Solution for corporate casestudy for warehouse designing for the Spear Logistic, Pune based 3PL company.

1. Samiksha
Spear Contract Logistics Casestudy
Team- ActiveY
NITIE, Mumbai
Nihar Barik, bariknr@gmail.com, 9920621469
Shanu Singh, shanuchaudhery@gmail.com, 9702018520

2. Executive Summary: Warehousing has become critical activity in Supply chain to outperform
competitors. In order to provide C-4 warehouse a source of competitive advantage we have
attempted to develop layout that has several characteristics such as modularity, compactness,
accessibility, flexibility and distribution of movement to enable to respond to changing
conditions, improve space utilization and reduce congestion and movement. Also future roadmap
for SPEAR logistics is discussed in context of Indian logistics industry.
Case:
Activity Flow in the Warehouse
Performance improvement at different levels of activity work flow:
1. Receipt
Improvement by introduction of more segregated entry points, here segregation is done
on the basis of type and the movement of product. In the layout we can see that we have
provided separate input/output for the engineering, automation and chemical products
because these products are generally heavy weight, bigger in size and have relatively
slower movement while other product moves from the other entry point.
Reverse logistics is explained in later part.

3. 2. Inspection
Since WMS is fully implemented at the warehouse, we can go a step further to leverage
upon this facility. This can be done by setting up a wireless network and providing
handheld/PDA to inspectors. Handheld can be connected to WMS in real-time through
wireless N/W and hence all the data can be accessed on the basis of pre-packing barcode
scanned on the spot of inspection. Thus inspection can be done in much efficient and both
time and cost effective manner, because it will help in better utilization of inspector
working hours.
Also inspection can be done at the end of proposed packaging conveyor belt, all the
packages can be weighed and their weight will checked against the expected weight(can
be retrieved in real-time from WMS on the basis packaging barcode).
Cycle count and physical count has to be done manually with the help of brute force
method only.
3. Picking & Kitting
Picking in addition to sorting and kitting is an important activity, researchers have
highlighted that costs related to it are more than a half of the total costs of a warehouse.
As clear from the layout, we have segregated the storage of item into three different
zones as follows:
A. Light weight multi-variety pharmaceutical and Retail products
B. Apparel and Telecom products
C. Heavy engineering, automation and chemical products
Number of varieties of product available in each one of the zone can be seen in the
following pattern:

4. Varitey
of
Varitey of Category
Category C
B
Varitey of
Category
A
Algorithms for picking and sorting are function of number of order lines and number of
items. As per the empirical study conducted for 42 similar warehouses in [reference 1]
Italy, there were presence of both “sorting” system and “pick-to-box” system when both
retrieval activity and number of managed items are high (number of order lines/day
higher than 1,000 and number of managed items higher than 1,000). Since our
requirement, working environment and client nature matches with the above case hence
we can take cue from it in designing our system.
In this model (for zone A & B products) similar item orders are batched together, thus
different batches are formed for simultaneous retrieval of goods from the shelf. Clearly
efficient batch formation is possible only when there are large numbers of order since
only then probability of matching of items is relatively high. Batched items are then put
on the forward shelf for further flow.
Since “zone C” products are slow-to-medium moving and heavy goods it is better to go
for “Picker-to-part” model. In this model, in picking activity, operators retrieve from
picking locations the item to complete single order or bath of multiple orders.
4. Put Away & Storage Model (Reserved Storage Area and Forward Area)
Forward area also known as picking area contains the batched items collected from the
storage area as demanded by the packaging facility. Here items are stored for small time
period therefore we suggest to go for FIFO storage model i.e. first batch of item is put at
the first collection point of the packing facility. Expedited/Rush orders are always kept at
the start of the FIFO irrespective of length or order list.
In Reserved storage Area mix of both dedicated and shared storage model should be
used. Since dedicated storage has its shortcoming of inefficient space utilization (~50%)
as shown in figure below but on other hand has advantage of faster and fixed access. This

5. storage model will be used by frequently ordered items under fast moving goods (retail,
pharmaceuticals and telecom).
Since shared storage provide flexibility of storing same type of items at 2/3 location
hence it can be used up for slow moving items (engineering, chemical, automation goods)
as extra time and effort will be involved in locating the goods. This storage model can be
expedited by usage of WMS to track and store the goods.
Since chemical (sacks or drums) and retail products require bulk storage hence for them
we should go for bulk storage model. Here each product type is to be stored in separate
rows as show below.

6. 5. Labeling/Bar-coding, Sorting, Packaging
Pre-packing is done for the goods which has recently arrived and deconsolidated. Main
objective is to pack good in-order to prevent wear-tear while storage. Also bar-coded
labeling is done with entry in WMS, so that product could be tracked at later stage.
Once the batched items are collected (picking) from the reserved storage area and put in
the forward area, items can be picked up in FIFO fashion. These batched items then
needs to be sorted out as per the given order, sorting can be done simply by scanning the
barcode of product with the help of scanner and workstation (with WMS connectivity) at
disposal. Once items are sorted out, separate post-packaging is done for each order and
packed good is put on conveyor belt for delivery to “packed goods area”.
Cross dock items (items for which there already exist an order, even before the item is
available in reserve storage) when arrives for deconsolidation, it is labeled, updated in
bar-coded, updated in WMS and then it is moved directly to cross dock packaging area
for packaging, labeling and delivery.
6. Reverse logistics
Reverse logistics is the most challenging activity as it involves very high cost because
each item has to be dealt separately and involves multiple steps: receiving goods (layout
– gate 2), checking physical validity vis-à-vis barcode label, product condition and re-
packaging/labeling and put-away. Most of the returned merchandise is generally in
saleable condition and will be returned to the storage area. To streamline the subsequent
put away process, saleable products should be staged on pallets in respective zones. If
product is defective, entry should be made in integrated ERP system so that manufacturer
knows about the defective inventory, further action depends on the manufacturer.
7. Aisle, rack design considerations
Aisle width and slotted angle rack height are directly dependent on the product type. For
pharmaceutical and telecom products can be stored on multi-level slotted angle racks.

7. Width of the aisle should only be enough to allow only one truck to go through so that
single access can be used to pick up the goods on both sides of the aisle.
For Heavy engineering, automation and chemical there should be wide aisle so that two
fork-lift truck could pass through at one time, it is because these items are bulky in size
and hence take lot of time while put-away and picking. Not recommended to must more
than 2 levels of rack (depends on weight of items)
For retail and apparel, again we need to have wide aisle along with multi-level racks
since they are bulky but light weight in nature.

8. Performance analysis on expansion from 60,000 sq ft to 140,000 sq ft
1. Proposed person productivity.
Present Proposed (After Expansion)
Productivity Productivity
Activity Person Employed SKU/person/day Person Employed SKU/person/day
Put away 6 47 9 48
Pick 9 95 12 130
Pack 8 105 14 111
Sub Total 24 35
Other activities 41 65
Total 65 247 100 289
2. Supervisor distribution
No of Supervisors
Department Gate 1 Gate 2 Total
Storage Area (zones) 8 6 14
Cross Dock 1 0 1
Pre Packaging 2 2 4
Packaging 2 2 4
Packaged Good 1 1 2
Reception 1 1 2
Delivery 1 1 2
Rev Logistic and
Scrap 0 1 1
Total 16 14 30
Assistant Manager Proposed: 3 – One for each zone (current 2)
No change in number of program manager

9. Inventory Control
1. Introduction of Cross Docking
Cross docking not only reduces material handling, but also reduces the need to store the
products in the warehouse. In most cases the products sent from the manufacturing area
to the loading dock has been allocated for outbound deliveries
Benefits
Reduction in labor costs, as the products no longer requires picking and put-away in the
warehouse.
• Reduction in the need for warehouse space, as there is no requirement to storage
the products.
2. Division of goods into fast moving and medium-slow moving goods
It will help in keeping up the appropriate inventory levels (on basis of statistical
analysis of past data).Fast moving goods can have relatively higher level of inventory.
Future Roadmap
We can conclude from the client list of SPEAR Logistics that the company has strategically
placed itself as a major player in automation, engineering, retail and telecom segment. Since
Indian GDP is expected to grow at an average rate of 9-10% in coming years hence the demand
for other segments such as agro-cold storage and packing facility and export/import are bound to
increase.
As per the report published by IL&FS, following areas would be key drivers in logistic
warehousing.
1. Free Trade Warehousing Zones (FTWZ): Since SPEAR logistics has level of expertise
required for maintaining FTWZ, it can venture into this upcoming warehouse

10. management segment. Development of Delhi-Mumbai Industrial Corridor that is coming
up alongside the Dedicated Freight provides the right opportunity to explore this option.
Since FTWZ is allowed to have 100% FDI limit, so on the basis of fund availability
SPEAR Logistics can go for foreign tie-ups in this segment.
2. Air Cargo Centers: The growth rate of the aviation sector in the next 10 years is
expected to be not less than 25 percent. According to the Planning Commission, India’s
air cargo movements would grow at over a CAGR of 11.5% from 2007-08 to 2011-12.
Currently 80% of international cargo is handled at Mumbai & Delhi airports. Since these
areas are already very competitive and face relatively low margins hence entering into
these airports would be very costly. Rather we can build upon Capex which can be
invested later to develop facility at second grade destinations such as Bangalore,
Hyderabad, Ranchi, Kolkata, Jammu and Varanasi. IL&FS anticipated that air cargo
activity shall expand from metro airports to mini metro and non metro airports post
development of necessary infrastructure.
Air cargo growth from 2009-10 to 2012-13
3. Agro Warehouse: It can be divided into 2 parts, dry storage and cold storage. Demand is
significant in both the areas because of high level of wastage. In India around 25%-40%
of perishable food products never reach the consumer because of shortage of proper

11. storage facilities. Since SPEAR Logistics has not focused in this segment yet, they can
start with setting up dry storage facility for grains like wheat, maize and rice and after
gaining experience eventually go for setting up cold storage facilities especially for fruits
as over 80 per cent of the existing cold storage facilities in India were designed to preserve
potatoes, tamarind and chilies,. Since more and more retail houses are going into direct
procurement from big farmers so demand for this type of facility is bound to increase.
Strategic location of the facility can decided on basis of demand survey from the big
retailers.
4. Cement Industry: Cement industry has the share of logistics cost in total sales. SPEAR
Logistics can venture into this segment.
Source – KPMG India
Compatibility of Layout for future expansion
Zone D along with operator at packaging/sorting area 2/3 (multi tasked for zone B and D) are
kept for future expansion. It can be used for new segment of goods or it can add a expansion for
zone A or B.
References: Please refer “SAMIKSHA_NITIE_ActiveY_References.docx” in the Iect