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    Chapter 09 - Warehousing

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    Chapter 09 - Warehousing

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    Kashif Niaz Meo
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    Chapter 09 - Warehousing

    Uploaded by

    Kashif Niaz Meo
    scrm

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 37

    CHAPTER 9: Warehousing

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Warehousing overview
    Strategic warehousing Warehouse operations Warehouse ownership arrangements Warehouse decisions

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Warehousing contributes value in the logistics process


    Traditionally viewed as a place to hold or store inventory Contemporary view is the warehouse functions to mix inventory assortments to meet customer requirements
    Storage of products is held to a minimum
    McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    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

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Warehousing types evolved to accommodate the dynamic aspects


    Distribution centers Consolidation terminals Break-Bulk facilities Cross-docks

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Strategic warehousing offers manufacturers a way to reduce dwell time of parts and materials
    Warehousing is integral to justin-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
    Product assortments Value-added services Shipment sequencing

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    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

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Consolidation and break-bulk reduce transportation cost


    Consolidation occurs when a warehouse receives materials from a number of sources and combines them into exact quantities for a specific destination Break-bulk occurs when a warehouse receives a single large shipment and arranges for delivery to multiple destinations

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Illustration of consolidation and break-bulk arrangements

    Figure 9.1 Consolidation and Break-Bulk Arrangements


    McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Figure 9.2 - Sorting involves reconfiguring freight as it flows from origin to destination

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    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

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Successful cross-docking is highly dependent on information technology


    Products are received, selected, repackaged, and loaded for shipment w/o storage
    Used with general merchandise & food

    Enabled by conveyors & sortation equipment Used in large distribution centers (800K to 1,200K sq.ft.)

    WalMart Distribution Center

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    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

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Assembly supports manufacturing operations


    Assembly occurs when products or components from second-tier suppliers are assembled by a warehouse located near manufacturing plant Common assembly processes are packaging and color customizing

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    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

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Reverse logistics processing


    Reverse logistics include activities supporting
    Returns management
    Recalls or product that did not sell

    Remanufacturing and repair


    Repairing/refurbishing equipment

    Remarketing
    Selling used equipment

    Recycling Disposal

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Illustration of reverse logistics flow

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    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 Value-added services include any work that creates a greater value for customers
    See Table 10.1 for examples

    Full Line Stocking at United Electrics Distribution Center

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Typical list of value-added services


    Table 10.1 Value-Added Services

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    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

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Handling
    Handling must optimize movement continuity and efficiency
    ReceivingUnloading the arriving vehicles In-Storagemoving goods for storage (transfer) or order selection (picking) Shippingverifying the order and loading the departing vehicles
    McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    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 Characteristicshow large or small, does it require rack or bin storage

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Illustration of storage plan based on product movement velocity

    Figure 9.3 Storage Plan Based on Product Movement Velocity


    McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Warehouses must manage two classes of storage


    Active Storagestorage for basic inventory replenishment
    Focuses on quick movement Includes flow-through or crossdock distribution

    Extended Storagestorage for inventory held in excess of period for normal replenishment
    E.g. seasonal, speculative, or even commodities
    McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    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 Bonded Special commodity Household goods and furniture

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    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

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    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
    McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    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
    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    McGraw-Hill/Irwin

    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

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Illustration of straight-line product flow to facilitate velocity

    Figure 9.4 Basic Warehouse Design


    McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Two examples illustrating the integration of handling equipment with final layout

    McGraw-Hill/Irwin

    Figure 9.5 Layouts A and B

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    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

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    Illustration of the range of activities coordinated by an advanced WMS

    Figure 9.6 Warehouse Management System Functionality


    McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    A summary of WMS functionality and decision support benefits


    Table 9.2 WMS Functionality and Decision Support

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    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
    McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    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 kits and spill plans

    Maintenance
    Scheduled maintenance of building, material handling equipment, and collision damage prevention

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

    What is the future of warehouse management?


    Will warehouses grow smaller in the future?
    Offer a wider range of services? Will final assembly of goods be increasingly done in warehouses?

    What is your solution to the challenge of the last mile posed by Dr. Patrick Dixon?
    Video link (7:45 min.) http://www.youtube.com/watch?v=ZbPMaxNl3J4

    McGraw-Hill/Irwin

    Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

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