Warehousing – An Overview

Packaging A & B Items Components Warehousing

WAREHOUSING - WHAT Supply Chain Consists of Nodes & Links to Move Material From Point of Origin To Point of Consumption Warehouses Are Nodes & Transportation Systems are Links in the Supply Chain 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 Storage & Handling Absorbs 20% of Distribution Costs

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 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 To Assist in the Marketing Process Storing Goods/ Merchandise Close to Market for Quick Delivery Improved Customer Service Through Faster Delivery Helps Increase Sales

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

Sorting & Cross-Docking WAREHOUSE FUNCTIONS Secondary Sorting V E N D O R Goods Receiving Reserved Storage Order Picking Replenishment Collate/ Packing C U S T O M E R Sorting & Cross-Docking Dispatch Flow Of Goods

MOVE-STORE ACTIVITES SHIPPING/DISPATCH WAREHOUSING PROCESSES Input RECEIVING Schedule Carrier For Unloading Unload Vehicles Inspect for Damage Compare To Purchase Order Put-Away Identify Product Identify Storage Location Move Product Update Records Input Order Picking Information Walk & Pick Batch Picking Automated Storage & Retrieval Process (AS/R) Storage/ Binning Material Handling Equipment Stock Location Fast Moving Unit Size Cube size Collating Packaging Labeling Staging SHIPPING/DISPATCH Schedule Carrier For Loading Load Vehicles Lorry Receipt (LR)/ Consignment Note (C/N) Compare To Purchase Order Output WAREHOUSING PROCESSES

WAREHOUSING - ROLES Warehousing Serves Several Value-Adding Roles in the Supply Chain Trade-Off Areas Value-Adding Roles Consolidation Product Mixing Service Contingency Protection Smooth Operations Transportation Order Filling Lead Times Stock Outs Production Warehousing Involves Costs But Often Adds More Value Warehousing of Goods Recommended Only If Trade-Off Possible in Other Areas

TRANSPORT CONSOLIDATION Physical Supply System Supplier Volume Shipment Supplier Distribution Warehouse Plant Supplier Supplier LTL for Short Distances TL for Larger Distances TL – Truck Load Rates – Lower CL –Car Load Rates – Lower LTL – Less-Than-Truck Load Rates – Higher Consolidating Small Inbound Into Larger Outbound Shipments Reducing Transport Cost By Consolidating Shipments at the Distribution Warehouse

TRANSPORT CONSOLIDATION Physical Distribution System Plant Retailers Distribution Warehouse Volume Shipment Retailers Plant Distribution Warehouse Retailers Plant TL for Larger Distances LTL for Short Distances TL – Truck Load Rates – Lower FCL – Full Car Load Rates – Lower LTL – Less-Than-Truck Load Rates – Higher Product Mixing/ Bundling Preparing Floor-Ready Merchandise Ticketing/ Labelling Marking - Apparel on Hangars

DISTRIBUTION CENTRE (DC) Product Mixing/ Bundling Customer 1 Plant 1 Products A & B A B C Customer 2 B C F G Plant 2 Products B & C Distribution Warehouse A G Customer 3 Plant 3 Products D & E A B C D E Customer 4 SC (Small Carriers) Plant 4 Products F & G TL (Large Trucks)

CROSS-DOCKING DC Plant DC Cross Docking Plant (DC) DC Plant Retailer 1 Inbound Dock Outbound Dock DC Cross Docking (DC) Retailer 2 Plant DC Retailer 3 Plant Cross Docking Justified By Reduction in Transportation Costs & Time for Product Mixing Supplies 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

SUPPLY MIXING WAREHOUSE Raw Material A Raw Material B Supply Mixing Warehouse A B C D LTL Plant TL Vendor Source C Vendor Source D Consolidation of Supplies from Different Sources

WAREHOUSING SYSTEM Storage Functions Material Handling 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

STORAGE FUNCTIONS Consolidation 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

STORAGE EXAMPLES Pallet Tote Box Storage/ Binning Storing & Retrieval Using Reach Truck

MATERIALS HANDLING FUNCTIONS Loading & Unloading 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. Movement Within Warehouse From Unloading Point to Storing Area Storing Area to Picking Area Picking to Staging Area Staging to Packing Area Packing to Docking Area Order Filling/ Picking 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 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 Design Layout/ Equipment/ Organisation/ Systems to Facilitate 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 Customizing Guaranteed Delivery Lead Time at Optimal Cost Multi-Product Order Servicing Assembling Multi-Sourced Products Single Point Delivery Desired Delivery Time (JIT) 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

Warehouses Increasingly Becoming CHANGED WAREHOUSING OBJECTIVES Warehouses Increasingly Becoming VALUE ADDING CENTRES In the FLOW of Goods Rather than Just STORING This is Achieved by Bringing in Goods Just In Time for JIT Deliveries