Storage & Handling Systems
Reasons for Storage
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Reduce transportation – production costs
Coordinate supply and demand
Assist in the production process
Assist in the marketing process
Storage System Functions
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Holding
Consolidation
Break-bulk
Mixing
Consolidation Warehouse
Manufacturer A
10,000 lbs.
10,000 lbs.
Manufacturer B
40,000 lbs.
10,000 lbs.
Consolidation
Warehouse
Manufacturer C
10,000 lbs.
Manufacturer D
Retailer
Break-bulk Warehouse
LTL
Low rate TL
shipment
Customer A
LTL
Manufacturer
Distribution
Warehouse
Customer B
LTL
Customer C
Distribution Warehouse used for
Product Mixing
Product A
Manufacturer A
Products A, B, & C
Customer X
Product B
Manufacturer B
Distribution
Warehouse
Product C
Products A, B, & C
Manufacturer C
Customer Y
Materials-Handling Functions
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Loading & Unloading
Movement to and from storage
Order filling
Storage Alternatives
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Space Ownership
Rented Space
Leased Space
Storage in Transit
Advantages of Space Ownership
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Less expensive warehousing than renting or leasing
(especially if have high utilization of the space)
Higher degree of control over warehousing operations
May be only practical alternative if products require
specialized personnel or equipment (i.e., pharmaceuticals)
Benefits from real estate ownership
May use space for other purposes in the future
Space may serve as base for sales office, private fleet, or
purchasing department
Renting Space in Public Warehouses
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6 most common types of Public Warehouses
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Commodity warehouses
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Bulk storage warehouses
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Limit services to storage & handling of commodities that
spoil easily (lumber, cotton, tobacco, grain, etc.)
Store & handle bulk products (i.e., liquid chemicals, oil,
syrups, etc.). Also mix products & break-bulk as part of their
service)
Temperature-controlled warehouses
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Regulate temperature & humidity in the storage space.
Renting Space in Public Warehouses
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6 most common types of Public Warehouses
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Household goods warehouses
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General merchandise warehouses
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Specialize in storage & handling of household items and
furniture.
Most common type. Store merchandise that does not require
special facilities or special handling
Miniwarehouses
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Small warehouses having unit space from 20 to 200 square
feet. Often grouped in clusters. Intended as extra space –
hence, few services provided.
Advantages of Public Warehouses
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No fixed investment
Lower cost if utilization of private space would be
low
Location flexibility
Leased Space
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Intermediate choice between short-term space
rental in public warehouse and long-term
commitment of private warehousing.
Typically can achieve lower rate in leasing than in
renting the space
Lose some location flexibility since lease contract
will be for specified period of time
Leasing might offer the opportunity to have
control over the storage space
Storage in Transit
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Refers to the time that the goods remain in the
transportation equipment during delivery
Requires coordination between owner of the goods
and provider of the transportation service
May reduce or even eliminate the need for
conventional warehousing
Attractive to firms dealing in seasonal
merchandise or shipments over long distances
Materials-Handling Considerations
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Load Unitization
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Palletization
Containerization
Space Layout
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Storage
Order picking
Storage Equipment Choice
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Racks, shelf boxes, bins, Uframes
Movement Equipment Choice
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Manual equipment
Power-assisted equipment
Fully-mechanized equipment