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A Hybrid Decision Support System for Storage Location Assignment

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A Hybrid Decision Support System for Storage Location Assignment

in the Fast-Fashion Industry

KL Choy, HY Lam, Canhong Lin, CKH Lee

Department of Industrial and Systems Engineering, The Hong Kong Polytechnic University, Hong Kong

Abstract--In the highly competitive market of the fast-fashion industry, the fashion trend keeps on changing rapidly while customers always chase after new fashionable products. To meet customers' expectation and to cater for seasonal demand fluctuation, the product life cycle becomes shorter. The result of this is that frequent delivery of new products from the distribution center to the fashion retailers is necessary. This puts extra pressure on the warehouse of the fashion retailer, in which a large number of fashion products of different sizes have to be handled within a limited period of time. Due to the lack of an appropriate storage location assignment strategy, fashion products are always stored randomly, which increases the difficulties of picking the designated products. This results in low warehouse operations efficiency. In this paper, a decision support system for facilitating hybrid storage location assignment decisions is proposed to improve the warehouse operations by considering the fashion product characteristics and the order picking patterns. By integrating the class-based storage assignment policy and association rule mining, the fashion products are classified into different classes and stored according to the correlation between products. Through conducting a pilot study in a retailer store, it was found that the systematic storage location assignment strategy improves the order picking efficiency in terms of shorter travel distance.

I. INTRODUCTION

With time-based competition of shorter cycle times in the fashion market, fast fashion has become a trend of the fashion industry in recent years. The concept of fast fashion is to reduce the lead times for getting new fashion product into stores, in order to satisfy consumer demand in the peak season [1]. As the product life cycle becomes shorter and shorter, the cycle time from the centralized distribution center to retail distribution centers is also reduced. Facing the challenges of customers’ changing expectations and seasonal demand fluctuation in the fast-fashion apparel industry, apparel companies need to quickly respond to the fast operation procedures of fashion products, especially at distribution centers which supply retail stores [2].

However, frequent delivery of new products from distribution centers to the retailers' stores brings increasing pressure to the warehouse of fashion retailers, in which large amounts of fashion products of different sizes have to be handled in a limited period of time. Due to the lack of an appropriate storage location assignment strategy, fashion products are always stored randomly, without a systematic warehouse storage layout. This will increase the difficulties of picking designated products. This results in low warehouse operations efficiency of fashion stores. As there is no systematic warehouse storage policy and proper order picking policy, the warehouse operators need to travel back and forth several times in order to search for the required products. Thus, the travelling distance and total picking time increase which affects the warehouse performance. Therefore, in this paper, a hybrid decision support system for storage location assignment (SLA-DSS) is proposed to improve the warehouse operations by considering the fashion product characteristics and the order picking patterns.

II. LITERATURE REVIEW

A. Overview of fast fashion Industry

In the fierce time-based competition in the fast-fashion markets, the product life cycle is becoming shorter. Businesses have to quickly react to changes in the market for the purpose of maintaining their market share [3]. A fast response to changing fashion trends and consumer demand is the main focus of retailers in the fast-fashion industry [4]. Delay in time will lead to a greater risk of stocks being obsolescent and there will be less time in which to make a profit [5]. Due to such time pressure, lead-time is critical in managing the supply chain of fashion products [6]. It is especially true for the retailers' stores which need to handle large quantities of products for sale in a short period of time. This brings pressure to the warehouse of retailers and therefore effective warehouse management is important to ensure that the store can respond quickly to fulfill customer demand.

B. Warehouse storage and picking management

According to Gu et al. [7] and Hou et al. [8], there are three fundamental decisions when dealing with the storage function in warehouse management: i) what is the quantity of stock keeping unit (SKU) that need to be kept in the warehouse; ii) what is the frequency and time needed to perform a replenishment for an SKU’s inventory; iii) where should the SKU be allocated, stored, distributed and moved to from among different storage areas. The storage location assignment problem is to allocate incoming products to storage locations in storage warehouses or zones for the purpose of lowering material handling cost and improving space utilization [9]. An appropriate storage location assignment helps to minimize total travelling time, or travelling distance, for order pickers in the warehouse. There are three major types of storage policy: random storage, class–based storage and dedicated storage. The concept of random storage is to randomly assign all incoming products to any available empty location in a warehouse [10]. This method is only applicable in a warehouse which is equipped

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2013 Proceedings of PICMET '13: Technology Management for Emerging Technologies.

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