At the Louisville, Kentucky DC, Kenco associates were using lift trucks to pick the product from vertical racks. The product was shipped both domestically and internationally via either LTL or small parcel. Kenco determined that a flow rack design was needed to better serve the small parcel volumes, rather than using a common pick-and-ship flow across all shipping modes and SKU velocities.
Kenco’s engineering team performed a velocity analysis for both domestic and international small parcel shipping to determine the optimal number of flow racks needed to pick all high-velocity SKUs. On the domestic small parcel, the analysis revealed that 22% of SKUs represented 80% of locations picked and 72% of picks, which dictated the need for 12 sections of flow rack, ranging from two to five shelves per section. On the international small parcel, 30% of SKUs represented 81% of pick locations and 79% of picks, which dictated the need for 10 sections of flow rack, also ranging from two to five shelves per section. The engineers then installed the flow racks with two days of inventory.
With the new flow rack designs and processed implemented, 80% of all small parcel picks are now picked within a 600 square-feet area, and the average number of associates needed for these picks has dropped from around 23 to 13. The annual savings from this headcount reduction is estimated to be $404,000, with a mere two-month payback for the cost of the flow rack.