A warehouse design framework for order processing and materials handling improvement: Case Etra Oy

Abstract

Warehouses function as node points in the supply chain linking the material flows between the supplier and the customer As a result of the highly competitive market environment companies are continuously forced to improve their warehousing operations. Many companies have also customized their value proposition to better meet customer demands, which has led to changes in the role of warehouses. In such conditions improvement of order processing and materials handling can bring significant cost savings and at the same time increase customer value. The purpose of this study is to develop a warehouse design framework that supports systematic decision making, and show that this framework can be used to reduce order processing cycle times and improve the overall performance of a warehouse.

The empirical part of this thesis was conducted as a case study in a Finnish technical wholesales company. Data for the study was collected from two primary sources. The first source was a review of the company’s order history. The material was profiled to determine ordering patterns of products and to understand order processing needs. The second source of research material came from a participant-observation of warehouse employees. This allowed assessing the overall distribution of time between different warehousing activities and identifying most critical bottlenecks in the warehousing process.

The results of this study show that even simple planning methodologies can provide general guidelines for designing warehouse processes. The results also imply that companies with poor information infrastructure are unable to efficiently track operations that are performed within the warehouse. This emphasizes the fact that management of information flows is becoming an increasingly important criterion to successfully plan and allocate resources within the warehouse.