Improving Efficiency of Warehouse Management using a Simulation Technique: A Case Study of Industrial Gas Distribution Company

Abstract

A case study of an industrial gas supplier company had a warehouse problem of inefficient item retrieval operations by human pickers, leading to spending too much time in the picking process resulting in costly delayed delivery. To formulate a more efficient way to manage such problems, the improving efficiency of the picking process in a warehouse was purposed by using a simulation technique. FSN analysis of inventory groups classified by consumption rate was constructed. Three groups of inventory items were identified i.e. fast-moving, slow-moving, and non-moving items. The analysis focused especially on the group of fast-moving items: industrial gas cylinder, welding wire, and cutting and grinding disc to redesign the warehouse storage layout by moving these items close to the packing station. Afterward, two scenarios using discrete order picking and batching picking methods were proposed and compared whether in which scenario could perform better in reducing the picking times and picking distances. The results of the simulation using ARENA software showed that the scenario of redesigning a storage layout combined with batching picking method outperformed the scenario of redesigning a storage layout combined with discrete order picking and the AS-IS model. It could reduce the picking time by 25.62%, the picking distance by 77.72%, and the total retrieval time by 19.06%. The research results could increase the efficiency of on-time delivery and reduce costs from delayed delivery of the case company.