(6) a storage and material handling ballou11

8/3/2019 (6) a Storage and Material Handling Ballou11

1/19

The Storage and HandlingSystem

The day soldiers (subordinates) stop bringingyou their problems is the day you have stoppedleading them.

Colin Powell


2/19

PLANNING

ORGANIZING

C

ONTROLLING

Transport Strategy Transport fundamentals Transport decisions

Customerservice goals

The product Logistics service Ord. proc. & info. sys.

Inventory Strategy Forecasting Inventory decisions Purchasing and supply

scheduling decisions Storage fundamentals

Storage decisions

Location Strategy Location decisions The network planning process

PLANNING

ORGANIZING

C

ONTROLLING

Transport Strategy Transport fundamentals Transport decisions

Customerservice goals

The product Logistics service Ord. proc. & info. sys.

Inventory Strategy Forecasting Inventory decisions Purchasing and supply

scheduling decisions Storage fundamentals

Storage decisions

Location Strategy Location decisions The network planning process

Storage Fundamentals in

Inventory Strategy


3/19

The Storage SystemExcept where customer service is a concern:

Storage is an economic convenience, not a necessity

Reasons for storage

y Transportation and production costs can be reduced

y Better coordination of supply and demand

y Storage can be an integral part of the production process

y Storage may enhance sales

Storage Functions

y Holding

y Consolidation

y Break-bulk

y

Mixing (merge-in-transit)


4/19

The Storage System (Contd)

Storage Space Alternatives

y Ownership

y Leasing

y Rental

y In-transit

Note Storage functions are performed in anattempt to reduce transportation, production, andpurchasing costs, which justify their addedexpense.


5/19

Manufacturer A

Manufacturer A & B

Manufacturer A, B & C

Manufacturer A, B, C & D

Percentageofu

sable

wa

rehousecap

acity

Time, months

Balancing the Load on a

Public Warehouse

0

20

40

60

80

100

120

J F M A M J J A S O N D


6/19

Consolidationwarehouse

A

A B C D

B

C

D

Manufacturer A

Manufacturer B

Manufacturer C

Manufacturer D

10,000 lb.

8,000 lb.

15,000 lb.

7,000 lb.

40,000 lb.

Customer

Consolidation Warehouse

Similar to a merge-

in-transit facility


7/19

Distribution

warehouse

Manufacturer Customer B

Customer C

Customer A

Low rate TLshipment

LTL

Distribution, Break Bulk, orPool

Point Warehouse

Warehouse may ormay not holdinventories


8/19

Storage Cost Savings

Direct shipments to customers

MANUFACTURER

SHIPPING

WEIGHT

(lb.)

LTLRATE TO

CUSTOMER COST

A 10,000 $2.00/cwt. $200

B 8,000 1.80 133

C 15,000 3.40 510

D 7,000 1.60 112Total $966


9/19

Storage Cost Savings (Contd)Shipments through a distribution center

MANUFACTURER

SHIPPING

WEIGHT (lb.)

LTLRATE TODISTRIBUTION

CENTERTOTALLTL

A 10,000 $0.75 $75

B 8,000 0.60 48

C 15,000 1.20 180

D 7,000 0.50 35

Total 40,000

DISTRIBUTION

WAREHOUSECHARGE

TLRATE FROM

DISTRIBUTION

WAREHOUSE TO

CUSTOMER TOTAL TL COST

$10 $1.00/cwt. $100 $185

8 1.00 80 136

15 1.00 150 345

7 1.00 70 112

$778


10/19

Space Comparison

Ownership alternative

Less expensive under high utilizationHigh degree of control over operationsBenefits of real estate ownership

Space may be converted to uses other than storage

Rental alternative

No fixed investmentLower cost under seasonal or low utilization of anowned facility

Location flexibility


11/19

The Materials Handling System

Materials Handling Functionsy Loading and unloading

y Movement to and from storage

y Order filling

Materials-Handling Considerations

y Load unitization

y Space layout

y Storage equipment

y Movement equipment


12/19

ALow Throughput, Holding Warehouse

Semi permanentstorage bay Product

Inbound andoutbound


13/19

Semi-permanentstorage bay

Product

Order picking and product mixing bays

Inbound

Outbound

A

B

C

D

C A Replenishment

Order-pickingroute

A High Throughput, Distribution

Warehouse


14/19

Storage/Handling Systems

y Manual handling system

y Forklift truck-pallet system

y Conveyorized system

yAutomated storage and retrieval

system


15/19

Semipermanentstorage bay

Product

Inbound andoutbound

A

B

C Order-pickingroute

OrderPickingArea System


16/19

Semipermanentstorage bay

Product

Order picking and product mixing bays

Inbound

Outbound

A

B

C

D

C A

Replenishment

Order-pickingroute

OrderPickingModified Area System

11-16


17/19

Shipping and Receiving

Outgoing

loads

Incoming

loads

Audit spurfor loadchecking

To auxiliarystorage areas

Automated cranestorage and orderpicking

An Automated Warehouse


18/19

Economics of Storage/Handling Alternatives

Private warehousing,automated handling

Publicwarehousing

Private warehousing,pallet-forklift truckhandling

Leased warehousing

a b c d

Costtoc

ompany,

$

Annual system throughput, cwt.0

a Economical range for public warehousing.b Economical range for leased warehousing, manual handling.c Economical range for private warehousing, pallet-forklift truck handling.d Economical range for private warehousing, automated handling.


19/19

Virtual Warehousing

Dont hold all inventories neededfor sale in companys warehouse

Ship selected items directly from

suppliersReduces investment in inventoriesRequires a first-rate order

management system

May require sharing criticalinformation with vendors

(6) a storage and material handling ballou11

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