How at Automated Warehouse Works (Part 1)

If you’ve ever been inside an automated warehouse, the first reaction is often a sense of awe and the thought, “how does this thing possibly work?” There are generally 2-3 miles of conveyors heading all directions, barcode readers everywhere, boxes speeding around, about 50-100 loading docks for trucks, and not all that many warehouse workers. It looks incredibly complicated, and on some level it is, but at a high level, it’s straightforward.

Part 1 will deal just with the order picking process. In future issues I’ll discuss receiving, shipping, transportation management systems, discounts, software, kitting, QC, and customer service; all of which are interrelated.

At the heart of a warehouse is software called a WMS, which stands for ‘warehouse management system’. This is not to be confused with a ‘wealth management system’, although the initials are the same*. From here on WMS means the software that manages a warehouse….

A WMS fundamentally alters how an order is picked in a warehouse.

In a manually run warehouse, customers call in orders, and those orders generate packing lists which print in the warehouse. A warehouse worker gets those packing lists, and walks around the warehouse picking the order. When done they pack the order in boxes, affix labels, and insert the packing list which tells the customer what is in the box.Pieces of this process are often automated--i.e. groups of orders with similar product might be combined on a 'pick' list--but in general the process is to pick an order.

In a WMS warehouse, warehouse workers no longer pick orders. Instead, they pick boxes. The WMS takes a day’s worth of orders (actually a ‘wave’ of orders), and breaks them down into ‘boxes’. We’ll use books as the product in this example, but it could be almost any product—cans of soup or widgets. This all happens in a batch process, but it can be thought of as a multi-step process:

1.    Determine full carton vs. loose pick—if a customer orders 45 books, and they come in cartons of 30, then that customer has ordered one full carton and 15 loose books.
2.    If a customer has ordered more than one book that day, it then does the same thing for those additional order ‘lines’. It also does the same thing for all other orders, whether for the same customer or not.
3.    The WMS then groups all loose book orders for the same customer together, figures out the weight and cubic volume of these books, and assigns those loose books to particular sized cartons.

The goal now is to pick the boxes (which make up the orders) as efficiently as possible.

In our hypothetical example of books, let’s say that this lucky publisher has a 'hot' best seller, and that on this day 500 customers have ordered at least 30 copies of this book. The WMS will now print out a label, showing customer address, purchase order number, and carton contents, plus a bar-code, for each full box of these books. The WMS also sends a ‘work order’ to a forklift driver to pull from the racks as many pallets of these books as necessary and move them to a designated area near the conveyor system. If there are 100 full cartons on a pallet, the forklift driver will bring at least 5 full pallets from the racks to the conveyors, more if some of those 500 customers have multiple full carton quantities. Then the warehouse worker, who used to walk around picking orders, simply stands in one spot, pulls boxes off the pallet, affixes a label to each box, puts it on the conveyor, and off it goes. What would have taken many hours by many people is now done is perhaps half an hour by one person.

The system takes over from here. Based on the weight and size of the original order, the system has pre-calculated whether the entire order should ship by small package carrier (UPS or FedEx) or common carrier (truck companies). As the orders move along the conveyor, they are scanned so the system knows where the particular box is located, and when the box arrives at the correct place on the main conveyor, what are called ‘diverts’ direct them onto new conveyors.

If the package is going UPS, the new conveyor directs the package down to the UPS truck in what’s called a ‘fluid load’, meaning that the conveyor, and hence the packages, go right onto the truck, where someone just unloads them and stacks them up. No effort at all is made to keep packages for the same customer or order together—that’s UPS’s problem, and it really isn’t a problem as their internal software systems do just that. UPS (or FedEx) go to great lengths to ensure they only make one trip per day to a location, so they take great care to match the packages to the customer.

If the original order is large enough to go on a pallet by truck, the same thing happens but the box goes to a different location. The WMS has pre-designated certain warehouse pallet locations (on the floor by the end of a conveyor), and simply sends the boxes down the appropriate conveyor, where someone takes it off and puts it on the pallet.

The loose pick portion of the order(s) for the same customer are handled the same way at the end, but first they need picked. The system again prints labels at the appropriate starting point for loose picking, plus tells the warehouse worker what box to use. The worker then builds the box, affixes the label and puts it on the conveyor, and off it goes. The bar-code tells the system what book is being picked first, so the conveyors and diverts move the package along to the appropriate places where the books are stored in smaller bins, ready to be picked in smaller quantities. Here again the person picking the books doesn’t move much—the box comes to him and stops there. He looks behind him, sees a number lit up on the shelving location where the proper books are stored, and puts that many books from that location into the box. Then off the box goes to the next location, where the process is repeated.

The above is oversimplified and there are many flavors to how it’s done, but basically all systems work this way. You don’t pick orders—you pick boxes. It’s like the assembly line for producing cars……auto workers don’t build complete cars. They just put their one piece on the car as it goes by. It’s not as much fun if you are a worker, but it’s a lot more efficient and error free.

Incidentally, more than just car assembly lines and warehouses run on this principle--any successful online company runs the same way. Customers key in their orders into a website/e-commerce site, and the system behind the scenes groups like orders together. Let's say it's a printing company specializing in small orders. 5000 customers order business cards in a day. The system simply combines all business card orders by some sort of criteria to make the process most efficient, and then sends the orders through. The printing process will vary based on the standardized quantities allowed, and of course has to print the correct information, but other than that the process is the same, and in the case of business cards, they are probably sorted right into the correct type box, labeled, and shipped with little if any human interaction. Christmas cards--same idea.

* The best way to tell which WMS software you are dealing with is by the environment….if you are in a mahogany paneled room at a bank, with oil portraits of men with long beards from the 18th century; your chair is plush and you are wearing a suit, you are most likely discussing a ‘wealth management system’. If you need to watch out for forklifts and walk between yellow lines, it's a warehouse management system.

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