Design of an automated warehouse in an Industry 4.0 context

The objective of this document is to illustrate the project conducted for the design of a new automated warehouse. This thesis derive from the opportunity I had in doing an internship in a logistics consultancy company: Simco. The materials and the results I am going to present arise from both the analyses carried out by the project team and from the research I have conducted first-hand, with a particular focus on the Fourth Industrial revolution. The projects involves a medium-sized firm operating as a distributor of electrical material; however, it has recently widened its business portfolio through investments in promising areas like renewable energies and home automation. Currently, the warehouse under examination plays a crucial role in the supply chain of the firm. It acts as a Central warehouse; it collects goods from a broad variety of suppliers and distribute them directly to its customers, or to its own sales subsidiaries, that cover foreign markets (especially mid-East European countries like Czech Republic). However, small re-working activities can be additionally performed, such as cutting operations. Hence, the building of the new automated warehouse represents a turning point for the focal company, since it doubles the storage area of the present warehouse. The new building will have a storage area of 10.000 square meters, and an average height of 10 meters. The reasons behind this huge investment rest in the high growth the company expects for the near future (2018-2021). In this perspective, the warehousing solutions that it is intended to implement could benefit from the Industry 4.0 paradigm. This investment constitutes a great opportunity for the company in order to be prepared for the changes the Fourth Industrial revolution is expected to bring along in every industry. The project’s structure bases on three main phases, the document presents in sequence. The first section is devoted to illustrate the AS-IS situation, in terms of Inbound flows, Outbound flows and inventory level. An overview of the current situation is provided in order to clearly understand the main areas of improvement. Indeed, the warehouse is organized according to different product categories, which are determined in function of both technical features and logistics requirements (for instance, Unit Loads and appropriate equipment). Cables products and Small products turn out to be the most stressed areas, since they account for the largest amount of inventory level and movements. In particular, ABC analysis conducted among all the product categories the focal company manages shows that 17% of articles accounts for more than 80% of Outbound flows. In turn, Outbound logistics activities prevails in the warehousing environment of the firm, due to the fragmentation of its customer base. Consequently, they appear as the most promising categories to implement advanced solutions that can improve significantly the performances of this crucial area. Thus, this thesis focuses on them. At the heart of this first part, a Feasibility Study is presented in order to depict the main peculiarities of the two product categories under examination, and to identify innovative solutions for the new warehouse. On one hand, cables products include a broad range of electrical wires, which are rolled up in specific Unit Loads (UL) consisting of wooden reels, whose weight can vary according to the diameter they have. In turn, special metal supporting equipment holds up the wooden reels; company has standardized it in order to facilitate handling and storage operations. Unit Loads (UL) are therefore defined as the whole kit composed by cables, reel and supporting equipment. On the other hand, Small products refer all those items characterized by short dimensions and, consequently, small volumes. Such products are stored in small Unit Loads, such as boxes or cases. They do not undergo any operation inside the company but come as finished products directly from the manufacturers or alternatively from wholesalers. As stated above, the Feasibility Study aims at identifying adequate solutions for both product categories under investigation. In doing that, it adopts some relevant hypotheses, that derive from both project team’s analyses and considerations of the top management. First of all, the turnover of the company is supposed to double in the TO-BE situation. Consequently, even the Inbound and Outbound flows are assumed to have the same growth rate. Furthermore, the order profile is not expected to change in the near future, as well as the number of articles the company manages. The reasons behind rest mainly in the past and recent experience of the firm. The solutions proposed as a result of the Feasibility Study are based on a high degree of Automation. As far as concerned with Small products, an AS/RS Miniload warehouse is considered as a viable alternative to increase the performances of the company. In particular, a preliminary layout ends up having three (3) aisles, 37 storage levels and a storage capacity equal to more about 30.000 plastic cases. All values derive form in-depth analysis on the data provided by the WMS of the company, with reference to a working period longer than one year. Also the choice of the different typologies of Unit Loads and the designing of both picking and shipping areas rely on the data analysis. The same approach is adopted even for Cables products. The layout of the Automated warehouse consists of one aisle with single storage depth. Different levels are designed according to the different typologies of reels (red, yellow and blue metal supports) the storage locations are enabled to host. However, the system AS/RS warehouse is connected through a conveyor system to the cutting machine, in order to automate the synchronization between storing/retrieving operations and cutting operations. In addition, the layout of this complex automated system encompasses the room for the introduction of a second cutting machine and a second storage aisle. They are likely to be necessary in the future, if the company grows to the full extent. Finally, in-depth Investment analysis finalizes the Feasibility Study. In this section, the main cost items of this investment are explored with the objective of pointing out the affordability of the proposed solutions. Payback time is around four years, since the huge initial outlay is compensated by the reduction of operating costs over time. The high degree of Automation allows to reduce significantly the workforce, which turns out to be the main source of savings. Moreover, a link with Industry 4.0 is highlighted. Indeed, the Italian Government has approved a system of incentives for those companies that implement solutions that belong to the Industry 4.0 paradigm. Therefore, the focal company (“Super and Hyper depreciation”) can reap fiscal additional benefits on this investment. The second phase consists of the fine-tuning of the results deriving from the Feasibility Study. Details of the in-depth analyses the project team has conducted in order to accurately determine the requirements of the two automated solutions are described. TO-BE scenario is adopted in performing all the computations. As far as concerned with Cables products, the main issues arise from the management of flows in the Automated system, as a whole. The performances of the stacker crane are established by considering both the incoming and outgoing flows, as well as the performances of the cutting machines. The stacker crane is enabled to perform 30 Dual Command cycles. However, it is difficult to assess the complexity and the implications of the system in this design phase. For this reason, the projects team has decided to build up a Dynamic Simulation in order to get insights on the potential complications the Automated system might give rise in the future. As a result of this simulation, improvements are included in the updated layout of this system. For instance, a traffic lighter is installed at the I/O point in order to limit the loading of the reels on the conveyor system; by this action, congestion decreases and the conveyor system has less odds to get stuck. The same analytical approach is replicated in studying Small Products. Beside the detailed analysis of Inbound flows, Outbound flows and inventory levels, the most interesting investigations are carried out with reference to the selection of the Unit Loads (cases) and to the identification of those items deputed to undergo refilling operations. On one hand, several alternatives of plastic boxes are simulated in order to find the optimal one, in terms of volume saturation and storage capacity (number of articles). Starting from the insights provided by the Feasibility Study, the project team recommended to adopt two typologies of Unit Loads, simultaneously. Their external dimensions are equal to 400 x 600 x (h) 220mm 400 x 600 x (h) 320mm, respectively. Moreover, the company has the possibility to partition the Unit Loads through dividers, to improve the saturation of these containers. On the other hand, a double ABC analysis is carried out to accurately identify the most appropriate articles to undergo refilling activities. The main trade-off lies in the storage capacity constraint and in the movements the Automated system would be asked to perform. In particular, refilling activity can improve the saturation of the containers and the storage capacity, since no additional locations would be occupied. On the contrary, stacker cranes need to do additional retrieving and storing missions; additional resources need to be allocated to the refilling station, as well. For these reasons, double ABC allowed the project team to select those items that experience poor saturation levels, and do not account for large number of order lines. Ultimately, only 5.234 articles are allowed to undergo refilling operations. The third phase deals with the description of the Industry 4.0 paradigm. As illustrated in the previous sections, the two solutions represent the first step the company took towards the implementation of the Smart Factory concept, adapted to the warehousing operations. The main characteristics of the Fourth Industrial revolution are illustrated, as well as the main components that give rise to it. Furthermore, this section puts particular emphasis in the iterative process enabled by the cornerstone of the Industry 4.0 paradigm: the strong connection and integration between the physical and digital world. Moreover, it investigates the main implications that can be triggered by this paradigm, as well. Many tough challenges are expected to arise in the future, with disrupting impacts on the traditional systems. Finally, this phase focuses on the next steps the company is intended to take in order to progress along the Industry 4.0 direction.

L’obbiettivo di questa tesi consiste nel mostrare le fasi percorse dal team di progetto nel progettare un nuovo magazzino, in un’ottica di Industria 4.0. In particolare, questo documento è il frutto di un progetto a cui l’autore ha avuto l’opportunità di prendere parte durante il suo periodo da stagista presso una società milanese di consulenza logistica. Si tratta pertanto di un elaborato che trae origine da un’esperienza pratica. Il team di progetto ha infatti lavorato a stretto contatto con l’azienda in questione nel tentativo di comprendere e analizzare ogni elemento utile al fine della buona riuscita del lavoro. Questa tesi si propone di organizzare in maniera strutturata i diversi passi che hanno portato alla progettazione del layout definitivo del nuovo magazzino di cui l’azienda intende dotarsi per far fronte alla promettente crescita futura. In particolare, lo scopo di tale documento si concentra attorno a due specifiche categorie di prodotto che la compagnia mette a magazzino e distribuisce. Tale selezione è dovuta al forte impatto che tali prodotti hanno sulle prestazione dell’azienda. Non da ultimo, le soluzioni concepite per gestire a magazzino i prodotti in oggetto si basano fortemente su peculiarità proprie del paradigma dell’Industria 4.0. In definitiva, questo elaborato aspira a fornire un esempio pratico riguardo a una media azienda italiana che intende cogliere le opportunità della quarta rivoluzione industriale. In merito a tale obbiettivo, una profonda disamina delle principali caratteristiche, benefici e implicazioni che tale rivoluzione si appresta a portare sono oggetto di questa tesi. Infine, i passi che l’azienda deve compiere durante la transizione verso questo nuovo paradigma produttivo sono illustrati allo scopo di arricchire i casi di studio che la letteratura già fornisce.