Optimal staffing recommendation for inbound operations

Amazon inbound operations are staffed following a 'staffing-to-charge' model in which labor is planned to match the incoming volume capacity required by the weekly Sales Operations Planning (S&OP) forecast. Staffing-to-charge is a lean model of staffing that attempts to maximize labor utilization by minimizing the possibility of a labor surplus or deficit. However, due to inaccuracies in the S&OP freight forecast, poor visibility into incoming inventory, and last minute staffing changes, it is often the case that labor capacity is not adequately aligned with the actual unit receipts. This leads to additional labor costs and network inefficiencies. This project explored the current staffing policies and current system constraints such as forecast accuracy, backlog management, and hiring schedules to understand the scope of the problem. From these findings, an alternate method for staffing, known as 'Level loading,' was proposed. Level loading consists of staffing to a known and consistent headcount every day of the week with the intent to reduce staffing costs and labor capacity variability. Level loading was found to improve the efficiency of inbound operations, leading to considerable costs savings for the distribution center. The project also created an optimization model that allows Fulfillment Center managers to plan the transition from their current shifts to level loading; Amazon's Production Planning Team will implement this model by mid-2017. To fully achieve the benefits from level loading, the system requires a change in the planning of incoming freight. In particular, the incoming freight should be scheduled and planned according to a known labor capacity, as set by the level loading policy. This change to freight planning is currently being investigated. The study found that delayed restocking of the network is a costly inefficiency, similar in magnitude to the cost from excess labor capacity. To mitigate this, a labor plan that allows for greater capacity is necessary. The cost savings of more effective inbound operations offsets the additional labor costs of such a plan. The findings of this study are based on an Amazon warehouse, but a staffing model with greater labor capacity can be applied to inbound operations at any distribution center.

Department dc:contributor.department

Leaders for Global Operations Program at MIT

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2017

Author dc:creator

• Li-Carrillo, Carla (Li-Carrillo Paredes)

Advisor dc:contributor.advisor

• Stanley Gershwin and Stephen Graves.

• Mechanical Engineering.
• Sloan School of Management.
• Leaders for Global Operations Program.

Statement dc:rights

• MIT theses are protected by copyright. They may be viewed, downloaded, or printed from this source but further reproduction or distribution in any format is prohibited without written permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/111938

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/111938