Supply Chain Management

Warehousing

Supply Chain Management

WarehouseA warehouse is a commercial building for storage of goods.

Warehouses are used by manufacturers, Wholesalers, retailers, importers,exporters, customs etc.

They are usually large plain buildingsin industrial areas of cities and towns.

Today warehouses are not used to store things but rather to

receive, breakdown, repackage and distribute components to

a manufacturing location or finished products to customers


http://en.wikipedia.org/wiki/Image:Automatisches_Kleinteilelager.jpg

Warehouses Some warehouses are completely automated, with very

few workers working inside.

The pallets and product are moved with a system of automated conveyors and automated storage and retrieval machines coordinated by programmable logic controllers

The direction and tracking of materials in the warehouse is coordinated by the WMS, or Warehouse Management System, a database driven computer program.

The WMS is used by logistics personnel to improve the efficiency of the warehouse by directing putaways and to maintain accurate inventory by recording warehouse transactions.


FUNCTIONS OF A WAREHOUSE


● Receiving, Storing, switching, change SKU size,

● Allows stock rotation (FIFO, LIFO),● Buffer stock for customers – retail or

commercial,● Command and control centre – inventory

control,● Enables off-the-shelf (JIT) for customers,● Provides a more-local 'Market Presence'.

FUNCTIONS OF A WAREHOUSE Consolidation and Break-Bulk Assortment (Cross Docking, Mixing) Postponement (Packaging, Labelling) Stockpiling (Seasonal, Bulk-Buy) Reverse Logistics



Consolidation:Groupage (Consolidation) Goods from a number of suppliers are

grouped together for single delivery points,

A range of goods from single suppliers are grouped together for each customer.


Plant 1

Plant 2

Plant 3

Consolidation Warehouse Store B

Store C

Store A


Break Bulk:• Receives customer orders from manufacturer and

delivers to different customers.

A break bulk operation receives combined customer orders from manufacturers and ships them to individual customers.

The break bulk warehouse sorts or splits individual orders and arranges for local delivery.


PlantBreak-BulkWarehouse Store B

Store C

Store A


CROSS-DOCK =

No storage(?)Cross-dock (from multiple suppliers):● goods sorted as they arrive,● goods moved across dock and loaded onto trailers,● benefits - optimal vehicle use and low handling

costs,● requires sophisticated planning techniques.



Cross Docking• Transferring goods

• from incoming trucks at receiving docks

• to outgoing trucks at shipping docks

• Avoids placing goods into storage

• Requires suppliers provide effective addressing (bar codes) and packaging that provides for rapid transshipment

In-comin

g Outgoing

Sainsbury's distribution timetable● Early evening -

Goods arrive at warehouse from supplier.● Overnight -

Sorted and packed.● Early morning -

Despatched.● 7.30am -

On store floor.


Warehouse Ownership Classification: Private (Ownership or Lease) Public (Standardized service, relationship is less

important) Contract (Customized, mutual benefits, long

term commitment, Good relationship)


Warehouse Planning: Location Analysis Site selection Design Product mix Future expansion


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Supply Chain ManagementLocation Analysis

Before selecting site, there is some location analysis techniques that could assist company in selecting a

general area for warehouse location.o Location Factor Rating

The location factor rating technique may be used when many sites are available, and each site has some appealing characteristics. The purpose of the technique is to "score" each site to be somewhat objective about the location decision. The steps in using the technique are:

Center-of-Gravity Technique The center-of-gravity technique can be used

when multiple suppliers or customer bases exist at different geographic locations, and it is economically sensible to locate centrally to service all of them. In general, transportation costs are a function of distance, weight, and time.


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Supply Chain ManagementSite Selection

Once location analysis is completed, a specific building site must be selected.

The primary factors in site selection are the availability of services and cost.

The cost of procurement is the most important factor governing site selection.

Beyond procurement cost, setup and operating expenses such as rail sidings, utility expenses, taxes, insurance rates, and highway access require evaluation.

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Supply Chain ManagementSite Selection

Several other requirements must be satisfied before a site is purchased

Necessary utilities must be available. The soil must be capable of supporting the

structure, and the site must be sufficiently high to afford proper drainage

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Supply Chain ManagementDesign Criteria: Warehouse design criteria address physical

facility characteristics and product movement. Three factors to be considered in the design

process are: ◦ the number of stories in the facility, ◦ height utilization, and ◦ product flow.

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Supply Chain ManagementNumber of stories in the facility The ideal warehouse design is limited to a single

story so that product does not have to be moved up and down.

The use of elevators to move product from one floor to the next requires time and energy.

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Supply Chain ManagementHeight Utilization: Regardless of facility size, the design should maximize the

usage of the available cubic space by allowing for the greatest use of height on each floor.

Most warehouses have 20- to 30-foot ceilings, although modern automated facilities can effectively use ceiling heights up to 100 feet.

Maximum effective warehouse height is limited by the safe lifting capabilities of material-handling equipment, such as forklifts.

Product-Mix Considerations The design and operation of a warehouse are

related directly to the character of the product mix.

Each product should be analyzed in terms of annual sales, stability of demand, weight, and packaging.

It is also desirable to determine the total size and weight of the average order processed through the warehouse.


Future Expansion Future expansion is often neglected when an

enterprise consider initial establishment of its warehouse facilities.

Well-managed organizations often establish 5 to 10 year expansion plans.

Such expansion considerations may require purchase or option of a site 3 to 5 times the size of the initial structure.


Warehouse Security Pilferage protection (Theft,) Product deterioration (Damages)


Safety and Maintenance Health and safety Incidents Environment


Warehouse management System (WMS)

• Computer software designed to manage the storage and movement of items throughout the warehouse.


Home Assignment:

Role of Barcodes, RFID’s and Voicepicking technology in Warehouse

&Role of MRP, MRPII and ERP systems in

SCM


End of Topic


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Supply Chain Management