Warehousing Decisions Chapter 8 Warehousing Decisions

The Nature and Importance of Warehousing Warehousing provides time and place utility for raw materials, industrial goods, and finished products, allowing firms to use customer service as a dynamic value-adding competitive tool. Chapter 8 Management of Business Logistics, 7th Ed.

Management of Business Logistics, 7th Ed. The Role of the Warehouse in the Logistics System: A Basic Conceptual Rationale The warehouse is where the supply chain holds or stores goods. Functions of warehousing include: Transportation consolidation Product mixing Cross-docking Service Protection against contingencies Smoothing Chapter 8 Management of Business Logistics, 7th Ed.

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 Chapter 8 Management of Business Logistics, 7th Ed.

Figure 8-3 Basic Warehousing Decisions Chapter 8 Management of Business Logistics, 7th Ed.

The Ownership Decision 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. Chapter 8 Management of Business Logistics, 7th Ed.

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 Chapter 8 Management of Business Logistics, 7th Ed.

Table 8-2 Firm Characteristics Affecting the Ownership Decision Chapter 8 Management of Business Logistics, 7th Ed.

Management of Business Logistics, 7th Ed. Public Warehousing Rationale for Public Warehousing Limited capital investment Flexibility Public Warehousing Services Bonded warehousing Field warehouses Chapter 8 Management of Business Logistics, 7th Ed.

Management of Business Logistics, 7th Ed. Public Warehousing Public warehousing regulation: Liability Receipts Public warehousing rates based upon: Value Fragility Potential damage to other goods Volume and regularity Weight density Services required Chapter 8 Management of Business Logistics, 7th Ed.

The Number of Warehouses 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 Chapter 8 Management of Business Logistics, 7th Ed.

Table 8-3: Factors Affecting the Number of Warehouses Centralized Decentralized Substitutability Low High Product Value Purchase Size Large Small Special Warehousing Yes No Product Line Diverse Limited Customer Service Chapter 8 Management of Business Logistics, 7th Ed.

Basic Warehouse Operations Movement Receiving Put-away Order picking Shipping Storage Stock location Warehouse Management System (WMS) Chapter 8 Management of Business Logistics, 7th Ed.

Warehouse Layout and Design 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. Chapter 8 Management of Business Logistics, 7th Ed.

Warehouse Layout and Design Provide for the transportation interface. Provide for order-picking space. Provide storage space. Provide recouping, office, and miscellaneous spaces. Chapter 8 Management of Business Logistics, 7th Ed.

Figure 8-8 Warehouse Space Requirements Chapter 8 Management of Business Logistics, 7th Ed.

Figure 8-9 Principles of Warehouse Layout Design Chapter 8 Management of Business Logistics, 7th Ed.

Warehouse Layout and Design Basic needs: Receiving Basic storage area Order selection and preparation Shipping Chapter 8 Management of Business Logistics, 7th Ed.

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. Minimize aisle space. Use full building height. Chapter 8 Management of Business Logistics, 7th Ed.

Warehouse Layout and Design: Layout and Design Objectives Cubic capacity utilization Protection Efficiency Mechanization Productivity Chapter 8 Management of Business Logistics, 7th Ed.

Management of Business Logistics, 7th Ed. Materials Handling Definition: Efficient short distance movement in or between buildings and a transportation agency. Four dimensions Movement Time Quantity Space Coordination Chapter 8 Management of Business Logistics, 7th Ed.

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 Chapter 8 Management of Business Logistics, 7th Ed.

Management of Business Logistics, 7th Ed. Figure 8-12 Utilization of a Warehouse’s Cubic Capacity: Principles of Warehouse Layout Design Chapter 8 Management of Business Logistics, 7th Ed.

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 materials handling. Asterisks mark those deserving special attention. Chapter 8 Management of Business Logistics, 7th Ed.

Table 8-5 Principles of Materials Handling Chapter 8 Management of Business Logistics, 7th Ed.

Materials Handling Equipment The choice of handling equipment can influence the type of storage equipment. The choice of storage equipment can influence the type of handling equipment. © Pearson Education, Inc. publishing as Prentice Hall

Materials Handling Equipment Material handling equipment can also be categorized as: Labor intensive Mechanized Automated Sufficient volume is needed to justify high cost of automated equipment © Pearson Education, Inc. publishing as Prentice Hall

Management of Business Logistics, 7th Ed. What Is Packaging? Consumer packaging Marketing managers primarily concerned with how the package fits into the marketing mix. Industrial 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. Chapter 8 Management of Business Logistics, 7th Ed.

Management of Business Logistics, 7th Ed. Packaging Interest in packaging is widespread Logistics Warehousing Transportation Size Marketing Production Legal Chapter 8 Management of Business Logistics, 7th Ed.

Management of Business Logistics, 7th Ed. The Role of Packaging Identify product and provide information Improve efficiency in handling and distribution Customer interface Protect product Chapter 8 Management of Business Logistics, 7th Ed.

Promotional and Protective Functions of Packaging Enclose materials Restrain materials from undesired movement Separate contents to prevent undesired contact Cushion contents from outside vibrations and shocks Support the weight of identical containers stacked above Position the contents to provide maximum protection Provide for uniform weight distribution Provide exterior surface for labeling Be tamperproof Be safe for consumers or others © Pearson Education, Inc. publishing as Prentice Hall

Management of Business Logistics, 7th Ed. Packaging Materials Table 8-6 presents a comparison of various packing material characteristics. Basic considerations include: Soft materials Plastic Environmental issues Recycling (reverse logistics) Chapter 8 Management of Business Logistics, 7th Ed.

Table 8-6 Comparison of Cushioning Materials Chapter 8 Management of Business Logistics, 7th Ed.

Package Testing and Monitoring A package system requires 3 types of information to design Severity of the distribution environment Fragility of the product Performance characteristics of various cushion materials © Pearson Education, Inc. publishing as Prentice Hall

Package Testing and Monitoring Vibrations Dropping Horizontal impacts Compression Overexposure to extreme temperatures or moisture Rough handling © Pearson Education, Inc. publishing as Prentice Hall

Figure 11-4: Kaiser Aluminum’s Moisture-Alert Label © Pearson Education, Inc. publishing as Prentice Hall

Labeling Labeling Retroflective labels Batch numbers Weight Specific contents Instructions for use Information to allow passage through customs Compliance labeling One- or two-dimensional bar codes Smart labels or RFID labels © Pearson Education, Inc. publishing as Prentice Hall

Figure 11-5: Examples of Shipping Labels © Pearson Education, Inc. publishing as Prentice Hall

Management of Business Logistics, 7th Ed. 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 Chapter 8 Management of Business Logistics, 7th Ed.