Optimization in warehouse operation


Warehousing and material handling equipment (MHE) involves solving a large number of important design and operational problems in production/distribution systems and economics research. Both are critical topics of interest for industry, managers, practitioners, public and private research, including academic research, as they affect costs, efficiency, profit, environmental impact, risks, maintenance, safety, and ergonomics.

Determining the location of a warehouse and its design are strategic problems that must be addressed at the outset of many supply chain design projects. It is important to know the size of the warehouse, often measured in terms of the number of storage locations by unit load/rack type. The appropriate size for a warehouse depends on the application and the type of warehouse as well as the expected number of storage and retrieval transactions during peak and off-peak times, among many other factors. The latter depends upon supply, demand, and their timing. Once the warehouse-size is determined, decisions on its footprint, height, and other factors need to be made. Selection of the appropriate material handling equipment has an impact on the footprint as well as the height decision, vice-versa, saving time and throughput. In addition to the size, the footprint, and height decisions, the size of the key areas in the warehouse such as receiving/shipping, reserve, forward, staging, sortation, and cross-docking must be determined.

MH involves selecting specific and appropriate technologies for moving the products into and out of storage/ staging in the forward, reserve, and cross-docking areas. Once the appropriate technology is selected for each area, the required number of devices, e.g., fork-lift trucks, autonomous vehicles, conveyor capacities, etc. must be determined. In recent years, many companies have completely reconfigured their supply chain to address increasing customer service levels and demand variability. Warehousing systems and MH systems play a pivotal and critical role in the supply chain, and requirements for warehousing and handling operations have significantly increased. Customer needs in terms of order accuracy and response times, order frequency, order quantity, and order size have dramatically changed with the global economy and current demand trends (e.g., e-commerce). The warehouse and MH system design and management, which is aimed at minimizing the operational costs and time while increasing the supply chain performance.

Customer service and logistics costs can be improved with the proper selection and use of warehousing and MH systems. For example, in the food industry supply chain, warehousing and transportation allow the timely arrival of perishable products at the consumer’s location, even when production plants and final points of demand (consumers’ locations) are in faraway countries, and the complex distribution system involves multiple parties such as distributors, wholesalers, dealers, and others. The basic mission of warehousing and MH is to cost-effectively ship products to the right place, at the right time, and in the right quantity without damage or alterations. Safety, quality, availability, and cost are important aspects of warehousing and MH systems. Other topics of interest include the level of automation, order picking systems (especially for the fast-growing e-commerce sector), plant layout, travel time, throughput rate, routing, storage assignment, storage allocation, batching, and zoning, among many others.

The warehouse combination among MHE, Software, and lean. The problem-solving dominates for cost differentiation with competitors.

Implementing the Lean Facility

Customer Focus

Rate of Demand on Facility - Takt Time of Key


Inventory Stratification - ABC Analysis

Fill Rate Accuracy

Supplier - Receiving Accuracy


Team Member and Labor Utilization

Team Member and Labor Turnover

Team Member and Training + Development

Asset Utilization - Lift Trucks - Storage Facilities

Asset Scalability - How to Absorb Future Growth


Standardization of Process - Implementation of

Standard Work

Standardization of Products - Isolate Cost of SKU



Visibility of Inbound Shipments - Ability to Plan

Visibility of Outbound Shipments - Ability to Plan

Facility - Internal Visual Management

Quality at Source

Isolating Key Failure Modes (Areas of Defects)

Error Proofing - Implementation of Poke Yoke(s)

Development of Quality Dashboard


Material Flow - Facility Layout

Information Flow - Inventory Accuracy

Teamwork - Collaboration

Supplier Collaboration

Logistics Provider Collaboration

Team Member Collaboration - Sharing Best


Customer Collaboration

Continuous Improvement - Waste Elimination

Waste Identification

Waste Elimination

Plan Do Check Act Implementation

Source: Decision models for the design, optimization, and management of warehousing and material handling systems, Lean in warehouse