Mgt of Bus Logistics - Warehousing Decisions

8/6/2019 Mgt of Bus Logistics - Warehousing Decisions

1/46

Chapter 8

Warehousing Decisions


2/46

Chapter 8 Management of Business Logistics, 7th Ed. 2

Learning Objectives -After reading the

chapter, you should be able to do the following:

Discuss the strategic value-adding rolewarehousing plays in the logistics system.

Explain the basic rationale for warehousing inlight of transportation consolidation, productmixing, service, contingency protection, andsmoothing.

Develop an analytical framework for basicwarehousing decisions.


3/46


Learning Objectives Distinguish between the different warehouse

activities requiring space in the warehouse

design. Discuss the major principles of warehouse

layout design.

Compare the use of private versus public

warehousing. Explain public warehousing services,

regulations, and pricing.


4/46


Learning Objectives Describe the decision-making approach used

to determine the number of warehouses in

the logistics system. Discuss the effect of materials handling and

packaging on logistics.

Describe the four dimensions and theobjectives of materials handling.


5/46


Learning Objectives Discuss the different types of materials

handling equipment and the criteria used to

select this equipment. Explain the cross-functional role of packaging

in a company.

Discuss the role of packaging in the logisticssystem.


6/46


Learning Objectives Describe the various types of packaging

materials available and their relative

advantages and disadvantages. Explain the rationale for using bar codes to

identify packages.


7/46


Logistics Profile:

Grainger Industrial Supply Grainger is dedicated to providing excellent

customer service using an effective network of

warehouses and distribution centers providingsame day or next day service.

13.6 million square feet in one nationaldistribution center, two regional and six zonedistribution centers, and 373 local branches

1.5 million customers, 220k SKUs, $4.5 billionin sales, 60k to 80k daily customer orders


8/46


The Nature and

Importance of Warehousing

In 1999, $75 billion, or 0.8 percentof GDP was spent on warehousing.

The total supply of U.S. warehousing space in1999 was 6.1 billion square feet, an increasefrom 1990 of 700 million square feet of space.

Warehousing provides time and place utility for

raw materials, industrial goods, and finishedproducts, allowing firms to use customerservice as a dynamic value-adding competitivetool.


9/46


The Role of the Warehouse in theLogistics System: A Basic Conceptual

Rationale

The warehouse iswhere the supply

chain holds or storesgoods.

Functions ofwarehousing include:

Transportationconsolidation Product mixing Cross-docking

Service Protection against

contingencies Smoothing


10/46


Table 8-1

Warehouse Value-Adding Roles


11/46


Figure 8-1

Transportation Consolidation


12/46


Figure 8-2

Supply and Product Mixing


13/46


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


14/46


Figure 8-3

Basic Warehousing Decisions


15/46


The Ownership Decision Public warehousing

costs mostly all

variable. Private warehousing

costs have a higherfixed cost component.

Thus privatewarehousing virtuallyrequires a high andconstant volume.


16/46


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


17/46


Table 8-2 Firm Characteristics

Affecting the Ownership Decision


18/46


Public Warehousing Rationale for Public Warehousing

Limited capital investment

Flexibility

Public Warehousing Services

Bonded warehousing

Field warehouses


19/46


Public Warehousing Public warehousing

regulation:

Liability Receipts

Public warehousing ratesbased upon:

Value Fragility

Potential damage toother goods

Volume andregularity

Weight density

Services required


20/46


Contract Warehousing Up 23% per year in 2000 to $20.4 billion.

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.

Other issues discussed in Chapter 11.


21/46


The Number of Warehouses Factors Affecting the

Number of Warehouses

Inventory costs

Warehousing costs

Transportation costs

Cost of lost sales

Maintenance ofcustomer service levels

Service small quantitybuyers


22/46


Table 8-3: Factors Affecting the

Number of Warehouses

Factor Centralized Decentralized

Substitutability Low High

Product Value High Low

Purchase Size Large Small

Special Warehousing Yes NoProduct Line Diverse Limited

Customer Service Low High


23/46


Basic Warehouse Operations Movement

Receiving

Put-away Order picking

Shipping

Storage

Stock location

Warehouse Management System(WMS)


24/46


Figure 8-6

Basic Warehouse Operations


25/46


Figure 8-7

The Computerized Warehouse


26/46


Warehouse Layout and Design Develop a demand

forecast.

Determine each itemsorder quantity.

Convert units into cubicfootage requirements.

Allow for growth.

Allow for adequate aislespace for materialshandling equipment.


27/46


Warehouse Layout and Design Provide for the

transportation interface.

Provide for order-picking space.

Provide storage space.

Provide recouping,office, andmiscellaneous spaces.


28/46


Figure 8-8

Warehouse Space Requirements


29/46


Figure 8-9 Principles of

Warehouse Layout Design


30/46


Warehouse Layout and Design Basic needs:

Receiving

Basic storagearea

Order selection

and preparation Shipping


31/46


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 handlingequipment.

Minimize aisle space.

Use full building height.


32/46


Warehouse Layout and Design:

Layout and Design Objectives

Cubic capacity

utilization Protection

Efficiency

Mechanization

Productivity


33/46


Table 8-4: Warehouse

Productivity Metrics Pounds or units per day

Employees per pound moved

Pounds unloaded per hour Pounds picked per hour

Pounds loaded per hour

Percentage of orders correctly filled

Productivity ratio = pounds handled/day divided bylabor hours/day

Throughput= amt of material moved through thesystem in a given time period


34/46


Materials Handling Definition: Efficient short distance

movement in or between buildings and atransportation agency.

Four dimensions

Movement

Time

Quantity

Space

Coordination


35/46


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


36/46


Figure 8-12 Utilization of aWarehouses Cubic Capacity: Principles of

Warehouse Layout Design


37/46


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 materialshandling. Asterisks mark those deserving

special attention.


38/46


Table 8-5

Principles of Materials Handling


39/46


Packaging Interest in packaging is widespread

Logistics

Warehousing

Transportation

Size

Marketing Production

Legal


40/46


The Role of Packaging Identify product and provide information

Improve efficiency in handling and

distribution Customer interface

Protect product


41/46


What Is Packaging? Consumer packaging

Marketing managers primarily concerned

with how the package fits into themarketing mix.

Industrial packaging

Logistics managers primarily concerned

with efficient shipping characteristicsincluding protection, ability to withstandstacking when on a pallet, cube, weight,shape and other relevant factors.


42/46


Packaging Materials Table 8-6 presents a comparison of various

packing material characteristics.

Basic considerations include: Soft materials

Plastic

Environmental issues Recycling (reverse logistics)


43/46


Table 8-6

Comparison of Cushioning Materials


44/46


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


45/46

Chapter 8:Summary and Review Questions

Students should review their knowledge of the chapterby checking out the Summary and Study Questions for

Chapter 8.


46/46

End of Chapter 8 and 8A Slides

Warehousing Decisions

Documents

Mgt of Bus Logistics - Warehousing Decisions