Within a warehouse, bulk locations and pick locations are often used. A pick location, also called a grab location, is a location from which orders can easily be picked. A bulk location is a location with often complete pallets of goods. This is where the excess stock is stored, which is not immediately needed to collect the orders. Such a bulk location is also sometimes called a pallet location: this definition is not entirely correct, however, since sometimes a pick location is also set up as a pallet location.
The bulk locations are often located in racks above the pick location. An order picker can often only pick on the ground floor (or sometimes on the first floor – see image below), while a rack can be up to 4 levels high. If there is sufficient stock at the pick location, a forklift does not have to be used to pick an order. If the pick stock is (almost) empty, it is replenished from the bulk stock.
Replenishment pick locations
That sounds pretty simple, but now it gets a little trickier. At what point should replenishment happen?
There are two possible ways to replenish pick locations: reactive and proactive. Reactive replenishment occurs when a pick location is (almost) empty, so that an order picker never stands in front of an empty pick location. It reacts to a certain stock level. If an order of 20 pieces is planned and the pick location has 15 pieces in stock, a replenishment order is always created first.
Proactively replenishing pick locations usually happens when the warehouse is quieter or as work preparation. Separate replenishment orders are then created for the warehouse employees. However, this is more a property of an article than of a location. You determine a replenishment point per article, as you can read later in this blog.
Creative solution with replenishment at WICS customer
Proactive replenishment was recently applied in a creative way at a WICS customer. The stock turnover rate was very high there. As a result, replenishment orders had to be created all day long and forklift drivers and order pickers got in each other’s way. A solution was devised: At the beginning of the day, there was a team that started an hour earlier and looked at what stock was needed that day to fulfill the orders.
Proactive replenishment was recently applied in a creative way at a WICS customer. The stock turnover rate was very high there. As a result, replenishment orders had to be created all day long and forklift drivers and order pickers got in each other’s way. A solution was devised: At the beginning of the day, there was a team that started an hour earlier and looked at what stock was needed that day to fulfill the orders.
Replenishment point / replenishment quantity
If the stock at the pick location falls below a certain level or reaches 0, it must be replenished. However, the replenishment point and the replenishment quantity are also extremely important in this. If there is a lot of space in the warehouse, it is easier to keep the replenishment quantity high and possibly use multiple pick locations for an article. If there is little space, this is sometimes not possible, which means that the replenishment point and the replenishment quantity must be coordinated with each other. This is done based on the turnover rate. It is not desirable for a pick location to have to be replenished every day.
For example, suppose there are the following variables:
- Bulk location: 200 pieces in 10 boxes on 1 pallet
- Pick location: (Max.) 50 pieces
- Refill quantity: 40 pieces (2 boxes)
- Refill point: 10 pieces
What would we recommend based on the number of outgoing goods per day?
- Average 1 piece per day -> is it necessary to use such a large pick location for this? The replenishment point could also be set lower now.
- Average 8 pieces per day -> This would mean that it would need to be replenished once every 5 days. If space for pick locations is limited, this is a great choice.
- Average 45 pieces per day -> In this case we would recommend looking for a larger or additional pick location, as it needs to be replenished every day.
To prevent unnecessary breaking of boxes, make sure that you replenish a multiple of units in the form of a number of boxes or a full pallet. Therefore, do not set a replenishment quantity of e.g. 53 pieces if there are 10 pieces in a box. Sometimes replenishment quantities are also set so that one or more layers are immediately removed from a pallet for the picking location, so that the warehouse remains clear and the pallet can possibly also be moved to a more efficient storage location.
Floating pick locations
In addition to working with fixed pick locations, it is also possible to work with floating pick locations. This is also often used within the First Expired First Out (FEFO) principle. FEFO means that the stock with the oldest expiration date is used first. It is possible that stock enters the warehouse at the same time, but has two different expiration dates. Or that an earlier expiration date enters at a later time. As a result, First In First Out (FIFO) does not always apply to shelf-life items.
With floating pick locations, a warehouse employee supplies an empty location of a defined picking zone instead of the fixed pick location. In the case of FEFO, there is never the same date at the same location. But this principle is also used when replenishing the location is not easy, for example when multiple pallets are stored in depth. Then all pallets would first have to be removed from the compartment to replenish the new stock, which costs a lot of labor. Now a new location is used, which will be planned last for incoming orders.
Temporary pick locations
The use of temporary pick locations is for slow movers that are temporarily placed in a picking zone and, for example, are placed back at the end of the day. Suppose you receive an order for a certain article once every 2 weeks, you can also bring down a pallet on the day itself. This way you do not ‘waste’ a fixed pick location.
Conclusion
Ultimately, the role of Logistics Manager or Application Manager responsible for this is all about the ‘law of large numbers’. When making choices, you can never do everything perfectly. It will always happen that a certain pick location has to be replenished a few times a day or that there is too much stock at a pick location. With the right tools, you can approach the most optimal logistics. If 90% of the strategy behind replenishment is an excellent choice, 5% is good and 5% could have been better in retrospect, you have already saved a lot of time.
Part 2
In the next part we will tell you about types of locations and the different conditions / properties of locations within the Warehouse Management System.
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