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Storage has always been important aspect of economic development. 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.
The warehouse is Functions of where the supply chain warehousing include: holds or stores goods. Transportation consolidation Product mixing Cross-docking Service Protection against contingencies Smoothing
Economic benefits of warehousing occur when overall logistics costs are reduced. Four basic economic benefits: 1. Consolidation and break bulk 2. Sorting 3. Seasonal storage 4. Reverse logistics
In consolidation, the warehouse receives materials, from a number of sources, that are combined in exact quantities into a large single shipment to a specific destination. A break-bulk operation receives a single large shipment and arranges for delivery to multiple destinations.
CUSTOMER A BREAK-BULKPLANT A CUSTOMER B WAREHOUSE CUSTOMER C
The basic benefit sorting is to reconfigure freight as it flows from origin to destination. Three types of assortment: Cross-docking Mixing Assembly
The objective of cross docking: to combine inventory from multiple origins into a prespecified assortment for a specific customer. Warehouse that perform in-transit mixing have the net effect of reducing overall product storage and minimizing transportation cost.
The objective of assembly is to support manufacturing operations. Products and components are assembled from a variety of second-tier suppliers by a warehouse, often referred to as lead supplier, located in close to manufacturing plant.
Company A Customer A Or Plant ACompany B Or Distribution center Customer B Plant BCompany C Customer C Or Plant C
Customer WPlant A A B C D Customer X A B C D Transit mixing point Customer YPlant B Product D A B C Customer Z A BPlant C
Vendor A Lead supplierVendor B Assembly plant distribution centerVendor CVendor A RetailVendor B Retail store distribution centerVendor C
Thedirect economic benefit of storage is to accommodate seasonal production or demand.
Reverse logistics includes the activities to support: Returns management Remanufacturing and repair Remarketing Recycling Disposal
Returns management is designed to facilitate the reverse flow of product that did not sell. Remanufacturing and repair facilitate the reverse flow of product following its useful life. Remarketers use coordination and reverse flow to resell product. Recycling returns product following its useful life so that they can be effectively reused. When material cannot be effectively reused, it still may require reverse logistics to dispose of it in the appropriate landfill.
1. Spot-stocking2. Full line stocking3. Value added services
Spot stocking is typically used to support customer accommodation. Manufacturers of highly seasonal products often spot-stock. Under this concept, select inventory is spot- stocked in a local market warehouse in anticipation of responding to customer need during the critical sales period.
The difference between spot-stocking and full line stocking is the degree and duration of warehouse utilization. A spot stocking strategy would temporarily warehouse a narrow product assortment in a large number of warehouse for a limited time period. The full line stocking warehouse improve service by reducing the number of suppliers.
Cross dock Order fulfillment Customer returns Pick Home delivery Pool distribution In transit merge Repair Kan Ban Returnable container Kitting Reverse logistics Labeling Specialty packaging Lot control Store support Mass customization/postpon ement
Handling Handling equipment Handling activities: ▪ Receiving ▪ In-Storage handling: Transfer and selection ▪ Shipping
Storage Stock location Warehouse management system (WMS) Type: ▪ Active storage: quick movement & flexibility (maintain minimal inventory in storage) ▪ Extended storage (maximum space utilization)
Receiving docks Storage space for high-Storage space for low- Storage space for low- volume product volume product volume product Staging and cross dock area Shipping docks
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
Typically operated by the firm owning the product. More flexibility since operating policies, hours, and procedures. Less costly The use of private warehousing is decline.
Rationale for Public Warehousing Limited capital investment Flexibility Economic of scale Public warehousing: General merchandise (electronics, paper, food) Refrigerated (chemical product, medical) Special commodity (bulk material) Bonded (licensed by government) Household goods and furniture
Combine characteristics of private and public. Compensation for seasonality in products. Increased geographical coverage. Ability to test new markets. Managerial expertise and dedicated resources. Less strain on the balance sheet. Possible reduction of transportation costs
Site selection (warehouse location): Service availability Cost (land cost) Expansion Utilities Design: The number of floors Cubic capacity utilization Protection Efficiency
Receiving area Bulk storage Rack storage area area Receiving area Receiving area Receiving areaProduct flow
Product-mix analysis Expansion Material handling Layout: Sizing Warehouse management systems (WMS): Discrete selection: a specific customer order (critical content order) Wave selection/ batch selection: all customer order.
Truck Receiving Truck ReceivingSelection area Storage area Remote storage Selection from storage along line Truck Shipping Truck Shipping
WMS Core functionality: Advanced functionality: Receiving Yard management Put-away Labor management Cycle-count Warehouse optimization Pick Value-added service Task management Planned cross-dock Quality analysis Returns management Replenishment Pack Opportunistic cross-dock Inventory control Work order management ship Interface systems (middleware) ERP—TMS—Material handling—Supply chain planning systems
Accuracy and audits: cycle counting Security Pilferage Damage Safety and maintenance