The Jethalal conundrum: Warehousing and Agent based simulation

cropped-warehouse2_cropped1Warehousing is a quintessential activity wherever production of physical products is involved, be it your mother’s kitchen where the good old refrigerator acts as a warehouse or a steel production facility spread over hundreds of acres of land belching out tons of steel products. The following article introduces the basic activities that are carried out in a warehouse and how simulation can be used to optimize those activities.

The warehouse operation consists of 5 key activities:

  • Goods receipt
  • Put away
  • Storage
  • Order Picking
  • Goods dispatch

Flow Proses Warehouse Activity

Goods receipt: is a document issued to acknowledge the receipt of the items listed in it. In other words, it is a document used to register the specifics of items physically received in the warehouse

Put away and storage: Put away is the process of moving received inventory from the dock/wharf or production area to a storage bin

Order Picking: The activity by which a small number of goods are extracted from a warehouse system, to satisfy a number of independent customer orders. It is the most labour intensive and costly activity and forms as much as 55% of the total warehouse expense.

Goods dispatch: This is the customer facing side of a warehouse where the picked goods are dispatched to the customer usually via 3rd party logistics partners

Now imagine M/s Jethalal and Sons hire you as an operations consultant for his biscuit factory. Mr Jethalal has recently ramped up the production capacity of his Gurgaon factory and wants to build a warehouse in Pune to serve his distributors Just-in-Time. He wants you to come up with a plan for warehouse operations which will enable his company to serve customers at the minimum cost and maximum efficiency. You toil hard, crunch the numbers and come up with 3 possible layouts. However there is no way to test these layouts and come up with the one which is the best fit for the company and the associated product. You now wish you could build miniature Lego models and assess your layouts.

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Introducing…. Agent based simulation

Agent based simulation

It is a decentralized and individual centric approach to model design. When designing an agent based model the modeller identifies the active entities, the agents (which can be people, companies, projects, assets, vehicles, cities, animals, ships etc.) defines their behaviour (main drivers, reactions etc.), puts them in a certain environment, establishes connections, and runs the simulation. The global behaviour then emerges as a result of interactions of many individual behaviours.

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Agent based simulation can be used in a wide variety of situations like traffic management, supply chain planning, network planning, production facility planning and of course: warehousing facility planning.

Coming back to our problem, by using simulation, one can easily visualize the proposed warehouse facility without actually building it. A simulation enables the designer to calculate put away and picking time thus helping him identify the bottlenecks that exist in the entire process.

You build a warehouse model for Mr Jethalal and identify the most time consuming processes of the warehouse. You recommend an FSN classification of product SKUs and propose a layout with unidirectional flow of material and multiple loading and unloading points. Mr Jethalal is happy and promises you free biscuits for life (well, this had to have a happy ending, right?).

The choice of software is critical for simulation activities. A few recommendations are- Anylogic (3D supported, student licence is free), Netlogo (2D but completely open source), FlexSim (Trial license free, 3D supported)

Check out a video of the FlexSim and CLASS warehouse simulations:

Find older JIT articles here

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