Applying Group Technology Principles to Warehousing Operations

This article suggests a number of ways that group technology (GT) principles can be applied in warehousing operations. To evaluate the suggested GT approaches, their use in a distribution organization was studied. This study produced a great deal of useful information about the applicability of GT principles to service operations. These results and related managerial insights are presented and discussed. BACKGROUND Group technology (GT) is a philosophy that seeks to achieve efficiencies by exploiting similarities. Typically, GT principles are applied in production environments; parts with similar processing requirements are identified and grouped together to form part families. Next, groups of dissimilar machine types that are capable of processing one or more part families are formed. Such a shop layout is referred to as cellular manufacturing (CM). Thus, cellular layouts differ from the traditional job shop layout. In the former layout, machines are located together based on the processing requirements of the part families, whereas in the traditional job shop, machines are located together based on similar processing functions (i.e., a functional layout). Numerous benefits are associated with CM. For example, in a survey conducted by Wemmerlov and Hyer, firms utilizing CM reported reductions in setup times, throughput times, work-in-process inventory levels, materials handling, and direct labor costs. Additionally, improvements were reported in product quality and job satisfaction.|1~ GT principles can be applied in a number of areas other than a production setting. For example, GT principles are often applied in product design by means of a coding and classification system. The idea is to identify an existing part that is similar to the specifications for a new part. Subsequently, modifications can be made to the design of the existing part. This approach saves time because it typically is easier to modify an existing part than it is to design a new part "from scratch." The same logic applies to process planning. Once a new part has been designed, it is usually easier to modify a similar part's process plan than to develop a completely new process plan for the new part. While GT principles have widely been applied to manufacturing operations, application of these principles is less established for service operations. The purpose of this article is to investigate the applicability of GT principles in service organizations. As a starting point for this research, the possible use of GT principles in warehousing operations was studied. Although there are a number of reasons for initiating the research in the warehousing industry, perhaps the most important is the number of characteristics that manufacturing and warehousing have in common. For example, in both manufacturing and warehousing, the operations themselves usually do not have to be designed differently for each customer. Thus, facility design in both manufacturing and warehousing can focus on operating efficiency. Because of higher levels of customer contact, many other service industries must additionally consider customer accommodation factors in facility design. The following sections of the article discuss, first, various approaches for applying GT principles to warehousing operations, followed by a case study in which these concepts are viewed in the context of a distribution warehousing operation. The article then concludes with an analysis of the experience. APPROACHES FOR APPLYING GROUP TECHNOLOGY PRINCIPLES TO WAREHOUSING OPERATIONS This section of the article presents four approaches for applying group technology principles to warehousing operations. One way in which efficiency can be improved in warehousing is to exploit similarities among stock-keeping units (SKUs). For example, certain products may have a relatively high probability of being "picked" at the same time. If such natural SKU clusters exist, it clearly would save time to locate these natural SKU clusters together in the warehouse. …