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.
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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
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• 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
.
Warehouse
Movement
Receiving, putting away
.
Warehouse
Movement
Receiving, putting away
Picking, staging, loading
.
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
.
Warehouse
Movement
Receiving, putting away
Picking, staging, loading
Cross-docking
Packaging
Light assembly, blending, kitting *
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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.
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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
.
Receiving, putting away
Picking, staging, loading
Cross-docking
Packaging
Light assembly, blending, kitting
Labeling, shrink wrapping
Breakbulk, consolidation
Warehouse
Movement
.
Receiving, putting away
Picking, staging, loading
Cross-docking
Packaging
Light assembly, blending, kitting
Labeling, shrink wrapping
Breakbulk, consolidation
Transportation
Warehouse
Movement
.
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
.
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
.
.
.
• 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.
.
.
.
.
.
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.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.
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Logistics Concepts
S
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p
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i
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Inbound Logistics
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Outbound Logistics
C
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t
o
m
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Manufacturing Support
(inbound logistics)
Carload or truckload shipments
Supplier A
Supplier B
Warehouse
Supplier C
Supplier D
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Mixing Warehouse
(outbound logistics)
1
Plant A, Product 1
2
3
4
Customer W
1
Plant B, Product 2
Plant C, Product 3
Plant D, Product 4
3
4
Customer X
1
2
3
4
Customer Y
1
.
2
2
3
4
Mixing Warehouse
(outbound logistics)
Plant A, Product 1
Customer W
1
1
Plant B, Product 2
Plant C, Product 3
Plant D, Product 4
22
3
44
2
3
4
Customer X
Mixing Warehouse
1
2
3
4
Customer Y
1
2
3
4
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.
• Private warehousing.
• Public warehousing.
Advantages:
XYZ
ABCCompany
Public Warehouse
Warehouse
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.
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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:
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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.