacy are requesting 1h order cycle time.

200-300000 lines

95% via EDI, Electronic Data Interchange

Legislative constraints Pre-wholesalers can't do our job.

GDP: European rules on how to get the stock of this products, and prices are fixed by law.

For Ethics margins=3%

Production Batch Number: really important for recall

Comifar 10% Phoenix Group turnover

23 warehouses (19 automated!), 2 hub warehouses (overstock, special service for pharmacies connected with marketing, huge supplies), 20 regions (full territory coverage) 7420% of market share

N°1 in 5 regions

13000 customers

844 pharmacies partners

100.000 items

1000 vans

21000 deliveries/day (every time I go to the pharmacy)

1800 total FTE (people)

1000 daily km in picking Totes: filled with every piece.

Virtual tour in Novate

300 Million€ per year

Value density is really high, 18500 sm

Customers (direct)

1300 Daily deliveries

>2600 Service Level 97% (IFR)

Product range (references): 85000

Daily Picked Lines: 67000

Daily Picked Pieces: 170000

Picking Automation: 65%

1 month=average stock

Warehouse organization

Warehouse Manager and Pharmacist Responsible

Goods In, Put Away, Picking, Dispatch, Customer Returns, Customer Service, Warehouse support

Receiving + Good Entrance

90 pallet per day and 12 personnel

Full cartons and mixed cartons and then we sort for the sector of destination. After the check-in we Put away the product.

Put Away

Tots goes to Automatic Picking

40000 lines /day, 2 pieces/line, 60% automations. 10 person. 75 High rotating products

Check: sample control

230 totes/day by 1 person. 60% managed in the automated system

Manual Picking

50000 references, 33 people, 25000 items per day

AI-based storage with a return routing policy, let our picker move less possible. From 6 to 8 meters. First 2 meter we make 70% of picking.

We have 2 lines per total per sector. 11 sectors. 4-5 thousands for sku.

Knapp

• Costs:
  • Transportation costs (5% of the company's turnover)
  • Packaging costs
  • Inventory carrying costs (safety stocks, those inventories used in order to cope with the unpredictability of the demand and lead time, cycle stocks in order to decouple different activities in the supply chain if the frequency of reordering is very high we have lower stocks, in transit stocks is the inventory in transit)