Supply Chain Logistics Management
Chapter 13: Warehouse Management
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
ECONOMIC BENEFITS OF WAREHOUSING
• Consolidation
• Break-bulk or cross dock
• Processing/Postponement
• Stockpiling
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
WAREHOUSE BENEFITSCONSOLIDATION
Plant A
Plant B
Plant C
Consolidation Warehouses
Customers
A B C
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
WAREHOUSE BENEFITDISTRIBUTION ASSORTMENT
Plant A
Plant B
Plant C
Distribution Center
Customer A
Customer B
Customer C
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
WAREHOUSE BENEFITBREAK BULK OPERATION
Plant A Break Bulk Warehouse
Customer A
Customer B
Customer C
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
SERVICE BENEFITS OF WAREHOUSING
• Spot stock
• Assortment
• Mixing
• Production support
• Market presence
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
WAREHOUSING BENEFITSIN-TRANSIT MIXING
Plant A
Plant B
Plant C
Warehouse Transit
Mixing Point
Product D
Customer W
A-B-C-D
Customer X
A-B-C-D
Customer Y
A-B-C
Customer Z
A-B
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
WAREHOUSING BENEFITSMANUFACTURING SUPPORT
Vendor A
Vendor B
Vendor C
Manufacturing Warehouse
Assembly Plant
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
WAREHOUSING ALTERNATIVES
• Options– Private– Public– Contract– Other
• Select warehousing option with best strategic fit
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
SHARE OF WAREHOUSE BUSINESS
53%
14%
33%
Private
Contract
Public
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
DECISION FACTORS
• Strategy
• Type of need
• Information system
• Control
• Product characteristics
• Culture
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
STRATEGY
• Full line
• Centralized postponement
• Utilization of current capacity and resources
• Market presence
• Segment focused
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
USE OF ALTERNATIVES(Percent of Facilities)
Type of Firm Private Public Contract Grocery 28 58 14 Drug/HC 65 30 5 Chemical 49 42 9 Automotive 84 9 7 Electronics 84 7 9 Consumer Goods
57 38 5
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
WHO USES THE MOST FACILITIES?
Type of Company Number of Facilities Grocery 14 Drugs/Healthcare 8 Chemical 25 Automotive 6 Electronics 8 Consumer Goods 5
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
TYPE OF NEED
• Turn inventory
• Promotional inventory
• Speculative inventory
• Custom services and activities
• Seasonal
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
INFORMATION SYSTEM
• Communication capabilities
• System compatibility
• Handling technologies
• Activity based costing
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
CONTROL
• Customs and bonding
• Temperature
• Secrecy
• Lot control and recall
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
PRODUCT CHARACTERISTICS
• Handling characteristics
• Storage characteristics
• Speed of movement
• Flexibility
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
NEW WAREHOUSES WILL BE:
50%
28%
22%
Larger
Same
Smaller
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
CULTURE
• Unionization
• Expertise
• Industry experience and economies
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
VALUE-ADDED WAREHOUSING
• Packaging
• Refined unitization– Adjust pallets or shrink-wrap– Change containers
• Production specialization
• Product climatization
• Recall capability
• Market confidentiality
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
TRADITIONAL HANDLING
• Palletizing, put away, storage, replenishment, selection and loading for shipment
• Food industry products handled up to 17 times in SC and in DC 4.3 times
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
CROSS-DOCKING
• Products received, selected, repackaged, loaded for shipment w/o storage
• Enabled by conveyors & sortation equipment
• Used with general merchandise & food
• Fast moving products replenished using POS/planagram systems
• Used in large (800K to 1,200K sq.ft..) DCs
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
FOOD INDUSTRYLess Impediments to C-D
• Scanning data-<OC
• Better category mgt. & tracking systems
• Expansion forward w/mfg. pre-assembly multi-SKU pallets
• Bar-code scanning at case & pallet levels
• Advanced ship
• EDI transactions
• Automated replenishment programs
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
CROSS-DOCKING RESULTS
• MFG. added costs +$.10 /case
• Average distributor cost savings $.35 /case
• Break down store sorted cases saves $.50 to $.55/case
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
ECR PILOT C-D TESTSRETAIL & WHOLESALE
• <Inventory carrying costs
• <Storage & processing space
• <Product handling(damage, shrinkage, out of date products, returns, DC labor costs
• Improved sales through displays
• >Logistics savings to product sales support
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
STUDY OF C-D IN INDUSTRY
• Only 76% space of traditional
• Only 57% of direct labor
• Case/hour increases Up to 75%
• Excellent payback periods
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
CONTRACT WAREHOUSING
• Storage space, software systems, labor & management dedicated to a specific shipper’s logistics system
• Resources customized to a specific client’s requirements
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
DIFFERENTIATIONCONTRACT VS. PUBLIC
• Productivity sharing
• Business relationships
• Real estate arrangements
• Pricing agreements
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
INTEGRATED LOGISTICS SERVICES
• Mission-Provide services to meet all or significant part of a shipper’s total logistical requirements
• Titles-Third party logistics, contract logistics, logistics utilities, and integrated logistics service providers
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
CONSIDERATION OF QUALITATIVE DECISION FACTORS
Private Contract PublicPresence synergyIndustry synergyOperating synergyLocation flexibilityScale economies
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
TECHNOLOGY
• Remote Computing• Automatic TrailerUL• EDI• Radio Frequency• Sortation Systems• HiDensity Unit Load
Automatic Storage• Scanning • Pick-to-Light • M’tl Handling Auto.
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
WAREHOUSING IN FUTURETOPIC OF WORKSHOP
• Evolutionary cycles– Become paperless
– Become shelfless
– Become seamless
• External factors– Global networks
– People
– Third party
– Technology
• Reverse logistics
• Company examples
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and CooperCopyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
CONCLUSION
• Warehouse strategy is evolving to more focused and flexible
• Technology and expertise are key warehouse alternative determinants
• Operating and industry synergies are more important factors