mgt of bus logistics - warehousing decisions
TRANSCRIPT
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Chapter 8
Warehousing Decisions
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Chapter 8 Management of Business Logistics, 7th Ed. 2
Learning Objectives -After reading the
chapter, you should be able to do the following:
Discuss the strategic value-adding rolewarehousing plays in the logistics system.
Explain the basic rationale for warehousing inlight of transportation consolidation, productmixing, service, contingency protection, andsmoothing.
Develop an analytical framework for basicwarehousing decisions.
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Chapter 8 Management of Business Logistics, 7th Ed. 3
Learning Objectives Distinguish between the different warehouse
activities requiring space in the warehouse
design. Discuss the major principles of warehouse
layout design.
Compare the use of private versus public
warehousing. Explain public warehousing services,
regulations, and pricing.
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Chapter 8 Management of Business Logistics, 7th Ed. 4
Learning Objectives Describe the decision-making approach used
to determine the number of warehouses in
the logistics system. Discuss the effect of materials handling and
packaging on logistics.
Describe the four dimensions and theobjectives of materials handling.
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Chapter 8 Management of Business Logistics, 7th Ed. 5
Learning Objectives Discuss the different types of materials
handling equipment and the criteria used to
select this equipment. Explain the cross-functional role of packaging
in a company.
Discuss the role of packaging in the logisticssystem.
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Chapter 8 Management of Business Logistics, 7th Ed. 6
Learning Objectives Describe the various types of packaging
materials available and their relative
advantages and disadvantages. Explain the rationale for using bar codes to
identify packages.
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Chapter 8 Management of Business Logistics, 7th Ed. 7
Logistics Profile:
Grainger Industrial Supply Grainger is dedicated to providing excellent
customer service using an effective network of
warehouses and distribution centers providingsame day or next day service.
13.6 million square feet in one nationaldistribution center, two regional and six zonedistribution centers, and 373 local branches
1.5 million customers, 220k SKUs, $4.5 billionin sales, 60k to 80k daily customer orders
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Chapter 8 Management of Business Logistics, 7th Ed. 8
The Nature and
Importance of Warehousing
In 1999, $75 billion, or 0.8 percentof GDP was spent on warehousing.
The total supply of U.S. warehousing space in1999 was 6.1 billion square feet, an increasefrom 1990 of 700 million square feet of space.
Warehousing provides time and place utility for
raw materials, industrial goods, and finishedproducts, allowing firms to use customerservice as a dynamic value-adding competitivetool.
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Chapter 8 Management of Business Logistics, 7th Ed. 9
The Role of the Warehouse in theLogistics System: A Basic Conceptual
Rationale
The warehouse iswhere the supply
chain holds or storesgoods.
Functions ofwarehousing include:
Transportationconsolidation Product mixing Cross-docking
Service Protection against
contingencies Smoothing
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Chapter 8 Management of Business Logistics, 7th Ed. 10
Table 8-1
Warehouse Value-Adding Roles
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Chapter 8 Management of Business Logistics, 7th Ed. 11
Figure 8-1
Transportation Consolidation
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Chapter 8 Management of Business Logistics, 7th Ed. 12
Figure 8-2
Supply and Product Mixing
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Chapter 8 Management of Business Logistics, 7th Ed. 13
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
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Chapter 8 Management of Business Logistics, 7th Ed. 14
Figure 8-3
Basic Warehousing Decisions
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Chapter 8 Management of Business Logistics, 7th Ed. 15
The Ownership Decision Public warehousing
costs mostly all
variable. Private warehousing
costs have a higherfixed cost component.
Thus privatewarehousing virtuallyrequires a high andconstant volume.
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Chapter 8 Management of Business Logistics, 7th Ed. 16
The Ownership Decision
Factors to consider
Throughput volume 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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Chapter 8 Management of Business Logistics, 7th Ed. 17
Table 8-2 Firm Characteristics
Affecting the Ownership Decision
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Chapter 8 Management of Business Logistics, 7th Ed. 18
Public Warehousing Rationale for Public Warehousing
Limited capital investment
Flexibility
Public Warehousing Services
Bonded warehousing
Field warehouses
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Chapter 8 Management of Business Logistics, 7th Ed. 19
Public Warehousing Public warehousing
regulation:
Liability Receipts
Public warehousing ratesbased upon:
Value Fragility
Potential damage toother goods
Volume andregularity
Weight density
Services required
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Chapter 8 Management of Business Logistics, 7th Ed. 20
Contract Warehousing Up 23% per year in 2000 to $20.4 billion.
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.
Other issues discussed in Chapter 11.
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Chapter 8 Management of Business Logistics, 7th Ed. 21
The Number of Warehouses Factors Affecting the
Number of Warehouses
Inventory costs
Warehousing costs
Transportation costs
Cost of lost sales
Maintenance ofcustomer service levels
Service small quantitybuyers
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Chapter 8 Management of Business Logistics, 7th Ed. 22
Table 8-3: Factors Affecting the
Number of Warehouses
Factor Centralized Decentralized
Substitutability Low High
Product Value High Low
Purchase Size Large Small
Special Warehousing Yes NoProduct Line Diverse Limited
Customer Service Low High
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Chapter 8 Management of Business Logistics, 7th Ed. 23
Basic Warehouse Operations Movement
Receiving
Put-away Order picking
Shipping
Storage
Stock location
Warehouse Management System(WMS)
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Chapter 8 Management of Business Logistics, 7th Ed. 24
Figure 8-6
Basic Warehouse Operations
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Chapter 8 Management of Business Logistics, 7th Ed. 25
Figure 8-7
The Computerized Warehouse
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Chapter 8 Management of Business Logistics, 7th Ed. 26
Warehouse Layout and Design Develop a demand
forecast.
Determine each itemsorder quantity.
Convert units into cubicfootage requirements.
Allow for growth.
Allow for adequate aislespace for materialshandling equipment.
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Chapter 8 Management of Business Logistics, 7th Ed. 27
Warehouse Layout and Design Provide for the
transportation interface.
Provide for order-picking space.
Provide storage space.
Provide recouping,office, andmiscellaneous spaces.
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Chapter 8 Management of Business Logistics, 7th Ed. 28
Figure 8-8
Warehouse Space Requirements
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Chapter 8 Management of Business Logistics, 7th Ed. 29
Figure 8-9 Principles of
Warehouse Layout Design
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Chapter 8 Management of Business Logistics, 7th Ed. 30
Warehouse Layout and Design Basic needs:
Receiving
Basic storagearea
Order selection
and preparation Shipping
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Chapter 8 Management of Business Logistics, 7th Ed. 31
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 handlingequipment.
Minimize aisle space.
Use full building height.
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Chapter 8 Management of Business Logistics, 7th Ed. 32
Warehouse Layout and Design:
Layout and Design Objectives
Cubic capacity
utilization Protection
Efficiency
Mechanization
Productivity
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Chapter 8 Management of Business Logistics, 7th Ed. 33
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 bylabor hours/day
Throughput= amt of material moved through thesystem in a given time period
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Chapter 8 Management of Business Logistics, 7th Ed. 34
Materials Handling Definition: Efficient short distance
movement in or between buildings and atransportation agency.
Four dimensions
Movement
Time
Quantity
Space
Coordination
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Chapter 8 Management of Business Logistics, 7th Ed. 35
Objectives of Materials Handling Increase effective capacity
Minimize aisle space
Reduce product handling
Develop effective working
conditions
Reduce heavy labor Improve logistics service
Reduce cost
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Chapter 8 Management of Business Logistics, 7th Ed. 36
Figure 8-12 Utilization of aWarehouses Cubic Capacity: Principles of
Warehouse Layout Design
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Chapter 8 Management of Business Logistics, 7th Ed. 37
Guidelines and Principles for
Materials Handling To effectively plan and control materials
handling, the logistics manager should
recognize some guidelines and principles. Table 8-5 lists 20 of the most commonly
accepted principles of effective materialshandling. Asterisks mark those deserving
special attention.
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Chapter 8 Management of Business Logistics, 7th Ed. 38
Table 8-5
Principles of Materials Handling
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Chapter 8 Management of Business Logistics, 7th Ed. 39
Packaging Interest in packaging is widespread
Logistics
Warehousing
Transportation
Size
Marketing Production
Legal
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Chapter 8 Management of Business Logistics, 7th Ed. 40
The Role of Packaging Identify product and provide information
Improve efficiency in handling and
distribution Customer interface
Protect product
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Chapter 8 Management of Business Logistics, 7th Ed. 41
What Is Packaging? Consumer packaging
Marketing managers primarily concerned
with how the package fits into themarketing mix.
Industrial packaging
Logistics managers primarily concerned
with efficient shipping characteristicsincluding protection, ability to withstandstacking when on a pallet, cube, weight,shape and other relevant factors.
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Chapter 8 Management of Business Logistics, 7th Ed. 42
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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Chapter 8 Management of Business Logistics, 7th Ed. 43
Table 8-6
Comparison of Cushioning Materials
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Chapter 8 Management of Business Logistics, 7th Ed. 44
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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Chapter 8:Summary and Review Questions
Students should review their knowledge of the chapterby checking out the Summary and Study Questions for
Chapter 8.
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End of Chapter 8 and 8A Slides
Warehousing Decisions