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?