In a company, it is vital to set goals before developing strategies and to monitor their consistency and achievability continually. In logistics, there are strategies for planning new systems, implementing them and optimising existing systems during operation. Among other things, usage and allocation strategies are used for these purposes. Depending on whether the goal is, for example, transportation optimisation or space minimisation, the respective strategy determines the arrangement of the functional regions of a warehouse.
Allocation strategies are part of the operating strategies for warehouse and picking systems. By planning a new warehouse and order picking system, the performance and costs of order picking systems are to be evaluated and investment and future operating costs reduced.
In general, operation strategies usually are classified in the following way:
- Allocation strategies
- Processing strategies
- Routing strategies
- Picking strategies
- Supply strategies
- Idle travel strategies
Through allocation strategies an optimal use of space, short distances and a low supply effort should be achieved.
The following allocation strategies can be used to determine the locations of items (shelf, storage zone):
- Fast movers concentration
- Fixed storage area arrangement
- Free storage place arrangement
- Zone by zone fixed storage arrangement
- Equal distribution strategy
- Storage space adaptation
- Homogeneous item type and batch type space allocation
- Mixed item space allocation
- Minimisation of partial storage spaces
In connection with the movement strategies, not all allocation strategies are compatible. For example, track strategy, representing the movement strategies, stands in opposition with the fast movers strategy. Only mutually compatible strategies achieve the desired strategy effect. Otherwise, unnecessary programming effort would lead to inefficient workflows. Before implementing the operational strategies, verification, whether the selected methods can work together effectively, is crucial.
The allocation strategies mentioned above are described in more detail below:
Allocation strategies: fast movers concentration
Fast movers concentration is an allocation strategy that can determine in which shelf and storage zone units are stored and staged—utilizing allocation strategies the aim ist o achieve optimal use of space, short distances and a low supply effort. If, for example, products in high demand locate close to the picking zone, an increase of handling capacity is possible. A distinction is made between the dynamic or static provision of the goods.
Fast movers concentration is a strategy to optimise the routes of the warehouse equipment and the routes of the pickers. The travel distances of the warehouse equipment are to be reduced by storing the units of fast-moving items in a place that can be accessed quickly. Depending on whether the supply of goods is static or dynamic, a specific location is selected.
Fast movers concentration with static goods staging
Static staging refers to man-to-goods picking, which means that an order picker takes the required goods directly from the storage location. The units of fast-moving articles are therefore accessed close to the base of the staging area.
Fast movers concentration for dynamic goods supply
Dynamic staging describes goods-to-man picking. The picker carries out the respective picking order within a warehouse zone. The units transfer to the order picker via transportation devices. The access units of fast-moving articles have their place near the storage and retrieval locations of the staging area.
With fast mover concentration during order picking, path time savings of up to 30 per cent and performance improvements of up to 10 per cent are possible. The extent to which these percentages can be achieved depends on the ABC distribution, the range of the assortment, how the access points are arranged and the selected routing strategy. The danger, or rather the disadvantage of fast movers concentration, is that staging areas in too close proximity to one another can obstruct the order pickers.
Allocation strategies – fixed vs free storage space allocation
With fixed storage space allocation, the maximum expected warehouse stock for an article is determined and the storage spaces required for this are firmly reserved. With free storage space allocation, storage spaces for a loading unit are used as soon as they become available. For the use of free storage spaces, it is irrelevant which article was previously stored in the particular location.
By reserving locations for certain articles, fixed storage space allocation must leave spaces free. Consequently, other articles cannot be stored there. The fixed storage area allocation makes sense, for example, in the staging area of picking zones. In the case of a fixed storage area allocation within defined zones, only as many zones as necessary should be created. Otherwise, the space required can be very high. The advantage of fixed storage areas is that the storage location can be determined quickly and without the need for warehouse management systems.
A warehouse management system is required for space management with free space allocation. The advantages of free allocation are shorter distances and the best possible use of storage capacity, as it is not necessary to reserve storage space. When goods are put away, the first free spaces can be used directly without having to drive through the entire warehouse to reach the storage area designated for this purpose.
Allocation strategy: equal distribution strategy
Another strategy that can be used to occupy a warehouse is the equal distribution strategy. In this strategy, identical articles are distributed to different aisles, so that each aisle can be used to access the respective goods.
In which storage space and in which storage zone units are located depends on the respective target of the allocation strategy. Each strategy, therefore, pursues a different objective. The goal of the equal distribution strategy is to ensure maximum access reliability.
Allocation strategy: storage space adaptation
If the warehouse is filled according to the storage space adaptation strategy, this means that the storage locations are filled with units according to their capacities. Small storage spaces are therefore occupied with small storage units and low stock of articles and large storage spaces with large storage units and a high stock of articles.
Allocation strategy: single-article vs mixed-article space allocation
Homogenous article space allocation is characterized by the fact that storage areas with several bins can only be occupied with loading units of the ‘same’ articles. Homogenous items are, for example, T-shirts or bicycle frames in the same size. In the warehouse management system, the articles can be marked as ‘same articles’ employing of an identification number or a barcode. In contrast, when storage spaces are occupied with mixed articles, the storage positions are occupied with units of different articles.
Mixed-article can be regarded as a stopgap solution, but it is often standard in e-commerce warehouses, where WMS systems are used that operate automatically. This storage method is implemented at Amazon, for example, and is called chaotic stock-keeping or random warehousing; it is one of the dynamic storage techniques.
Despite the term ‘chaotic’, this storage technique is also subject to certain rules, which are determined individually (warehouse-dependent). The benefits include increased space utilisation and more efficient and faster processes (e.g. when stocking the warehouse); in addition, financial accounting, purchasing processes and the handling of customer orders are simplified. However, this requires a high degree of discipline in booking and an absolutely reliable, automated merchandise management system; the acquisition costs are correspondingly high.
However, more stock movements take place in a mixed-article allocation, which results in higher equipment requirements than in homogenous-article space allocation. After all, in mixed-article storage, loading units of one article may first have to be moved to reach the loading units of another article. So that no problems arise in the management of the storage bins, the mixed-article space allocation has increased planning requirements.
Allocation strategy: Minimisation of partial storage spaces
Depending on whether the goal is transportation optimisation or area minimisation, the system determines in which storage space and zone units are located. It can happen that the available room in a storage space is not sufficient. In this case, the goods are then distributed to several storage spaces and so-called partial storage spaces are created. Loading units that are located in storage compartments that are not fully stocked are removed from storage first. This allocation strategy is intended to improve the fill level in multiple-article storage spaces in a warehouse and to prevent more than one storage bin per article from being opened.
Summary
An allocation strategy determines how the functional areas of a warehouse are arranged. It also affects what services can be provided in a warehouse and what costs are incurred; the allocation strategy is thus intended to reduce investment and operating costs. Correct planning and allocation of a warehouse are not only essential in terms of optimisation. If an incorrect allocation strategy is used, poor warehouse operation can be expected. For example, lack of space, low filling level, bottlenecks in storage and retrieval as well as poor space utilisation can disrupt the material flow and all processes linked to it.
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