Warehouse layout sets the stage for order-picking, the most important activity in the warehouse. If product is staged for quick retrieval, customers will receive good service at low cost.
Everyone knows how to lay out a warehouse: Conventional wisdom says to put the fastest-moving skus in the most convenient locations. The problem is that all this depends on what is meant by “fast-moving” and what is meant by “convenient”.We elucidate this by building models of space and time (labor) to make this truism mean something precise. Frequently the answer is surprisingly at odds with standard practice and with intuition.

• We start with a particularly simple type of warehouse: A “unit-load” warehouse in which the skus arrive on pallets and leave on pallets. In such warehouses, the storage area is the same as the picking area and models of space and time (labor) are simple linear models. Accordingly, we can estimate the work inherent in using each storage location and the work inherent in moving each sku through the warehouse. This enables us to say exactly where each pallet should be stored to minimize labor.

• We move to more complicated warehouses in which most skus arrive packaged as pallets and leave as cartons. It is harder to make distinctions amongst all the storage locations, as we could do for unit-load, but we can identify those skus that deserve to be stored as pallets in a forward storage area to minimize labor.

• Next we examine high-volume, labor-intensive warehouses, such as those supporting retail stores: Skus may be stored as cartons and leave as pieces.Orders typically consist of many skus and may be assembled as on an assembly line. We are able to identify those skus that deserve storage as cartons in the forwardmost locations to minimize labor.

Part III, Order-picking
Order-picking is the most labor-intensive activity in the warehouse. It also de- termines the service seen by your customers. It must be flawless and fast.

• When there is a common pick-path, order-pickers can operate as a sort of assembly line, “building” each customer order and passing it downstream. We show a new way of coo¨rdinating the order-pickers in which each fol- lows a simple, decentralized rule but global coo¨rdination emerges sponta- neously.

• When there is not a pick-path that is common to all order-pickers, then it must be decided by what path an order-picker should travel through the warehouse to retrieve the items of an order.

• A crossdock is a kind of high-speed warehouse in which product flows with such velocity that there is not point in bothering to put it on a shelf. Occu- pancy times are measured in hours rather than days or weeks and efficient operation becomes a matter of finely-tuned material handling.

• What are the essential statistics by which the operations of a warehouse are to be understood?Where is the information found?

• Which of several warehouses is most efficient? It would be nice to know because then others could copy its best practices. It can be tricky to com- pare the performance of two different warehouses, especially if they are of different sizes, different configuration, or serve different industries.