MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION CAPSTONE PROJECT INDUSTRIAL MANAGEMENT ANALYZING OF WAREHOUSE MANAGEMENT AT AVERY DENNISON COMPANY (WAREHOUSE[.]
Background of the thesis
Production plays a crucial role in our daily lives, with manufacturing companies dedicated to driving economic growth and meeting market demands Effective production management relies heavily on efficient warehouse management, ensuring that inventory levels and raw material sources are adequate to support the production process This synergy guarantees that production facilities have the necessary inputs to fulfill their operational responsibilities.
Effective warehouse management is crucial to minimize errors that can disrupt operations and hinder overall company productivity Beyond mere storage, warehouses play a vital role in managing the flow of raw materials and semi-finished products for production However, various challenges can impact the sustainability of these processes.
During my six-month internship at Warehouse 4 of Avery Dennison, I encountered various challenges within the material warehouse and actively participated in a project aimed at enhancing the company's warehouse management This experience inspired me to write an essay that combines both objective and subjective perspectives on real-world issues while applying theoretical knowledge in practice Motivated by the significant benefits of improving the warehouse management system, I have chosen the topic "Analyzing Warehouse Management at Avery Dennison Company (Warehouse 4)" for my graduation thesis to share these insights with a broader audience.
Purpose of the thesis
- Analyze warehouse 4 management at Avery Dennison RBIS Company
- Improve the management performance of raw materials in the stock at Warehouse 4 of Avery Dennison RBIS Company
- Learning and grasping about the process, professional operations, and management of Warehouse 4 of Avery Dennison Company
- Evaluating warehouse performance and limitations
- Proposing solutions to improve Warehouse 4 management of the company
- Suggesting solutions to make employees work more efficiently and inventory management better.
Scope and Object of the thesis
This study focuses on the warehouse management practices at Warehouse 4 of Avery Dennison RBIS Vietnam, situated at No 4 Street, Long Hau Industrial Park, Long An Province The data for this research was collected over a period from July 1, 2021, to November 20, 2021.
Research method
Information collection methods: collect information from profile, document and results through internal audits as well as feedback of involving people
- Data analysis methods: using the analyzed historical data
- Qualitative data analysis: implemented in the form of either interpretation explanation and understanding of the situations from investigating
- Delphi method: Useful information when exchanging with experts in the field.
Paragraphs
Chapter 1: Overview about Avery Dennison and Warehouse 4
Chapter 3: The reality of Warehouse 4’s working performance
Chapter 4: Solutions for a better Warehouse 4 management
Introduction to Avery Dennison
Avery Dennison (NYSE: AVY) is a leading global materials science company based in Glendale, California, known for its expertise in designing and manufacturing diverse labeling and functional materials As a Fortune 500 member, the company plays a significant role in the industry.
Avery Dennison RBIS, a $1.6 billion division of Avery Dennison Corporation, focuses on delivering innovative and sustainable solutions for apparel and footwear brands By optimizing product value and enhancing performance in global trade supply chains, Avery Dennison RBIS elevates brand visibility through a range of offerings, including graphic paper labels, printed fabric labels, decorative accessories, and packaging designed to attract consumers.
Full name: Avery Dennison RBIS Vietnam Co., Ltd
Address: Lot E01 Center Street (Duong Trung Tam), Long Hau Industrial Park, Long Hau Ward, Can Giuoc District, Long An
Operation date: August 1, 2003 (Operating for 18 years)
Legal represent: Nguyễn Cửu Thanh Châu
Number of employees: Over 1,000 people
Corporation slogan: Inspired Brands, Intelligent World
Avery Dennison Corporation, originally established as Kum Kleen in 1935 in Los Angeles, California, was renamed Avery Adhesives in 1937 Founded by Ray Stanton (“Stan”) Avery, the company is recognized for inventing the first self-adhesive sticker.
Avery labels originated as basic, round price stickers, created by Stan Avery, who initially named his company Kum Kleen Products to highlight the unique feature of self-adhesive labels that could be removed cleanly Within five years of its establishment, the company employed just 19 people.
Avery Dennison, originally incorporated as Avery Adhesive Label Corp in 1946, underwent several name changes, becoming Avery Adhesive Products, Inc in 1958, Avery Products Corporation in 1964, and Avery International Corporation in 1976 The company strategically merged with Dennison Manufacturing Company in 1990, adopting the name Avery Dennison Today, it operates in over 50 countries, employs more than 32,000 people, and generates over $7 billion in revenue.
In Vietnam, the factory was established on May 3/2003 first in VSIP, Thuan An town, Binh Duong Province and quickly get the trust of customers and occupy a strong market often
After over 12 years in the Vietnamese market, the corporation has responded to significant market demand by constructing and inaugurating a new factory in Long Hau Industrial Park, located in Can Giuoc town, Long An province, with a total investment capital reaching substantial levels.
With a workforce exceeding 3,000 employees, the company has grown significantly, now valued at 30 million dollars It specializes in various sectors, including labels, packaging, decorative accessories, and RFID labels Notably, in 2020, Avery Dennison completed the acquisition of Smartrac’s RFID transponder business, further enhancing its market presence.
Avery Dennison Corporation is a multinational manufacturer and distributor of pressure-sensitive adhesive materials (such as self-adhesive labels), apparel branding labels and tags, RFID inlays, and specialty medical products
The company's diverse product range serves nearly every major industry, featuring pressure-sensitive materials for labels and graphics, bonding solutions such as tapes for industrial, medical, and retail uses, as well as tags, labels, and embellishments for apparel Additionally, they offer radio-frequency identification (RFID) solutions tailored for retail apparel and various other markets.
- Label and Graphic Materials (LGM)
Label and Packaging Materials: Design and produce packaging and label products to collect customer needs from many fields (Food and Drink, Pharmaceuticals,…)
Figure 1.2: Label and Packaging Materials products
Graphics Solutions: Design vinyl graphics and automotive wrap graphics worldwide
Reflective Solutions: Build reflective panels to illuminate construction areas, traffic signs, ambulances,
- Retail Branding and Information Solutions (RBIS)
Apparel Solutions: Delivery tickets, tags, and labels to external embellishments, and packaging for brands around the world
Figure 1.5: Retail Branding and Information products
RFID (Radio Frequency Identification): Provide RFID solutions for brands and system integrators
Printer Solutions: Providing customers with innovative and sustainable printer and labeler products and supplies that accelerate supply chain performance, increase productivity, and elevate the consumer experience
- Industrial and Healthcare Materials (IHM)
Performance tapes offer high-performance bonding and functional materials tailored for baby care, incontinence care, feminine hygiene, and consumer packaging Our solutions encompass a diverse array of adhesive closures, mechanical closures, and closure components.
Fastener Solutions: A global provider of fasteners for a wide range of industries and applications, along with the applicators and equipment needed to apply them
Medical: As a partner for medical device manufacturers, Avery Dennison Medical offers customized solutions, expertise, and the facilities to take your ideas from concept to completion
These are the 4 key strategies of AD RBIS Southeast Asian companies Avery Dennison RBIS Vietnam is an important link in the chain of companies in Southeast Asia
To achieve significant growth in high-value categories, it is essential to maintain leadership in smart labels within the apparel sector Additionally, accelerating vertical growth in key industries and concentrating on expanding the external market, particularly among strategic customers in the sports and art segments, will be crucial for success.
Unlock growth and value in the food and logistics sectors by addressing market demands for enhanced visibility, efficiency, and sustainability through integrated identity solutions and smart labels This vision emphasizes a commitment to sustainability and long-term success.
Transforming the business model is essential for sustained growth and profitability By focusing on flexibility, productivity, automation, and innovative fixed-cost strategies, companies can enhance their competitiveness This approach not only secures a strong market position but also fosters trust among loyal customers.
Enhance your organization's digital capabilities to improve solutions and elevate customer experience As digital transformation rapidly evolves, adapting to these changes is essential for future success.
Figure 1.11: Avery Dennison RBIS chart operation
Total Quality Manager EHS Manager Supply Chain
Figure 1.12: Avery Dennison Annual Financial Report 2016 – 2020
The analysis of the company's financial statements over the past five years indicates a consistent growth trajectory from 2016 to 2019 Despite the significant revenue impact from the COVID-19 pandemic in 2019 and 2020, the company managed to achieve an increase in net profit during this period.
Figure 1.13: Avery Dennison Year Stock Chart
Supply Chain department
1.2.1 Introduction to Supply Chain department
The Supply Chain department at Avery oversees and manages the entire corporate supply chain, ensuring efficient control of production processes This department is integral to the inflow and outflow of materials, directly impacting the enterprise's operational effectiveness.
The MSEA Supply Chain Manager oversees the entire Supply Chain department, directly managing four subordinate departments Decisions and information will be communicated in a top-down manner.
There are 4 job parts under MSEA Supply Chain Manager They will perform different functions
Purchasing: Researching potential vendors; Comparing and evaluating offers from suppliers; Negotiating contract terms of agreement and pricing…
Effective logistics management involves monitoring and tracking key factors such as quality, quantity, inventory levels, delivery times, transportation costs, and overall efficiency It is essential to optimize warehouse potential while collaborating closely with the production department and quality assurance teams to ensure seamless operations.
Materials Planning: Determining the required materials and generating purchase orders; Ensuring the consistent and adequate supply of materials necessary for production…
Supply Chain Analyst: Monitor and collect data on current operations, including scheduling, sourcing, warehousing, production, and delivery; Analyze data to determine areas for performance improvement…
Warehouse 4 plays a crucial role in the supply chain by ensuring the safety of goods and effectively managing inventory based on quantity and quality Its various functions support the overall operations, as the department handles significant volumes of materials and data.
Improvements in warehouse 4 will apply within the framework of warehouse 4 and under the supervision of Supply Chain Manager, and do not directly affect the activities of related departments
The warehouse is an important part of logistics There are 2 main warehouses in Avery Dennison RBIS Long Hau: Warehouse 1 are finished good warehouses, Warehouse 4 is a material warehouse
Warehouse 4 has 3 departments including WH Clerk, WH TQ, WH Keeper/ Operator Each of them we can call a team Also for the warehouse 1
Figure 1.14: Supply Chain Department and Warehouse work chart
Warehouse 4
Warehouse 4 is the raw material warehouse of AD RBIS Viet Nam, under the Supply Chain department division Play an important role for the production of the entire RBIS Viet Nam
Avery Dennison Warehouse 4, situated on Road 4 in LHIP, Can Giuoc, Long An, Vietnam, spans an area of 7,000 square meters and employs approximately 150 staff members across various roles.
It has 2 main areas which are Zone A (paper, PFL…) is 2200 square meters and Zone
The facility encompasses a total area of 2200 square meters dedicated to woven and thermal products Additionally, there is a 1200 square meter staging area (Zone C) for the temporary storage of goods, along with a designated WIP area for the Production Department Furthermore, a private storage space of 400 square meters (Zone D) is maintained at a controlled temperature to preserve sensitive items such as inks and chemicals.
Our warehouse contains approximately 2,630 pallets distributed across two main areas, Zone A and Zone B Each zone features 24 racks labeled from A to Z, with each rack comprising 5 floors and accommodating 24 pallet positions numbered 1 to 24 Additionally, the reserve area consists of 10 racks, designated TAM1 to TAM10, which mirror the structure of the main area.
Warehouse 4 has 3 departments including WH Clerk, WH TQ, WH Keeper/ Operator Each of them we can call a team Also for the warehouse 1
Each group will take care of specific tasks in the import and export process and warehouse operations
In the operator group, there will be subgroups for each small warehouse, warehouse Team 4A, warehouse Team 4B and warehouse Team 4C
In the Clerk team will be responsible for receiving information, documents and exchanging for 1 or a few certain types of raw materials
Besides the main teams above, there is still one more team that is the supply chain analyst (Data Analyst)
This team, consisting of a small number of members, is primarily responsible for overseeing warehouse supply chain operations and managing the flow of materials throughout the main supply chain.
In addition, they control the data information and reports of the overall warehouse
LITERATURE REVIEW
Definition of supply chain
A supply chain encompasses all processes that convert raw materials into finished products and ensure their delivery to customers It typically involves several key stages, including suppliers, manufacturers, warehouses, distribution centers, retailers, and the end customers.
Figure 2.1: Structure of a supply chain
Material flows in the supply chain move from suppliers to customers, while information flows regarding orders and demands travel in the opposite direction In today's competitive marketplace, companies with more effective and efficient supply chains gain a significant advantage over their rivals According to the Council of Supply Chain Management Professionals (Vitasek, 2010), this dynamic is crucial for success.
Supply chain management involves the comprehensive planning and oversight of activities related to sourcing, procurement, conversion, and logistics It emphasizes the importance of collaboration with channel partners, including suppliers, intermediaries, third-party service providers, and customers Essentially, it integrates supply and demand management both within and between companies As a crucial integrating function, supply chain management connects key business functions and processes, fostering a cohesive and high-performing business model This encompasses logistics management, manufacturing operations, and the coordination of processes across marketing, sales, product design, finance, and information technology.
Warehouse in Supply Chain
A warehouse functions as a temporary storage solution for inventory and acts as a buffer within supply chains Its primary purpose is to align product availability with consumer demand, ensuring the efficient movement of goods from suppliers to customers while meeting demand in a timely and cost-effective manner.
A warehouse serves as a crucial trans-shipment point, ensuring that all received goods are dispatched quickly, effectively, and efficiently The fundamental processes of warehouse management have remained consistent over time, encompassing the receipt of goods, order processing, replenishment, the addition of value-adding services, and the final dispatch of products.
2.2.2 The role of the warehouse
Warehouse activities are directly linked to the organization and preservation of goods, so the role of the warehouse are:
- Ensure the continuity of the production and distribution of goods Helping businesses store all products and manage production quantities on the entire system
Warehouses play a crucial role in minimizing production, transportation, and distribution costs, enabling the creation of economically scaled shipments This efficiency leads to a reduction in the average cost per unit Additionally, effective warehouse management helps save circulation costs by minimizing goods loss and optimizing the use of facilities.
Enhancing customer service in businesses involves ensuring that goods are delivered with the right quantity and quality, while also maintaining accurate delivery status This process contributes to timely and efficient deliveries at the same time and place.
2.2.3 The function of the warehouse
The function main of the warehouse are:
Consolidation in warehousing allows for the efficient gathering of goods from various sources, creating large shipments that benefit from economies of scale during transportation to factories or markets.
Effective coordination of goods is essential for fulfilling diverse customer orders The warehouse plays a crucial role in this process by separating large shipments and combining various items into complete orders This ensures that products are ready for sale or production, meeting the needs of the requester efficiently.
To ensure the security and storage of goods, it is essential to maintain their quantity and quality throughout the operational process Maximizing warehouse area and capacity is crucial, along with proper care and preservation of items stored within the facility.
Warehouse management
Warehouse management involves the control and optimization of intricate warehouse and distribution systems Beyond basic inventory management, which includes overseeing quantities and storage locations, it also encompasses the planning and control of transportation methods Effective warehouse management employs strategies and tools to monitor system status and select optimal operating procedures Therefore, it is more accurately described as an internal system for managing and optimizing material flows.
Warehouse management involves overseeing inventory and related operations within a warehouse, while inventory management encompasses the broader task of managing stock across the entire business and predicting trends Although both are essential for effective stock management, inventory management offers a strategic overview, whereas warehouse management zeroes in on the specifics of stock movement.
ABC Classify
An ABC analysis can assist in more effective inventory management of the different items (Luenendonk, 2016) (5) The whole aim is to enhance the ability to
Page 18 manage massive and complicated data sets with ABC analysis This is broken down into three simple categories
Products in category A are the most prevalent in the warehouse and significantly contribute to a business's sales profits Although they constitute only 10% of the total inventory, they generate approximately 80% of the income, making them a crucial component of profitability These items require minimal investment while delivering substantial returns.
Category B products, which represent 20% of your inventory and contribute 15% of your sales, are often overlooked by management However, these items hold significant potential, as with minimal investment and attention, they can be transformed into cash-generating A products (Luenendonk, 2016).
Items in category C contribute minimally to overall profits, generating only about 10% of total revenue while comprising approximately 70% of a company's inventory Despite their low profitability, these items require minimal oversight, allowing the organization to maintain a comfortable profit margin (Luenendonk, 2016).
After completing the initial ABC Analysis focused on Sales Revenue, it is advantageous to conduct a subsequent analysis to gain insights into the most frequently picked goods This next step involves performing an ABC analysis based on picking frequency, as outlined by Frandsen (2014) The categorization of picking frequency will follow the methods listed below.
• A-products account for 80 % of the picking frequency
• B-products account for 15 % of the picking frequency
• C-products account for 5 % of the picking frequency
A Double ABC Analysis would then contain 9 different product classifications, 3 for the sales revenue criteria and 3 for the picking frequency which would give 9 different areas classification (Frandsen, 2014) (6):
Figure 2.2: Example of a Double ABC Analysis
Figure 2.3: ABC Analysis: product value and frequency of sales
Vendor Management Inventory (VMI)
Vendor Managed Inventory (VMI) streamlines inventory management by ensuring product availability and freshness at the point of sale while minimizing logistics costs and inventory levels throughout the purchasing chain Successful implementation of VMI requires all stakeholders to communicate effectively and share a common understanding.
Page 20 apply the same standards and methods and work together on a constructive basis In any case, commercial pressure in the consumer goods industry will force companies to further streamline their purchasing processes, in order to achieve a sustained increase in efficiency and profits (Wassim Sasso, 2020) (8)
Vendor Managed Inventory (VMI) offers a more efficient alternative to traditional order-based replenishment by enhancing supply chain integration and collaboration In a VMI arrangement, the vendor takes charge of managing the customer's inventory, automatically replenishing goods at the customer's location according to predefined conditions and rules.
Vendor Managed Inventory (VMI) empowers vendors with the responsibility and authority to oversee the complete replenishment process This shift fundamentally alters performance metrics, prioritizing inventory availability and turnover over traditional measures like delivery time and accuracy.
Collaboration is essential for the success of Vendor Managed Inventory (VMI) Both buyers and vendors should approach VMI with the goal of fostering multi-disciplinary teams that work together to identify mutually beneficial solutions It is crucial for all participants to be collaborative and to comprehend the needs and requirements of their trading partners.
Min stock/ max stock levels for VMI:
In the VMI program, the next crucial step involves establishing Min/Max stock levels for products The Min/Max method is one of the earliest automated inventory replenishment techniques utilized in enterprise planning, where the "Min" value plays a key role in maintaining optimal inventory levels.
Page 21 represents a stock level that triggers a reorder The “Max” value represents a new targeted stock level following the reorder
There are no universal formulas for setting the Min/Max levels in VMI systems It depends on sales, production, planning,…
Vendors and buyers should initially agree on the delivery frequency and establish general Days of Supply (DOS) targets It is advisable to avoid setting excessively low targets from the outset; instead, implementing a 3-phase project with progressively lower stock levels is recommended to maintain product availability.
To ensure optimal inventory management, VMI warehouse managers must continuously review and adjust the Min/Max levels of products as needed.
Bullwhip phenomenon
The “Bullwhip Effect” is a new term (but not a new phenomenon since it has been debated in the literature for over four decades) coined by Lee, Padmanabhan and Whang
In 1997, it was noted that orders to suppliers often exhibit greater fluctuations compared to sales to buyers, leading to a distortion that amplifies as it moves upstream Typically, the distortion becomes more pronounced the further upstream the echelon is located.
(Source: Lee, Padmanabhan and Whang) (9) (p.555)
THE REALITY OF WAREHOUSE 4’S WORKING
General link operation process
Figure 3.1: General link operation process
The process begins with the production department, which creates a production plan upon receiving an order This order and planning information is subsequently shared with the planning and purchasing departments.
The Material Planner will input data for Warehouse 4 to assess whether the available materials are sufficient If the raw materials meet the required levels, they will notify Warehouse 4 to proceed with exporting the materials to the production department.
The materials planning department will develop an additional plan to ensure that material preparation aligns with the production department's schedule They will collaborate with the purchasing department to communicate the material plan, which the purchasing team will then use to establish contracts with suppliers, ensuring that all processes adhere to the established plan.
The Supplier is set to deliver materials to Warehouse 4 as scheduled, where raw materials will be stored for production It is essential that the delivered materials align with the items specified in the Purchasing plan Any discrepancies in inventory and warehouse management will not be tolerated by the production department and may lead to significant repercussions.
After the goods are finished, the production department will stock them in WH1 and WH2 We will take finished goods to our customers from those two warehouses
While the overall process is general, each department is responsible for various specific tasks In Warehouse 4, I will outline three key processes that are essential to its operations.
Specific business process in Warehouse 4
In order to present more specific and vivid information, I will present on the table the process of importing materials at Warehouse 4
Due to weather reasons, the material delivery truck may arrive at the warehouse at irregular hours
Table 2.1: Input – Work instruction at Warehouse 4
Step Job Description Illustrating image
The related department (Im –Ex,
Purchasing,…) will inform details information such as intern code, quantity, quantity of packages, waybill, arrival time to Warehouse
Clerk who will inform to WH
Supplier or transporter contact with warehouse clerk when they come to company for delivering
Warehouse Clerk check the delivery documents and inform to
WH Operator who will check, count, receive raw materials and sign
WH Operator moves raw materials to temporary location where waiting to inspect quantity and hard – over delivery document to WH Clerk
Figure 3.4: Raw materials arrive at Warehouse 4
The TQ department relies on the mail of the Warehouse Clerk to take samples of raw materials and compare with approved sample by
- Qualified: TQ confirm to receipt raw materials to warehouse clerk by email
- Unqualified: TQ inform to hold, don’t receipt raw materials by email
TQ will control this raw materials; make the complaint documents to exchange or return with supplier
Unqualified materials will be transported to Zone C (Reserve area) and placed in temporary locations This process is necessary to facilitate return and complaint procedures until the supplier provides the correct goods.
Depending on the type of goods and the distance of the supplier, the items have different take-back times
On average, it takes about 1-2 weeks to complete The warehouse 4 has a reserve area to store for such cases
When the time is longer than expected, our side will send an email to urge the supplier
Figure 3.5: The TQ team are checking new RM
After receiving the information to receipt raw material, WH Operator check actual with packing list when they arrive to warehouse
Each team of Operator, will be responsible for each item of their own
Zone Zone B for example When the items of Zone B arrive, the Operator of Zone B will come and check the quantity against the Goods receipt note and packing list
Then there will be a month stamp on the boxes and a note of the item and the date of receipt
The items will be delivered to their designated Zone and placed in the available locators This process will be recorded on the Goods Receipt Note and updated in the stock cards Finally, all relevant documents will be returned to the Clerks.
Warehouse Clerk receipt on system by PO, item and location follow actual
Document archives: goods received note with sign, delivery note, and packing list Figure 3.8: RM Tracking computer
Just like the import of the warehouse, the export process will also be presented in the table
For more information, the company has a professional transportation team between Warehouse 4 and the production department at the head office
Warehouse 4 at Avery Dennison employs the FIFO (First In – First Out) method for exporting raw materials, ensuring that older stock is prioritized for removal This approach guarantees that raw materials stored for extended periods are dispatched first, maintaining efficiency in inventory management.
Table 2.2: Output – Work instruction at Warehouse 4
Step Job Description Illustrating image
WH Clerks receive “Raw materials request” from Production
Based on Raw materials request,
WH Clerks check stock (item, quantity,…), if:
+ Enough: inform to WH Keeper to prepare (item, quantity, locator…)
Print the Raw Materials request note and give to WH Operation
+ Not enough: inform to production planning
Figure 3.11: Clerk team are checking on computer
Based on the Raw materials request note, WH Operator will prepare them (follow FIFO)
Update stock card follow actual quantity
Update PO number (input date if
VMI), remaining stock on Raw materials request note
Figure 3.12: The vacant location at Warehouse 4
WH Operator deliver RM with
RM request note to Production
Production department check quantity and sign in RM request note
Figure 3.13: The Operator takes the goods
WH Operator transfer RM request note to WH Clerk who will update system (item, locator ) follow actual
Document archives: output note from system with RM request note
Once the raw materials are stored in designated locations within the warehouse, the focus shifts to their careful preservation and management This preservation involves a systematic approach, characterized by the direct involvement of the Keeper and the indirect assistance of the Clerk, ensuring that the materials are maintained effectively.
The only workaround to check and make sure everything is on track in the warehouse All activities will be done daily
The forklifts and the pallets must be ready for operation After finishing the workday to focus them on the right place specified
The pallets are classified according to regulations Pallets damaged during transportation must be brought to the damaged goods area behind the factory
The temperature of the warehouse must be suitable and always in a ready state Any interruption of the air conditioner must be reported and rectified as quickly as possible
Figure 3.15: Air conditioner at Warehouse 4
Raw materials at the locators are monitored using stock cards that display the actual quantities It is essential to ensure that the stock cards are completely replenished, and any invalid stock cards should be promptly discarded.
Figure 3.16: Safe working loads instruction
The quantity and volume of materials must be neat and the load according to the standards The Operators have to bear the consequences if violated
Figure 3.17: The racks of Warehouse 4
The storage racks feature five sturdy floors, labeled from A to Z, providing a clean, dry, and secure environment for our materials Specific items are designated for particular locations within areas A, B, C, and D.
Regular inventory checks should be conducted at the start and end of each day to ensure accuracy It is crucial to verify the correctness of stock cards Items will be organized by specific locations, and operators will be designated to manage these items within their respective areas.
Due to the FIFO method, raw materials are quickly labeled with the month label when entering the warehouse
The month label must be properly affixed and filled with relevant information clearly This will facilitate the following operations
Figure 3.18: The month label at Warehouse 4
Reality of warehouse management
Currently, the management of raw materials is stable but not flawless, as the recorded data often fails to reflect reality This discrepancy leads to various issues, including shortages, surpluses, and prolonged inventory periods While the operators perform admirably, they struggle to locate and prepare materials for the production department and other orders due to numerical errors that create confusion for both them and the clerical team.
Zone Category Item Clerk Data Stock cards
Errors can occur not only in quantity but also in the location of items, leading to inefficiencies Additionally, some products may lack sufficient information, resulting in prolonged storage in the warehouse and occupying valuable space This situation necessitates further discussions among teams before proceeding with the import or export of goods, consuming significant time and effort.
Mistakes in using stock cards lead to a series of consequences, primarily due to the imprecise recording of actual quantities, which can create significant confusion Additionally, the absence of automation in the warehouse information management system contributes to this issue, resulting in inventory reports and dashboards that are only approximate and lack complete accuracy.
Employee tools are gradually being digitized But the clerk's specific operations on the data are still manual and not entirely accurate
Clerks utilize user-friendly support tools like Excel and Google Sheets to manage their tasks efficiently They regularly prepare inventory reports for their superiors, relying on daily data collected from the Clerk team This data is substantial, making it time-consuming to organize and analyze effectively.
TQ team is in that situation as the Clerk team They have to work on multiple tools
As well as exchanging information in many different ways
Warehouse 4 boasts a vast area, making material coordination straightforward yet labor-intensive To prevent significant delays, additional operators may be necessary A major challenge lies in accurately entering data into material requisition forms and stock cards, as reports indicate frequent misunderstandings due to varying handwriting from multiple individuals.
The Warehouse Manager recently initiated a project to enhance the warehouse layout, building on the success of previous implementations that have been operational for over a year The effectiveness of these improvements is supported by recent results The team utilized the ABC method to assess product category values and employed a double ABC method to evaluate throughput and material frequency This analysis facilitated a cost-effective and physically efficient redesign of the layout for picking and receiving operations.
The proposed layout is designed to be robust and adaptable to future needs, with long-term objectives focused on minimizing ingredient inventory during peak seasons and reducing travel costs Additionally, the storage area has been optimized, resulting in a 27% increase in efficiency, according to data analysis.
The design enhances material movement efficiency and creates designated storage areas within the warehouse With layout challenges addressed, Warehouse 4 is progressing towards additional enhancements.
The operators utilize four types of forklifts: counterbalance forklifts, pallet jacks, walkie stackers, and reach fork trucks, each designed for specific transport needs These diverse forklifts effectively handle the movement of materials within the warehouse, ensuring efficient operations.
Counterbalance forklift: The 3-wheel variant is ideal for situations requiring the operator to turn and maneuver in circles (Total length: 2.35m, total width: 1 meter and total height: 2 meter)
Pallet jacks are compact yet powerful tools designed to maneuver in tight spaces, making them ideal for lifting small weights in confined areas With dimensions of 1.6 meters in length, 0.65 meters in width, and 1.2 meters in height, they offer an efficient solution for material handling in limited environments.
Walkie stackers are uniquely designed material handling trucks that differ from traditional forklifts by lacking cabs, requiring the operator to guide them from behind using a handle While they may not possess the power, agility, or speed of other machines, they excel in situations where a higher pallet jack is needed, offering a significantly longer reach than standard pallet jacks.
The reach forklift is a specialized warehouse truck designed for indoor operations, distinguished by its ability to extend forks beyond the compartment to access high warehouse racks, a feature not available in standard forklifts Its open compartment design enhances operator visibility, making it ideal for indoor tasks However, due to limited under-carriage clearance, reach trucks are not suitable for outdoor use.
Figure 3.22: The reach fork truck
Ensuring safety at work is crucial for protecting human life, which is why fire protection stations and clear instructions are strategically placed throughout the workplace These fire protection systems are routinely maintained and inspected, and emergency fire alarm buttons are readily accessible Additionally, the warehouse is equipped with an extensive fire protection system that activates when smoke is detected, providing an essential response in case of an incident.
There are special types of items that will be stored in area D and will be affixed with an additional label called "Chemical Identification Tag"
This label will classify the hazard and flammability of these chemical materials
Evaluation of the management of raw materials at Warehouse 4
The secretariat serves as the primary source of information for required reports, with the secretarial team responsible for data entry and the maintenance of original documents, allowing them to correct any errors found within those documents.
The materials in the warehouse will be transferred to the Data Analyst, who will organize and build real-time tracking and reporting based on data obtained from various secretaries.
The Warehouse Supervisor will receive the reports to manage and operate the warehouse effectively, followed by a review and feedback process directed towards the logistics department.
3.4 Evaluation of the at Warehouse 4 management
Warehouse 4 has built an effective material storage system Specific and reasonable inventory preservation activities Site layout, layout arrangement, and regular inspection help prevent material damage and material loss That makes it easy to ensure that enough materials are delivered to the production department Output materials are always satisfactory materials
• Professional import and export process
The warehouse operates with a lean and targeted process, ensuring smooth and convenient import and export operations Effective collaboration among departments maximizes team potential, while strong communication links enable excellent control over incoming and outgoing materials.
Implementing a structured process enhances logical operations and minimizes errors, while also fostering better collaboration among warehouse teams These processes offer a comprehensive view of the plant's overall operations, ensuring alignment across diverse teams and tasks.
In the warehouse, each team plays a unique role, collaborating efficiently and professionally Their exceptional skills have been honed through extensive training Each team has distinct tasks and responsibilities that are designed to operate independently without interference.
The Clerk team is the core of information and plays an important role in coordinating information and keeping information for the material warehouse
The TQ team meticulously upholds quality standards, ensuring that all products entering and leaving the warehouse meet rigorous requirements They are dedicated to sourcing the highest quality raw materials to maintain excellence in their offerings.
The Operator team excels in agile coordination of materials and effectively addresses material-related issues, ensuring that all warehouse items are properly organized and undamaged.
The technique for layout design, traveling, and the calculating method for layout and travel picking optimization were built fully and efficiently
The initiative was designed to improve performance and increase efficiency in staging by optimizing storage space for various items in a flexible and user-friendly way, while also minimizing the distance traveled during picking.
Recently, material retrieving and moving has cut costs quite a bit
Warehouse 4 has clearly classified each type of product into each separate area Expensive and perishable materials will be transferred to Zone D (such as digital ink) and other zones will preserve different types of raw materials This reduces costs and increases the life of raw materials The zones also have different layouts to accommodate the materials in them
The facilities that Warehouse 4 equips employees are very rich The tasks are the means and tools to support all of its features
The warehouse management department demonstrates a strong commitment to understanding the activities and challenges faced by each employee, supported by a comprehensive selection of forklifts and information tools, including computers and intranets.
• Raw materials stock for a long time
Materials often linger in warehouses for extended periods primarily due to insufficient product information, which hinders their extraction and utilization.
PO or has been planned into the system data
Tracing the origin of goods requires considerable time and effort, particularly when addressing the storage challenges of these materials Due to prolonged shipping delays, many of these materials fail to meet quality standards and become outdated Consequently, expired raw materials must be disposed of properly.
• Hard to find a direct and pick raw material correctly
Despite having effective material layout arrangements, selecting the necessary materials and transitioning to the required area remains challenging This challenge arises from the need to calibrate materials according to the FIFO (First In, First Out) method to ensure compliance with requirements.
SOLUTION FOR A BETTER WAREHOUSE
Urgency and purpose
In today's competitive economy, effective warehouse management presents significant advantages, yet challenges remain that hinder progress for warehouse managers To stay relevant, businesses must continuously enhance their productivity and management efficiency, or risk falling behind.
Raw materials are essential assets for any enterprise, serving as the crucial inputs in the production process Effective management of these materials ensures smooth product manufacturing They are vital to the supply chain, particularly for large companies like Avery Dennison RBIS.
Enhancing the management of Warehouse 4 and its materials relies on internal resources, necessitating adherence to market economy standards while minimizing external influences Key requirements include operating within the established financial framework, aligning with the specific characteristics of Warehouse 4 and AD Company, and achieving the intended outcomes.
Solution for warehouse 4 management
Warehouse 4 should periodically and unexpectedly check the amount of inventory
Regular inspections of Warehouse 4's inventory are essential; however, implementing random checks can provide a more accurate understanding of the situation These random audits are effective in identifying errors, fraud, and management oversights, allowing for timely corrections and ensuring that the information reflects reality.
Periodic reports and random reports will be the most objective metrics when combined From there, managers will make wiser decisions
A surprise quality check may assess the storage of papers and the location of materials in Warehouse 4, providing evaluation results on each team's responsibilities and the level of work completed.
Warehouse 4 needs to build a strategic plan for inventory – VMI
VMI effectively mitigates the abrupt fluctuations associated with the bullwhip effect by ensuring that products are already in stock and prepared for production, rather than relying on placing orders that incur additional costs.
The supplier remains relatively unaffected at the bottom of the bullwhip chain, particularly during crises like the COVID-19 pandemic The challenges posed by the pandemic hinder our ability to place regular and accurate inventory and production orders In this context, Vendor Managed Inventory (VMI) emerges as a viable solution to alleviate pressure on both the warehouse and the company.
This solution cannot work alone It is necessary to have the contribution and support together of other departments in the Supply Chain department
Creating a strategic plan is a significant undertaking that demands both investment and effort Collaborative contributions are essential for ensuring the stability of the division and fostering the company's growth.
Warehouse 4 needs to coordinate with the material planning and purchasing department To develop a specific inventory strategy plan Can resolve common problems such as overstocking or material shortages This is a series of linked activities
To effectively implement small-scale initiatives like purchasing, storing, and production, it is essential to share research data among teams Collaborative investment in forecasting and strategic planning is crucial The proposed plans will establish a foundation for detailed and coherent workflows across all departments.
Investing strategically in Vendor Material Inventory (VMI) is essential, as it has evolved from being merely a supplementary measure to a key component of future strategic planning Embracing VMI can significantly enhance our inventory management and overall operational efficiency.
VMI goods vary in extent and nature based on the agreement between the involved parties In the context of Warehouse 4, these goods are classified as items that have been purchased and are stored in the warehouse, making them readily available for use.
Page 46 only paid when they have actually been released from the warehouse and used for purposes other than inventory.
Figure 4.1: VMI category using space inventory
According to the latest statistics in July, the number of pallets that VMI accounts for is only about 584 The capacity of the whole warehouse has a capacity of more than
5800 square meters (8584 pallet load) Its main materials are Paper Sheet, Tape, Paper Roll, other materials are not
Figure 4.2: VMI total inventory and max stock
The VMI row exhibits irregular fluctuations and lacks stability, indicating the need for a strategic development plan To optimize the company's financial capital and enhance relationships, it is essential to implement a smart use strategy for VMI rows Engaging with suppliers to establish mutually beneficial contracts is crucial, as VMI represents a symbiotic WIN-WIN solution for both parties.
To enhance our VMI materials, we should incorporate a wider variety while maintaining balance It's essential to avoid excess and establish a thoughtful benchmark for their use In essence, a careful and strategic approach to VMI is crucial.
In short, we need to build a plan to use VMI effectively and intelligently
Stage 1: Reusing previous ABC and double ABC analysis data that the layout project has completed Previous project information and data are carefully stored and managed by the warehouse manager
Stage 2: We will calculate the remaining and unused warehouse locations for newly arrived VMI items
Stage 3: Connect to RM and Planning Based on the available data of the warehouse and the data of the parts on the logistics To select which items should be provided with VMI
Stage 4: Contract to Vendor Promote strategies and ways to negotiate with suppliers on a decision common to both parties
Stage 5: Applying, Keep track and variable fix After completing the above stages
At this point, we need to monitor the production situation, supply ability, control ability Finally adjust the VMI row volume continuously and dynamically
Warehouse 4 needs to be installed with a modern management data information system (Oracle Cloud WMS)
Collaboration among departmental employees revealed several errors and limitations that impacted their work outcomes To effectively achieve their objectives, they must concurrently manage multiple applications and diverse software tools.
Managing information and data of this raw material warehouse needs an effective and professional management system Oracle Cloud WMS is an option worth considering
Oracle Warehouse Management offers cutting-edge features, mobile solutions, and robust reporting tools, all accessible through a user-friendly browser interface This dynamic solution is highly configurable, allowing for quick implementation and adaptability to the evolving needs of our business.
With this advanced system we can achieve (General scale):
• Reduce manual processes: Reduce manual processes and excel spreadsheets by up to 70% By using a tool, single system
• Reduce costs: Maximizing enterprise resources brings high efficiency in resource use Leading to cost savings and boost revenue
• Real-time data is updated automatically: Improve the quality of accounting and secretarial information Accurate and timely data
• Industry 4.0 developments: As a foundation to guide businesses to the future industry 4.0 platform Improve competitiveness and stay ahead of the market About the warehouse in particular (Oracle Warehouse Management Cloud):
Oracle Cloud WMS offers multi-level warehouse management, allowing the company level or Supply Chain department to access data from each warehouse efficiently.
Page 49 is optimally supported Manage materials and goods codes uniformly, avoid duplication, and flexibly
Shipping Mark Advanced Solution (QR Barcode)
In addition to the above solutions, the Supply Chain department has a project to improve the management of the raw materials warehouse It's the QR Barcode project
The QR Barcode project for Warehouse 4 aims to enhance operations across various departments, including Warehouse, Production, Management, and Supervision The initiative addresses overarching challenges through the implementation of a Shipping Mark system.
The project goes for the goals:
● Unify the database throughout the products based on system and reality
● Close information and products linkage between warehouse and manufacture
● Visualize & standardize the physical information display
● Systematically tracking real-time transactions, reduce manual workload and human mistakes
● Pick goods purposefully following FIFO, decrease out-of-date material
● Minimize manual record and eliminate error typing (Stock cards)
● Close the gap between physical count and system count
4.3.2 Current and Early Project Step
Figure 4.6: QR Barcode current and early project step
Currently, the project is still being implemented and is in the “Applying & Testing Automation Barcode project” Step by step is a kind of many activities The whole
Page 52 process step is applied to Zone D And then will apply to other zones of the whole Warehouse 4
This project aims to enhance inventory management by replacing traditional stock cards with a more efficient system using shipping mark labels Each box of materials will have a shipping mark label affixed upon arrival, streamlining the tracking and management process.
Different materials are associated with unique QR codes, with retail items featuring specialized core labels The outer label serves as the parent label, while the core label functions as the child label Additionally, QR code readers are utilized to access the data for the Operator.
▪ Help the Operators identify materials and item codes
▪ Import and export material data for the working process
▪ Responsible for the stock card and the monthly card (Turn 2 into 1)
▪ Declare the relevant information Explain the information outside and inside
To ensure the successful execution of the shipping mark process, Warehouse 4 needs to establish an additional team, known as the Shipping Mark Team, responsible for overseeing both current and future tasks.
The Shipping Mark Team is responsible for creating and applying labels to materials under their control, although their mission has not been clearly defined Their primary tasks include generating labels and affixing locator labels The team utilizes computers and printers as their main working tools.
Figure 4.7: Working desk of Shipping mark team
The shipping mark shows the basic information of the material and its QR code The
The QR code embedded within the material bin connects to an external QR code, with both codes generated by advanced algorithmic software, ensuring that each code is unique.
Adding a team to Warehouse 4 changes the workflow And the steps in that process will be summarized as follows:
Figure 4.10: Shipping mark workflow chart
The steps to build a shipping mark workflow are also a description of the future shipping mark's working steps Each step will be a stage in the working process
Upon entering the gate, the shipping team will fully stamp the inventory before proceeding with the standard warehouse entry steps If there is a movement of materials, they must be scanned and relocated accordingly Subsequently, the materials are exported from the warehouse, scanned out, and presented at the gate for shipping.
4.3.4 Evaluation and solutions for QR Barcode project
The QR Barcode project aims to enhance warehouse management efficiency, serving as a crucial foundation for future operational improvements Throughout its implementation, we identified various strengths and limitations, highlighting the importance of addressing challenges and overcoming shortcomings.
● Pick goods purposefully following FIFO, decrease out-of-date material
● Minimize manual record and eliminate error typing (Stock cards removed)
● Close the gap between physical count and system count, the efficiency of cycle count
● The Operators work faster and improve the performance of other teams
Disadvantages/issues of the project:
● The old teams do not yet understand the new process that is about to change This major change will cause employees to re-learn from the beginning
● The locator labels are so vulnerable It was not a long lifespan
● The WIFI system does not meet The Reader's network access needs Sometimes, the information may be lost during connection failure
● There are still errors in information while scanning So the data on the system will also be wrong
4.3.5 The solution for the project
Change the overall process of both warehouse and employee training
Integrating the new team into the Warehouse 4 process is essential for enhancing collaboration and efficiency This can be achieved through training sessions focused on innovative operational methods A comprehensive overhaul of warehouse processes and team responsibilities is necessary, allowing teams to adapt to changes and embrace new workflows Specifically, the Operator team requires in-depth training on coordinating with shipping marks and effectively using barcode readers and QR codes.
To effectively manage a team focused on KPIs and labels, it is essential to appoint a professional leader A strong leader will enhance the management of staff and facilitate comprehensive training for the shipping mark team, ultimately improving the group's overall performance.
Make sure the team locator is solid and in place This makes searching and scanning the code unobstructed
Using a label holder for locator labels is essential to maintain workflow efficiency and prevent data loss Without proper labeling, operations can be hindered, leading to potential setbacks in various activities Implementing a label holder serves as a protective measure, ensuring that our locator labels are well-preserved and safeguarded against physical damage or loss.
Set up a stable WIFI network
To enhance productivity in the warehouse, it is essential to increase the number of WIFI hotspots This will ensure that employees maintain a reliable network connection while working Strong and stable WIFI signals are crucial for facilitating quicker data entry into the system.
To ensure a strong and reliable connection in our warehouses, it is essential to install additional WIFI transmitters that share the same signal name This uniformity will prevent scanners from losing connectivity during operation, enhancing overall efficiency.
When applying shipping marks to all items in stock, the tally may vary We can utilize scanner phones to verify the quantity at each rack, but this information is also provided by the Operators.
To ensure accuracy in inventory management, it is essential to establish a dedicated team responsible for manually counting items and verifying them against the system using scanner phones This team's reliable findings will help identify the sources of errors and assign accountability Implementing a small risk classification can significantly lower warehouse risk costs Furthermore, given the high value and security of raw materials stored in the warehouse, effective theft management is crucial.
4.3.6 The novelty of the solution