The company currently operates in a 40,000 square foot (3,716 m 2 ) manufacturing facility which is

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The company currently operates in a 40,000 square foot (3,716 m²) manufacturing facility which is 29.5 feet (9 m) high. The warehouse is attached to the manufacturing facility, however the transfer of finished product necessitates driving forklift trucks outside the manufacturing facility and back into warehouse, as the door which allowed the internal movement of goods between the two buildings has been blocked to make space for more production equipment.

The manufacturing facility has three automated filling lines and three automated packing lines. There is also a manual packing line which is used when demand increases during peak periods such as Valentine’s Day, Singles Day in China (11 November), Mothers’ Day and the lead up to Christmas. There is very little space to hold finished goods which necessitates moving the items into the warehouse soon after production.

There are two floor-level doors to the outside however one is currently out of use as the roller shutter is inoperable and Acme currently stores return product in this area.

The L-shaped mezzanine floor in the production facility is fully occupied with raw materials, packaging, labels and returned product awaiting re-work or disposal. The floor loading is not sufficient for significant amounts of product storage. There are 612 shelves, 2.8 m wide by 0.5 m deep, with a clear height of 0.8 m. The base of the mezzanine floor is 5 metres from the floor of the warehouse

There are in excess of 6,000 raw material stock items shown on the system.

The warehouse has 3,100 pallet locations as seen in the figures below. The aisle width is 3.7 m. Each bay is 2.8 m wide and has a clear height of 1.65 m. Only one exterior door is active as the other is now obstructed by offices currently. The pallets are 1.2 m wide by 1.0 m deep by 1.5m high.

There are four 20 foot containers in the yard. These are used to hold finished stock prior to collection by various third-party logistics companies (known as 3PLs) for onward delivery. They are owned by Acme. They are able to hold a total of 10 pallets each.

Acme Fragrances relies on a variety of 3PLs to undertake their deliveries. Choice of 3PL depends on the destination of the goods and the cost of transport. Acme has a contract with the Royal Mail and DHL for the delivery of online orders. Pallet distribution in the United Kingdom is undertaken by Palletline, a pallet distribution company. Parcel distribution into Europe and the rest of the world is undertaken by DHL. Pallet and full load deliveries into Europe are undertaken on a back-load basis by European transport companies who have delivered goods to other companies on the Horizon Business Park where Acme is situated. Some of the European wholesalers collect their goods on an ex-works basis.

The space outside the buildings is not large and most of the space is taken up by staff car parking, the storage of empty pallets and the four containers. There are times when completed orders are stored in the yard prior to collection when the containers are full and also finished goods are held in the yard until the warehouse has sufficient space and time to check and put away. This means they are open to the elements.

Cars have to be moved when an articulated delivery/collection takes place.

There are no dock levelers so loose-loaded containers from the Far East have to be unloaded outside using a counter-balance truck with a cage attachment.

The warehouse manager is inexperienced, having managed the transport operation until the old warehouse manager left, and now has responsibility for both areas.

The warehouse manager has received no formal training in warehouse management and is unaware of concepts such as Pareto (Bousquet et al 1964) and ABC analyses (Wild T 2017) and has no knowledge of the different types of storage mediums and materials handling equipment.

The company operates a paper-based system, printing off orders from the sales system and passing the orders to the four warehouse staff who walk through the warehouse to pick the items for online orders. These are returned to the office area to be packed, labelled and placed in a roll cage ready for the courier company to collect. Products are located in alphabetical order with one pallet location per product line (sku). Some locations have multiple sku as there is insufficient space to hold products in their individual locations. Large wholesale and retail orders are picked utilizing a powered pallet truck. Items located on levels 3, 4 and 5 are picked by medium level order picker equipment where the operative is lifted into the air on a platform. Where multiple cartons from a location are required, the pallets are picked by an articulated forklift truck and the remaining cartons are returned to the location once the required number of cartons are removed. This can cause congestion within the aisles at times as there is a delay in returning the pallet to its location.

All orders are picked individually.

Service timelines to the customer are acceptable although they could be improved significantly. Before the United Kingdom left the EU, European consumers were constantly contacting the company regarding quicker delivery for online sales. The majority of these sales have now stopped due to the increased costs and delays. The European wholesalers and retailers are also looking for quicker deliveries at a lower cost.

The company has approached a consultancy company to assist them with their future strategy in terms of whether to continue operating from their current leased warehouse, move to a new facility or outsource to a logistics services provider. They also need to find solutions for their European business, both from an import and export perspective.

As logistics consultants, you are tasked with assisting Acme Fragrances to overcome the short-term issues and produce a longer-term strategy for the next 5 years.

Question : How can you provide Acme with more space in their facility to accommodate growth in the short-term?

Please answer the question by concepts of Operations management.