Optimize Performance by Investigating Re-engineering Initiatives
The Kroger Company (NYSE: KR), a large grocery store chain in the US and the country’s second largest grocery retailer by volume, is continually seeking to lower its operating costs in the areas of transportation, distribution, and supply chain management.
In order to support future supply chain expansion, and to make product shipments from Kroger’s DCs (distribution centers) to stores more store-friendly, Kroger wanted to investigate the possibility of inserting another layer into its current supply chain setup using Visual8’s Warehouse Pick Cell Simulator. The layer, termed “Remote DCs”, or “Service Centers”, allows shipments in from large, centralized DCs to smaller, more local Remote DCs.
Visual8 was approached to develop a Warehouse Pick Cell Simulator that would simulate store- and aisle-friendly product deliveries, with a labor-neutral impact on the overall supply chain system. The re-engineering initiative would determine a better pick cell and service center configurations to ensure optimal performance.
The Warehouse Pick Cell Simulator was developed using SIMUL8 software. A base model was built that included:
- Pick cell replenishment rates,
- Order pick rates,
- Shipping and receiving docks,
- Picker timings,
- Pick cell configurations, and
- Travel distances.
The model also included the industrial engineering Picker walk/ride/pick standards, and an heuristic carrying out the division of product into “A”, “B”, and “C” items. The product smoothing algorithm allocated product to slots within each pick cell based on commodity, family group, and product heat (turnover).
The Warehouse Pick Cell Simulator consisted of the following elements:
- Store order generator,
- Pick cell allocator,
- Pick model,
- Shipping-marshalling orders, and
- Shipping-marshalling orders.
The pick cell layout manager allowed users to redefine SKU locations automatically, based on the heat map, and allowed users to manually modify individual SKU locations for fine-tuning Cassette usage. This level of detail allowed Kroger to accurately model the performance of a complete Remote DC.
Traditionally, a costly pilot approach would be used to evaluate a new supply chain initiative. The Warehouse Pick Cell Simulator allowed Kroger to quickly and affordably conduct performance analysis and evaluate the overall supply chain impact of this new approach.
Using Visual8’s Warehouse Pick Cell Simulator, Kroger was able to answer questions such as:
- What is the ideal mix of pallet and pick cell aisles for a given order mix?
- What product-to-pick cell aisle allocation would smooth cassette turnover and maximize picker utilization?
- How many receiving docks, forklifts and shipping docks are needed to attain a target order throughput?