Storage systems’ impact on order picking time: An empirical economic analysis of flow-rack storage systems

Manual order picking (OP) is still the predominant warehousing system in brick-and-mortar grocery retailing, making human workers an integral part of operations. Besides human capabilities, the storage system design was found to impact performance, quality, and worker well-being as the major outcomes of OP systems. In warehousing practice, full-pallet storage systems and high-density flow-rack storage systems are often used in parallel within the same warehouse. However, empirical performance comparisons simultaneously considering picking and replenishment processes are largely missing for such systems. We aspire to close this research gap by empirically examining the economic impact of a high-density flow-rack storage system in which 28 different items are stored in a storage location with the ground floor size of three full pallets. The flow-rack storage system is designed with a slight slope, such that items automatically roll to the front to ensure a first-in-first-out product flow. We apply a parametric log-logistic accelerated failure time model where log-transformed picking time is the dependent variable. Using real-world data containing 2,357,976 picks performed by 192 order pickers in a German grocery warehouse, we find that the high-density flow-rack storage system accelerates the OP process by up to 4.60%, reducing the important performance indicator of picking time. In terms of replenishments, our findings indicate that replenishment processes are decelerated by 38,65% compared to normal pallet-sized rack storage places. Assuming identical labor costs for all warehouse tasks, we finally derive an optimal economic replenishment quantity per storage location in high-density flow-rack storage.