Improving the Material Handling Performance through Redesigning an Inventory Layout : A case study on Proton Finishing Forsheda

Abstract: The companies operating in today’s business environment are facing several challenges in meeting the demand of the customers due to globalization. Research has shown that by focusing on supply chain management and improve the business processes, benefits could be extended beyond the company. Through redesigning the warehouse layout, the supply chain could be strengthened, leading to value creation and reduced cost for the company.    The traditional manufacturing company suffers from departmental thinking where each function cares only for its department. The case company is not an exception, and what can be seen at the company is the sub-optimization of the overall process. Ad hoc solution has led to cost being shifted to another department, but the root problem remains at the company. Thus, the study aims to examine the effect on the material handling performance from inventory to the production lines when redesigning the inventory layout.   Building on existing literature on double ABC classification, warehouse layout design, and lean principle, the current inventory layout of the case company will be evaluated based on its effect on material handling performance. This was measured by using the three parameters: travel distance, number of handlings, and non-value adding activities. In this context, the number of handlings refers to the movement of material in the material handling process to the production lines.                                                                                                                                     Based on qualitative data collected, the study has described the current state of the inventory layout and the material handling performance at the case company. Furthermore, the study took on a quantitative study where data from the ERP system was collected to understand the impact of each article on travel distance.   Analysis of the ABC classification of the current article placement showed that critical and less critical articles are allocated to the same location and may affect the travel distance more than anticipated. Furthermore, the analysis demonstrated that there exists a mismatch between the usage of the storage system and theoretical practice. The result indicates that through redesigning the layout, the largest reduction can be found for the overall travel distance and number of handling. Furthermore, the study highlighted that it is important to have a strategy for article placement, and in this study, a double ABC classification was proven to be a good fit. Lastly, having a customized storage system according to the need of the facility is essential for efficient material handling.