Warehouse management system implementation in the U.S

WAREHOUSE MANAGEMENT SYSTEM IMPLEMENTATION IN THE U.S. BY IGNACIO LAFUENTE PIEDRAFITA Submitted in partial fulfillment of the requirements for the degree of Master of Industrial Technology and Operations in Industrial Technology and Management Illinois Institute of Technology Supervised by Herbert Shields Advisor Chicago, Illinois 07 2024 ii ACKNOWLEDGEMENT I would like to express my heartfelt gratitude to Professor Herbert Shields for his invaluable guidance and support throughout this project. I would also like to thank him for facilitating my arrival at Artico Cold to give a helping hand with their warehouse software. Additionally, I also want to extend my thanks to Richard Tavares, Pat Donhue, Dave McPhee, Arnold Perez and Khaleel Frazier for their warm welcome and for making me feel like a valued member of the team over the past six months. This experience has been unforgettable for me. iii TABLE OF CONTENTS Page ACKNOWLEDGEMENT ....................................................................................... ii TABLE OF CONTENTS ......................................................................................... iii LIST OF FIGURES ................................................................................................. iv LIST OF TABLES ................................................................................................... v PROJECT ABSTRACT ........................................................................................... vi CHAPTER 1. INTRODUCTION ............................................................................................. 1 1.1 Background and Context ............................................................................ 1 1.2 Historical Evolution of Warehousing ....................................................... 2 ....1.2.1 Ancient Civilizations of Egypt and Mesopotamia ....1.2.2 The Roman Empire ....1.2.3 The Middle Ages ....1.2.4 The Industrial Revolution ....1.2.5 The Current Era 1.3 Role of Warehousing in the Supply Chain ................................................ 10 1.4 Warehousing Key Processes ...................................................................... 11 ....1.4.1 Receiving ....1.4.2 Putaway ....1.4.3 Picking ....1.4.4 Packing ....1.4.5 Loading and Dispatching 2. WAREHOUSE MANAGEMENT SYSTEMS ................................................. 19 2.1 Evolution of Warehouse Management Systems ........................................ 20 ....2.1.1 Automated Storage Retrieval System ....2.1.2 Information Management System ....2.1.3 UPC Barcodes ....2.1.4 J.C. Penney’s System ....2.1.5 The First Cloud-Based Warehouse Management System 2.2 Trends and Innovations in Warehouse Management Systems .................. 24 ....2.2.1 Artificial Intelligence and Machine Learning ....2.2.2 Process Automation and Robotics ....2.2.3 Internet of Things ....2.2.4 Wearable Technology 2.3 Technology Adoption in the Warehouse .................................................. 31 iii ....2.3.1 Steps for Successful Technology Adoption 3. ARTICO COLD STORAGE ................................................................................. 40 3.1 Company History and Overview ............................................................. 40 ....3.1.1 Rosepack ....3.1.2 Ashland Cold Storage ....3.1.3 Artico Cold Storage 3.2 Artico Warehousing Services .................................................................... 45 ....3.2.1 Warehousing ....3.2.2 Packing ....3.2.3 Logistics ....3.2.4 Import/Export 4. IMPLEMENTATION OF BLUE YONDER AT ARTICO COLD ................... 50 4.1 Why Switch From Old WMS to Blue Yonder .......................................... 51 4.2 Directed Putaway ....................................................................................... 56 5. CONCLUSION .................................................................................................. 65 REFERENCES ........................................................................................................ R-1 BIBLIOGRAPHY .................................................................................................... BB-1 iv LIST OF FIGURES Figures Page 1 Step Pyramid of Djoser’s grain silos ............................................................... 3 2 Horrea Galbae in the southern outskirts of Rome ............................................ 5 3 Conveyor belt network inside one of Amazon’s fulfilment centers ................ 9 4 Warehousing activities as a percentage of total cost ....................................... 12 5 Picker, order and handling equipment strategies for picking .......................... 15 6 Storage methods, picking type and hardware/software for picking ................. 16 7 LTL loading configuration ............................................................................... 18 8 Early 1960s AS/RS system designed by Demag ............................................. 21 9 Connected weight-sensing storage shelves ...................................................... 28 10 Warehouse operator using smart glasses during a task .................................. 30 11 Worker using finger scanner during an item check ........................................... 31 12 Wearable body computer paired with finger scanner .................................... 32 13 Project timeline example ................................................................................ 36 14 Employee being trained correct lifting posture .............................................. 38 15 Rose Packing Company manufacturing plant ................................................ 42 16 Ashland Cold Storage logo ............................................................................ 43 17 Artico’s West Pack room ............................................................................... 49 18 Storage search paths screen ........................................................................... 59 19 Storage search path menu 1 ........................................................................... 60 20 Storage Search Path Menu 2 .......................................................................... 61 21 Item families screen ....................................................................................... 62 22 Zone rules screen 1 ........................................................................................ 62 iv 23 Zone rules screen 2 ........................................................................................ 63 24 Storage zone screen ........................................................................................ 64 25 New storage zone naming screen ................................................................... 64 26 Mass location update screen .......................................................................... 65 27 Zone rule configuration screen ...................................................................... 66 v LIST OF TABLES Table Page 1 Artico warehousing services ............................................................................ 47 vi PROJECT ABSTRACT This project dives into the evolution and significance of warehouse management systems, focusing on the implementation of the industry leading platform Blue Yonder at Artico Cold Storage, a logistics company based in the Chicagoland. The report will begin with a comprehensive exploration of the historical evolution of warehousing from ancient civilizations, through the Industrial Revolution to today’s warehousing landscape. It will then investigate essential warehousing processes such as receiving, putaway, picking, packing and loading/dispatching. Then the project will explore management software in detail, delving into management systems’ evolution, contemporary innovations and procedures for adopting new technologies. Artico Cold Storage serves as a case study; this report provides insight into its history, values and comprehensive warehousing services including logistics and import/export operations. The implementation of Blue Yonder at Artico is detailed, exploring the motivations behind transitioning from traditional system to Blue Yonder’s advanced capabilities. Key features like Directed Putaway are examined in depth, showcasing the practical benefits and operational enhancements achieved through this implementation. Overall, this project highlights the impact of advanced warehouse management systems like Blue Yonder in optimizing warehouse operations and enhancing supply chain efficiency, thereby contributing to organizational growth and competitiveness in the global marketplace. 1 CHAPTER 1 INTRODUCTION 1.1 BACKGROUND AND CONTEXT This is a Final Research Project on Warehouse Management System implementation in small to medium size companies in the United States. Modern storage management software tools help companies to efficiently manage a wide range of warehousing procedures and operations that would otherwise be handled by tribal knowledge of experienced workers. In order to refine the project’s primary focus, attention will be placed on the directed putaway algorithm within the management system. The project has been carried out within the Artico Cold Storage logistics company, which is a public cold warehouse in Chicagoland. For the duration of this project, Artico permitted my daily involvement in the company’s daily operations by allowing me to work onsite on the warehouse management system implementation. Additionally, they ensured my active engagement outside office days by keeping me updated on warehouse management system implementation-related matters via my Artico email and teams accounts. The majority of the information required for the development of this report has been gathered at Artico during these past months. When professor Shields presented the opportunity to work with Artico, I was instantly motivated to undertake this project; my aspiration to build a career in supply chain management fueled this enthusiasm. The dynamic and multifaceted nature of supply chains fascinates me and I am eager to apply knowledge and skills obtained in my master’s degree to real-world challenges. 8 warehousing practices to a new dimension in terms of efficiency and dynamism. Today's warehouses feature advanced, cloud-based warehouse management system, real-time pallet and package tracking technologies, Artificial Intelligence-enhanced data analytics… these upgrades allow companies to maintain high levels of warehouse location usage, consolidate speed and accuracy of supply chain operations and meet the demands of global commerce. Companies like Amazon have played a pivotal role in transforming warehouse management by recognizing and capitalizing on massive opportunities for cost saving within the industry. One of Amazon’s key strengths has been the integration and implementation of robotics and automation, which has set new industry standards in efficiency and scale. The company has an extensive network of over 175 fulfillment centers globally (with more being built), equipped with cutting-edge tools like Kiva robots, which streamline the picking and packing processes (Garman & Naoum, 2023). Robot and conveyor belt integration in the warehouse both reduce the time, effort and personnel needs required for manual tasks, significantly boosting productivity and accuracy in product delivery. 9 Figure 3: Conveyor belt network inside one of Amazon's fulfillment centers Moreover, Amazon's use of artificial intelligence combined with machine learning algorithms prepared for analyzing and predicting future warehouse needs together with inventory management techniques allows the company to anticipate product demand and effectively manage stock levels within the storage units. These tools ensure constant product availability in the exact location and at the point in time they are needed, minimizing delays and enhancing customer satisfaction. Many warehousing companies have identified a significant business opportunity in this sector and are now adopting Amazon-like strategies to boost profit margins and reduce unnecessary expenses. 10 1.3 ROLE OF WAREHOUSING IN THE SUPPLY CHAIN In the past, warehouses primarily served as stockholding points, aiming to align supply with demand. They functioned as intermediaries between raw material and component suppliers, manufacturers, wholesalers, retailers and consumers, acting as buffers in the supply chain. Limited stock visibility and low information along the supply chain resulted in producers and merchants holding more stock than needed for their operation. Warehouses have always played a crucial role in storing raw materials; lands and storage buildings were usually relatively inexpensive, which is why it was common and acceptable to hold large quantities of raw materials and finished goods and swallow up associated costs (Richards, 2014). The supply chain management and optimization revolution that initiated by retailers at the beginning of the 1980s significantly transformed the role of warehouses in the industry. Before this shift, manufacturers’ common practice was to operate many local storage units and deliver product directly to retail stores. However, after the revolution, retailers began to build national and regional distribution centers aimed to serve extensive areas and regions. In this period, the warehousing industry moved towards larger, multi-temperature facilities often owned by the retailers and frequently operated by third-party logistics companies. Despite this trend, smaller, inner-city storage locations remain essential as the final link between large distribution centers and small retail stores and are at times owned and operated by independent companies that serve clients in the same warehouse unit. Today, warehouses have become significantly more valuable in the supply chain. Costs of land, building, labor and energy are constantly on the rise; this coupled with the implementation 11 of manufacturing and production techniques like JIT (Just-in-Time) or ECR (Efficient Consumer Response), manufacturing firms aim for low stock holding and throughput maximization. This is why, in addition to storing raw materials and finished goods, warehouses play an important role in the final stages of some manufacturing processes. Incomplete products are shipped to the warehouse where they are to be finished, this practice is known as postponement and it is becoming increasingly common among various types of manufacturers. 1.4 WAREHOUSE KEY PROCESSES The many processes that occur inside a warehouse are important in today’s business and trade landscape. If any of said warehouse activities is somewhat improved with new technology or skills, it could potentially have a positive impact in the efficiency of the entire supply chain, reducing waste, costs and product lead times. Not all processes are as time and money consuming, in figure 4 a chart showing percentage of total warehouse cost per activity is displayed: 12 Figure 4: Warehouse activities as a percentage of total cost (Richards, 2014) Enhancing the most cost-intensive activities, such as order picking, packing or loading, would have the largest impact in supply chain efficiency. Since substantial capital are spent on carrying out those processes, there is a greater potential for cost saving in them. Some of these will now be reviewed in depth. 1.4.1 Receiving This is the initial step when inbound trucks arrive at the warehouse with new orders. Warehouse personnel must ensure that the received goods match the agreed-upon product type, quality and quantity before clearing the load for put away. Essentially, this task involves controlling supplier compliance and adherence to contracts and agreements. 13 Occasionally, an incoming load may have several incidences that need to be resolved. However, once the loaded truck has arrived in the warehouse it is often too late to correct receiving problems. The warehouse personnel must then contact supplier and client to inform them of receiving issues and work towards a mutually satisfactory solution. To prevent receiving issues, action and control steps should be implemented during the pre-receipt phase. The following parameters must be clearly defined (Richards, 2014): - Type, length, height and width of cartons - Type of transport packaging (usually pallets) - Type, length, height and width of pallets - Product type and quantity label 1.4.2 Putaway Putaway refers to allocation of goods in storage locations within the warehouse facility; traditionally, this process relied on the trivial knowledge and experience of the warehouse supervisors. The system worked decently if the person responsible for storage decision making was well organized and meticulous in their work but is no match to the putaway management efficiency of today’s automated software systems. Moreover, whenever the supervisor took a vacation period or a sick leave, storage in the warehouse often became chaotic and unorganized. Most of today’s warehouse management systems assign load components to specific locations as soon as the truck is docked and ready to be unloaded. These systems, which are designed to reduce forklift travel time and associated personnel and resources expenses, often 14 inform the warehouse operator where to place the unloaded pallet via tablets or forklift screens. For this system to work accurately, the following information must be input in the system (at least) (Richards, 2014): - Type, length, height and width of pallets - Location volume - Velocity location information - Velocity item information - Item pick status - Rack weight capacity As mentioned in the introduction, Artico Cold’s primary goal for this project is to define a directed put away algorithm based on a set of predefined premises. The task took several months to be completed and after multiple revisions to the putaway approach, an algorithm was delivered and finalized. 1.4.3 Picking Picking refers to the process in which individual items are selected from the fulfilment facility to complete customer’s orders; it is the costliest and one of the most labour-intensive processes in the warehouse. Errors during picking have severe impact in regular warehousing operation as it can damage the facility’s reputation with clients and consumers. Common mistakes include forgetting items that should have been shipped, sending incorrect quantities of product or mistaking the item that is to be sent. There are different picking strategies and mechanisms that may vary depending on the type of product being handled and its key characteristics: 15 Figure 5: Picker, order and handling equipment strategies for picking Figure 6: Storage methods, picking type of operation and hardware/software for picking 16 A warehouse must be extremely careful when selecting which picking strategies to implement. Some strategies require expensive machinery and equipment; mistakenly choosing a strategy with a heavy initial investment, like conveyor belt-based picking, could potentially bankrupt an independent warehousing firm. A conventional picking system in a warehouse (like the one at Artico Cold) would be: 1. Picker: Picker to goods system. 2. Orders: Picker by order. 3. Handling equipment: Forklift trucks. 4. Storage methods: Conventional racking, Last In First Out type. 5. Picking operations: Scanning. 6. Hardware / Software: WMS and scanners. This is a basic system which could easily be improved with some minor or major investments as follows: 1. Picker: robots (expensive). 2. Orders: Batch picking (needs programming). 3. Storage methods: Conventional racking, First In First Out type (improved and more advanced racking system). 4. Picking operations: Automatic RFID (robot knows what LPN to pick). 5. Hardware / Software: WMS (no need for scanners with robots). The differences between the current system and the proposed improved system are massive and action has been taken at Artico to move towards the enhanced picking version. Plans to replace the outdated (1960s) Last In First Out racking system with a newer First In First Out rack, have 17 been prepared and are ready for implementation. At the same time, WMS extensions and improvements are continuously being explored and added in order to achieve more efficient batch picking. 1.4.4 Packing Packing involves placing items designated for shipment into usable and appropriate containers. The chosen packaging must fit perfectly onto the pallets; avoiding any potential overhang that may lead to instability and unused, costly space. Effective order packing aims to minimize product damage, maximizing truck and rack cubic capacity, ensure that the receiving end can handle the load and maintain the stability of the cargo during transport. Before the order is shipped away, an inspection has to be carried out and shipping labels have to be attached to the side of each pallet or container. 1.4.5 Loading and Dispatching The loading process involves placing the physical inventory into a truck or container. Items must be loaded in the correct order and must be placed in a pre-defined spot to ensure efficient use of truck space. Often trucks will stop at multiple destinations to partially unload their cargo, this is commonly known as a Less-than-Truckload (LTL) shipment. If pallets intended for the first stop are placed at the back, the entire truck has to be unloaded and reloaded to deliver the first shipper’s before proceeding to the next stop. On the contrary, if pallets are arranged strategically and space utilization is maximized, only the necessary pallets will need to be unloaded at each stop. Figure 7 shows a correct placement of items for a LTL shipment: 24 Manager. This groundbreaking innovation utilized cloud technology to provide real-time data access from any company device with internet connection. It offered third party logistics companies a new set of solutions, greater flexibility and scalability for their businesses. Since then, Extensiv has been one of the market leaders in the online warehousing industry, continually enhancing their platform with new features and integrations to this day, always with their customers in mind. Several companies, inspired by Extensiv’s example, have developed their own software to compete with 3PL Warehouse Manager. Leading warehouse management systems currently include Blue Yonder, Microsoft Dynamics for the Supply Chain, Oracle Fusion Cloud Warehouse Management and Körber Warehouse Management Systems. 2.2 TRENDS AND INNOVATIONS IN WAREHOUSE MANAGEMENT SYSTEMS This section will analyze the current trends and innovative directions in warehouse management systems. It will explore state-of-the-art technology and emerging ideas that may be implemented in the future. 2.2.1 Artificial Intelligence and Machine Learning Artificial intelligence and machine learning have been massive breakthroughs in warehouse management systems’ progress. The new era of software technology enables more efficient management of warehouse activities as in-depth data analysis and future needs forecasting is now possible. The implementation of these new features eventually leads to significant improvements in various aspects of that link of the supply chain. 25 One of the most important applications of artificial intelligence and machine learning in warehousing demand forecasting based on predictive analysis. Warehouse management systems that use this technology are able to accurately predict future demand by analyzing historical data, market trends and other relevant factors. This allows logistics companies to keep inventory at optimum levels at all times, balancing having the right amount of stock to meet customer needs and preventing stockouts as well as overstock situations. With accurate demand forecasting, stock levels are lower than they would otherwise be, lowering holding costs and improving overall inventory management (OmnelaabWMS, 2023). Another crucial application of artificial intelligence and machine learning excel is inventory management improvement. New software platforms are able to make decisions based on the newest set of data, in and outbound product flow patterns and external factors such as seasonal variations. This analysis helps calculate the desirable stocking levels and ideal storage locations for different products. This level of automation allows warehouses to reduce carrying costs, enhance inventory turnover rates (which dramatically boosts warehouse profitability) and streamline order fulfillment processes. Warehouses who use artificial intelligence-based software are able to respond more effectively to changing customer demands thanks to real time insight analysis (OmnelaabWMS, 2023) 2.2.2 Process Automation and Robotics Robots have become one of the go-to tools when enhancing warehouse operations as they operate in a much more efficient manner than traditional warehouse staff. The robots of choice for 26 standard warehousing activities are called Automated Guided Vehicles, which are self-driven robots designed to navigate and transport goods within warehouse facilities without the need for a constant human monitoring. These robots are transforming traditional logistics because they are drastically reducing errors in tasks such as picking, packing and shipping, and they are doing so by minimizing the reliance on manual labor for these tasks (OmnelaabWMS, 2023). These robots are the perfect soldier for the new generation of artificially intelligent warehouse management systems. The combination of properly implemented robotics and tech savvy warehouse staff can offer a multitude of advanced functionalities. By merging warehouse management system capabilities with robotics, warehouses can achieve automated picking and sorting of inventory, real-time tracking of stock levels and efficient order fulfillment processes, leaving humans to managerial and control tasks. Warehouse activities are carried out at a faster pace and with less errors, which means lower cost of production and higher customer satisfaction (OmnelaabWMS, 2023). In essence, the convergence of automation, robotics and intelligent warehouse management systems represents a pivotal advancement in modern logistics. Businesses, especially 3PL companies, are ready with robotics operated warehouses to meet the escalating demands of today’s market by enhancing efficiency, accuracy and responsiveness in warehouse operations. 2.2.3 Internet of Things The Internet of Things in warehousing enhances efficiency and accuracy because it eases real time tracking and condition monitoring. Connected devices used for this purpose, such as 27 RFID tags and GPS sensors, feed location and condition information of the item they are monitoring. On the other hand, weather sensors control environment factors like temperature, humidity or lighting to feed the information into the warehouse management system which will ensure climate conditions remain as expected throughout the warehouse. These data collection components streamline inventory management, for instance, smart shelves equipped with weight sensors and RFID readers reduce the need for manual checks and enable automatic replenishment when the weight of the stored item falls below a certain threshold (Insights, 2024). Figure 9 shows an instance of these weight sensing shelves, internet connected metal plate sensors are located under each tray: Figure 9: Connected weight-sensing shelves (eTurns, 2024) 28 Integrating internet-connected devices with warehouse management systems is one of the most effective methods for improving inventory accuracy. When these technologies work in symphony, the need the need for cycle counts - a warehousing procedure where operators manually verify that items are stored in the right locations and in the right quantities - is virtually eliminated. This integration allows for better demand forecasting and process optimization. Digital twins, which are virtual models of physical warehouses created with data from IoT devices, exemplify the power of integrating internet-connected components with warehouse management system. This feature enables management teams to visualize operations, test proposed changes and simulate various scenarios for efficient planning without disrupting workflows in the storage facility. This integration is key for identifying inefficiencies, optimizing layouts and improving overall productivity. At Artico Cold we had three distinct testing environments and each was designed for a specific type of testing: - NP1: Designed to test receiving and loading procedures - NP2: Designed to test expediting and shipping procedures - NP3: Designed to test brand new ideas like the directed putaway algorithm (most of the time inactive or on standby) IoT extends benefits beyond the warehouse because visibility improvements are evident throughout the supply chain. When company management are able to understand see their supply chain more clearly, coordination improves, lead times are reduced and stockouts are prevented. Additionally, IoT helps improve safety standards by predicting equipment maintenance needs and monitoring machinery movements to prevent accidents. The result is increased operational efficiency, cost savings, and better strategic decision-making (Insights, 2024). 29 2.2.4 Wearable Technology Another method of improving warehouse operations is by implementing wearable technology as it boosts efficiency, safety and productivity. These devices do so by feeding realtime data, improving communication capabilities and allowing for hands-free operation: 1. Smart Glasses: they are a prime example of wearable technology; equipped with augmented reality displays, they enable workers to access picking instructions and inventory locations without looking away from tasks at hand. Images fed into these virtual reality displays are managed by the company’s warehouse management system, which calculates the shortest path to pick faces and projects it before the operators’ eyes. Figure 10: Warehouse operator using smart glasses during a task (Mitchell, 2018) 30 2. Wearable scanners: usually finger scanners, allow for quick barcode scanning and realtime data transmission to warehouse management systems. They play a similar role to IoT devices, but the data they transmit to the system is only generated when a worker actively checks an item in the storage. Figure 11: Worker using finger scanner during an item check (Aero, 2024) 3. Wearable computers: they can be attached to the body or clothing, provide access to data and communication tools with voice-activated commands. Voice recognition enables workers to use software while performing manual tasks, without the need to stop their activity. At the same time, wearable computers come with health and safety monitors to track movements, posture and environmental conditions to prevent injuries and ensure safety. 31 Figure 12: Wearable body computer paired with finger scanner (AbeTech, 2024) The benefits of wearable technology are mainly faster operations, reduced errors, proactive health and environmental monitoring, improved communication and valuable data collection for real-time insights and informed decision-making. By providing instant updates and facilitating better connectivity, these devices significantly improve overall operational efficiency in warehouses (Enterprise, 2022). 2.3 TECHNOLOGY ADOPTION IN THE WAREHOUSE When introducing a new technology in a warehouse, a series of steps must be taken in order to ensure the success of its implementation. Continuous improvement entails modifying standard operation procedures, requiring workers to adapt to new methods of task execution. At times, the warehouse’s staff will express discomfort with improved operation procedures and pose 32 inconveniences and cause delays in change adoption, which is why implementation must be progressive and subtle, aiming to make the transition as smooth as possible (Dyrsmid, 2023). 2.3.1 Steps for Successful Technology Adoption 1. Needs Assessment and Goal Setting. In order to successfully implement a new technology or improved process within a company, the management team must first identify specific problems or inefficiencies in their operation that require addressing. In a warehouse setting, this could mean focusing on improving inventory accuracy, reducing labor costs or enhancing throughput. Once the needs have been understood, clear, measurable objectives must be defined for the technology implementation. An example could be reducing order picking time by 20%, decreasing inventory discrepancies by 15% or decreasing average putaway forklift travel time by 30%. Goals will serve as a metric of measuring the extent of success of the technology’s implementation; they should be achievable while challenging, doable but ambitious. 2. Market Research and Solution Selection The next step involves researching available technologies that will be able to meet the warehouse’s needs. During this phase, a company may choose to study their competitors’ practices, consider attending trade shows and consult with vendors and technology developers. Once a suitable solution is identified, potential technology providers should be 33 evaluated based on their track record, customer reviews and other relevant metrics. This process can be streamlined by requesting detailed proposals from vendors, to gain insights into cost estimates, implementation timelines and customer training and support plans. 3. Risk – Reward Analysis In the final step of the decision-making process, it is crucial to perform a comprehensive cost calculation that takes into account initial purchase costs, implementation fees, training expenses and ongoing maintenance costs. Once the cost estimate has been prepared, the expected benefits should be thoroughly quantified; these may encompass labor savings, enhanced productivity, lead time decreases, error minimization or more efficient operational processes. Finally, conducting a thorough return on investment analysis is essential to ensure that the accrued benefits justify the incurred costs over a reasonable period of time. If the outcome of this analysis is unsatisfactory, either due an excessively long investment return period or lower-than-expected benefits, the initiative will be cancelled and a different solution will have to be implemented. 4. All aboard! Once the initiative has been approved, it is key to get all stakeholders on board with the implementation process. This involves early engagement of warehouse managers, IT staff and end-users to gather input and build support from the get-go. To ensure widespread approval, management must effectively communicate the advantages of the new 40 CHAPTER 3 ARTICO COLD STORAGE 3.1 COMPANY HISTORY AND OVERVIEW A significant portion of the information for this project has been sourced Artico Cold Storage. Therefore, it is appropriate to dedicate a section a section of this paper to explaining what the company is, its background, origins and future direction. This will provide a comprehensive understanding of the contributions and context of Artico Cold Storage within the scope of the project. 3.1.1 Rosepack In 1924, Louis Rose founded Rose Packing in South Barrington, Illinois, a small town located on the outskirts of Chicago (this year marks the 100 anniversary of the company’s incorporation). At the time, he could not have dreamt of the levels of growth Rose Packing would experience through the following decades. Initially a modest boning house for beef and pork trimmings serving the burger and sausage industries in the area, Rose Packing has developed into a market leader in the meat industry (pork products in particular). The legacy passed down through 5 generations of the Rose family, has earned a national reputation for product quality and exceptional customer service and support. 41 Figure 15: Rose Packing Company Manufacturing Plant (McAdams, 2020) The company now employs over 700 people and operates a massive 200,000-square-foot production facility in Chicago. The corporate headquarters remain in Barrington, the original founding location, with additional branch offices established over the past century. Their product lines have expanded through the years and current offer includes Canadian bacon, fresh and fully cooked pork sausage, ethnic sausage, back ribs, various hams, smoked pork shoulder butts, pork roasts, pork tenderloins and labor-saving toppings. The primary reason why Rose has not further expanded their line of product is duethey limited capacity and square footage for increased production. In 2019, OSI Group acquired the company from Louis Rose’s great-great-grandson to leverage Rose's industry-leading reputation. OSI promised to provide the necessary resources for factory expansion or building acquisition, which would allow Rose Pack to finally ramp up production. OSI chose to retain Rose’s existing 42 management to ensure the company continued to operate in the tradition it has maintained since its founding, this would allow rose to maintain character and company values even after the acquisition had been completed (Schroeder, 2019). 3.1.2 Ashland Cold Storage After experiencing several years of growth, made the strategic decision to streamline certain segments of its core operations for increased efficiency. One of the areas that underwent this differentiation was warehousing, which led to the establishment of Ashland Cold Storage in 1968, a storage facility located at the intersection between Ashland and 42nd street in South Chicago. Although now operating independently, Ashland Cold Storage remained under the ownership of Rose Packing, even after its separation from the parent company. Figure 16: Ashland Cold Storage Logo (Goods, 2012) At the outset of its independence, Ashland Cold Storage relied on Rose Packing as its only client. Because of it, its financial performance was dismal, with the warehouse consistently 43 operating at a loss quarter after quarter. Nevertheless, as the company matured and new management teams took charge, Ashland Cold Storage began forming partnerships with new clients, leading to a significant improvement in its profit and loss statements. It thus became a public warehouse, where anyone who wished could store their product in strictly temperaturecontrolled environments. Investments were made in warehousing infrastructure at Ashland & 42nd street: LIFO racks were purchased (which were cutting edge technology back in the 1970s); new docks were built to accommodate the increased truck traffic; the storage facility was expanded to increase maximum stock capacity… Operations at Ashland Cold Storage remained largely unchanged over the next 50 years. Clients came and went but were essentially the same. Both management and warehouse operators typically spent their entire careers at the company until retirement, and business continued without many surprises. 3.1.3 Artico Cold Storage In 2021, everything changed. Young entrepreneur and visionary Richard Taveras, after working many years as an investment banking learning how to seize opportunities, purchased Ashland Cold Storage, along with partner Pat Donhue. Under their leadership, the company embarked on a new era of innovation and growth. They purchased this company with the intention to integrate the latest technology into an old business that had been complacent and comfortable with their routine operation for too long. 44 With the purchase of the company came early investments in personnel, operational tools and features, some of them are listed below: 1. Career-long experienced individuals were hired to manage the business and operations of the warehouse. Arnold Perez joined Artico as the company’s general manager and, around the same time, Dave McPhee was appointed as the new director of operations. 2. Old, faulty and breakdown-prone forklift were upgraded to the latest electric class leading machines. 3. Construction work was initiated to replace the remaining standard truck docks left from the Rose Packing period of the 1930s. They were replaced with diagonal docks, aimed at maximizing truck parking capacity. 4. An old, outdated and offline warehouse management system was replaced by Blue Yonder software. 5. Plans to replace LIFO racking were drafted and awaited opportune moment to be put into action. 6. The company upgraded its hardware and software systems to a cloud-based solution using Microsoft Office. Documents, standard operating procedures, invoices and other essential files were stored in the cloud to prevent their loss. Richard and Pat were inspired by the outstanding transformation the warehousing industry has undergone in recent years. Inspired by Amazon and Walmart’s industry-leading supply chain efficiency, the pair recognized significant business potential on a facility they believed was not being managed to operate at full capacity. In Richard’s own words “Having Artico is like having a poorly maintained Ferrari in our garage. It performs adequately, but due missmanagement and 45 neglect, it falls short of its full potential. This we are here and why we purchased the company in 2021. With our leadership, dedication and improvements I am confident Artico will thrive and the business will become very profitable in the coming years”. 3.2 ARTICO WAREHOUSING SERVICES 3.2.1 Warehousing The main area of operation for Artico Cold is storage related business. They offer a variety of warehousing services listed in the following table: Table 1: Artico warehousing services Service Description Rerigerated Storage Temperature-controlled storage for perishable goods, ensuring freshness and quality maintenance Order Selection Precise picking and assembling of items based on customer orders for accurate fulfillment Stretch Wrapping Securing palletized goods with stretch film to prevent shifting and damage during transportation Cross Docking Streamlining logistics by transferring incoming goods directly to outbound vehicles, reducing storage time 46 Slipsheet Loading/Unloading Handling and transferring goods using slipsheets rather than pallets, optimizing space and efficiency Hand Stack Loading/Unloading Manual loading and unloading of goods without palletization, suitable for irregularly shaped items Blast Freezing Rapid freezing of products to extremely low temperatures using specialized equipment, preserving freshness and extending shelf life Certification Compliance with industry standards and regulations, ensuring products meet quality and safety requirements Tempering Controlled adjustment of product temperatures to achieve desired conditions for storage or distribution Labelling Application of accurate and clear labels to goods, enabling efficient tracking and identification throughout the supply chain. Container Loading/Unloading Efficient loading and unloading of goods into/from shipping containers, maximizing space utilization and ensuring secure transport. 3.2.2 Packing While the exterior facades of the Artico Cold facility may appear outdated, extensive updates and modernizations have transformed its interior. Notably, the Packing Rooms (there are two packing rooms at Artico, west pack and east pack) have seen significant improvements since Richard and Pat’s takeover. These rooms are now equipped with state-of-the-art technology and 47 with it, they ensure a seamless and efficient packing process for jobs of any scale and type of product. Whether the customer’s needs are large or small, they will be handled and met at the Artico Packing Rooms (Artico, 2021). Figure 17: Artico's West Pack room Artico Cold adheres to stringent USDA standards, operating under M3535 for Beef and Pork, and P178131 for Chicken and Turkey. In order to ensure compliance with regulatory requirements throughout the packing process, a USDA inspector is present in the facility during all hours of operation, with full access clearance to monitor any process they see fit as needed. Additionally, each package undergoes thorough scrutiny with Artico’s metal detectors both before and after the packaging operation has been completed, to uphold quality and safety standards of products shipped from Artico. This commitment to regulatory compliance, combined with 48 versatile packing capabilities enables Artico to provide world class service to its customers. The company is capable of efficiently packing goods from combo bins to boxes, or vice versa, accommodating a wide range of packaging needs. Whether it's even weight or catch weight boxes, Artico’s scalable processes ensure precise handling according to your specifications. 3.2.3 Logistics Another major branch of Artico Cold’s business is local transportation services for the Chicagoland area through what they call Artico Logistics (ASLO) division. The company’s inhouse carrier, managed by seasoned transportation professionals with career long experience in the sector, takes care of all pick-ups and deliveries within the Chicago areas. This service is primarily used by smaller family-owned companies that lack the capital and size to manage their own logistics. Artico stores a supplier’s stock in their warehouse, coordinates with small retailers and arranges delivery of products to end consumer, which is typically a restaurant or a local convenience store. By streamlining this process, Artico Logistics ensures timely and efficient product delivery, helping small businesses maintain their supply chains without the burden of managing logistics and incur in associated costs like trucks, salaries or administrative procedures. Additionally, ASLO offers customized transportation solutions tailored to meet the unique needs of each client, enhancing the overall flexibility and responsiveness of Artico Cold Storage’s services. Overall, ASLO provides comprehensive transportation solutions for products moving in and out of Artico Cold Storage, as well as additional local routing needs (Artico, 2021). 3.2.4 Import/Export Artico Cold Storage provides a range of services, including USDA-approved inspections for imported products, where they work with their onsite USDA inspector to schedule and assist 49 with inspections according to current regulations, stamp products with authorized USDA approval and stack products as required. This means that anyone willing to import foods to the United States can work with Artico to facilitate their products’ access to the country. Artico’s Import – Export division will ensure that all products meet the necessary standards for importing. Additionally, Artico Cold Storage can assist importers with various documentation needs related to inspections, imports and exports for agencies like the USDA, FDA, U.S. Customs and Import Brokers. Artico Cold Storage has extensive experience exporting as well, operating in over 50 countries and a number of US military bases which are spread around the globe. They have recently hired an expert who is able to prepare specialized Bills of Lading and packaging lists for export containers, ensuring compliance with international shipping regulations and facilitating smoother customs processes. The company also offers container loading and unloading services for floorloaded, slip-sheeted or palletized products and can load export containers in a designated delivery sequence to optimize shipping efficiency. Their USDA Import Establishment number is I-208, which further attests to their capability in handling and processing USDA-regulated goods for export. Additionally, Artico Cold Storage's robust export infrastructure and experienced team ensure that products reach their destinations safely and efficiently, meeting the diverse needs of their global clientele. 56 on energy for cooling. A. By optimizing warehouse layouts and implementing efficient routing strategies through Blue Yonder, Artico Cold Storage can maximize storage capacity and minimize energy consumption, driving down operational costs. Blue Yonder is here to enhance the overall profitability and competitiveness of Artico Cold Storage in the cold chain logistics industry. The transition to Blue Yonder's cloud-based solutions offers Artico Cold Storage takes away the burden of maintaining extensive on-premises IT infrastructure. By moving their operations to the cloud, Artico Cold Storage can dynamically scale their computing resources based on demand, optimizing resource allocation and reducing operational costs associated with physical server investment and maintenance. 4.2 DIRECTED PUTAWAY As stated in the introduction, the primary goal of this project was to develop a directed putaway algorithm for the Artico storage facility. This section will provide commentary on the process of generating a new rule in the algorithm, supported by graphical evidence illustrating the work completed. This entire responsivity of the project rested on my shoulders, as Artico’s technicians were unfamiliar with process automation. Therefore, the insights presented in this section stem directly from my own experience and the outcomes of my work at Artico. 1. Storage Search Paths. These are the “lines of code” of the putaway algorithm. Each storage search path represents a rule that the system will adhere to when allocating items to different 57 storage locations. These paths are sorted by relevance, allowing the algorithm to sequentially verify requirements until it identifies the appropriate storage search path for the item being stored. For this example, we will create the Allergen storage search path, along with all that the system needs for it to work. Figure 18: Storage search paths screen 2. Inside the Allergen Storage Search path When accessing a search path, the menu shown in figures 19 and 20 appears. In it, the programmer can select path priority, name, selection criteria and zone rules. In this instance, under the Item Family tab “ALGN” (which is the code for the allergen item family) is displayed, indicating that items from the family “ALGN” will adhere to this storage rule. 58 Figure 19: Storage Search Path Menu 1 59 Figure 20: Storage Search Path Menu 2 3. Item Families For Blue Yonder to understand what is meant by “ALGN”, a family with that ticker must be defined. Figure 21 shows the screen in which the programmer can add item families by clicking on the “Add” option in the upper left corner. 60 Figure 21: Item Families Screen 4. Zone rules After defining the criteria for the storage search path, the next step is to determine where the system will allocate these inbound items. To do this, the programmer selects the “Zone Rules” option as shown in Figure 20, which opens the following interface (split into two images for better viewing): Figure 22: Zone Rules Screen 1 61 Figure 23: Zone Rules Screen 2 This screen will be empty in the beginning, but it will look like figures 22 and 23 once the programmer has finished coding the system procedure. There are some preparation steps that must be taken before adding destinations for putaway rules. 5. Creating a Storage Zone In order for the system to know where the programmer intends to send the items being putaway, a defined storage zone must be established. In this example, as depicted in Figure 22, the designated zone for storing items is named the “Allergen Zone”. For it, the programmer will navigate to the Storage Zone screen: 62 Figure 24: Storage Zone Screen Here, the programmer will select the create storage zone option in the Actions tab and then will complete the zone criteria with the name and ticker they see fit and then click Next on the bottom right corner: Figure 25: New Storage Zone Naming Screen After clicking Next, a menu will appear where the programmer will need to perform a mass update of the storage locations that will become part of this new zone: 63 Figure 26: Mass Location Update Screen 6. Definition of Zone Rules. Finally, the programmer will return to the screen shown in figures 22 and 23 and will begin adding the Zone where items adhering to this storage search path will be stored in. In this final configuration the programmer will choose whether to store the item in its last known location, alongside other items, or in a location that is partially filled with the same item. 64 Figure 27: Zone Rule Configuration Screen 7. Repeat process This simplified process will be repeated every time a new rule is added to the putaway algorithm. The programmer will need to understand the storage preference of the company’s management, translate that information into rules and zones and programe it in the storage search path. 65 CONCLUSION In conclusion, this project has provided a comprehensive exploration of warehouse management systems and their role in logistics companies like Artico Cold. It has also provided in depth insights in the implementation process of Blue Yonder at Artico, most notably of the directed putaway algorithm. From tracing the historical evolution of warehousing through ancient civilizations to the Industrial Revolution and beyond, to dissecting key warehousing processes and the latest innovations in WMS technology, the journey has been enlightening. Working briefly with Artico Cold Storage was particularly enriching, it allowed for direct involvement in their daily operations and in the preparation, development and implementation of software solutions to improve their efficiency. This experience further helped me understand the extent of the impact these technologies have in today’s supply chains. If the warehousing industry is already at this level of technology adoption, I am excited to see what the future will bring in terms of improvements and automation.