Transcript Chapter 8
Chapter 8
Warehousing Decisions
The Nature and
Importance of Warehousing
Warehousing provides time and place utility
(primarily time) for raw materials, industrial
goods, and finished products, allowing firms to
use customer service as a dynamic valueadding competitive tool.
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The Role of the Warehouse in the
Logistics System: A Basic Conceptual
Rationale
Functions of
The warehouse is
warehousing include:
where the supply
Transportation
chain holds or stores
consolidation
goods.
Product mixing
Cross-docking
Service
Protection against
contingencies
Smoothing
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Table 8-1
Warehouse Value-Adding Roles
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Figure 8-1
Transportation Consolidation
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Figure 8-2
Supply and Product Mixing
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Figure 8-3
Basic Warehousing Decisions
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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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The Ownership Decision
Chapter 8
Public warehousing
costs mostly all
variable.
Private warehousing
costs have a higher
fixed cost component.
Thus private
warehousing virtually
requires a high and
constant volume.
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The Ownership Decision
Factors to consider
Throughput volume
(because of fixed costs)
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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Firm Characteristics
Affecting the Ownership Decision
Table 8-2
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Figure 8-6
Basic Warehouse Operations
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Public Warehousing
Rationale for Public Warehousing
Limited capital investment
Flexibility
Public Warehousing Services
Bonded warehousing
Field warehouses
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Public Warehousing
Public warehousing
regulation:
Liability
Receipts
Chapter 8
Public warehousing rates
based upon:
Value
Fragility
Potential damage to
other goods
Volume and
regularity
Weight density
Services required
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Contract Warehousing
Increasing phenomenon
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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The Number of Warehouses
Chapter 8
Factors Affecting the
Number of Warehouses
Inventory costs
Warehousing costs
Transportation costs
Cost of lost sales
Maintenance of
customer service levels
Service small quantity
buyers
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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
No
Product Line
Diverse
Limited
Customer Service
Low
High
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Basic Warehouse Operations
Movement
Receiving
Put-away
Order picking
Shipping
Storage
Stock location
Warehouse Management System
(WMS)
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Warehouse Layout and Design
Chapter 8
Develop a demand
forecast.
Determine each item’s
order quantity.
Convert units into cubic
footage requirements.
Allow for growth.
Allow for adequate aisle
space for materials
handling equipment.
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Warehouse Layout and Design
Provide for the
transportation interface.
Provide for orderpicking space.
Provide storage space.
Provide recouping,
office, and
miscellaneous spaces.
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Figure 8-8
Warehouse Space Requirements
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Warehouse Layout and Design
Chapter 8
Basic needs:
Receiving
Basic storage area
Order selection
and preparation
Shipping
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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
handling equipment.
Use an effective storage plan
Minimize aisle space.
Use full building height.
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Warehouse Layout and Design:
Layout and Design Objectives
Cubic capacity
utilization
Protection
Efficiency
Mechanization
Productivity
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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 by
labor hours/day
Throughput = amt of material moved through the
system in a given time period
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Materials Handling
Definition: Efficient short distance
movement in or between buildings and a
transportation agency.
Four dimensions
Movement
Time
Quantity
Space
Coordination
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Objectives of Materials Handling
Increase effective capacity
Improve operating efficiency
Use building’s height and minimize aisle space
Reduce product handling
Develop effective working
conditions
Reduce heavy labor
Improve logistics service
Reduce cost
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Table 8-5: Principles of Materials Handling
To effectively plan and control materials handling, the logistics
manager should recognize some guidelines and principles.
(* deserving special attention)
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Packaging
Interest in packaging is widespread
Logistics
Warehousing
Transportation
Size
Marketing
Production
Legal
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The Role of Packaging
Identify product and provide information
Improve efficiency in handling and
distribution
Customer interface
Protect product
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What Is Packaging?
Consumer (interior) packaging
Marketing managers primarily concerned
with how the package fits into the
marketing mix.
Industrial (exterior) packaging
Logistics managers primarily concerned
with efficient shipping characteristics
including protection, ability to withstand
stacking when on a pallet, cube, weight,
shape and other relevant factors.
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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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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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Appendix 8A
Materials-Handling Equipment
Dock Equipment
Forklifts
Dock bumpers
Dock levelers
Dock seals
Trailer restraint
systems
Pallets
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Pallets and Pallet Movers
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Figure 8A-1
Chapter 8
Forklift Truck
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Figure 8A-2
Chapter 8
Pallet Types
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Other Materials Handling
Equipment: Conveyors
Types
Roller or gravity style
Belt style
Advantages
Assist in keeping
inventory records an
location
Ability to move
goods quickly and
efficiently
Chapter 8
Disadvantages
Very expensive
Relatively inflexible
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Other Materials Handling
Equipment: Other
Types
Cranes (overhead
and wheeled)
Packers (COFC
and TOFC)
Automatic guided
vehicles
Chapter 8
Advantages
Ability to handle
special
movements
quickly and
efficiently
Disadvantages
Very expensive
and limited use
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Cranes
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Materials-Handling
Equipment Top-running
Figure 8A-3
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Order-picking and Storage
Equipment
Picker-to-part systems - order picker must
travel to the pick location within the aisle.
Bin shelving
Modular storage drawers
Flow racks
Mobile storage systems
Order-picking vehicles
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Order-picking and Storage
Equipment
Part-to-picker systems - the pick location
travels through an automated machine to the
picker.
Carousels
Horizontal
Vertical
Mini-load automated storage and retrieval
systems (AS/RS)
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Figure 8A-4
Order-Picking Equipment
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Figure 8A-5
Chapter 8
Mezzanines
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Types of Materials Handling
Equipment – A Design Perspective
Flexible path
Fork lifts, power lifts/skids
Very flexible, but usually labor intensive
Continuous-flow fixed path
Conveyors, track-guided vehicles
Expensive but capable; limited flexibility;
need high volumes to be efficient
Intermittent-flow fixed path
Rail-mounted cranes
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Equipment Selection Factors
Physical attributes of the product and its
packaging
Characteristics of the facility
Time requirements
Sources of information
Vendor sales force
Company engineers
Consultants
Similar site visitation and inspection
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