1. Warehousing Decisions
Chapter 8
Warehousing Decisions

2. 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.

3. 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.

4. 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.

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

6. 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.

7. 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.

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

9. 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.

10. 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.

11. 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.

12. 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.

13. 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.

14. 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.

15. 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.

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

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

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

19. 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.

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

21. 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.

22. 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.

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

24. 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.

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

26. 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

27. 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

28. 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.

29. 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.

30. 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.

31. 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

32. 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.

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

34. 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

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

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

37. 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

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

39. 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.