Chapter 9: How to Proceed with Distribution Center Planning

I. The Essence of Distribution Center System Planning

Understanding "Correct Answers" in Center Planning

• Systems Under Multiple Constraints: Distribution center systems involve numerous intertwined constraints; therefore, there is not one single answer, but "many correct answers".
• Correlation Between Conditions and Design: The resulting system varies greatly depending on how constraints are set and the planner's philosophy.
• Difference from Mathematical Solutions: It is not a mathematical process where inputting raw data leads to a single, absolute answer.
• The Subjectivity of "Best": It is important to note that the "best system" presented by a planner is an optimal solution based on their standards and may not necessarily be the best for the client.

II. Key Points and Professionalism in Planning

• Required Expertise: Distribution center planning is a specialized technical field requiring knowledge of "Center Characteristics," "Logistics Equipment Characteristics," and "Planning Techniques".
• Nature of the Technology: While it has low-tech aspects of moving goods, the complexity of elements often causes hesitation in practice. Precision improves with experience and studying case studies.
• Planning Perspective: Requires both a micro view of individual elements and a macro view (total optimization) of the entire system.

III. The Basic System of a Distribution Center

Definition and Objective Approach to the Basic System

• Definition: Defined as a "system based on the numerical conditions of EIQ data," independent of specific equipment.
• Handling Constraints: Assuming specific equipment (like automated warehouses) from the start leads to an inflexible design bound by those constraints.
• Ensuring Objectivity: By basing the plan on data and documenting assumptions, a logical and reproducible system can be derived regardless of who performs the planning.

IV. Developing into the Final System

Correlation between the Basic and Final Systems

• Design Process: The data-driven Basic System transforms and adapts into the Final System based on various site conditions.
• Importance of Basics: Designing without a basic system risks reduced efficiency or creating an unusable system that fails in actual operation.
• Ensuring Legitimacy: Establishing a basic system based on numerical data first is essential to achieving an efficient and practical facility.

V. Five Important Principles of System Planning

1. Existence of Many Correct Answers: Design under the premise of multiple constraints.
2. Recognition of Sales Logistics: One must recognize that its characteristics differ fundamentally from production logistics.
3. Pursuit of Total Optimization: Look at the whole rather than partial optimization. Systems are always a "trade-off" where satisfying one side may affect another.
4. Emphasis on Inbound/Outbound Conditions: The system is determined by these conditions; EIQ analysis is the core method for examining outbound conditions.
5. Systematization of Operations: Software aspects (how to operate) are part of the system as much as hardware (equipment).

VI. Priority in Logistics Equipment Selection

Points to note during equipment selection

• Characteristic Mismatch: Productivity drops significantly if equipment characteristics do not match center characteristics.
• Avoiding "Equipment-First": Avoid selecting equipment early; derive it logically from the center's characteristics first.
• The Pitfall of Automation: Focusing on automated storage first might lead to selecting inappropriate equipment, even when floor stacking would provide better storage efficiency or picking speed.

VII. Major Storage Equipment by Packaging Unit

In logistics system planning, equipment is selected to match the characteristics of the packaging units (PCB).

VIII. The Thinking Process of the EIQ Method (7 Principles)

The following seven thinking principles are vital in center planning:

• 1. Consider the mission of the system
• 2. Recognize EIQ as the key factor in logistics
• 3. Deeply interpret the characteristics
• 4. Maintain a macro perspective of the whole
• 5. Use practically effective precision (the "Good Enough" method)
• 6. Repeat reviews to improve accuracy (Iteration method)
• 7. Look to the future and think flexibly

IX. Creating and Selecting Multiple Proposals