Warehousing Slides Only 2007

Warehousing, Part One. Marketing Logistics Advance manually to begin.

Warehousing

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• The storing of products, including raw materials, parts, goods-in-process, finished goods at and between point-oforigin and point-of-consumption. • Provides information on status of goods. Distribution centers are a type of warehouse which hold minimum inventory of high-demand goods. . . . .

Warehousing: Storage of inventories all through logistics process.

• Raw materials, components, parts. • Finished goods. •

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Physical supply

Warehouse

The storing of products, including raw materials, parts, goods-in-process, finished goods at and between point-of-origin and point-of-consumption. Provides information on status of goods.

Distribution

Warehouse

Inventory in a Warehousing Context • Achieves transportation economies.

Transportation Economies

Economies of scale .

Supplier

Transportation carriers usually give discounts for bigger loads.

Warehouse

Transportation Economies

Economies of scale .

Supplier

Warehouse

Inventory in a Warehousing Context • Achieves transportation economies. • Achieves production economies.

Achieves Production Economies Economies of scale

Warehouse

Assembly line

Inventory in a Warehousing Context • Achieves transportation economies. • Achieves production economies. • Quantity purchased discounts, forward buy discounts. • Maintain source of supply. • Support customer service policies. .

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Inventory in a Warehousing Context . . .

• To meet changing market conditions. – Seasonality. – Demand fluctuations. – Competition.

• To overcome time and space differentials between producers and consumers. • To minimize logistics costs while meeting customer service goals. • To support just-in-time inventory programs.

End of Part One. Scroll Down to Part Two.

Warehousing Part Two

Three Basic Warehouse Functions • Movement. • Storage. • Information.

Movement Receiving, putting away

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Warehouse

Movement Receiving, putting away

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Warehouse

Movement Receiving, putting away Picking, staging, loading

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Warehouse

Movement Receiving, putting away Picking, staging, loading Cross-docking

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Warehouse

Movement Receiving, putting away Picking, staging, loading Cross-docking Packaging

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Warehouse

Movement Receiving, putting away Picking, staging, loading Cross-docking Packaging Light assembly, blending, kitting* .

Warehouse

Vendorseek.com

Movement Receiving, putting away Picking, staging, loading Cross-docking Packaging Light assembly, blending, kitting* *Kits are how some manufacturers sell parts. By selling the parts. in a kit, the manufacturer gains economies of scale in things like transportation costs. It also saves administrative costs because rather than billing for and keeping track of each part, the manufacturer only has to keep track of the kit. Warehouse Kitting is also a light manufacturing technique in which assembly workers, sometimes in a warehouse, get all the component parts of what they are assembling in a single kit so that time is not lost looking for parts. Vendorseek.com

Movement Receiving, putting away Picking, staging, loading Cross-docking Packaging Light assembly, blending, kitting Labeling, shrink wrapping .

Label Label Label Label

Warehouse

Movement Receiving, putting away Picking, staging, loading Cross-docking Packaging Light assembly, blending, kitting Labeling, shrink wrapping .

Warehouse

Movement

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Receiving, putting away Picking, staging, loading Cross-docking Packaging Light assembly, blending, kitting Labeling, shrink wrapping Breakbulk, consolidation Warehouse

Movement

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Receiving, putting away Picking, staging, loading Cross-docking Packaging Light assembly, blending, kitting Labeling, shrink wrapping Breakbulk, consolidation Transportation Warehouse

Movement

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Receiving, putting away Picking, staging, loading Cross-docking Packaging Light assembly, blending, kitting Labeling, shrink wrapping Breakbulk, consolidation Transportation Import, export services Warehouse (also an information function)

Storage

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Warehouse

Information Inventory tracking Order entry Proof of delivery Tracing/customer service billing. Service reporting/carrier monitoring Site location .

Real estate management Network analysis Systems analysis Display building/promotions

Warehouse

Warehouses versus Distribution Centers:

Warehousing

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• The storing of products, including raw materials, parts, goods-in-process, finished goods at and between point-oforigin and point-of-consumption. • Provides information on status of goods. Distribution centers are a type of warehouse which hold minimum inventory of high-demand goods. . . . .

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Warehouses versus Distribution Centers: • Warehouse

• Distribution Center

--Receives. --Stores. --Picks --Ships Distribution Center

Warehouse

Warehouses versus Distribution Centers: • Distribution Center – Receives – Ships

Distribution Center

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www.perotdevelopment.com

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www.arvinmeritor.com

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www.arvinmeritor.com

Warehouses versus Distribution Centers: Other Differences

• Warehouses

--Minimal adding of value. --Data collection in batches. --Aim at minimizing shipping costs.

• Distribution Centers --Maximum adding of value (including final assembly). --Real-time data collection. --Aim at maximizing profit of demand

End of Part Two. Scroll Down for Part Three.

Warehousing. Part Three.

Uses of Warehouses: • Support manufacturing. • Mix products from multiple production facilities to a single customer. • Break bulk. • Consolidate small shipments into large shipments. .

Logistics Concepts

S u p p l i e r .

Inbound Logistics

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Outbound Logistics

C u s t o m e r

Manufacturing Support (inbound logistics) Carload or truckload shipments

Supplier A Supplier B Supplier C Supplier D

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Warehouse

Mixing Warehouse (outbound logistics) 1 Plant A, Product 1 Plant B, Product 2 Plant C, Product 3

Plant D, Product 4 .

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3

4 Customer W 1

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Customer X 1

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Customer Y 1

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Mixing Warehouse (outbound logistics) Plant A, Product 1

1

Plant B, Product 2

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Plant C, Product 3

3

Plant D, Product 4 44

Customer W 1

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4

Customer X Mixing Warehouse

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Customer Y 1

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ConsolidationWarehouse (outbound logistics) Customer

Plant A Plant B

Customer Consolidation Warehouse

Plant C

Plant D

Customer

Breaking bulk

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BreakbulkWarehouse (outbound logistics) Customer 1

Customer 2 Plant

Breakbulk Warehouse

Customer 3

Types of Warehousing • Direct store delivery. • Private warehousing.

Advantages: Control Flexibility in design and operation Long-term cost Better use of human resources. Tax benefits: depreciation. Intangibles: image of stability. . . .

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XYZ Company Warehouse

Disadvantages Fixed costs, especially if built for peak seasons. Investment. Return may be better if money is placed elsewhere.

Types of Warehousing • Direct store delivery. ABC XYZ Public Company Warehouse Warehouse • Private warehousing. • Public warehousing. Advantages:

Disadvantages

Conservation of capital.

Incompatible communications systems.

Able to increase capacity when needed.

Lack of specialized services..

Reduced risk of obsolesence.

May be unavailable when needed. Economies of scale due to warehouse company’s investment Flexibility Tax advantages: some states have no inventory taxes for products in public warehouses. Specific knowledge of costs.

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Types of Public Warehousing General merchandise Refrigerated or cold storage Bonded warehouses. Household goods, furniture. Special commodity

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ABC Public Warehouse

Types of Public Warehousing General merchandise

ABC Public Warehouse

Refrigerated or cold storage Bonded warehouses. Household goods, furniture. Special commodity Bulk storage. Cross-docking facilities (3PL concept). Contract warehousing (can be used in 3PL). .

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Warehouse Characteristics • Increase the number of warehouses and the average size of warehouses decreases. • Factors influencing the number of warehouses: – Cost of lost sales. – Inventory costs. – Warehousing costs. – Transportation costs. .

Warehouse Locations • Market-based – nearest the final customer. • Production positioned – collection points or mixing facilities. • Intermediate positioning between producer and final customer.

Factory

Warehouse

Customer

Cross-docking: Movement from an inbound dock directly to an outbound dock Movement directly from an inbound dock to a sorting process to an outbound dock. Outbound

Inbound

Outbound Outbound

Inbound

Outbound

Inbound

Sorting area

Crossdock in at least two of these conditions: • • • • • • • • •

Product destination is known upon receipt. Destination is ready for immediate delivery. You daily ship to less than 200 locations. More than 70% of products fit conveyors. You receive large quantities of individual items. Products arrive pre-labeled. Some products are time-sensitive. Distribution center is near capacity. At least some inventory is pre-priced.

End of Program.