Business Logistics & Transportation Chapter 9

Warehousing Value

* contributes value in the logistics process
* traditional view: a place to hold or store inventory
* contemporary view: the warehouse functions to mix inventory assortments to meet customer requirements

Warehousing Types

1. distribution centers
2. consolidation terminals
3. break-bulk facilities
4. cross-docks

Strategic Warehousing

offers manufacturers a way to reduce dwell time of parts and materials

Economic Benefits of Strategic Warehousing

occur when overall logistics costs are reduced

* consolidation and break-bulk
* sorting
* seasonal storage
* reverse logistics

Service Benefits of Strategic Warehousing

justified by sales improvements that more than offset added cost

* spot stocking
* full line stocking
* value added services

Consolidation

occurs when a warehouse receives materials from a number of sources and combines them into exact quantities for a specific destination

Break-Bulk

occurs when a warehouse receives a single large shipment and then breaks the sjopment down into individual deliveries to multiple destinations

Sorting

* basic benefit is to reconfigure freight as it is being transported from origin to destination
* 3 basic types:
* cross-docking
* mixing
* assembly

Cross-Docking

* combines inventory from multiple origins into a pre-specified assortment for a specific customer
* highly dependent on information technology

Mixing

combines inventory from multiple origins (like cross-docking) but also adds items that are regularly stocked at the mixing warehouse

Assembly

occurs when products or components from 2nd tier suppliers are assembled by a warehouse located near the manufacturing plant

Seasonal Storage

* produces direct benefit by accommodating seasonal demand and/or production
* storage provides and inventory buffer, which allows production efficiencies within the constraints imposed by material sources and consumers

Seasonal Demand

lawn furniture and toys

Seasonal Production

agricultural products

Reverse Logistics Processing

includes activities such as:

* returns management
* remanufacturing and repair
* recycling
* disposal

Returns Management

recalls or product that did not sell

Remanufacturing and Repair

repairing/refurbishing equipment

Recycling

returning product following its useful life with the objective of decomposing it into its component materials so they can be effectively reused

Disposal

for material which cannot effectively be reused

Spot-Stocking

positioning of inventory for seasonal or promotional demand

Full Line Stocking

provides one-stop shopping capability for goods from multiple suppliers

Value-Added Services

Includes any work that creates a greater value for customers

Warehouse Operations

includes to major activities:

* handling
* storage

Handling

must optimize movement continuity and efficiency

Receiving

unloading the arriving vehicles

In-Storage

* moving goods within the warehouse for storage (transfer) or order selection (picking)
* items may be moved to a staging area in preparation for shipping

Shipping

verifying the order and loading the departing vehicles

Storage

* plans should consider product velocity as a major factor in determining the warehouse layout
* it is essential that products be assigned a specific locations in the ware house called slots

Slotting

determines specific locations for the product based on velocity, weight, and special storage requirements

Velocity

how fast the goods move

Weight

how heavy is the product

Special Storage Requirements

how large or small, does it require rack or bin storage

Active Storage

* storage for basic inventory replenishment
* focuses on quick movement
* includes flow-through or cross-dock distribution

Extended Storage

storage for inventory held in excess of period for normal replenishment

Private Warehousing

warehouse operated by the firm owning the product

Public Warehousing

service company owns warehouse and hires out space and services

Contract Warehousing

* combines elements of private and public operations
* usually long-term relationship or contract between a firm and the warehousing operator

Network Deployment

combination of private, public and contract facilities used by a firm

Site Selection

* warehouse decisions that determine handling and storage efficiency:
* identify broad geography where an active warehouse meets service, economic and strategic requirements
* selection and number of retail outlets drives location of support warehouses
* final selection should be preceded by extensive analysis

Warehouse Management System (WMS)

integrate procedures and software support to standardize storage and handling work procedures

Discrete Selection

when a specific customer's order is selected and prepared for shipment as a single work assignment

Wave/Batch Selection

when orders are processed through zones of the warehouse assigned to specific employees

WMS Functionality and Decision Support Benefits

1. put-away
2. task interleaving
3. pick/replenishment
4. slotting
5. cross-docking
6. inventory visibility
7. work queue resolution
8. error correction
9. simulations
10. return goods
11. cycle counts

Put-Away

improved productivity and cube utilization

Task Interleaving

routing of fork trucks on demand as contrasted to predetermined assigned tasks, areas, or sequences

Pick/Replenishment

* direct picking from single or multiple locations including pick to assure expiration date compliance
* facilitates replenishment of pick location inventories when appropriate

Slotting

variable slot or product placement locator assignment to enhance space utilization

Cross-Docking

facilitate direct receipt to shipment flow

Inventory Visibility

* tracking specific inventory lots by warehouse location as well as daily visibility of receipts
* date specific lot control

Work Queue Resolution

identification of alternative ways to rapidly or efficiently resolve work constraints or queues

Picking Strategy

routines to perform selected picking strategies

Error Correction

* ability to identify, resolve, and correct data errors in real time
* ability to identify and resolve differences in purchase orders or advanced shipment notifications (ASN) and actual quantities or product received

Simulations

performance of real-time decision support scenarios to assist in operational decision making

Return Goods

facilitate processing and audit compliance for reverse logistics programs

Cycle Counts

ability to conduct and resolve real-time inventory counts