warehousing – an overview
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Warehousing – Warehousing – An OverviewAn Overview
Module 8
A & B Items
Components
Packaging
WAREHOUSING - WHAT
Warehouse Provides Space for Storage & Holding of Raw Material/ Consumables Work-in-Process Finished Goods/ Merchandise
Warehousing Function Responsible for Managing Storage/ Holding/ Preserving Material Material Handling Within Warehouses
Supply Chain Consists of Nodes & Links to Move Material From Point of Origin To Point of Consumption
Storage & Handling Absorbs 20% of Distribution Costs
Warehouses Are Nodes & Transportation Systems are Links in the Supply Chain
WAREHOUSING - WHY
To Reduce Production/ Transportation Costs Producing Economic Batch Quantities Reduces Production Cost Offsetting Higher Cost of Warehousing & Inventory Reducing Transportation Cost Using TL by Combining Different Customers’ Deliveries
To Coordinate Supply & Demand Matching Highly Seasonal Product Supply (Fruits) To Meet Round the Year Demand for Canned Fruit Juices
To Assist in the Production Process
To Assist in the Marketing Process Storing Goods/ Merchandise Close to Market for Quick Delivery Improved Customer Service Through Faster Delivery Helps Increase Sales
Wine/ Liquors/ Cheese Production Includes Ageing in Storage Storing Products in ‘Bonded WH’ To Delay Paying Excise Tax Value-Adding Activities - Special Packaging/ Private Labeling/ Custom Product Preparation Before Sending To Retail Outlet
WAREHOUSING - WHY
Creates TIME Utility for Raw Material/ Industrial Goods/ Finished Products/ Merchandise
Market-Oriented Warehouses Situated Close to Market Allows Firms to Serve Customers Faster
Warehousing Increases Utility of Goods for Prospective Customers by Broadening their Time Availability Warehousing Allows Company’s to Provide Higher Customer Service By Making Goods Available WHEN and WHERE Customers Demand Them
Importance of Warehousing Increasing as Companies Use Customer Service As A Dynamic/ Value-Adding Competitive Tool
BASIC WAREHOUSING OPERATIONS
Warehouse Management Material Handling/ Movement of Material Inventory Holding/Storage
Material Handling Activities Loading/ Unloading Moving Product To/ From Various Locations Within Warehouse Order Picking Order Assembly
Storage/ Inventory Holding Activities Accumulation of Inventory Over Time Different Locations/ Lengths of Storing Time Based On Purpose of Storage
Short-Distance Product Movement in W/H Operations Receiving – Bringing in Goods from Transport Network Put Away - Moving From Receiving Dock to Pre-Storing Area Order Picking – Selecting Products For Filling Customer Order Collating - Staging/ Packaging/ Preparing for Shipping Shipping - Loading Goods for Shipping To Customer
WAREHOUSE FUNCTIONS
ReservedStorage
OrderPicking
SecondarySorting
VENDOR
CUSTOMER
GoodsReceiving
Replenishment
Sorting & Cross-Docking
Collate/ Packing
Dispatch
Flow Of Goods
MOVE-STORE ACTIVITES
RECEIVING• Schedule Carrier For Unloading• Unload Vehicles• Inspect for Damage• Compare To Purchase Order
SHIPPING/DISPATCH• Schedule Carrier For Loading• Load Vehicles• Lorry Receipt (LR)/ Consignment Note (C/N)• Compare To Purchase Order
Input
Output
Put-Away• Identify Product• Identify Storage Location• Move Product• Update Records
Storage/ Binning• Material Handling Equipment• Stock Location
• Fast Moving• Unit Size• Cube size
Order Picking• Information• Walk & Pick• Order Picking• Batch Picking• Automated Storage & Retrieval Process (AS/R)
Collating• Packaging• Labeling• Staging
WAREHOUSINGPROCESSES
Warehousing Involves Costs But Often Adds More Value
Warehousing of Goods Recommended Only If Trade-Off Possible in Other Areas
Value-Adding Roles Trade-Off Areas
WAREHOUSING - ROLES
Warehousing Serves Several Value-Adding Roles in the Supply Chain
Consolidation Product Mixing Service Contingency Protection Smooth Operations
Transportation Order Filling Lead Times Stock Outs Production
TRANSPORT CONSOLIDATION
Consolidating Small Inbound Into Larger Outbound Shipments Reducing Transport Cost By Consolidating Shipments at the Distribution Warehouse
Supplier
Supplier
Supplier
Supplier
DistributionWarehouse
Plant
Volume Shipment
TL – Truck Load Rates – LowerCL –Car Load Rates – LowerLTL – Less-Than-Truck Load Rates – Higher
TL for Larger Distances
LTL for Short Distances
Physical Supply System
TRANSPORT CONSOLIDATION
Plant
DistributionWarehouse
DistributionWarehouse
Plant
Plant
Retailers
Retailers
Retailers
TL – Truck Load Rates – LowerFCL – Full Car Load Rates – LowerLTL – Less-Than-Truck Load Rates – Higher
Volume Shipment
LTL for Short Distances
TL for Larger Distances
Physical Distribution System
Product Mixing/ BundlingProduct Mixing/ Bundling Preparing Floor-Ready MerchandisePreparing Floor-Ready Merchandise
• Ticketing/ LabellingTicketing/ Labelling
• Marking - Apparel on HangarsMarking - Apparel on Hangars
DISTRIBUTION CENTRE (DC)
Plant 1Products
A & B
Plant 2Products
B & C
Plant 3Products
D & E
Plant 4Products
F & G
Customer1
Customer2
Customer3
Customer4
A B C
B C F G
A GDistributionWarehouse
A B C D E
Product Mixing/ BundlingProduct Mixing/ Bundling
TL (Large Trucks)
SC(Small Carriers)
CROSS-DOCKING DC
Plant
DC
DC
Plant
Plant
Retailer 2
Retailer 1
Retailer 3
Cross Docking(DC)
Cross Docking Justified By Reduction in Transportation Costs & Time for Product MixingSupplies Packed & Invoiced as Per Retailers’ Orders at Suppliers’ End Supplies From Different Sources Combined as per Retailer-Orders at Cross-Docking DC & Sent To Respective Retailer-DC in Shorter Time/ Cost Goods Transferred Directly from Inbound to Outbound Docks No Storing in Cross-Docking DC Goods Along with Respective Invoices Leave DC Within 24 Hours
Inbound Dock
Outbound Dock
SUPPLY MIXING WAREHOUSE
Supply MixingWarehouse Plant
RawMaterial A
RawMaterial B
Vendor Source C
Vendor Source D
A B C DLTL
TL
Consolidation of Supplies from Different SourcesConsolidation of Supplies from Different Sources
Storage Functions Accumulation of Inventory Over Time Depending on Purpose of Storage & Different Lengths of Time a Product Required to Remain in the Warehouse Different Locations in the Warehouse Chosen for
Storing Product Based on Purpose of Storage
Material Handling Functions Loading & Unloading Activities Moving Products To and From Various Locations Within the Warehouse Order Picking
Identification of Major System Activities Promotes Understanding of the System as a Whole & Helps
To Provide a Basis for Generating Design Alternatives
WAREHOUSING SYSTEM
STORAGE FUNCTIONS
Holding (Providing Protection & Orderly Holding of Inventory) Holding Time/Storage Requirement Drives Store Configuration/ Layout
• Long-Term Specialized Storage (Ageing Liquors/ Wines)• General-Purpose Merchandise Storage (Seasonal Goods) • Temporary Holding of Goods (Truck Terminal)
Consolidation Transportation Rate Structure/Breaks Influences Use of Storage Facilities
• Collection Point (Warehouse/ Freight Terminal) Used for Small Shipment-Consolidation To Avail More Economical TL Rates
Bulk-Breaking (Opposite of Consolidation) TL Supplies Received from Long Distance Factory Broken into LTL Loads (Order) & Sent To Short-Distance Retail Outlets Distribution/ Terminal Warehouses Used to Break-Bulk
Mixing Products From Different Suppliers Mixed to Assemble Retailer’s Orders For Delivering to Different Short-Distance Retail Outlets
Tote Box Pallet
STORAGE EXAMPLES
Storage/ Binning
Storing & Retrieval Using Reach Truck
MATERIALS HANDLING FUNCTIONS Loading & Unloading
Movement Within Warehouse
Order Filling/ Picking
On Arrival at Warehouse Goods Are Unloaded from Trucks Packed Goods are Loaded on Outgoing Trucks Often Special Equipment are Required for these Operations Involves Various Activities of Checking Order Contents/ Order Sequencing etc.
From Unloading Point to Storing Area Storing Area to Picking Area Picking to Staging Area Staging to Packing Area Packing to Docking Area
Selection of Stocks From Storage Areas To Build Customer Order Order Selection May Take Place Directly From Semi-Permanent/ Bulk Storage Area (Order Picking Areas) Often the Most Critical Material Handling Activity due to Small- Volume Orders
LOADING/ UNLOADING
Dockside Counter Balance Truck
SEMI MECHANIZED PICKING
WAREHOUSING DECISION TREE
Ownership
Private Public
How Many
Centralized Decentralized
What Size
Where (Warehouse Location)
Warehouse Layout
What Products Where(Product Location)
Warehousing Decisions Made in a Trade-Off Framework
WAREHOUSING OBJECTIVES
Achieve Maximum Efficiency in Organizing and Handling Flows at Minimum COST
Design Layout/ Equipment/ Organisation/ Systems to Facilitate
Balance COST/ Utility by Adjusting Following Variables
Number of Warehouses in the System Warehouse Building Size Width & No. of Aisles for Easy Movement of Material/ Men/ Equipment No. & Size of Shelves Internal/ External Material Handling Equipment Computer Systems Manpower
Savings on Labour & Time Increase Speed of the 3 Flows
No. Of Warehouses Decided in Trade-Off With Logistics Costs As Number of Warehouses Increase
• Cost of Transportation & Lost Sales Decline• Cost of Warehousing & Inventory Increases
CONTRIBUTIONS
Enhancing Customer Service Offerings Guaranteed Delivery Lead Time at Optimal Cost Multi-Product Order Servicing
Customizing Re-Packaging as per Customers’ Specification
Bulk Packaging In Re-usable Eco-Friendly Pallet boxes Own Packaging for Saleable Spares In Sets for Delivery at Point of Assembly
• Assembling Multi-Sourced Products• Single Point Delivery• Desired Delivery Time (JIT)
CHANGED WAREHOUSING OBJECTIVES
Warehouses Increasingly BecomingVALUE ADDING CENTRES
In the FLOW of GoodsRather than Just STORING
This is Achieved by Bringing in GoodsJust In Time for JIT Deliveries
Any Questions Please?
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