Supply Chain Logistics Management
Chapter 13: Warehouse Management
ECONOMIC BENEFITS OF
WAREHOUSING
•
•
•
•
Consolidation
Break-bulk or cross dock
Processing/Postponement
Stockpiling
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WAREHOUSE BENEFITS
CONSOLIDATION
Plant
A
Plant B
Consolidation
Warehouses
Customers
A
B
C
Plant
C
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Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
WAREHOUSE BENEFIT
DISTRIBUTION ASSORTMENT
Plant
A
Plant B
Plant
C
Customer A
Distribution
Center
Customer B
Customer C
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Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
WAREHOUSE BENEFIT
BREAK BULK OPERATION
Customer
A
Plant A
Break Bulk
Warehouse
Customer
B
Customer
C
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Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
SERVICE BENEFITS OF
WAREHOUSING
•
•
•
•
•
Spot stock
Assortment
Mixing
Production support
Market presence
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Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
WAREHOUSING BENEFITS
IN-TRANSIT MIXING
Customer
W
A-B-C-D
Plant A
Warehouse
Transit
Mixing Point
Plant B
Product D
Plant C
Customer X
A-B-C-D
Customer Y
A-B-C
Customer Z
A-B
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
WAREHOUSING BENEFITS
MANUFACTURING SUPPORT
Vendor
A
Vendor
B
Manufacturing
Warehouse
Assembly
Plant
Vendor
C
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Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
WAREHOUSING ALTERNATIVES
• Options
–
–
–
–
Private
Public
Contract
Other
• Select warehousing option with best strategic
fit
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
SHARE OF WAREHOUSE BUSINESS
33%
Private
Contract
Public
14%
53%
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
DECISION FACTORS
•
•
•
•
•
•
Strategy
Type of need
Information system
Control
Product characteristics
Culture
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
STRATEGY
•
•
•
•
•
Full line
Centralized postponement
Utilization of current capacity and resources
Market presence
Segment focused
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
USE OF ALTERNATIVES
(Percent of Facilities)
Type of Firm
Grocery
Drug/HC
Chemical
Automotive
Electronics
Consumer
Goods
Private
28
65
49
84
84
57
Public
58
30
42
9
7
38
Contract
14
5
9
7
9
5
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
WHO USES THE MOST FACILITIES?
Type of Company
Grocery
Drugs/Healthcare
Chemical
Automotive
Electronics
Consumer Goods
Number of Facilities
14
8
25
6
8
5
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
TYPE OF NEED
•
•
•
•
•
Turn inventory
Promotional inventory
Speculative inventory
Custom services and activities
Seasonal
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
INFORMATION SYSTEM
•
•
•
•
Communication capabilities
System compatibility
Handling technologies
Activity based costing
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
CONTROL
•
•
•
•
Customs and bonding
Temperature
Secrecy
Lot control and recall
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
PRODUCT CHARACTERISTICS
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•
•
•
Handling characteristics
Storage characteristics
Speed of movement
Flexibility
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
NEW WAREHOUSES WILL BE:
22%
Larger
28%
Same
Smaller
50%
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
CULTURE
• Unionization
• Expertise
• Industry experience and economies
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
VALUE-ADDED WAREHOUSING
• Packaging
• Refined unitization
– Adjust pallets or shrink-wrap
– Change containers
•
•
•
•
Production specialization
Product climatization
Recall capability
Market confidentiality
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
TRADITIONAL HANDLING
• Palletizing, put away, storage,
replenishment, selection and loading for
shipment
• Food industry products handled up to 17
times in SC and in DC 4.3 times
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
CROSS-DOCKING
• Products received, selected, repackaged,
loaded for shipment w/o storage
• Enabled by conveyors & sortation
equipment
• Used with general merchandise & food
• Fast moving products replenished using
POS/planagram systems
• Used in large (800K to 1,200K sq.ft..) DCs
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
FOOD INDUSTRY
Less Impediments to C-D
• Scanning data-<OC
• Better category mgt. &
tracking systems
• Expansion forward
w/mfg. pre-assembly
multi-SKU pallets
• Bar-code scanning at
case & pallet levels
• Advanced ship
• EDI transactions
• Automated
replenishment
programs
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
CROSS-DOCKING RESULTS
• MFG. added costs
+$.10 /case
• Average distributor
cost savings $.35 /case
• Break down store
sorted cases saves $.50
to $.55/case
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
ECR PILOT C-D TESTS
RETAIL & WHOLESALE
• <Inventory carrying costs
• <Storage & processing space
• <Product handling(damage, shrinkage, out of
date products, returns, DC labor costs
• Improved sales through displays
• >Logistics savings to product sales support
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
STUDY OF C-D
IN INDUSTRY
• Only 76% space of
traditional
• Only 57% of direct
labor
• Case/hour increases
Up to 75%
• Excellent payback
periods
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
CONTRACT WAREHOUSING
• Storage space, software systems, labor &
management dedicated to a specific
shipper’s logistics system
• Resources customized to a specific client’s
requirements
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
DIFFERENTIATION
CONTRACT VS. PUBLIC
• Productivity sharing
• Real estate
arrangements
• Business
relationships
• Pricing agreements
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
INTEGRATED LOGISTICS
SERVICES
• Mission-Provide services to meet all or
significant part of a shipper’s total logistical
requirements
• Titles-Third party logistics, contract
logistics, logistics utilities, and integrated
logistics service providers
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
CONSIDERATION OF QUALITATIVE
DECISION FACTORS
Private
Contract
Public
Presence synergy
Industry synergy
Operating synergy
Location flexibility
Scale economies
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
TECHNOLOGY
•
•
•
•
•
•
Remote Computing
Automatic TrailerUL
EDI
Radio Frequency
Sortation Systems
HiDensity Unit Load
Automatic Storage
• Scanning
• Pick-to-Light
• M’tl Handling Auto.
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
WAREHOUSING IN FUTURE
TOPIC OF WORKSHOP
• Evolutionary cycles
– Become paperless
– Become shelfless
– Become seamless
• External factors
– Global networks
– People
–
Third party
– Technology
• Reverse logistics
• Company examples
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
CONCLUSION
• Warehouse strategy is evolving to more
focused and flexible
• Technology and expertise are key warehouse
alternative determinants
• Operating and industry synergies are more
important factors
Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.