Case Study. Operations Planning

Transcription

1 Case Study Operations Planning Transport Planning Background The company The Alliance Distribution Centre (ADC) is part of a national network of distribution centres owned by XYZ Transport, a leading logistics and transport operator servicing the needs of British industry. The Centre is located in the West Country and is a dedicated facility serving the regional needs of 40 supermarkets owned by a leading food retailing chain. The Centre distributes goods to the stores in a region encompassing the West Country, South Wales and the West Midlands. In the last year of operation the Centre handled over 16 million cases of product worth a total of 820m. The Centre employs a permanent staff of 220 people consisting of pickers, drivers, clerical staff, supervisors and managers. The parent company is operating in a highly competitive industry where customer satisfaction and quality of service are paramount. Customer care is very important. The company prides itself on its quality control and service attributes and is one of the leading transport and distribution specialists in the UK. The company is conscious of its reputation and is concerned that there has been a slight increase in the number of complaints received recently by Head Office staff from the regional manager of the supermarket chain about the performance of the ADC. The complaints have been Transport Planning Page 1

2 about late delivery and the poor condition of some goods on receipt. With the supermarket chain contract up for renewal in the next twelve months, senior managers are under pressure to maintain high levels of service and customer satisfaction. The site The ADC is located conveniently close to the junction of the M4 and M5 motorways on a companyowned site of three hectares. The Centre consists of a large covered warehouse with 10,780 square metres of storage space divided into a cool store of 3,470 square metres for the storage of vegetables and fresh produce and 7,310 square metres for the storage of ambient goods. A large open area surrounds the warehouse for parking road vehicles, storing empty pallets and roll-cages and for the movement of vehicles delivering or collecting goods. The facility has the capacity to handle and store a maximum of 400,000 cases of goods a week. A plan of the facility is shown in Figure 1. The business Figure 1: Plan of the ADC The throughput of the distribution centre can be split conveniently into three major commodity groups. The ADC currently handles units of perishable goods--referred to as produce--consisting of vegetables, potatoes and fruit. Quality control is vitally important to these products and they are placed in a cool store while in storage and are distributed in temperature controlled (chilled) vehicles. The second major group of products is referred to as ambient goods and includes foodstuffs, toiletries and home care products. These goods are normally packaged in cartons or boxes. The third group consists of more bulky goods such as beers and wines which, together with ambient goods, are stacked in racking systems under ambient temperatures. Produce must be delivered fresh to the stores each day. Loading and unloading schedules ensure that it is received and placed on the supermarket shelves before each store opens. For this reason, produce has priority over ambient commodities at the time of picking and delivery. Transport Planning Page 2

3 The ADC acts as a consolidation centre and is designed to receive and store goods delivered in large consignments from market gardeners, wholesalers and other suppliers before picking and assembling loads for distribution to the network of supermarkets. Goods are received into the warehouse from 05:30 20:00 each day. The picking of orders for delivery to the supermarkets commences at 21:00 and may continue through the night until 12:30 the following day. Vehicles are loaded and despatched according to a timetable determined by the transport office. Operations The Centre handles an average of 380,000 units of goods a week with 60% of them regularly in the ambient goods category. The Centre operates a three-shift system (21:00 05:30, 05:30 14:00 and 12:30 20:30 daily, six days a week. No picking or deliveries take place on Sundays. Ambient goods, beers and wines are received into the Centre between 05:30 and 20:00 daily and are placed immediately into storage on pallets into the racking system. The Centre maintains an inventory of these goods based on past demand patterns. At 22:00 each night, the Centre receives details of the each store s requirements for delivery the following night and this is used to develop the work plan for picking and delivery for the next day. Prior to delivery, the operatives pick the cases/units from the stacks (according to a picking list) and place them in roll-cages to make up the deliveries for each store. A case is the smallest unit of ambient goods distributed. For example, a case may be a box or shrink-wrapped tray containing 24 tins of baked beans, 12 bottles of shampoo or a box of toilet rolls. Produce is delivered directly to the Centre from local farms, market traders and wholesalers. It is packed in stackable plastic trays provided by the Centre. Stackable plastic produce tray Immediately on arrival the trays are placed on pallets and stored by commodity type in numbered aisles, rows and shelves in the cold store to await delivery to the stores. To satisfy the tight time constraints involved, produce is delivered to the warehouse between the hours of 10:00 and 20:00 (typically 80% of the produce arrives between 18:00 and 20:00). The part of the operation which receives incoming goods (called goods inward or goods receipt) stops at 20:00 to allow pickers to assemble orders for despatch. No delivery can be accepted once picking starts. Operatives use powered pallet trucks of various capacities to receive, pick and deliver produce and to pick and deliver ambient goods. Transport Planning Page 3

4 Powered pallet truck A fleet of turret trucks or reach stackers is used to receive palletised ambient goods and to place them in the racking system. Reach stacker Produce is delivered to the store on pallets which hold 40 plastic trays each. Euro pallet Transport Planning Page 4

5 Roll Cage Both roll cages and pallets are loaded into vehicles for delivery to the stores. It is possible for a vehicle to deliver to more than one store on the same trip and it is likely that the vehicle will make more than one trip each day. The Transport Manager is responsible for planning loads and routes to meet the required level of service. Service level is measured as: Service level = (number of cases delivered/number of cases ordered) * 100% and the company sets managers a target of performance level of 99%. Target levels for on-time deliveries (another key performance indicator (KPI)) require that 85% - 90% of all deliveries should arrive on schedule, i.e. the vehicle should reach the store within the time window specified by the client. Each store establishes a target delivery time and a window of 30 minutes before and after the target arrival time when it is prepared to accept deliveries of produce and ambient goods. The delivery vehicles are expected to arrive within this interval. The loading of the road vehicles and delivery schedule to the stores begins at 21:00 each night with the objective of delivering all goods to the network of stores by 12:00 (noon) the following day. The first delivery always carries the produce requirements which must reach the stores before they open to the public (at 06:30) at each day. At the time of loading, produce is moved directly from the storage area to the seven delivery bays set aside for the purpose and loaded aboard the road vehicles. When a vehicle is loaded, it leaves the bay to be replaced by an empty vehicle. Some vehicles can exclusively carry produce; others carry a mixture of both produce and ambient goods. Some vehicles are designed to be divided in to a maximum of three separate compartments in which different temperatures can be maintained. Planning The key to the smooth receipt and delivery of goods, and meeting the required performance standards, is operations planning. Under the present system, the regional manager of the supermarket chain provides the ADC with a six-week forecast of requirements, based largely on past experience, current demand patterns for the different commodities at the 40 stores and future predictions. Records show that there has been a considerable seasonal, weekly and daily variation in demand and in the recent past these forecasts have only been 80% reliable. At the beginning of each week, the regional manager prepares and submits a weekly forecast of demand, to the ADC. Although these are more accurate, they are only 90% reliable because of the large Transport Planning Page 5

6 variations experienced in the trade. At the third stage of planning, a forecast for the night s deliveries is given to the Centre at 22:00 the previous day. These are quite reliable estimates. Failure to meet the daily delivery schedules has many consequences for the ADC. Additional road journeys may have to be scheduled, involving extra cost. It may lead to additional handling of goods and overtime payments to workers. However, the major penalty is customer dissatisfaction if goods do not arrive to meet demand and the damage that this does to the reputation of the Centre. Resource Allocation The second stage in the ADC s planning process is the preparation of an 'operations' plan for each day s work commencing with the night shift (21:00 05:30). The major activity in this stage of the planning process is the allocation and deployment of resources to meet receipt and delivery schedules. Of critical importance are the allocation and deployment of labour and equipment to the receipt and delivery operations for the different commodity groups handled in each shift. Receipt, picking and delivery operations The receipt, picking and delivery of goods at the Centre is highly mechanised and relies on the use of a range of materials handling equipment. Each activity is planned and supervised to ensure efficiency and safety and to minimise the risk of errors and omissions in the quantity and condition of goods delivered to each supermarket. The Centre has an established a set of operating procedures and operatives follow these to ensure efficient materials handling practices in the warehouse and ease of handling when the goods are unloaded and placed on the shelves in the supermarket. A brief summary of the procedures for handling produce, ambient goods and beers & wines is provided so that you have an understanding of the operation. Produce Produce is collected directly from farmers, market gardeners and other suppliers, packed in plastic trays and placed on 4 way entry wooden pallets of Euro dimensions (800mm * 1200mm). Each plastic tray is 400mm*600mm in size to conform to the dimensions of Euro pallets. The sides of the plastic trays are tapered with a flat base enabling them to be stacked one above the other when full and to rest inside each other when empty to save space. Each pallet can hold 40 trays when full of produce and stacked to a maximum height of 1.8m. The largest vehicles can carry a maximum of 26 pallets of produce. When a road vehicle arrives at one of the produce reception bays in the Centre, the pallets are removed by an operative using a powered pallet truck fitted with standard length forks. Each truck can lift one pallet load. The pallets are transferred immediately into the cool store where they are grouped, in storage, by product and stacked one high in numbered blocks and rows. This is a fast and efficient operation. Transport Planning Page 6

7 When the delivery commences, the consignments of different produce ordered by supermarkets are collected and assembled by pickers ready for loading to a road vehicle. Pickers make up full pallet loads by selecting the different varieties of produce which are retained in their plastic trays. When complete, the pallet loads are transferred directly to the road vehicle (using the same bays used for receipt) where they are loaded into the cargo compartment and secured for their journey to the supermarket. When the vehicle is full or when all of the pallet loads for delivery to that store are secured (including in some cases goods and beers & wine segregated in different compartments and maintained at ambient temperatures), the doors of the vehicle are closed and it is driven away from the loading bay. Ambient goods and beers & wines All ambient goods and beers & wines (B&W) are delivered in large consignments to the Centre, packed and secured on double-deck, four-way entry Euro pallets of 800mm*1200mm dimensions. When the road vehicle delivering the goods is safely parked at one of the 8 reception bays reserved for the receipt of ambient goods, the vehicle s doors are opened and the pallet loads are lifted, transferred and stacked immediately into pre-arranged and numbered storage slots. The Centre uses a fleet of reach or turret stackers capable of stacking pallets five high, in a racking system erected in the warehouse. The reach stackers are supported by fork lift trucks (FLT). Reach stacker Fork Lift Truck Supervisors ensure that one pallet load of each type or brand of goods is stored at the ground level, so that operatives have easy access to them at the time of picking orders. When delivery operation commences, operatives (pickers) are issued with picking and loading orders to complete for each supermarket store. Battery-powered pallet trucks fitted with extended forks and capable of transporting two pallets or roll cages at a time are used in this operation. Roll cages are a wheeled variant of a conventional pallet and are fitted with wire metal frames or sides and gates to secure contents while they are being transported. Roll cages 700mm*800mm are used in the distribution of groceries and household goods. Transport Planning Page 7

8 Pickers travel up and down the aisles separating the racking systems in a pre-determined sequence (to ensure that the goods at the bottom of the roll cage are not damaged by the weight above and to ensure that the different products are accessible in the order that they are placed on the supermarket shelves), picking cases from the pallets (which have had their strapping and protective covering removed) and placing them in roll cages. When an order is complete, the roll cages are transferred by the pallet truck to the delivery bay (the Centre uses the produce reception delivery bays for this purpose) where they are marshalled with others for the same destination and placed in rows allocated for deliveries to each super market store. The picker then collects an empty set of roll cages and proceeds to pick the next order. At the time of loading, the cages are rolled on to the road vehicle by hand and secured for the journey to the supermarket store. When a load for the journey is complete, the vehicle's doors are closed and it is moved away from the loading bay to allow the next vehicle to begin loading. Traffic Office The traffic office of the Alliance Distribution Centre (ADC) is responsible for organising the delivery of goods to their destinations in a manner which meets the customer s requirements. Decisions are made on routes, types of vehicles, loading schedules and departure times. The choice of vehicle depends on the demands of the customer, the mix of products to be delivered, the route and the physical layout of the supermarket store. Vehicles may carry pallets and/or roll-cages and the correct allocation of vehicle makes it possible to carry a combination of up to three different categories of goods in the same trailer. Transport Planning Page 8

9 Introduction to the Exercise Your team is employed in the ADC Traffic Office and it is your team s responsibility to prepare a daily loading and transport schedule for the delivery of goods to 20 different branches of a large supermarket chain. There is a fleet of company-owned vehicles, of different types and sizes, available for the task and, unless otherwise stated, all vehicles may be used on all routes. Your task is to allocate the vehicles in an efficient manner by preparing a transport schedule which meets the customer s delivery requirements and makes the best use of the company s resources. The basic criterion for efficient allocation is that the largest vehicles are assigned to routes with the largest volumes and that routes that are constrained in any way receive the first allocation of vehicles. Table 10 contains details of the available trailer fleet by type and capacity. All trailers are compatible with all tractor units. All the trailers are temperature controlled except those designated DB which are dry box trailers; these are not temperature controlled and are not suitable to carry produce. Some units are designated DF signifying a double freezing unit, one at each end of the trailer. This allows the vehicle to be divided into three separate temperature controlled compartments. Different temperatures may be maintained, and hence different product types can be carried in each compartment. These trailers give managers flexibility when loading and scheduling. Table 11 shows the capacity limitations for pallet and roll-cages and the trade-offs for each type of trailer when a combination of both types of unit load is carried. Vehicles may be loaded exclusively with pallets (holding 40 plastic trays of produce per pallet) or roll-cages (holding 30 cases of ambient items including B&W per roll-cage) or with a mixture of both pallets and roll cages, depending on the customer requirements and product mix. Produce must be carried on pallets in temperature controlled vehicles but ambient items are packed in roll-cages and do not need to be temperature controlled. Ambient goods are those which are transported and stored at the temperature of the day. Task 1 Table R shows each store s requirements for a particular day and distinguishes between produce and ambient (including B&W) goods. Given this information: Calculate the number of pallets and roll-cages to be assembled for delivery to each store and, using the additional data in Tables 10 and 11, determine the best size of trailer to allocate to each delivery. When completing Table R, you should not, at this stage, consider the availability of vehicles; simply determine the most suitable size of vehicle for the route according to each store s requirements. Complete Table R and the summarise the transport requirements in Table S Transport Planning Page 9

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11 Task 2 Given: the distance of each store from the ADC in Table T together with an estimate of the average vehicle speed on each route and a target arrival time at each store, calculate the time taken for each return journey. you should be aware that, for a driver, a complete journey i.e. the time taken for a round trip, consists of: o driving time to the store+ delivery time+ rest period+ return driving time to the ADC working practices are such that 90 minutes are allowed as delivery time at the store (for unloading goods and loading empty crates, pallets and roll-cages for return to the Centre. a statutory rest period of 45 minutes is allowed for each journey in addition to the delivery time. Once a vehicle has returned to the ADC it may be reallocated to another route and, in such cases, the cycle outlined above will recommence. All vehicles will take 30 minutes to discharge empty pallets/roll-cages and to load goods at the ADC before they depart again. complete the rows and columns in Table T Transport Planning Page 11

12 Task 3 Rearrange the entries in Table T into a timetable of departures (a transport schedule) from the ADC. The timetable should run sequentially from the earliest departure time to the latest. Enter this schedule into Table U and, where appropriate, provide a comment. Task 4 Using the data in Tables R, S and T and according to the timetable in Table U, allocate available vehicles (see Table 10). You should not attempt to optimise the transport schedule at this stage. Simply allocate the available vehicles as best you can and comment on the results Calculate the Service Level% and the On-time delivery % for your transport schedule and enter the results into the appropriate boxes Task 5 Given the following additional constraints: o The stores in Newport, Cardiff, Bridgend and Swansea are in Wales and will be reached via the Severn Bridge. o Of these four stores, Bridgend is relatively small and delivery may be combined with either Cardiff or Swansea, but the Bridgend store will not accommodate 43 foot vehicles. o Salisbury and Andover are small stores and may be served by the same vehicle. o The Weston store has accessibility problems and can only receive 30 foot vehicles. o The Cheltenham store may be served by the Gloucester vehicle. o Winchester cannot accept 43 foot vehicles. o The maximum size vehicle acceptable at both Bridgwater and Taunton is 40 foot. Transport Planning Page 12

13 Identify any additional issues arising from your vehicle allocations in Table U as a result of these constraints Consider possible solutions and develop a revised transport schedule to best address these constraints. Do not use specialist transport planning software Complete Table X showing your revised transport schedule Calculate the Service level% and the On-time delivery % for your transport schedule and enter the results into the appropriate boxes. Clearly state any assumptions you have made. Task 6 Your team has a meeting with the Transport Manager to update him on your Transport Schedule. The agenda for the meeting is as follows: Present the ways in which the transport schedule could be optimised (using the available resources) and the factors you would consider in deciding between them Present the way your team addressed the constraints Present any assumptions made, any issues arising from your trailer allocations in Table X and how they might be addressed Disclaimer This case study has been developed with the help of Wincanton Ltd. The data does not relate to any one particular location or client. Any names and roles bear no relation to any past or present employees. Transport Planning Page 13