Professional Documents
Culture Documents
10-1
Key components of distribution and logistics
10-2
Component of customer expectation
10-3
Warehousing overview
Strategic warehousing
Warehouse operations
Warehouse ownership
arrangements
Warehouse decisions
10-4
NATURE OF WAREHOUSE
10-7
Role of Warehousing in value chain is it
necessary to have a warehouse
Demand for the product is
continual (make to stocks,
make to order, engineer to
order
Bridge the supply and
demand lead time.
Some of the role of
warehousing can not be
rule out and these are
10-8
Role of Warehousing in value chain is it
necessary to have a warehouse
Inventory holding point
(coupling /decoupling points)
Consolidation/docking
center points
Cross Docking points
Sortation points
Assembly points
Transshipment
Return Good center
Quarantine
10-9
Value added by warehouse
10-10
Costs
10-11
Evolution of strategic warehousing
Warehouses were once viewed
as a necessary evil, used to
coordinate product supply with
customer demand
The explosion of the consumer
economy after WWII saw the
rise of distribution networks for
consumer goods
Warehousing shifted from
passive storage to strategic
assortment
10-12
Evolution of strategic warehousing
Market /Industry trend
Business model
Corporate Objectives
Business plan
Supply Chain Strategy
International and domestics
warehousing.
Customer services level eg.
Diabetes, hepatitis c
Cold chain
External factors etcs
10-13
Warehousing types evolved to accommodate
the dynamic aspects
Distribution centers
Consolidation terminals
Break-Bulk facilities
Cross-docks
10-14
Strategic warehousing offers manufacturers a way
to reduce dwell time of parts and materials
Warehousing is integral to just-
in-time (JIT) and stockless
production strategies
Requires strategically located
warehouses across the globe
An important goal in
warehousing is to maximize
flexibility
Respond to ever-changing
customer demand
10-15
Strategic warehousing can provide both
economic and service benefits
Economic benefits of warehousing occur
when overall logistics costs are reduced
Consolidation and break-bulk
Sorting
Seasonal storage
Reverse logistics
Service benefits are justified by sales
improvements that more than offset added
cost
Spot-stocking
Full line stocking
Value-added services
10-16
Illustration of consolidation and break-bulk
arrangements
10-18
Cross-docking is used extensively by retailers to
replenish store inventories
Cross-docking combines inventory from multiple origins
into a prespecified assortment for a specific customer
10-19
Successful cross-docking is highly dependent on
information technology
Products are
received, selected,
repackaged, and
loaded for shipment
w/o storage
WalMart Distribution
Center
10-20
Mixing is usually performed at an intermediate
location between origin and destination
Mixing combines inventory from multiple origins (like
cross-docking) but also adds items that are regularly
stocked at the mixing warehouse
Stock
Inventory
10-21
Assembly supports manufacturing operations
10-22
Seasonal storage provides direct benefit by
accommodating production or demand
Seasonal production
include agricultural
products
Seasonal demand includes
lawn furniture and toys
Seasonal storage allows
production efficiencies
within the constraints of
seasonality
10-23
Reverse logistics processing
10-24
Service benefits of warehousing
Spot-stocking is the
positioning of inventory for
seasonal or promotional
demand
Full line stocking provides
one-stop shopping capability
for goods from multiple
suppliers Full Line Stocking at
Value-added services include United Electrics
any work that creates a greater Distribution Center
value for customers
See Table 10.1 for examples
10-25
Typical list of value-added services
10-26
Warehouse operations involve two major
activities handling and storage
10-27
Warehouse operations involve two major
activities handling and storage
Objective is to
Efficiently receive inventory
Store it as required
Assemble it into complete
orders
Make a customer shipment
Operations will therefore
emphasize product flow
10-28
Handling
10-29
Storage plans should make product velocity
a major factor
Slotting determines
specific locations for the
product based on
Velocityhow fast the
goods move
Weighthow heavy is the
product
Special Characteristics
how large or small, does it
require rack or bin storage
10-30
Warehouses must manage two classes of storage
10-31
Warehouse ownership arrangements
Privatewarehouse operated
by the firm owning the product
Building may be owned or leased
Publicservice company owns
warehouse and hires out space
and services
Usually classed as
General merchandise
Refrigerated
Special commodity
Household goods and furniture
10-32
Contract warehousing combines elements of
private and public operations
Usually a long-term relationship
or contract between a firm and
the warehousing owner/operator
Long-term cost savings compared
with public warehouse
Often a firms employees will work
alongside the contract warehouses
Example is Kraft Foods who has
contracted with AmeriCold Logistics
since the late 1990s
10-33
Network deployment is the combination of private,
public and contract facilities used by a firm
Network deployment strategy
requires answering two questions
How many warehouses should be
established?
Which warehouse ownership types
should be used in specific markets?
For example, when warehouse
utilization is not full throughout
the year
Use private or contract warehouse
to cover 75 percent requirement
Public facilities used to
accommodate peak demand
10-34
Warehouse decisions that determine
handling and storage efficiency
Site Selection
Design
Product-Mix Analysis
Expansion
Materials Handling
Layout
Sizing
Warehouse management system
Accuracy and audit
Security
Safety and maintenance
10-35
Site selection is driven by service availability
and cost factors
Identify broad geography where an active warehouse meets service,
economic and strategic requirements
Selection and number of retail outlets drives location of support
warehouses
Final selection should be preceded by extensive analysis
10-36
Warehouse management systems encourage
best practices
Warehouse management systems (WMS) integrate
procedures and software support to standardize storage
and handling work procedures
One main use of WMS is to coordinate order selection
Discrete selection is when a specific customers order is
selected and prepared for shipment as a single work assignment
Wave or batch selection is when orders are processed through
zones of the warehouse assigned to specific employees
10-37
Other warehouse planning issues
Inventory accuracy is typically
maintained by annual physical
counts or counting portions of
inventory on a planned basis
Cycle counting is the audit of selected
inventory on a cyclic schedule
Audits are common to maintain
safety, assure compliance to
regulations and help improve
procedures
Security issues involve protection
from pilferage and damage
10-38
Safety and maintenance issues must also be
considered when planning warehouse designs
Accident prevention
Comprehensive safety programs
and training, accident
investigation and follow up
Environmental protection
Spill ( leak ) kits and spill plans
Maintenance
Scheduled maintenance of
building, material handling
equipment, and collision damage
prevention
10-39