Evaluating storage assignment policies and layout decisions in a food warehouse : Case Suomen Nestlé Oy

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http://urn.fi/URN:NBN:fi:hulib-201608292653
Title: Evaluating storage assignment policies and layout decisions in a food warehouse : Case Suomen Nestlé Oy
Author: Paimela, Johannes
Contributor: University of Helsinki, Faculty of Agriculture and Forestry, Department of Economics and Management
Publisher: Helsingfors universitet
Date: 2016
Language: eng
URI: http://urn.fi/URN:NBN:fi:hulib-201608292653
http://hdl.handle.net/10138/166908
Thesis level: master's thesis
Discipline: Livsmedelsekonomi
Food Economics
Elintarvike-ekonomia
Abstract: Storage assignment policies and layout decisions have an impact on warehouse performance. The purpose of this study is to measure how storage assignment policies and layout decisions affect travel distances of material handling equipment in a warehouse and to find out whether the current storage assignment policy and layout meet the objectives set by the management. This study is a case study and the case company is Suomen Nestlé Oy. The research methodology includes a discrete-event simulation and semi-structured theme interviews. FlexSim simulation software is used in order to investigate how a warehouse layout modification and different storage assignment policies such as the current storage assignment policy, random storage and class-based storage affect travel distances of material handling equipment in a real-life food warehouse. Moreover, four semi-structured theme interviews are conducted in the own warehouses of Suomen Nestlé Oy and in the outsourced warehouses of Suomen Nestlé Oy in order to examine whether the management is satisfied with the current storage assignment policy and layout, and how the warehouse performance is measured. I find that class-based storage can reduce order picking travel distances and travel times compared to the current storage assignment policy and random storage in the warehouse of Suomen Nestlé Oy. Also, class-based storage can reduce total travel distance and travel time of material handling equipment compared to random storage in the warehouse of Suomen Nestlé Oy. Sizes and dimensions of each class, number of empty storage locations for buffer in each class and the skewness of the product demand curve have a huge impact on the performance of class-based storage. The proposed new layout increases putaway travel distances and total travel distance of material handling equipment compared to the current layout in the warehouse of Suomen Nestlé Oy. The interviews reveal that the managers are dissatisfied with the current storage assignment policies as they do not reduce travel distances of material handling equipment and material handling costs. Implementation of class-based storage is considered problematic due to difficulties configuring ERP, increased need for information management and low storage space. Outsourced warehouses could enhance the use of class-based storage and their own operations if Nestlé would provide them with product demand forecasts. Methods regarding warehouse performance measurement vary a lot in different warehouses. However, simulation and benchmarking are not common tools to measure warehouse performance according to the interviews. Labor resource allocation and planning can be considered the most important area in warehouse performance measurement based on the interviews.
Subject: food warehouse
warehouse performance measurement
warehouse layout
storage assignment policies
discrete-event simulation
FlexSim simulation software


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