WAREHOUSING

By. Akhmad Suryana

Storage has always been important aspect of economic development.

Warehousing provides time and place utility for raw materials, industrial goods, and finished products, allowing firms to use customer service as a dynamic value-adding competitive tool.

The warehouse is where the supply chain holds or stores goods.

Functions of warehousing include: Transportation

consolidation Product mixing Cross-docking Service Protection against

contingencies Smoothing

Economic benefits of warehousing occur when overall logistics costs are reduced.

Four basic economic benefits:1. Consolidation and break bulk2. Sorting 3. Seasonal storage4. Reverse logistics

In consolidation, the warehouse receives materials, from a number of sources, that are combined in exact quantities into a large single shipment to a specific destination.

A break-bulk operation receives a single large shipment and arranges for delivery to multiple destinations.

PLANT ABREAK-BULK WAREHOUSE

CUSTOMER C

CUSTOMER B

CUSTOMER A

The basic benefit sorting is to reconfigure freight as it flows from origin to destination.

Three types of assortment: Cross-docking Mixing Assembly

The objective of cross docking: to combine inventory from multiple origins into a prespecified assortment for a specific customer.

Warehouse that perform in-transit mixing have the net effect of reducing overall product storage and minimizing transportation cost.

The objective of assembly is to support manufacturing operations.

Products and components are assembled from a variety of second-tier suppliers by a warehouse, often referred to as lead supplier, located in close to manufacturing plant.

Company AOr

Plant A

Company COr

Plant C

Company B Or

Plant B

Distribution center

Customer A

Customer B

Customer C

Customer W

Customer X

Customer Y

Customer Z

A B C D

A B C D

A B C

A B

Transit mixing point

Product D

Plant A

Plant B

Plant C

Vendor A

Vendor C

Vendor B

Vendor A

Vendor C

Vendor B

Lead supplier

distribution center

Assembly plant

Retail distribution

centerRetail store

The direct economic benefit of storage is to accommodate seasonal production or demand.

Reverse logistics includes the activities to support: Returns management Remanufacturing and repair Remarketing Recycling Disposal

Returns management is designed to facilitate the reverse flow of product that did not sell.

Remanufacturing and repair facilitate the reverse flow of product following its useful life.

Remarketers use coordination and reverse flow to resell product.

Recycling returns product following its useful life so that they can be effectively reused.

When material cannot be effectively reused, it still may require reverse logistics to dispose of it in the appropriate landfill.

1. Spot-stocking2. Full line stocking3. Value added services

Spot stocking is typically used to support customer accommodation.

Manufacturers of highly seasonal products often spot-stock.

Under this concept, select inventory is spot-stocked in a local market warehouse in anticipation of responding to customer need during the critical sales period.

The difference between spot-stocking and full line stocking is the degree and duration of warehouse utilization.

A spot stocking strategy would temporarily warehouse a narrow product assortment in a large number of warehouse for a limited time period.

The full line stocking warehouse improve service by reducing the number of suppliers.

Cross dock Customer returns Home delivery In transit merge Kan Ban Kitting Labeling Lot control Mass

customization/postponement

Order fulfillment Pick Pool distribution Repair Returnable

container Reverse logistics Specialty

packaging Store support

Handling Handling equipment Handling activities:

▪ Receiving▪ In-Storage handling: Transfer and selection▪ Shipping

Storage Stock location Warehouse management system (WMS) Type:

▪ Active storage: quick movement & flexibility (maintain minimal inventory in storage)

▪ Extended storage (maximum space utilization)

Receiving docks

Shipping docks

Storage space for low-volume product

Storage space for low-volume product

Staging and cross dock area

Storage space for high-volume product

Factors to consider Throughput volume Stability of demand Density of market area to be served Security and control needs Customer service needs Multiple use needs of the firm

Typically operated by the firm owning the product.

More flexibility since operating policies, hours, and procedures.

Less costlyThe use of private warehousing is

decline.

Rationale for Public Warehousing Limited capital investment Flexibility Economic of scale

Public warehousing: General merchandise (electronics, paper, food) Refrigerated (chemical product, medical) Special commodity (bulk material) Bonded (licensed by government) Household goods and furniture

Combine characteristics of private and public.

Compensation for seasonality in products. Increased geographical coverage. Ability to test new markets. Managerial expertise and dedicated

resources. Less strain on the balance sheet. Possible reduction of transportation costs

Site selection (warehouse location): Service availability Cost (land cost) Expansion Utilities

Design: The number of floors Cubic capacity utilization Protection Efficiency

Product flow

Receiving area

Receiving area

Receiving area

Receiving area

Bulk storage

area

Rack storage

area

Product-mix analysis Expansion Material handling Layout: Sizing Warehouse management systems (WMS):

Discrete selection: a specific customer order (critical content order)

Wave selection/ batch selection: all customer order.

Truck Receiving

Storage areaSelection area

Truck Shipping

Truck Receiving

Truck Shipping

Remote storage

Selection from storage along line

Core functionality:ReceivingPut-awayCycle-countPickTask managementQuality analysisReplenishmentPackOpportunistic cross-dockInventory controlWork order managementship

Advanced functionality:Yard managementLabor managementWarehouse optimizationValue-added servicePlanned cross-dockReturns management

WMS

Interface systems (middleware)

ERP—TMS—Material handling—Supply chain planning systems

Accuracy and audits: cycle countingSecurity

Pilferage Damage

Safety and maintenance