To desIgn a distribution center for a client in automobile sector: Miebach Consulting

Abstract

The project aims to design a distribution center for a client in automobile sector with annual throughput of Rs 760 crores. Daily receipt/dispatch data for year 2009-10, stock statement for 1st March 2010, current LE (Load Equivalent) map, SKU addition plan and revenue projections for coming 3 years and SKU master was provided by the client. Out of 40,986 unique SKUs 32,509 was chosen for the analysis, out of left 8,477 SKUs 6,121was found to be either non-moving, dead or obsolete SKUs. Out of chosen SKUs 21,928were having either Ibh or LE data and was used for calculation of storage space requirements. ABC analysis was done on the basis of frequency of dispatch and was used to classify items which will be stored in Gold, Silver and Bronze zones (based on ease of access).Daily inventory was derived from daily receipt/dispatch data and stock statement (for 1stMarch 2010). 20 average inventory was taken for a SKU to determine stock norm for which storage requirement planning will be done, 20 approach ensured that the probability of shortage of space requirements for a peak is less than 15.87% and reduces the cost of having extra space if planned for peak inventory. For some SKUs for which stock norm was provided by the client, maximum of client given stock norm and derived stock norm is taken for the final stock norm. Pallets were selected of standard sizes, crate sets were selected on the basis of best fit analysis giving maximum utilization as well as it was selected in a manner that a common storage system can be used for all the crates. With Ibh data and stock norm, Load Unit (LU)selection was done, such that the space requirements are least as well as no. of LUs to be used is least. LU selection was done keeping in mind 'A' class items which are most frequently dispatched, they are kept is LUs which is more convenient to service dispatch demands. Also, a methodology was devised to identify small items which when kept in bigger LUs will tend to become unstable, and was designated to be kept in smaller LUs or bigger caged LUs as the case may be. The option not using the crates at all for storage was also considered, in that case racks will be used as storage without crates. It was found that this option is quite economical and can lead to phenomenal cost savings. Based on 20 daily receipts and dispatch receipt and dispatch docks were designed, also prepackaging area, kitting area and packing areas and manpower requirements were estimated keeping daily 20 volume into account. Correction in volume for unconsidered SKUs was made keeping in mind % of total SKUs they constitute as well as their obsolete/dead/non-moving status. SKU growth over time was accommodated by using regression model with an assumption that sales of spares parts matures in 3 years from the year of introduction of that SKU in the market.