Lean Management
Warehousing Decisions & Layouts.
The Nature and Importance of Warehousing
Warehousing provides time and place utility (primarily time) for raw materials, industrial goods, and finished products, allowing firms to use customer service as a dynamic value-adding competitive tool.
Warehouse Operations
Warehouse:
A warehouse is a commercial building used for storage and distribution of goods.
Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, etc.
The Role of the Warehouse in the Logistics System: A Basic Conceptual
Rationale
The warehouse is where the supply chain holds or stores goods.
Functions of warehousing include:
Transportation consolidation Product mixing Cross-docking Service Protection against contingencies Smoothing
Table 8-1
Warehouse Value-Adding Roles
Figure 8-1
Transportation Consolidation
Figure 8-2
Supply and Product Mixing
Figure 8-3
Basic Warehousing Decisions
Basic Warehouse Decisions:
A Cost Trade-off Framework
Ownership
Public versus contract versus private
Centralized or Decentralized Warehousing
How many Location Size Layout What products where
The Ownership Decision
Public warehousing costs mostly all variable. Private warehousing costs have a higher fixed cost component. Thus private warehousing virtually requires a high and constant volume.
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The Ownership Decision
Factors to consider
Throughput volume
(because of fixed costs)
Stability of demand Density of market area to be served Security and control needs Customer service needs Multiple use needs of the firm
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Table 8-2 Firm Characteristics
Affecting the Ownership Decision
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Figure 8-6
Basic Warehouse Operations
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Public Warehousing
Rationale for Public Warehousing
Limited capital investment Flexibility Bonded warehousing Field warehouses
Public Warehousing Services
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Public Warehousing
Public warehousing regulation:
Public warehousing rates based upon:
Liability Receipts
Value Fragility Potential damage to other goods Volume and regularity Weight density Services required
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Contract Warehousing
Increasing phenomenon Compensation for seasonality in products. Increased geographical coverage. Ability to test new markets. Managerial expertise and dedicated resources. Less strain on the balance sheet. Possible reduction of transportation costs.
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The Number of Warehouses
Factors Affecting the Number of Warehouses
Inventory costs Warehousing costs Transportation costs Cost of lost sales Maintenance of customer service levels Service small quantity buyers
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Table 8-3: Factors Affecting
the Number of Warehouses
Factor
Substitutability Product Value Purchase Size Special Warehousing
Centralized
Low High Large Yes
Decentralize d
High Low Small No
Product Line
Customer Service
Diverse
Low
Limited
High
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Basic Warehouse Operations
Movement
Receiving Put-away Order picking Shipping Stock location Warehouse Management System (WMS)
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Storage
Warehouse Layout and Design
Develop a demand forecast. Determine each items order quantity. Convert units into cubic footage requirements. Allow for growth. Allow for adequate aisle space for materials handling equipment.
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Warehouse Layout and Design
Provide for the transportation interface. Provide for order-picking space. Provide storage space. Provide recouping, office, and miscellaneous spaces.
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Warehouse Layout
Warehouses must be laid out so they can function in the most efficient manner possible Different industries have different warehouse layouts
EXAMPLE: Food warehouses may have a freezer section, cooler section, and dry foods area.
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Warehouse Layout
Racking and isles always runs toward the dock doors when in the same room as the dock doors. Racking must also take in consideration any I-beams or other obstructions.
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Warehouse Layout
Each section of racking is called a bay. Each bay usually holds 2 or more pallets. Racking is usually 1 to 6 bays high (depending on how much space is available in the warehouse. Each bay usually has a label with a identification number.
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Warehouse Layout
Each section must have 3 on each side (front and back) free for the pallets to hang over the racking.
This is a OSHA Standard
3 inches for each pallet
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Warehouse Layout
This is an example of what happens when the racking does not have 3 on each side!
A standard pallet is usually 40 wide by 48 deep Most pallets cannot be stacked higher than 60
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Warehouse Layout
A functional design must also take into consideration the isle space (area between the racks.) If the isle does not allow enough space for the material handling equipment (fork lifts and pallet jacks) to function properly, productivity goes down greatly.
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Figure 8-8
Warehouse Space Requirements
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Warehouse Layout and Design
Basic needs:
Receiving Basic storage area Order selection and preparation Shipping
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Warehouse Layout and Design
Layout and Design Principles: Use one story facilities where possible. Move goods in a straight-line. Use the most efficient materials handling equipment. Use an effective storage plan Minimize aisle space. Use full building height.
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Warehouse Layout and Design:
Layout and Design Objectives
Cubic capacity utilization Protection Efficiency Mechanization Productivity
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Table 8-4: Warehouse
Productivity Metrics
Pounds or units per day Employees per pound moved Pounds unloaded per hour Pounds picked per hour Pounds loaded per hour Percentage of orders correctly filled Productivity ratio = pounds handled/day divided by labor hours/day Throughput = amt of material moved through the system in a given time period
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Materials Handling
Definition: Efficient short distance movement in or between buildings and a transportation agency. Four dimensions
Movement Time Quantity Space
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Coordination
Objectives of Materials Handling
Increase effective capacity
Use buildings height and minimize aisle space Reduce product handling
Improve operating efficiency
Develop effective working conditions Reduce heavy labor Improve logistics service Reduce cost
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Table 8-5: Principles of Materials Handling
To effectively plan and control materials handling, the logistics manager should recognize some guidelines and principles.
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Packaging
Interest in packaging is widespread
Logistics
Warehousing Transportation Size
Marketing Production Legal
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The Role of Packaging
Identify product and provide information Improve efficiency in handling and distribution Customer interface Protect product
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What Is Packaging?
Consumer (interior) packaging
Marketing managers primarily concerned with how the package fits into the marketing mix. Logistics managers primarily concerned with efficient shipping characteristics including protection, ability to withstand stacking when on a pallet, cube, weight, shape and other relevant factors.
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Industrial (exterior) packaging
Packaging Materials
Table 8-6 presents a comparison of various packing material characteristics. Basic considerations include:
Soft materials Plastic Environmental issues Recycling (reverse logistics)
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Bar Coding
Standard markings that can be read by automatic or handheld scanners that allow for labor saving logistical activities for all supply chain members. Bar Codes contain information regarding:
Vendor Product type Place of manufacture Product price
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Appendix 8A
Materials-Handling Equipment
Dock Equipment
Forklifts Dock bumpers Dock levelers Dock seals Trailer restraint systems Pallets
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Pallets and Pallet Movers
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Figure 8A-1
Forklift Truck
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Figure 8A-2
Pallet Types
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Other Materials Handling Equipment: Conveyors
Types
Disadvantages
Roller or gravity style Belt style
Very expensive Relatively inflexible
Advantages
Assist in keeping inventory records an location Ability to move goods quickly and efficiently
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Other Materials Handling Equipment: Other
Types
Advantages
Cranes (overhead and wheeled) Packers (COFC and TOFC) Automatic guided vehicles
Ability to handle special movements quickly and efficiently Very expensive and limited use
Disadvantages
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Cranes
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Materials-Handling Equipment Top-running
Figure 8A-3
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Order-picking and Storage Equipment
Picker-to-part systems - order picker must travel to the pick location within the aisle.
Bin shelving Modular storage drawers Flow racks Mobile storage systems Order-picking vehicles
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Order-picking and Storage Equipment
Part-to-picker systems - the pick location travels through an automated machine to the picker. Carousels Horizontal Vertical Mini-load automated storage and retrieval systems (AS/RS)
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Figure 8A-4 Order-Picking Equipment
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Figure 8A-5
Mezzanines
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Types of Materials Handling Equipment A Design Perspective
Flexible path
Fork lifts, power lifts/skids Very flexible, but usually labor intensive Conveyors, track-guided vehicles Expensive but capable; limited flexibility; need high volumes to be efficient Rail-mounted cranes
Continuous-flow fixed path
Intermittent-flow fixed path
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Equipment Selection Factors
Physical attributes of the product and its packaging Characteristics of the facility Time requirements Sources of information
Vendor sales force Company engineers Consultants Similar site visitation and inspection
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