1. “H.E.B. Simulation Project” Gabriel Carreno Gonzalez Richard Wambua Andrew Fails Stephen Rosales Supervisor: Dr. Jesus Jimenez 1 Industrial Engineering Ingram School of Engineering Capstone Design Project

2.  Background  H.E.B Logistics/System Configuration  Terminology  Witness Simulation Overview  Objective  Model  Data Mining(R studio)  Simulation model and Analysis  Assumptions of Improvement  Recommendations Agenda 2

3.  A Retail Support Center is a warehouse that is stocked with inventory to be redistributed to wholesalers, retailers, or directly to consumers. 3 Background Source: Material Handling Institute of America (http://www.mhi.org)

4.  Formally known as H.E. Butt Grocery Company.  Started in Kerrville, Texas with one family-owned store in 1905.  One of the largest food chain, with annual sales of more than $15 billion.  Supplies families all over Texas and Mexico in 155 communities, with more than 340 stores and 76,000 employees.  Named Retailer of the Year in 2010 by Progressive Grocer Magazine.  Ranked 15 th in America’s Largest Private Companies by Forbes. Company Background 4 Source: http://www.heb.com/sectionpage/about-us/company/heb-history/3000002

5. H-E-B Logistics San Marcos Retail Support Center (SM-RSC) Purpose: Slow-Moving Merchandise Size: Approx. 400K sq. ft. 5 Existing Facilities Layout:

6. Terminology  A picker is the human resource who: 1.Receives assignments 2.Picks products on to Pallet 3.Wraps the Assignment- filled pallets 4.Loads all work assignments into the truck supported by machinery equipment. 6

7. Problem Statement 7  Arrange the locations of products in order to improve cases per hour by at least one percent.  Make travel routes shorter to increase efficiency.  Reduce traffic congestion due to unnecessary transport moves.

8. Objectives 8  Use Witness simulation to compare the order picking process of current layout configuration and proposed data mined solution  Use R to data mine associations between items ordered by stores

9. 9 Witness Simulation Model

10.  The new layout is based on market basket analytic techniques using an apriori algorithm  Rules formulated using the CRAN “arules” and “arulesviz” package for R  Implemented rules chosen based on a measure of how frequent the items are selected together 10 Proposed Layout

11. 11 R-Studio Results

12. Rule Example 12

13. Results for New Layout 13

14. Conclusion 14  Several valuable process improvement variables (Relevance, Timeliness, Accessibility and Comparability) were considered and implemented to the results.  With a series of process improvement goal, an objective of reducing cases per hour throughput by one percent was achievable

15. Recommendations 15  Implement a family grouping storage assignment system to ensure time efficient traveling routes.  Rearrange the products according to association rules support.  Reduce traffic flow by adopting unidirectional routing.

16. Q&A Session Special thanks to: Jessica Johnson (HEB) & Dr. Mendez( Fm16@txstate.edu) McCoy School of Business Texas State University *Sponsor of problem and data *Sponsor of WITNESS simulation language Would like to become a sponsor of a IE capstone design project? If Yes, please contact Dr. Jesus Jimenez (jj30@txstate.edu)jj30@txstate.edu 16 Q&A & Acknowledgements