Supply Chain Management Principles LB 3: Warehousing Operations Overview

LB Objectives Understand the difference between a Warehouse and a DC Communicate the characteristics of a Warehouse and a DC Articulate the key operations of a Warehouse (e.g. receiving, storage, product placement, filling orders, and order-picking-process) Review the key shipment documents LO1

Warehouses Warehouses and DC’s are the link between incoming products from suppliers & manufacturing on one side and manufacturing & customers on the other Warehouses are used to process and store goods and materials purchased from suppliers. Warehouses are used to store products that have been assembled and manufactured to fill customer orders. LO2

Warehouses Serve as the interim staging location for purchased goods Provides availability for production and manufacturing to produce at efficient levels They store products to satisfy customer demand and are also used for: Receiving goods, Storage, Retrieval, & Preparation for shipment When value-added services are performed at a warehouse, the basic warehouse can be transformed into a DC or Fulfillment Center LO1

Warehouse Value-Added Services Cross-docking – When incoming goods are immediately prepared for outbound shipment so that no storage is required. Cross-docking may involve sorting materials intended for different destinations or to combine materials from different origins into vehicles with the same or similar destinations Marking & Labeling – Done to satisfy unique customer request for product identification Light final product assembly – Combining products to meet specific customer requirement LO1

Warehouses Warehouses can efficiently store products for varying periods of time. Manufacturers use warehouses to store products They are sometimes located next to a manufacturing facility Importers direct products to seaport warehouses Warehouses are located in small and large cities (often in a concentrated central location) LO2

Warehouses Warehouses use sophisticated technology such as: Barcodes Automated storage and retrieving systems Inventory management computer systems Many warehouses operate on JIT (Just-In-Time) Warehouses may store equipment, raw materials, excess or obsolete inventory, and inventory that is work-in-process Automated technology includes: Conveyor Belts, & Programmable Robot Devices that move products LO2

Distribution Centers (DC’s) DC’s house products that are redistributed to wholesalers, retailers, or directly to consumers A DC is the principal part, or order processing element, of the order fulfillment process Retail DC – Distributes goods to retail stores Order Fulfillment Center – Distributes goods directly to consumers Cross-dock – Stores few or no products LO3

Warehouse Management System (WMS) WMS’s manage entire operations of warehouses and DCs WMS’s control the Receiving, Movement, Storage, and Retrieval of products WMS’s provide real-time information on status or warehouse space utilization and product turnover WMS’s manage communication among receiving, storage and shipping Technology used for efficiency includes: barcode scanners, wireless handheld systems, pick-to-voice, pick-by-light, mobile computers, RFID (Radio-frequency-identification) tags LO1

WMS WMS is a large database of information that generates status reports such as product location, number of units available, number received and shipped in a given time period LO5

The Receiving Process 1 – Time and date for unloading is scheduled 2 – Product is moved from vehicles into warehouses 3 – Trailers are successfully backed into unloading bays 4 – Shipping paperwork is transferred and products are inspected for damage 5 – During unloading, products are counted, labeled, and sent for storage 6 – Discrepancies must be noted 7 – Some products are shipped immediately, others are stored in warehouses LO5

Common Equipment & Technology Dock plates, Dock levelers, Dock seals, Wheel chokes They help secure trailers in place and provide bridges for forklift and other heavy equipment to unload a trailer Pallet jacks and forklifts are used to unload palletized products Wooden pallets are cheaper than plastic pallets but they are not as durable Wooden pallets break easily, create a mess, is a safety hazard with splinters, and can harbor insects and rodents

Pallets & License Plates License plate barcode labels are commonly found on pallets WMS generates barcode labels that are placed on pallets Pallets can be instantly identified using a barcode scanner RFID tags are small and can be placed anywhere on pallets RFID tags are expensive, but expected to become the method of choice in the future

Paperwork and Inspection in Receiving A packing list is required for all commercial shipments. It lists the following contents for containers: Items included Item codes or Stock Keeping Units (SKU’s) Description of the items Quantity Any additional information about the items

Paperwork Bill of lading is a contract document from shippers that confirms that items have been delivered to the appropriate recipient. It is used for the following: Record and track dispatch Record weight of each load Inspection and verification are the final step in receiving. We inspect for: Visible signs of damage such as crushed packages, torn or broken cartons / containers. We also confirm quantity against the packing list, bill of lading, and original purchase orders.

The Storage Process Storage involves putting products away in specific, clean, and secure locations for easy retrieval Proper storage takes time and money Proper storage saves employees valuable time in finding specific items throughout the warehouse to fill customer’s orders

Strategies for Storage Minimal Handling is the most efficient management practice in warehouses Handling costs may increase due to: Extra time and labor needed Possibility of damaging the products Possibility that the products may be misplaced Possibility of re-storing the product in a different location than originally assigned through the WMS Product Demand – High demand items may go directly to outbound shipping areas and may never be stored. Items that move slowly will be stored in a remote area

Strategies for Storage Storage Racking – Common warehouse strategy that provides a unique number to each rack as well as a row number for each row within a rack Rack numbering allows everyone to know where products are located within the warehouse Rack numbering creates a safe, organized, and clean workspace while providing protection for products Racks make good use of overhead space Racks can go up to 8 pallets high Bins and Containers – Used for items stored in configurations smaller than pallets

Labeling and Storage Location Storage labels are generated at receiving bays by the WMS upon receipt of the product They are also known as Location labeling or License plates Effective labeling systems reduces picking errors, saves time in finding items, and facilitates more accurate inventory management

The Order Process Orders usually provide the following information: The order fulfillment process starts when customers place an order Orders come from retail stores, other DC’s, manufacturing organizations or directly from end users Orders usually provide the following information: Part or item number Quantity Color Unique attributes Delivery date When orders are received, a pick list is generated and the order fulfillment process is initiated

Order Picking Order picking refers to picking items from their storage to complete an order The goal of order picking is efficiency through speed to delivery, reducing waste, and lowering cost WMS systems include handheld barcode readers or scanners Inventory is also maintained using the WMS

Distinctive Picking Types Manual Picking – Most basic method of picking. Order pickers manually pick one item from storage and bring it back to the staging area Order Picking – Items are picked individually for an entire order using a cart, basket, or pallet Batch Picking – Pickers pick items for several different orders, improving picking efficiency and accuracy Zone Picking – Warehouses are divided into zones so that pickers are assigned to a specific zone to fulfill orders

Distinctive Picking Types Voice-Picking – Similar to GPS in cars, voice-pickers follow directions they receive in their headsets Benefit includes faster picking times and reduced picking errors Pick-by-light systems – Beneficial for quick and accurate selection. Digital display in warehouses tell the picker where the items to be shipped are located The pickers turn off the switch after completing their order

Preparation for Shipment The last step in the order fulfillment process is preparation for shipment We have our final opportunity to correct any order issues and verify order fulfillment accuracy Personnel should be aware of carrier packing/packaging requirements and should keep the following in mind: The size of the order The modes and methods of transportation (Vast majority of goods are transported in trucks with rail second, air being the least used) The carriers’ shipping requirements (airbags for certain items?) The need for refrigeration of safeguards for hazardous materials

Safety, Cleanliness, Stating, Loading, and Transporting Staging area is where products unloaded off the truck and are loaded into trucks The staging area is the most dangerous area of the warehouse and DC and safety is absolutely critical It is dangerous because: Workers move rapidly throughout the area Lighting may be poor or inconsistent due to sun blindness Forklifts rush back and forth Large trailers back in and out Trailers butt up against buildings Environment is hot, noisy, crowded, and busy

Tidying up - Trucks Large palletized orders are shrink wrapped to prevent their contents from spilling inside the truck Protective padding is added inside the truck if needed Refrigerated or frozen trucks are used as needed Many warehouses wrap pallets before loading using hand or automated application

Shipping Documentation Bill of Lading – The most important document to ship an item. It is given to carriers before departure. It is a contract that signifies acceptance of goods by the carrier to be delivered to a specific receiver Shipping/packing list, Shipping Manifest and Waybill – Shows itemized detail with complete history of loads. Usually does not include cost or pricing. They provide more detail about the product specifics than a bill of lading for shipper and receiver Tracking – Allows user to know exact status and location. A unique tracking number is assigned