DESIGN OF THE PHYSICAL DISTRIBUTION OF THE PRODUCT WAREHOUSE

FINISHED AT THE COMPANY:

IMPROVE STORAGE CAPACITY

FABIÁN A. CAVIEDES CHARRY

JUAN MANUEL GONZÁLEZ C.

PONTIFICAL JAVERIAN UNIVERSITY CALI

FACULTY OF ENGINEERING
Industrial Engineering Degree
Santiago de Cali
2016
DESIGN OF THE PHYSICAL LAYOUT OF THE PRODUCTION WAREHOUSE
TO IMPROVE STORAGE CAPACITY

FABIAN A. CAVIEDES CHARRY

JUAN MANUEL GONZALEZ C.

Degree thesis presented as a requirement to obtain the degree of

Industrial Engineer

Director

LUIS ALONSO VELASCO ROLDÁN

PONTIFICAL JAVERIAN UNIVERSITY CALI

FACULTY OF ENGINEERING
Industrial Engineering Degree
Santiago de Cali
2016
ARTICLE 23 of Resolution No. 13 of the 6
of July 1946, of the regulations of the
Pontifical Javeriana University.

holds responsible for the

concepts issued by their students in their
thesis work. It will only ensure that it does not
I publish nothing contrary to dogma and morality.
catholic and because the theses do not contain attacks
or purely personal controversies; rather, it
see in them the longing to seek the truth and the
 DEDICATION

My university career, along with all the people who directly or indirectly have
being part of it has left me with very important lessons for me
professional and personal development, I am immensely grateful to the administrative group and
faculty who were part of the development of my career. On the other hand, I thank
infinitely to my parents and family who were following my process and
accompanying me at all times when I needed it, this graduation project is not the result of
not only from my efforts, but also from the effort and drive that you cultivated in me and
hoy en día cosechamos juntos. Gracias.

FABIAN CAVIEDES CHARRY

During this training stage, I have managed to overcome great challenges that have left me
five years of experiences and teachings. I learned to fight for my goals thanks to the support
unconditional of the people who were directly or indirectly linked on this path.
I dedicate this thesis primarily to my parents, my sister, my family, and to
my friends for their advice and constant support.

JUAN MANUEL GONZALEZ CORONADO

 ACKNOWLEDGMENTS

Thank you very much to the whole group of people who, in one way or another, made this possible.

culmination of this work.

Engineer Luis Alonso Velasco Roldán: Your address, trust placed in

Our broad knowledge was essential for the completion of this work.
of Degree.

Juan Carlos Suso: For his unconditional help at all times, his contribution and support
The information was of utmost importance in the completion of the work.

Workers of the Esmeralda Rice Mill: For the good disposition and commitment,
their daily experiences enriched and gave value to this degree work.

Teachers: Because we learned something important from each of them, they were the foundations of

our professional and personal training. They taught us the meaning of outlining and achieving
results.

Family and Friends: For supporting us unconditionally and for giving us a voice of encouragement.

when we need it.

Faculty: For providing complete and timely information always.

 CONTENT

RESUMEN

INTRODUCTION

1. PROJECT GENERALITIES ........................................................................1

Study company..................................................................................................1

Mission

Vision

Organizational values

Products ..................................................................................................................3

2. STATEMENT OF THE PROBLEM ..................................................................4

3. OBJECTIVES..................................................................................................................7

General Objective.................................................................7

Specific Objectives

4. REFERENTIAL FRAMEWORK..........................................................................................8

Theoretical framework.................................................................................................................8

Methodological framework.........................................................................................12

5. ANALYSIS OF THE SYSTEM AND STORAGE AREA................14

Description of storage area.................................................................14

Description of the processes.........................................................................................16

Inventory management .................................................................................................22

6. DESCRIPTION OF OPERATION COMPONENTS (CURRENT) 24

Storage method.........................................................................................24
 Forklift...........................................................................................................25

Pallets

Packing machines...........................................................................................27

Identification of the weaknesses of the area...................................................28

7. DESIGN OF PROPOSALS FOR THE DISTRIBUTION OF THE AREA OF

STORAGE THROUGH QUANTITATIVE METHODS THAT
ALLOW TO SUPPLY SPACE NEEDS.

Implementation of shelves to improve storage capacity

taking advantage of the currently underutilized height.......................................................29

Calculation of the new storage capacity............................................30

Shelf implementation...............................................................................31

ABC classification of products...........................................................................32

Forklift...........................................................................................................35

Outsource the storage service to improve capacity

storage without the need for investment in infrastructure........................................36

Calculation of the CD capacity............................................................................37

8. EVALUATION OF THE PROPOSALS DESIGNED THROUGH

KEY CRITERIA FOR PROJECT SELECTION.......................................43

Benefits analysis of the implementation...............................................................43

Cost Analysis

9. ECONOMIC ANALYSIS OF THE PROPOSAL ...........................................45

10. CONCLUSIONS ...............................................................................................47

11. RECOMMENDATIONS .....................................................................................49

12. BIBLIOGRAPHY .................................................................................................50

 TABLES

Table 1 Methodological Stages.........................................................................................12

Table 2 Specifications on the packaging machines..............................................27
Table 3 ABC Classification..............................................................................................33
Table 4 Sizing of the DC (Sales Projection 2017)...................................42
Table 5 Implementation costs of the proposal.........................................................44

TABLE OF FIGURES

Figure 1 Distribution plan in the storage and packaging warehouse..................14

Figure 2 Use Cases - Product Flow Systems..................................................16
Figure 3 Current distribution of the storage area...........................................19
Figure 4 Storage area...................................................................................20
Figure 5 Use Cases Operating System ..............................................................21
Figure 6 Current elevator of the company............................................................26
Figure 7 Proposed distribution of the storage area.....................................31
Figure 10 Investment and income, transferred to the time of realization.............................46
 GLOSSARY

ARRUME: orderly placement of bundles on a stowage (set of bundles on)

a stowage). It is also used to refer to the arrangement of one stowage on top of another.
forming a column.

LOAD: process in which a person or forklift operator moves a bag

or rice of the vehicle subject to dispatch.

CHECK LIST: are formats created to carry out repetitive activities, control the
compliance with a list of requirements or to collect data in an orderly and structured manner
systematic.

STOWAGE: Storage unit on which the product is placed for easy

transport and handling.

FIFO: First in, first out.

LIFO: The last palette that enters is the first one that goes out.

LAYOUT: corresponde a la disposición de los elementos dentro del almacén. El layout

A warehouse must ensure the most efficient way to handle the products it contains.
make available.

PADDY: freshly harvested rice.

PACKAGING MACHINERY: The packaging machinery refers to the

machinery intended for the introduction of the product into its sales packaging.

BAILING MACHINE: It is the machinery that rearranges the containers in

a packaging that protects them from damage at the time of being placed on the
stacks.
 ABSTRACT

This graduation project rice sector company,

dedicated to the production, processing and distribution of rice. The project aims to design
the physical layout of the storage warehouse to achieve increased capacity. For this, an
an analysis of the storage area in order to identify current storage conditions was made; it
using the engineering tools of which have added knowledge with a rigorous literature
Review of articles and grade papers related to the topic. A proposal for a new design, based
on a characterization of it, based on projections of demand, production and policies
established by the company, using quantitative and qualitative methods to achieve a better
The alternative for the company will be in a second step.

Key words: Design, Enlistment, Characterization, Distribution center

 SUMMARY

This graduation project was carried out at the company 'Arrocera la Esmeralda S.A.S.'
belonging to the rice sector, dedicated to the production, processing, and distribution of rice.
The project aims to design the physical layout of the warehouse.
storage to achieve an increase in capacity. For this, an analysis of the area was carried out.
for storage in order to identify its current conditions; making use of
engineering tools of which there is accumulated knowledge along with a review
bibliographic of articles and theses related to the topic. Secondly
se hizo lapropuesta de un nuevo diseño, basado en una caracterización del mismo,
based on projections of demand, production, and policies established by the
company, using quantitative and qualitative methods to improve quality levels
logistics in the company's storage area.

Palabras clave: Diseño, Alistamiento, Caracterización, Centro de Distribución

 INTRODUCTION

In recent years, according to the Colombian Rice Federation, the growth of the
Rice production in Colombia has been 5% annually; a growth that has been
accompanied by an improvement in productivity per hectare of 8%. The above has
allowed the sector to become the second most important transitional crop in the country,
with 10% of the agricultural area and presence in 220 municipalities whose economy depends

fundamentally from rice farming. (Fedearroz, 2011)

The demand for paddy rice is made directly by the mills in order to
transformarlo en arroz blanco y posteriormente comercializarlo a nivel nacional, en
bulk presentations of rice in bulk and/or through the private labels of the mills.

This project aims to generate a proposal for the Esmeralda Rice Mill.
the redesign of the physical layout of the storage warehouse that allows
determine a correct distribution, this in order to increase capacity
storage to keep the largest amount of rice produced and thus be able to
response to immediate or future requests in order to expand the company's market.
 1. PROJECT GENERALITIES

Study company
In the municipality of Jamundí, Valle del Cauca, a rice mill was founded in 1950.
Several entrepreneurs from the region promoted this project to process what they produced in
the field. Since then, the company has not suspended its functions nor its intention to
encourage farmers to continuously produce this food.

Currently, the rice from the Cauca Valley is considered the best of
Colombia, due to the quality of its land, also links approximately 4500 jobs.
indirect in the area farmers throughout the department. Over these 60 years,
The Esmeralda rice mill has modernized its production machinery with technology from
punta para brindarles a sus clientes el mejor producto. (ARROCERA LA ESMERRALDA
SAS, noun)

Mission
Promote the growth of agriculture; a fundamental basis for development.
Colombia and especially for the Southwestern Colombian region, fully satisfying the
market needs through high-quality products, building relationships of
mutual benefit with our stakeholders under criteria that guide the activities
humans towards sustainable development.

Vision
To be a leader in the markets of Southwestern Colombia, in the processing and
marketing of rice; developing processes under controlled conditions that
contribute to the protection of the environment, with high-quality products and
efficiency of our service that meets the needs of the clients.

Organizational values
Arrocera la Esmeralda S.A.S is committed to implementing, maintaining and
continuously improve the Integrated Management System, according to international standards
1
and national standards of ISO 9001, ISO 14001 and ECOCERT ESR Standard; complying
with the current legal requirements and other applicable requirements to their activity, with the
purpose of:

To be a leader in customer service and end consumer satisfaction, offering

high-quality products, with optimal service and at a reasonable cost.

Prevent and reduce the environmental pollution inherent to our processes.

Promote staff development through training, coaching, and use of

best practices to achieve the effectiveness and efficiency of our processes.

Integrate the different interest groups into our management, taking into account the
development at the social, economic, and environmental level, in order to generate value and well-being.

Provide technical assistance, advice, and technology transfer with information on

high quality for the best performance of rice cultivation; thus generating the best
productions at a lower cost for the producer.

Support producers through the financing of seeds and supplies.

Fomentar el cumplimiento de los principios de comercio justo para los productores

linked to the Organic Agriculture program.

2
 Products

The Esmeralda rice mill manages several product lines, with different characteristics and
excellent quality. Below are the references that are part of the
portfolio and the most relevant characteristics of each one:

Blanquita: It is a clean rice, long grain type 1, it opens perfectly, it is

celestial white, gluten-free, zero cholesterol, anti-allergenic and totally
pure.

Blanquita Premium: It is completely clean, 100% natural, with no preservatives,

additives or preservatives, with long grain type 1, seed especially
selected from only whole grains, pristine white and excellent flavor.

Integral White: It is processed under the strictest and most rigid standards.
where its shell is polished, leaving only the antioxidant properties,
vitamin B12, natural fiber and gamma oryzanol. Unlike other rice
integrals, it has no debris or material (broken shell) that flies inside the
bag and its grain is long whole.

Blanquita Organic: Blanquita Organic is the first organic rice of

Colombia. Every detail of its cultivation is cared for and controlled to ensure not
only a 100% organic, healthy, and delicious rice, but a rice that protects
environment and its biodiversity and what it contributes to the community, in a relationship

fair and sustainable long-term trade.1

1
Company website, available on the internet:[Link]

3
 2. STATEMENT OF THE PROBLEM

Over the last seven years, there has been an increase in sales in the reports.
annual company reports, exceeding up to 25% growth from one year to the next. In
on average, there has been a growth of 15% annually compared to the previous year, this for
every year from 2008 to 2015. According to the above, it is necessary to carry out
the improvement of the storage area to maximize resource use
available, from the perspective of space and infrastructure, making changes that
allow to increase the capacity of the finished product warehouse, to comply with
high orders during peak months and improve warehousing processes.

It is worth highlighting that, by improving this point, there would be multiple benefits from this.

restructuring in other sectors of the company, improving its infrastructure, technology and
workloads in certain jobs, likewise, will bring indirect improvements in the
dispatch area, order preparation and distribution of the warehouse. As mentioned
previously, sales have shown significant growth every year, which has
can be evidenced in Graph 1. Percentage growth of sales (2008-2015), which
allows to see the increase in sales of one year compared to the previous one.
Appendix 3

On the X-axis of graph 1, there is a numbering from number 1 to number 7.

being 1 the first time interval, which consists of the growth between the year 2008 and
2009. 2, referring to the second interval, taken between 2009 and 2010, and thus
successively until knowing the percentage growth between the year 2014 and 2015.

4
Chart 1 Percentage growth of sales (2008-2015)

Source. Annual reports from the company's commercial area

According to interviews conducted with the production manager, shipping manager, and the manager of

sales, the increase in capacity in the storage area is of utmost importance,

Well, the flow of product and the maximum utilization of available technologies, it
They are being affected by the lack of capacity of the warehouse.

The increase in demand at the Rice Mill has brought with it inconveniences of a certain nature.

logistics in the storage area. It was observed that the company has the capacity to
supply and reception of raw materials, drying and processing to meet the
current demand, while the storage area does not have the necessary capacity
for the large volume of production.

The packing area has 4 sets of automatic machines, which are

composed of one or more packers and one or more wrappers and 3 manual machines
(packagers), which have the capacity to package approximately 18.3
tons/hour, however, the available technology is not being utilized in its
totality as a consequence of the following factors:

5
There are not enough pallets to keep the inventory fully stocked, however, if the
they would not fit in the warehouse, as the storage capacity is
Approximately 378 tons, being this lower than the capacity of
production, which with the 23.5 daily working hours, would exceed the capacity of
the warehouse in approximately 50 Tons.
The storage area still has the same infrastructure as before.
fifty years.
There is a silo that is under construction, which will increase the capacity of
Reception of Paddy up to 200 tons.

6
 3. OBJECTIVES

General objective

Design an alternative for the physical distribution of the storage area.

Esmeralda Rice Mill, in order to increase its storage capacity through a
model that optimizes the use of spaces.

Specific Objectives

Analyze the system and storage area to identify the current conditions
of the physical design, through the surveying of the layout of the elements in the warehouse
that allows for a study of the measurements of the installations and their distribution

Design proposals for the distribution of the storage area using methods.
quantitative measures that allow meeting space needs according to the capacity of the
processes and demand variability.

Evaluate the proposals designed using key project selection criteria.

7
 4. REFERENTIAL FRAMEWORK

Theoretical framework

The Council of Logistics Management defines logistics as:

cost of flow and storage of raw materials, of product inventories in

process and finished products, as well as the respective flow of information from the point of origin
up to the point of consumption (including internal and external movements, and the
export and import operations), with the purpose of complying with the
requerim (baptiste & perez, 2004)

To establish the set of factors involved in the design of the area of

storage it is necessary to take into account: the design of the warehouse initially, the
internal configuration of the warehouse, the available space for storage of the
materials, the number of articles stored, the required service speed,
arrangement of the pallets and the optimization of picking operations.

Para realizar eldiseño del área de almacenamiento se hace necesario el uso de

qualitative and quantitative tools that allow for making the best decision based on
reliable information.

The layout or floor plan of a company consists of the physical organization

(where) of the factors and industrial elements that participate in the productive process of
the company, in the distribution of the area (how much), in the determination of figures and shapes,
(as) relatives and in the location of the different departments (Avila & Malagon,
2012

Out of a warehouse must ensure the most efficient way to handle the
products available in it. Thus, a warehouse continuously supplied with
stock will have different layout and technological objectives than another warehouse that
8
initially stores raw materials for a company that works on demand. When
the layout of a warehouse is carried out, the strategy for incoming and outgoing should be considered
warehouse and the type of storage that is most effective, given the characteristics of the
products, the method of internal transportation within the warehouse, the rotation of the products,
the level of inventory to maintain, the packaging, and guidelines for preparation
(Salazar, n.d.)

Aspects to consider for the distribution proposal

Determine the space required for the placement of the new shelf.

Estimate the situation of each area according to the flow of people and materials that
They must circulate in each sector where the shelf location is proposed.

Locate the shelves strategically so that the materials are at

scope of the operator without incurring in long displacements and risks
unnecessary.

The physical layout of the warehouse must take into account the utilization of the
spaces, easy access to the finished product, reduction of handling time
of the product and the maximum possible rotation since it is food. An efficient layout allows
avoid congestion areas and points, facilitate maintenance tasks and arrange the
necessary means to achieve the highest possible speed of movement in order to reduce the
working hours.

There are two types of operational management models for warehouses. They are called: management
of organized warehouse (each reference has a specific location assigned in the warehouse
and each location has specific references assigned) and chaotic warehouse management (no
There are pre-assigned locations. Products are stored according to availability.
space and/or criterion of the warehouseman). ([Link])

9
 Depending on the load unit, the grouping of products is examined, their
resistance, stability, and management. In the management, the type of storage is evaluated that
go to use, at this point the type that is most convenient should be selected: By area
group products with common characteristics together, in easily accessible places. Can
lose space, but gains in time and ease of access), random (groups products
according to the size of the batches and the available space, without relating the characteristics
of the products. The warehouse space is used efficiently, but it does not help with the
(collected), in bulk (this form generates a single storage block, where it
they arrange the products as they arrive, without differentiating between their expiration dates or
references. It presents difficulties regarding the rotation of products and the management of
inventories, which is why it is only recommended for companies that manage a single
product class), shelves (this form of storage consists of safeguarding the
different products in the warehouse, using metal structures that form a set
of cavities where it is possible to locate the products. This way of
storage allows for a wide variety of products to be stored and allows for identification
easily the references). (Perez, 2006)

The storage system refers to the equipment that is used to accommodate a

stowage with merchandise in an established location for its storage and the system
Extraction of pallets refers to the vehicle or system used to pick up or extract.
the merchandise that was stored at the location (Astals, 2009)

The most efficient ways to perform storage with stacking are: stacking
of pallets (consists of the arrangement of the product or raw material on pallets on a
rigid surface such as wood, metal, or polycarbonate in ascending order in various
levels), single depth shelves (characterized by placing in a space
determined a single product at various levels), double deep stackable shelves
(this type of shelf uses both sides to store or retrieve merchandise by its
location and design), simple shelves (characterized by allowing the storage of several
references of a product at various levels due to its uniform and simple structure), shelves
compact (designed to store a greater number of goods (more capacity) on pallet
taking advantage of the height of the warehouse), pallet flow racks (Supported by a slope
10
that allows moving the merchandise on a roller system, which upon removing a pallet
automatically stored leaves the next one in front), push back type shelves (System
storage by accumulation that allows depositing up to four pallets deep
each level. Suitable for storing medium turnover products, with two or more
pallets by reference (LIFO system: the last pallet to enter is the first to exit).

The following rules must always be taken into account general or principles of
almacenaje:
The warehouse is not an isolated entity, independent from the rest of the functions of the

company. Consequently, and as a principle of all productive activities in the

company, its planning management and control must be in accordance with the general policies of
this is to integrate into the general planning to participate in its business objectives.

The stored quantities will be calculated so that the costs they incur are
minimums; as long as the desired service levels are maintained.

The arrangement and use of the warehouse should be such that it requires the least
efforts for its proper functioning; for this, it must be minimized:
The space used: utilizing the storage volume in its entirety
available.
The internal traffic, which depends on the distances to be covered and the frequency with which
the movements occur.
The movements: aiming for the better use of resources.
Accessibility to the warehouse via forklift or stower and to the use of
full loads. (Lagos, 2011)

A warehouse must be as flexible as possible regarding its structure and layout.

form that can adapt or be modified to the needs that the company requires or to the
evolution of this.

In the realization of this project, the analysis of the benefits will be taken as a basis.
what the development proposal brings with it.
11
 Methodological framework

To carry out the project, a descriptive methodology will be initiated based on the
field observation and interviews, in which the sales manager and the
main actors in the process such as: the Sales Assistant, the Shipping Manager,
Packaging Manager and Workers. This will provide an initial focus to identify the situations.
that are presented within the storage area and be aware of the possible
problems in the area. Subsequently, the necessary analysis of the information will be carried out.

supplied by the company and extracted from the visits made, this in order to focus on
on the highest risk pillars and generate proposals for the improvement of the processes
who participate in storage activities

The validation of the final proposal will be done through the analysis of the benefits it brings.
I manage the design of the storage area and selection techniques for alternatives, which
allow to clearly see which is the best proposal for the mitigation or eradication of
problem. The decision on the implementation of the proposal falls on the company.

In Table 1. Methodological stages, the different stages of the project are shown.
description of the activities and tools required to carry out each one
of the proposed objectives.

Table 1 Methodological Stages

Objective Activities Method/tools

1. Analyze the system and area of Description of the Survey Area
storage to identify storage
the current conditions of Description of use diagrams
physical design, through theprocesses
lifting of the disposition Definition of the Observation
from the elements of the warehousetechnical infrastructure
that allows for a study to be conducted
Calculation of capacity Mathematical calculations
of the dimensions of the installations
current storage
and its distribution

12
 weaknesses of the area Analysis

Design proposals of the proposed alternatives Outline of new

distribution of the area for the solution of the distribution
storage through problem
Sizing of a
methods quantitative what
CD
allow to meet the needs
of space. Definition of Economic Analysis Criteria
selection
3. Evaluate the proposals Definition of Economic Analysis criteria
designed according to selection criteria
keys of selection of
projects.

Source: Project Authors

13
 5. ANALYSIS OF THE SYSTEM AND STORAGE AREA

In this chapter, the aim is to show the functioning of the processes that are part of
the storage warehouse, identifying the resources available to each one and
emphasizing those involved in the area of study. The above is to understand
all the details of the area and identify the most relevant aspects susceptible to change
positives for the company.

The data and information obtained for the development of this chapter were obtained from
through informational interviews2with the sales manager, warehouse chief, and coordinator
from the office. The measurements of the warehouse were also taken to carry out
a floor plan as a tool that allows visualizing the distribution and location of the areas
with greater comfort.

Description of storage area

Below, the current conditions of the physical design of the warehouse will be defined.
storage of the company Arrocera la Esmeralda, through different means that allow
visualize and analyze it, identifying the key aspects to improve in this sector.
In Figure 2. Layout in the storage and packing warehouse, It
show the physical distribution of the storage and packing area through the
drawing up a distribution plan that allows for easier recognition of the
current conditions of the warehouse.

Figure 1 Layout of the storage and packing warehouse.

2
Types of interview. Available on the internet: [Link]

14
Source: Project authors.

Main door: It is 3.5 meters wide and 3 meters high.

2) Offices: Offices of sales managers, dispatches, and hygiene and safety
Finished product: Packed rice stacked on pallets to be dispatched.
4) Silos: 14 silos that store the rice dispatched from the mill and supply the
packing machines
Packing machines: Pack rice into bags of different sizes
depending on the series (Classic, Integral, Premium, Organic) and quantity (1kg, 2.5
kg, 3 kg, 5 kg.
Tool warehouse of the workers.
A) Loading zone: Where trucks wait to be stocked by the forklift.
B) Dispatch area
C) Storage area: space designated for the finished product until it is
transported by the elevator to the trucks.

15
 Description of the processes

In this section, the analysis of the system will be presented using a methodology called
use cases, a methodology that allows seeing the behavior of systems and knowing the
steps that are being taken to carry out certain activities in the company. It will be done
the use case regarding the processes that Paddy undergoes until it becomes
in rice ready for commercialization (See Figure 2. Use Cases - Flow Systems of
product), in addition to this, it is indicated at the bottom of each actor (process), the
capacity of the same to process the raw material in units of speed or level of
production per day to lead the reader to a better understanding of the process.

Figure 2 Use Cases - Product Flow Systems

Source: Project authors.

16
 Actors:3

Production Area4, Silos, Packing Area, Storage, Dispatch Area

(Sales/average/day).

Process:

The use case diagram shows the product flow through all the processes of the
company, making comparisons between the flow and capacity of each of the actors,
in order to demonstrate where the bottleneck of the system is being created.

En el area de tranformacion de la materia prima, se procesa el Paddy para obtener arroz

in bulk, which is sent through a conveyor belt that enters from the part
superior of the warehouse to the 14 internal silos, each with a capacity of 18 tons.
That is, there is a total storage capacity of 252 tons of
finished product without packaging. After passing through the silos, the grain is sent to the area
of packaging.

As shown in Figure 4. Packing area and Figure 5. Distribution of the

storage and packaging warehouse, this area is equipped with a set of machines
6
manuals5and four automatic machine games that together have a capacity of
pack up to an average of 427 tons/day.

Figure 3 Packaging area

3
Toda entidad externa al sistema que guarda una relación con éste y que le demanda una funcionalidad
4
Area for transforming raw material into finished product in bulk.
5
A machine that consists of a packer requires two operators,
Figure one who packs and of
4Distribution the other
the who seals the
warehouse
pacas.
6
Machine that consists of a baler and packager, requiresstorage
only oneand packaging
operator to stack the bales.

17
Source: Project Authors

When the product has already been packaged and stowed, it is sent to the area of
storage through a forklift, which serves the function of stacking the
product finished according to the reference. The number of columns per reference currently
is defined respecting the first 4 for blanquita presentation at blanquita * 25
unit * 500 gr due to being the best seller, the rest of the arrangements are not made
siguiendo el mismo concepto si no por disposicion del encargado. El orden de las columnas
according to the product reference is the following:

4 columns of Whiteness presentation at Whiteness * 25 units * 500 gr.

1 column of white presentation paca. 5 bags of white 6 lb.
1 columns of white presentation paca. white x 12 units * 500 gr.
2 Emerald column presentation at emerald 25 units * 500 gr.
2 columns of Emerald presentation paca emerald 25 units * 450 gr.
2 columns of Emerald presentation paca. 3 white bags 10 lb.

The layout of the aforementioned warehouse can be observed more clearly.

ease in Figure 5. Current distribution of the storage area, in which there
They divide the references according to the number of columns designated for the storage of each.
one in different colors.

18
Figure 3 Current distribution of the storage area

Source: Project Authors.

There are other references such as (Blanquita rice package * 10 kg, Blanquita of 15 units.*
1000 gr, pack of 3 bags Esmeralda*5 kg and pack Integral*15 units) due to its low rotation and
the lack of space is stacked in areas outside of the storage, a situation that does not
it allows for a good flow and movement of workers, reduces hallway areas
inside the warehouse and increases the likelihood of workplace accidents. See Annex 2.

Currently, the storage area has an average capacity for

store up to 378 tons of packaged finished product. Once the product is
in storage ready for shipment, the forklift is responsible for carrying out the transfer of
the merchandise requested for the dispatch trucks.

19
Figure 4 Storage area

Source: Project Authors.

By analyzing the capabilities of each of the actors in the system, it is demonstrated

that storage creates a bottleneck in production due to lack of capacity,
since after approximately 2 days, it will be necessary to stop production due to the
imbalance between rotation, storage, and production capacity.

Taking into account the average sales level per day (190 tons) and the future demand
of the market, it is necessary to redesign the storage area in order to improve the
capacity and power to respond to the growing demand.

For the above, it was decided to focus the study on the storage area as a point.
basis to improve the flow of finished products from the production area to the
office.

Now, in this case, the same analysis will be carried out, using use cases, focused on
all the operations that must be carried out to comply with the sales process, in this
we take as actors the people who participate directly in the
production process until the product dispatch (See Figure 7. Use Cases -
Operating System). See Appendix 1

20
 The system starts with the client, who can directly enter their order into the system or
make a call to the sales assistant, who is in charge of entering the data
and the generation of the order in the system. Subsequently, the information is reviewed by the
warehouse manager in order to plan the production9of the day, according to the stock of the

available references. After the verification and planning, the order is given to the
machine operators to start production depending on the
needs.

The elevator plays a crucial role in the system, as

any workload overload or logistical inconvenience of this could delay the
dispatch of goods, being the one responsible for continuing with the flow of the system.
After the product is packaged, the forklift takes it from the packing area.
to the warehouse to later collect the order shipments by truck and subsequently
take the requested product so that the workers can load the trucks. In
In the middle of this dispatch process, there is a control point where the verification takes place.
quantity and reference of the product that leaves the warehouse on each trip. This process is
carried out by the dispatch assistant, who has the sheets where the information is
of each order by references and quantities along with the complete data of the truck and
assigned drivers for distribution.

When the orders are approved and production has been scheduled, the manager of
dispatches, who from the beginning had a copy of the order, defines according to the routes and
distances, along with other relevant factors, in what order they should be dispatched
mill trucks. This entire process takes place the day before, when the level of
work and dispatch of goods has already decreased in the mill.

Inventory Management

Regarding the company's inventory management, it was observed that they do not comply with
no specific standard, the production order varies according to demand, not
they make sales forecasts nor use any tools that allow them to have a

9
In this case, reference is made to the packaging process when talking about production.

22
inventory management defined. Daily between 28 and 35 tons are left in the warehouse.
products distributed among the different references handled by the rice mill, this quantity is
defined empirically, calculations or tools that allow establishing are not used
What is the required inventory need.

The way this process is carried out is as follows; every day the program is scheduled the
production according to what they have in inventory with respect to what is missing for
the sales the next day, according to the sales report presented by the head of dispatch.
There is no order according to references nor is there a fixed inventory for each one, only
produce when it is needed and makes exactly the amount of sales for the next day.

According to interviews with the packaging manager, he says they have estimated that approximately

In two days that sales are stopped for any reason, it is necessary to stop the
production, as there is neither the space nor the infrastructure to support a stoppage of.
sales greater than or equal to the number of days previously mentioned.

23
 6. DESCRIPTION OF THE OPERATION COMPONENTS (CURRENT)

For the execution of a process, there are certain components that play a crucial role.
importance in the results of it, these factors have to get along and work together
association for the proper development of the process.

Storage method

Currently in the finished product warehouse of Arrocera la Esmeralda, there is no

It has a systematically established storage system that includes shelves.
The way the company conducts storage is through stacks between the
stacks, placing one on top of the other, reaching up to three levels. This method of
storage can create logistical inconveniences, wastage of
high altitudes, high levels of risk of occupational accidents or loss of time and money due to
instability of the blocks, which could collapse at any moment and would cause
reprocessing of the raw material is necessary.

Currently, the warehouse has the capacity to place 7 pallets deep, occupying
8.4 meters from the storage area leaving 5.6 meters for the forklift.
enter and remove the pallets with the product from the stacks. The warehouse measures 20.30 in width.

metros where 12 rows of different product references are located, the first reference
it is the area with the highest rotation, which is located in the area closest to the door, but to the rest of

references do not give importance to location according to this criterion.

With the current layout, an improper storage system is used for this type of
product, LIFO, which is suitable for non-perishable and/or high-turnover products. Due to
that the rice has a rotation of between three and four days (average rotation) and is a
perishable product, the LIFO storage system is not suitable for this, as it
This way the product will have greater antiquity on the wall and without constant output.

24
 Calculation of current storage capacity
To calculate the storage capacity, the measurement taken was
mainly the average weight of the product per stack and its measurements is
to say if currently with the warehouse's measurements there are 12 rows of stacking by 7 of
depth as shown earlier and when storing through stacks it only supports 3
stowage floors the calculation is as follows:

Locations

252 pallets

Referring to 252 locations, there are 252 pallets with an average weight of 1500 kg.
to say that the warehouse with the current distribution and capacity can store

kg

= 378.000 kg

The total storage capacity is currently approximately 378 tons of

finished product.

Forklift
There is a forklift that performs the following functions:

Take the empty pallets to the packing area to be loaded with the
packaged product.
Collect the loaded pallets and take them to the storage area.
finished product.
Collect the orders from each truck that is waiting to be filled.
Pick up the product in the warehouse according to the truck orders that are there
being filled.
Pick up the pallets after emptying them and take them back to the area.
packaging to repeat the previous process.

25
 According to the observations and interviews conducted with the forklift operator, there
presents an overload of work, as it has to fulfill many activities
simultaneously without any type of order.

The forklift available has the following characteristics (See Figure 6.

Current forklift of the company:

Brand: NISSAN
Accessory: LATERAL SHIFT
Frame weight: 4005 KG
Maximum load height: 4750 mm
Maximum load capacity: 1900 KG

Figure 6 Current elevator of the company

Source: Project Authors

Staves
It was identified that approximately 38% of the available pallets are
they are found in poor condition and must be constantly sent for repair, on the other hand,
it was observed that there is no fixed amount for the storage area, the deficit of
This causes a delay in operations because when another area of the rice mill...
requires having storage regardless of whether it is in production or not

26
they will be used during the day. This results in stoppages in the
production, wasting time and wasting the capacity of the packaging area.

Packing machines
Below, a table will be presented (table 2. Specifications on machines of
pack) with the information of the machinery available in the packing area, where
the reference and capabilities of each of these are specified.

Table 2 Specifications on Packaging Machines

(bolsas/minute
(foth
rheours/minute)

rauma speed bag economic

Raumakmultivaler300

ambassador Raumak speed bag R7

Raumakmultivaler300

ambassador Roomak speed bag economic

indumakmultivaler300
Indumakmf100
Indumakmk30

Source: Project authors.

When we talk about the maximum factory speed, it is the speed for which it is designed.

designed the machine, different from the optimal maximum speed, which is the speed
selected by the company to carry out its operations in the rice mill, as it was verified
that by using the maximum factory output, a greater amount of downtime was being generated due to
maintenance and technical support, also when reaching maximum capacity they were seen
variations in weight and there was no accuracy in the specified grams.

27
 Referring to game No. 3, the optimal maximum speed is 35 bags/
minute, in this case not for efficiency or productivity, but for the worker who stows the
packages, because when the machine is running at full capacity it does not reach
make the necessary arrangements for loading, as the time it takes to go to the loading dock and
return to the workplace is greater than the departure time of the next bag with
product. On the contrary, with the speed being used, there is still time left.
I need to carry out your activities without wasting time or product since upon returning
Should I stop the production or ask another worker for help while picking up what is in it?
floor due to lack of time.

With the previous information about the machines, it was concluded that the total capacity
The packaging is approximately 420.8 tons daily.

Identification of the weaknesses of the area

Few spaces for the movement of personnel and forklifts.

Difficulty in expanding storage space.
Underutilization of height.
Poor distribution of the storage area.
Use of LIFO methodology, which is inadequate for a rotating product.
medium.
multiple unnecessary forklift movements.
forklift too large for the available space.
Of all the references, only those located near the dispatch door are positioned well.
two of highest rotation.
Restriction due to lack of area

28
 7. DESIGN OF PROPOSALS FOR THE DISTRIBUTION OF THE AREA OF
STORAGE THROUGH QUANTITATIVE METHODS THAT
ALLOW TO SUPPLY SPACE NEEDS.

PROPOSED ALTERNATIVES

In this section, two proposals will be made, which are complementary to each other.
Another, that is, a first proposal will be presented with which the conditions will be met.
spaces and storage methodologies in order to increase capacity
storage that the rice cooker currently has. Then an analysis will be conducted through
quantitative methods, to which the updated data will be entered with the first proposal
and it will be determined whether its implementation is necessary or not. These two proposals aim to

restriction on the construction of a new warehouse for storage as the company does not
it has a space to build.

Implementation of shelves to improve storage capacity

taking advantage of the currently underutilized height

Descripción:

The proposal to be presented is based on the proposed changes of the redesign, in

this layout does not require having a distribution with a LIFO system. Taking into account
This and the location of the entrance to the winery is established that it will be stored from the back.

forward towards the loading door, based on the FIFO storage system.

Objective:

It is intended to design a storage system that has criteria

methodological approaches and equipment that allow improving the capacity of the warehouse, in order to have

good efficiency and effectiveness indices in storage processes.

29
 Calculation of the new storage capacity
To calculate the storage capacity, it was taken as
main measure the average weight of the product per stack and the measurements of the
the same, that is, if with the new warehouse measures there are 11 rows with five
Depth locations and five levels, the calculation is as follows:

Locations

= 275 skids

The number of locations refers to the number of pallets that will fit in the
new distribution with the implementation of the shelf, which reach a weight
average of 1500 kg, which translates to the following storage capacity in
kilograms

kg

412.500 kg

The total storage capacity with the new installed layout is

approximately 412 tons of finished product.

30
Figure 7 Proposed distribution of the storage area

Source: Project authors.

When distributing the storage area as shown in Figure 7.

Proposed distribution of the storage area is taking full advantage of the
warehouse capacity using 8 m of height that is currently being wasted
since when storing in piles, the maximum height is three floors with a shelf
five-story series. When stored as shown, it not only increases capacity
from the warehouse by almost 9.12%, but also a correct system is adopted
storage for this type of product, which is called FIFO (first in, first out)
enters, first comes out), since the elevator can introduce the stack from the part
I rearranged the shelf and collected it from the front, avoiding the pallets with
products go long periods without being collected.

Shelf implementation
The aim is to implement shelves that allow for better utilization of
the height of the warehouse, this in order to meet the need for space and that in the months
production due to lack of space in the area of
storage. The implementation brings with it a series of improvements for the company in
logistical inconveniences that are being encountered, such as those that will be mentioned

31
continuation. When a stack falls due to the instability of the arrangements, the following exist
possibilities of problems;

Fall on an operator and create a legal problem for the company.

Knock down all the product columns stored in the warehouse.

Stopping all processes while the fallen pallets are being rearranged.

Loss of time and money in the collection and reprocessing of raw material
damaged.

ABC classification of products

The ABC classification of the products stored in the study warehouse will be serialized.
which will guide us on the strategic order for arranging the existing references
according to the turnover level of each one, this in order to have the highest references
flow closer to the shipping door and achieve a reduction in travel times
of the forklift. The standards for defining the classification are presented below
the same

The A articles are goods whose annual consumption value is the highest.
70-80% of the annual consumption value of the company usually represents only
between 10 and 20% of the total inventory items.
The articles are articles of an intermediate class, with a consumption value.
medio. Ese 15-25 % de valor de consumo anual generalmente representa el 30 % de los
total inventory items.
The C items are, on the contrary, items with the lowest consumption value. The 5%
lower than the annual consumption value generally represents 50% of the items of
total inventory.

In the case of the Esmeralda rice cooker, this classification was made to relocate them.
references for higher sales in the area closest to the shipping door.

Separated from the initial organization presented below:

32
 - 4 blanquita columns presentation @ blanquita * 25 units * 500 gr
1 white columns presentation paca. 5 bags of white 6 lb.
1 Blanquita columns presentation pack Blanquita x 12 units * 500 gr.
- 2 Emerald column presentation at emerald 25 units * 500 gr.
- 2 Emerald columns presentation pack emerald 25 units * 450 g.
- 2 Emerald columns presentation paca. 3 white bags 10 lb.

When performing the ABC classification, two new products were taken, which are (bale 3
emerald bags * 5 kilos and whole pack x 15 units kilo) due to the new
distribution and implementation of shelving of these products that were stored in
the aisles can now be stored correctly with the other references.

Table 3 ABC Classification

REFERENCES FREQUENCY FREQUENCY

ACCUMULATED

WHITE ARROBA * 25 0.50769816 0.507698155

UD * 500 GRS

EMERALD PACK 25 UNITS 0.18547019 0.693168342

450 GRMS

AT ESMERALDA 25 0.10084692 0.794015258

UD * 500 GRS

PAQ. 3 BAGS 0.06788411 0.861899372

BLANQUITA 10 LB.

PAQ. 5 BAGS 0.04500952 0.906908891

WHITENING 6 LB.

33
WHITE PACK X 12 0.04452161 0.9514305
UNID * 500 GRS.

PACKAGE RICE 0.01908782 0.970518323

BLANQUITA X 10 K.

WHITE 15 UNITS X 0,01224563 0.98276395

1000 GRS

LEQ. 3 BAGS 0.00980607 0.992570022

ESMERALDA * 5 KILOS

INTEGRAL PACKAGE x 15 0.00742998 1

UNIT KILO

Source: The authors of the project

The number of columns per reference is according to the demand for each.
with the increase in stored capacity in the case of white arroba, in the same 4
Columns where 126 tons were previously stored, now could store 150.
tons, continuing with the location (1 from left to right), Based on the
Classification the second product to be placed is esmeralda pack 25 units * 450 grams,
that was previously located starting from the ninth column, using the same amount
there is an increase of 8 tons that can be stored, the third product
Following the order it would be @esmeralda 25 unid * 500 gr with two columns, with a
increase of 8 tons. The aforementioned references represent the
best-selling products by the company. For this reason, they are part of group A and were respected the

number of columns increasing its capacity thanks to the shelf.

Group B consists of the paca references. 3 white bags 10 pounds and paca 5
white bags 6 lb, with 1 column, that is, increasing 8 tons.

34
 Group C is represented by 5 references with low sales levels, so it
they decided to locate at the farthest part from the dispatch door distributed in a single
each column at a different level, that is, paq white x 12 units * 500 grams in the
first level where the forklift takes less time to carry out the collection, in the
second level bag of white rice * 10k, in the third white rice of 15 units * 1000gr, in the
fourth pack 3 emerald bags * 5k and in the fifth the reference that sells the least package
integral* 15 units.

Forklift
With the established proposal, it is necessary to acquire a forklift that meets
with the requirements of the new distribution, for this case the forklift must
reach the sufficient height to collect the product at the top, that is, 8
meters in height. The storage area does not have spacious areas for transit
and maneuver, which is why the forklift should not be very large. A sensor should be installed.
in the elevator that allows you to know when a person is nearby and thus avoid
accidents.

The Crown RD 5700 lift truck is a short vehicle, which allows it to operate with
ease in a space of 2.50 to 2.90 meters. Achieves stability thanks to some frames
located at the front of the forklift and has a type of extension mechanism
pantographs that allow the forks to reach the load. It can reach up to 10 meters.
height. See Annex 4.

35
 Outsource the storage service to improve capacity
storage without the need for investment in infrastructure

Description:

This alternative consists of outsourcing the temporary storage service,

for the months or weeks necessary, due to the space requirement
exposed by the demand in a studied time interval. In this case, it will be done by the
monthly spatial need, that is, it will abstract from the methodology used, the area
required by the product in the warehouse compared to the demand and the space
a percentage of that poorly stored product will be available in certain months, which
indicates that this amount exceeds the capacity of the current warehouse, that difference between the
capacity and the need for space (in tons), will be the amount of product that is
must move to a rented storage warehouse.

In this case, the model will be created with the sales data from 2016, entering the data from the
warehouse with the changes made in proposal 3.1.1. (Implementation of shelves
to improve storage capacity by taking advantage of the height currently
wasted). The calculation will be made in order to verify with the sales of this year, and the
modification of the warehouse layout, if it would be necessary to outsource
during this period of time. Subsequently, it will be concluded with the investment of the
shelf, in how many years would the new layout serve without high requirements
investment in outsourcing storage services.

36
 Objective:

The main objective of this alternative is to avoid the construction of a new warehouse or
the remodeling of the current one, defining according to the number of months necessary for this
process, whether it would be profitable to adopt this solution. It is desired to verify if with the

the installation of the shelving and the new layout of the warehouse allow the product
currently poorly stored would have a space on the current shelf or if done
necessary outsourcing during the months of highest flow.

Calculation of the CD capacity

The design of the size of a distribution center is a decision of utmost importance.

for any company, as this depends on the total utilization of resources
available and make the most of them.

In the case of sizing a warehouse, two possible scenarios can be found.

where the first refers to the oversized size of the CD (center of
distribution), creating a lack of utilization of the available space which could turn
the construction of it is not feasible, or on the contrary, carry out the sub-dimensioning
from the CD, which would generate higher handling costs, longer transfer times and the
increase in other factors that make the operation more expensive, where at times it will be done
it is necessary to subcontract other storage spaces, which is not necessarily a bad thing in
certain occasions, because construction costs could be higher than those of
leasing and the variations in cash flow in the different months do not make it necessary to
monthly lease, but only in peak months.

For the sizing, a mathematical model will be used, which is designed for
to yield an optimal size of the CD
Microsoft Excel. The data established by the model will be entered, with the information

37
updated spaces and distribution exposed in proposal 3.1.1, to carry out the
necessary operations and obtain the expected information. Additionally, it will be abstracted
information about the percentage of product that will be poorly stored, that is, the
product that, due to lack of storage capacity, had to be stored in places
inadequate or outside the warehouse area. The same model will be used later.
in order to generate improvement proposals.

For greater clarity, it is necessary to say that for the development of the model, work will be done on

oh, this is the weight

average product in each stack regardless of the reference.

For the solution of the model, the following data must be entered;

Maximum height of the warehouse (Amax): The maximum available height must be entered.
to store the product that the warehouse has. In this case, since it has already been done
the installation of the shelf will take the maximum storage height into account;

Amax = 8 meters

Initial investment (I): It is considered as investment, all the equipment and labor.
external to the daily operations that should be used to refurbish the area of
storage, in this case the value of the investment is derived from the sum of the cost of the
shelf with the cost of the new forklift.

Cost of shelving + cost of shelving installation + cost of forklift = $

190,000,000

For the development of the model, the total investment cost must be converted to cost of
investment per square meter, which allows us to define what;

I = $190,000,000 / Current area of the warehouse

I = $ 669,014 / m2

38
 Repayment period (PA): Refers to the number of months over which it will be
finance the budget necessary for the initial investment. For this project;

PA = 8 años.

Variable cost (Cv): Refers to the cost that changes depending on the level of
production or additional cost to common expenses. According to information provided by the
In this sector, variable costs are defined as fuel costs and
maintenance of the forklift, however, the quoted forklift is a forklift
electric that does not require fuel, for which only a budget was assigned
from $500,000 for the resolution of monthly unforeseen expenses in the warehouse area. For the
ingreso de los costos variables al modelo debe hacerse la conversión a Costo variable por
each stowage, that is to say, the total variable cost per month, must be divided by the quantity
of pallets that fit in the storage area. This is defined by the following calculation.

Cv = $500,000 / number of pallets that fit in the new layout

Cv = $ 500,000 / 275

Cv = $ 1,818 / loading

Annual fixed cost (Cf): These are costs that do not vary or depend on
production behavior, always remains unchanged in the face of this type of
changes. In this case, variable costs are assigned to the average cost of
lift maintenance combined with monthly shelving maintenance costs
and this cost must be converted to units of; annual fixed cost per meter
stackable square, that is, the multiplication of the available square area of shelving
by the number of floors in total that are available. It was specified as follows;

Cf = $1,000,000 / Warehouse Area in m2storable

Cf = $ 12,000,000 / m2storeable

Cf = $ 12,121 / m2storable

39
 Cost of rented warehouse (Cbr): refers to the monthly cost of the rent for
storage. It is measured in cost per location, when we talk about location it is cost per
each stored stowage. According to the quote from the company providing this service, the cost
by location it is $23,000 / stack / month.

Warehouse rental management cost (CMbr): The management cost of the rented warehouse is
measures the handling cost of each stored stack per month. This cost was quoted at $
5,000 / stowage / month.

Flow (F): the monthly flow will be the amount of pallets (1500 kg) that were sold
in each month of a certain year.

-Passages (Pz): refers to the percentage of warehouse space that will be used.
like hallways for the transfers of the forklift. In this case, the proportion was made of
passageways concerning the total area of the warehouse, the following result was obtained:

% Pz = 62 %

Usage (Ut): usage refers to the percentage of the warehouse, which for ease
logistical management must be in use. In this case, we will take as a percentage of
utilization of 95% because it is required to have the warehouse nearly full to maximize its
utility in necessary space.

Rotation (Rt): rotation is taken as the number of days it takes for the warehouse to
to become completely empty. To find this data, the following formulas must be used;

Turnover = Average flow / Average inventory

Space month (Em): refers to the amount of square meters occupied by each
It is stacked monthly. It is determined as follows;

Em = stowage volume with product / Maximum Height

Space Factor (Fe): This factor is defined by the following formula;

40
 Fe = ((1/pz)*(1/Ut)*(1/Rt))* Em

-Área Requerida (A): Nos muestra el espacio requerido por la cantidad de flujo mensual
of the product. To determine it, it is necessary to use the following formula;

A = Flow * Space Factor

Private Warehouse (Bp): It is the percentage of the flow in a certain month that fit in the warehouse.

private, with 100% referring to the fact that all the product flow for that month was filled, if this
a lower percentage means it was necessary to rent another warehouse for the product
remaining.

Once the model result is obtained in Excel, the difference will be determined.
capacity with the need according to the rotation and monthly product flow, to analyze the
information and generate viable proposals that mitigate the problem or complete solutions
the same. The aim is to minimize the company's total annual costs while maximizing the
utilization of available spaces in combination with subcontracting of a
logistics operator.

One of the ways to demonstrate that the project is truly functional for the company and
that the storage area was improved, is that the implementation of the shelving
it increases the capacity in such a way that during the amortization period (in this case,
eight years) there is no increase in costs from the outsourcing of the service of
warehousing, for which it was decided to project the sales of the following eight
years to input the flow of each of these into the model and define from what year it
it was necessary to outsource the service.

After entering the previously mentioned data into the model format and
using the sales projection for 2017, the following were obtained
resultados (Ver tabla 4. Dimensionamiento del CD (Proyección de ventas 2017)):

41
Table 4Dimensioning of the CD (Sales Projection 2017)
Cost Cost
Grocery store
Grocery store
RequiredArea Rent Management Cost
My Flow [staging (kg)] Private Rented
[m2 ] Mens Mensua Mensual ($)
(%) (%)
ual ($) l ($)
I am. 3509 263 100.00% 0.00% $ - $ - $ 7.386.361
Feb. 3126 234 100.00% 0.00% $ - $ - $ 6.690.462
Mar. 3271 245 100.00% 0.00% $ - $ - $ 6.953.350
Abr. 3270 245 100.00% 0.00% $ - $ - $ 6.951.973
May 3206 240 100.00% 0.00% $ - $ - $ 6.835.230
Jun 3115 234 100.00% 0.00% $ - $ - $ 6,670,924
Jul 3497 262 100.00% 0.00% $ - $ - $ 7.364.816
Ago 3440 258 100.00% 0.00% $ - $ - $ 7.261.084
Sep. 3347 251 100.00% 0.00% $ - $ - $ 7.092.250
October 3237 243 100.00% 0.00% $ - $ - $ 6.891.796
Nov. 3185 239 100.00% 0.00% $ - $ - $ 6.798.363
Dec. 3722 279 100.00% 0.00% $ - $ - $ 7.774.896
Total 39923 2.995 12 0.000 0 0 84.671.505

Source: Project authors.

As shown in Table 4. Sizing of the CD (Sales Projection 2017),

with the new measures and distribution of the storage area, it becomes evident that
the capacity of the warehouse compared to the flow and turnover of the product is superior to
the space needs, that is to say that; during this year it is not necessary to carry out
outsourcing of the storage service in no month due to lack of space in the warehouse,
which concludes that the proposed distribution really increased the capacity of the area
storage meeting the space needs for the monthly flow of
product in the Rice Cooker La Esmeralda SAS.

On the other hand, and in order to have greater justification, the projection of the
next eight years in order to know from which year it was necessary to carry out the
outsourcing service due to lack of capacity and it was concluded that with the size of this
The current warehouse is sufficient to meet the demand space for the next
eight years, with an average annual sales growth rate of 15% and increase
of the decision factors for this conclusion, such as turnover and inventory data
monthly average.

42
 8. EVALUATION OF THE DESIGNED PROPOSALS THROUGH
KEY CRITERIA FOR PROJECT SELECTION.

Benefits analysis of the implementation

Although the proposal is based on the increase in the capacity of the warehouse in the
Arrocera La Esmeralda SAS, it is important to highlight that this comes with a series of improvements to

logistical level and economic interests of the company. Next, the following will be exposed
generally the general benefits of the proposal:

The implementation of the shelving resulted in an increase in the capacity of the area.
storage at 9%.
Better use of the available machinery in the packing area, no longer
It will be necessary to halt production due to lack of space in the area of
storage.
By improving the necessary conditions for storage, the risks will be reduced.
work-related accidents and loss of money and time due to the fall of pallets due to
the practical aspects of storage.
With the implementation of the ABC location methodology, the decreases are
time taken by the forklift to travel from the warehouse area to the door of
load, because the higher turnover references will remain in the location, as
near the dispatch door.
The change of the freight elevator will reduce the costs of this operation monthly.
due to the fact that the current forklift runs on gas and the proposed one will be a

electric forklift, which will have lower costs each month.

The new layout of the warehouse will allow for a change in the methodology of
LIFO storage (last in, first out) by the FIFO methodology
first in, first out, because rice is a product
perishable and with medium rotation, it must have this methodology to avoid deterioration
of the product.

43
 With the increase in the warehouse capacity, the aisles will be free again.
free from poorly stored goods and the mobility in the warehouse will be greater.
speed.
In case there is a peak month and it exceeds the warehouse capacity, there is the
option to outsource the storage service, without the need to build one
new warehouse or damage the mobility infrastructure of it.

Cost analysis

Considering the proposal for the new distribution, in order to increase the
capacity of the storage area and improve its logistical aspects, it
carried out the analysis of the costs that the company would incur in case of its execution.
Next, the values of the total investment, combined with the variable costs are shown.
and fixed assets that it would bring with it for a term of one year. These are specified in the

Table 5 Implementation costs of the proposal

DESCRIPTION OF COSTS VALOR ($)

Deconstruction cost (Installation and purchase of shelving)

$ 83,000,000

Cost of the new forklift

$ 112.000.000

Maintenance cost
$ 12,000,000

Variable costs
$ 6,000,000

TOTAL COST
$ 213,000,000

As observed in Table 5, the total cost of the initial investment, taking into account
the fixed and variable costs for a period of one year are approximately $

44
213,000,000.00 (Two hundred thirteen million pesos), this without taking into account analysis of
times nor divide the investment into a defined amortization period.

9. ECONOMIC ANALYSIS OF THE PROPOSAL

Having completed the analysis of the benefits of the proposal, we will now proceed to carry out the
economic analysis relevant to determine if the investment proposal is viable for the
company or not.

The implementation costs are justified by the logistics benefits and

organizational factors previously mentioned, such as; capacity increase of the
warehouse, reduction in workplace accident probabilities, reduction in times
transfer of merchandise, change of storage methodologies, among others.

Now, to carry out the economic evaluation, the VPN (net present value) indicator will be used.
net present value), due to the fact that the investment and implementation of the proposal is one hundred percent

one hundred in the company's decision, for which an analysis will be made assuming that the proposal
will take place in 3 years, this indicator will allow bringing the current values to a value
present of the project initiation time. The NPV is the result of the difference between
the incoming flows of net present value (income) and the outgoing flows (expenses) in the same
time period. Depending on the outcome, the decision must be made. So;

If VPN > 0, the proposal is economically viable for the company

If VPN < 0. The proposal is not economically viable for the company.
-If VPN = 0, the proposal will generate neither income nor expenses; both will be equal and the
the proposal is indifferent.
To carry out the estimation of investment values for the year 2019 (year of initiation of
project) and the income from the two years following the investment, a projection was made
sales for the year 2020 and 2021 adding an approximate inflation rate of 5%
EA and applying the approximate industry discount rate of 15% EA. The total
The investment to be able to use the VPN must be transferred to 2019 to know the value.
from the investment in this year, it is also necessary to advance the income for

45
the two years following the investment and start of operation of the project. These
calculations are performed as follows;

( -) Investment (2019) = $ 213,000,000 x (1+0.05)3$246,574,125

( + ) Revenues (2020) = $ 109,293,118,004 x (1+0.05)4= $ [Link]

( + ) Revenues (2021) = $ 125,687,085,705 x (1+0.05)5$ [Link]

Figure 8 Investment and income, transferred to the time of realization.

$ [Link] $ [Link]

2016 2017 2018 2019 2020 2021 2022

$ 223.650.000

As shown in figure 8, the expenses (investment) and income have already been transferred to the
year of project implementation and was found through sales projections
realized, added with inflation the income of the two years following the
implementation of the proposal. Once this process is completed, the NPV can be found for
define if the project is economically viable.

VPN= VPN (ingresos) VPN (egresos)

VPN= $ [Link]

46
 In this case and as explained at the beginning of the economic analysis, when the NPV is
greater than zero, means that the project is economically viable for the company. It
which indicates that the project Design of the physical distribution of the product warehouse
finished at the company, Arrocera la Esmeralda S.A.S. to improve the capacity of
meets the economic standards to make it feasible the
proposal with a VPN value of $183,482,448,915.

10. CONCLUSIONS

47
With the study of the current condition of the storage area, it was possible to
determine that the distribution used by the company la Esmeralda did not allow
store the finished product in its entirety in a single designated area, it
they used hall areas to meet the space needs of some
least sold references.

With the implementation of the shelving, the capacity was increased

storage allowing to store all the references produced by the
Company. From storing 378 tons through stockpiling, it was possible to store
412 tons, approximately 9.12% more, allowing not only to cover the
market demand variability, but also having a stock of
security of a day preventing any type of internal or external inconvenience.

According to the results obtained in the model, with the increase of the capacity of
the warehouse, it was validated that, with the rotation of the product and the monthly flow, it does not

it requires outsourcing the storage service in none

of the months of the year 2017.

According to the evaluations conducted on the proposal, it is concluded that it is viable as well

logistics as economically for the Arrocera la Esmeralda SAS.

48
 11. RECOMENDACIONES

It is proposed to change the shipping door a few meters from the area.
of storage, as the current system has many failures
traffic between the elevator and workers from other areas, there is no order in the
work and this makes the task of the forklift operator cumbersome,
disorganized and delayed. On the other hand, this proposal is made so that the
travel times decrease and work is more efficient as well as
reduce the costs generated by this operation as the routes to be traveled
they will be smaller and unnecessary displacements will be negligible.
Reactivate the shipping dock because currently both the forklift
how the porters waste a lot of time organizing the product inside the
truck. The workers often have to wait for the forklift to
Step down from your duties to load the pallets to the level of the truck.
Correctly mark the aisles of the warehouse as they are not clearly distinguished.
places where the forklift travels and where people do.

49
 12. BIBLIOGRAPHY

Astals, F. C. (2009).Almacenaje manufacturero y transporte internoen la industria.

Catalonia.

Avila, G. S., & Malagon, W. (2012). Improvement project for the storage area
a factory of metal furniture. Soacha.

Baptiste, A. E., & Perez, X. A. (2004). Proposal for improvement of the center of
Hewlett Colombia Ltda. distribution, located in the free trade zone of the city of
Bogota integrating the management of the commercial and logistics areas in favor of the

corporate objectives. bogota.

Fedearroz. (2014). Obtained of

[Link]
[Link]

engineering industrial on line

[Link]
industrial/warehouse management/design and layout of warehouses and
distribution-centers/

Lagos, E. (2011). Storage (logistical). Obtained of

[Link]

Mancilla, M. S. (2012). Proposal for the improvement of the general warehouse and warehouses
mobile phones from the management of Barrancabermeja refinery (GRB) - ECOPETROL S.A.

Bucaramanga.

Pérez Herrero, M. (2006). Storage of materials: How to design and manage

Warehouses optimizing all resources of the logistics processes. Marge Books.

Perez, H. (2006). 11.

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[Link]. (n.d.). warehouse manual, 15.

51
 ANNEXES

Annex 2. Initial layout survey of the warehouse

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Annex 2. Poorly stored product

53
Annex 3. Percentage Growth Company

54
Annex 4. Forklift Specifications

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56