SCM WAREHOUSING

warehousing Chapter 6

Part of firms logistics system that stores products at and between point of origin and point of consumption.

Term Warehousing is referred as transportation at zero miles per hour

Warehousing provides time and place utility for raw materials, industrial goods, and finished products, allowing firms to use customer service as a dynamic value-adding

competitive tool.

INTRODUCTION

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

Warehousing contributes value in

the logistics process

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

Evolution of strategic

warehousing

Warehousing types evolved to

accommodate the dynamic aspects

Distribution

centers

Consolidation

terminals

Break-Bulk

facilities

Cross-docks

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

Product assortments

Value-added services

Shipment sequencing

Strategic warehousing offers

manufacturers a way to reduce

dwell time of parts and materials

Amazon Warehouse/Distribution Center in UK

Amazon Warehouse/Distribution Center in

US

Netflix Warehouse/Distribution Center

FedEx

Warehouse/Dis

tribution Center

Shipping

iPhone 5,

September 21,

2012

Strategic warehousing

Warehouse Operations

Warehouse ownership

arrangements

Warehouse decisions

Warehousing overview

Strategic Warehousing


Warehouse Ownership Arrangements

Warehouse Management Decisions


Economic Benefits

Service Benefits




Strategic Warehousing Economic Benefits

Consolidation and Break-Bulk

Sorting

Seasonal Storage

Reverse Logistics

Service Benefits




Plant 1

Plant 2

Plant 3

Consolidation

Warehouse Store B

Store C

Store A

Plant Break-Bulk

Warehouse Store B

Store C

Store A



Sorting (cross-docking; in-transit mixing; sorting/sequencing)

Seasonal Storage

Reverse Logistics

Service Benefits




Plant 1

Plant 2

Plant 3

Distribution

Center Store B

Store C

Store A

Sorting by Distribution Center Cross Docking

Plant

Producing

Product 1

Transit Mixing Point Store B

Products 1, 2, 3

Store C

Products 1, 2, 4

Store A

Products 1, 3, 4

Sorting by In-Transit Mixing

Plant

Producing

Product 2

Plant

Producing

Product 3

Product 4

Supplier/

Vendor of

Component A

Order Assembly by

Sorting/Sequencing

Manufacturing

Plant 1

Components

A,B,C

Order Assembly by Sorting/Sequencing

Supplier/

Vendor of

Component B

Supplier/

Vendor of

Component C

Manufacturing

Plant 1

Components C, B

Manufacturing

Plant 1

Components

C,B,A



Sorting

Seasonal Storage

Reverse Logistics

Service Benefits




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

Typical list of value-added

services


Economic Benefits

Service Benefits





Economic Benefits

Service Benefits

Spot Stocking

Full Line Stocking

Value Added Services




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

Service benefits of

warehousing

Full Line Stocking at

United Electrics Distribution Center

Illustration of reverse

logistics flow

Storm super cell in Montana




Warehouse Decisions



Product Handling

Product Storage


Warehouse Decisions



Product Handling

Receiving

In-Storage Handling

Shipping

Product Storage


Warehouse Decisions



Product Handling

Product Storage


Warehouse Decisions

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

Handling

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

Illustration of storage plan based on

product movement velocity

Storage Plan Based on Product Movement Velocity



Product Handling

Product Storage

Active

Extended


Warehouse Decisions

Active Storagestorage for basic inventory replenishment Focuses on quick movement

Includes flow-through or cross-dock distribution

Extended Storagestorage for inventory held in excess of period for normal replenishment E.g. seasonal, speculative,

or even commodities

Warehouses must manage

two classes of storage




Warehouse Decisions




Private Warehouses

Public Warehouses

Contract Warehouses

Warehouse Decisions




Private Warehouses

Control

Operating Flexibility

Cost

Public Warehouses

Contract Warehouses

Warehouse Decisions




Private Warehouses

Public Warehouses

Contract Warehouses

Warehouse Decisions

Active Storagestorage for basic inventory replenishment Focuses on quick movement

Includes flow-through or cross-dock distribution

Extended Storagestorage for inventory held in excess of period for normal replenishment E.g. seasonal, speculative,

or even commodities

Warehouses must manage

two classes of storage

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

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

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

Network deployment is the

combination of private, public and

contract facilities used by a firm




Warehouse Decisions




Warehouse Decisions

Site Selection

Design

Size & Expansion Capabilities

Audit Activities

Security

Safety & Maintenance

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

Site selection is driven by

service availability and cost

factors

Illustration of straight-line

product flow to facilitate

velocity

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

Warehouse management systems

encourage best practices

A summary of WMS

functionality and decision

support benefits

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

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

Safety and maintenance issues

must also be considered when

planning warehouse designs

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

SCM WAREHOUSING

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