SCM Warehousing

Supply Chain Logistics Management
Warehousing - more complex than other

areas of logistics operations
Traditionally viewed as serving primarily
storage function
Strategic Warehousing
Warehouse Operations
Warehouse Ownership Arrangements
Warehouse Management Decisions
Economic Benefits
Service Benefits
Economic Benefits
Consolidation and Break-Bulk
Plant 1
Store A
Plant 2
Consolidation
Warehouse
Store B
Store C
Plant 3
Lowest freight, timely & controlled delivery,

reduced congestion at customers docks
Enables inbound / outbound movements to
be consolidatedlower shipment costs
Quicker delivery
Store A
Plant
Break-Bulk
Store B
Warehouse
Store C
Economy of scale due to bulk transportation
Customer requirements also met by breaking bulk
Economic Benefits
Sorting (cross-docking; in-transit mixing; sorting/sequencing)
Sorting by Distribution Center Cross Docking
Plant 1
Store A
Distribution
Plant 2
Store B
Center
Store C
Plant 3
Sorting by In-Transit Mixing
Store A
Plant
Producing
Product 1
Plant
Producing
Product 2
Products 1, 3, 4
Transit Mixing Point

Product 4
Plant
Producing
Product 3
Store B
Products 1, 2, 3
Store C
Products 1, 2, 4
Order Assembly by Sorting/Sequencing
Supplier/
Manufacturing
Plant 1
Vendor of
Component
A
Supplier/
Vendor of
Component
B
Components
A,B,C
Order Assembly by
Sorting/Sequencing
Manufacturing
Plant 1
Components C, B
Supplier/
Manufacturing
Plant 1
Vendor of
Component
C
Components
C,B,A
Economic Benefits
Sorting
Seasonal StorageToys & Lawn Furniture sold during a short
marketing periodbut produced all round the year
Economic Benefits

Sorting
Seasonal Storage
Reverse Logisticsreturns management(unsold items /
recalls), remanufacturing (updating the product), remarketing
(reselling products no longer reqd by original user), recycling
(after useful life of product decomposing it to its components
for reuse), disposal (materials which cannot be reused---for
landfill purposes) etc.
Economic Benefits
Service Benefits
Spot Stocking-seasonal products in anticipation in
strategic locations (key customers?)eliminated
after the season..
Full Line Stocking
Value Added Services
Customer returns, home delivery, labeling, reverse
logistics, postponement, packing, repair, RFID tag
application, sequencing, returnable container mngt.
Product Handlingprinciples
longer handling movements preferred vs a number
of short handlings (Product damage ??)
Move largest qty of loads possible-scale economies
Move cases grouped on pallets / containers
Product Handling
Receivingunloading- usually mechanical means
Lift truck / conveyors / manual
Unitization-enables rapid movement of goods & quick release of
vehicles / container
In-Storage Handling
Transfer(3 types)-Receiving area to storage area (lift trucks), Storage
area to Order selection area, Selection area to Shipping staging area
Selectionvery Imp area-materials, parts & products grouped to be in
line with customer order reqts.
Shipping
Order verification & loading of transport eqpt. (low vol)

Unitized / palletized loads-facilitates unloading later
Shipment content verification-change of ownership
Trailers / containers are sealed when fully loaded & ready for shipping
Product Storage
Specific locations (SLOTS) based on velocity,
weight. Other spl storage requirements
High-velocity products-positioned near doors, main aisles,
lower levels in racks
Low-velocity itemsdistant from main aisles, higher up
on racks
Heavy itemslow to the ground to minimize lifting
Bulk / low-density products require volume- use floor
space along outside walls.
Smaller items-use storage shelves, bins, drawers.
Extended storage
Seasonal items, product conditioning (ripening)
Quality checks
Product Handling
Product Storage
Active
Extended

Warehouse Decisions
Warehouse Decisions
Private Warehouses
Public Warehouses
Contract Warehouses
Warehouse Decisions
Private Warehouses
Public Warehouses
Contract Warehouses
Warehouse Decisions
Private Warehouses
Control
Operating Flexibility
Cost
Public Warehouses
Contract Warehouses
Warehouse Decisions
Private Warehouses
Public Warehouses
Contract Warehouses
Warehouse Decisions
Private Warehouses
Public Warehouses
Contract Warehouses
Warehouse Decisions
Warehouse Decisions
Warehouse Decisions
Site Selection
Design
Size & Expansion Capabilities
Audit Activities
Security
Safety & Maintenance
Warehouse Decisions
Site Selection
Design
Audit Activities
Security
Warehouse Decisions
Site Selection
Design
Audit Activities
Security
Warehouse Decisions
Site Selection
Design
Audit Activities
Security
Warehouse Management Systems (WMS)

Headquarters
Supply Chain
Vendors
Host / ERP
EDI
Internet
Sales Info
EDI
Internet
Forecasting
Systems
Manufacturing Plant
Advanced
Planning
System
Host / ERP
OMS
EDI
Internet
Exchange
Portal
EDI
Internet
POS
Scanner Data
TMS
Manufacturing
Execution
System
Retail Customers
With POS Scanners
RFDC or Barcode
Scanner or Pager
YMS
Transportation
Manufacturing to Warehouse
EDI
Internet
or RFDC
Warehouse
(WMS)
RFDC
EDI
Internet
or RFDC
EDI
Internet
RFDC
RFDC or Pager
YMS
Warehouse
(WMS)
Transportation
Warehouse to Customer
RFDC
Scanners
Yard Management Systems (YMS)

Headquarters
Supply Chain
Vendors
Host / ERP
EDI
Internet
Sales Info
EDI
Internet
Forecasting
Systems
Manufacturing Plant
Advanced
Planning
System
Host / ERP
OMS
EDI
Internet
Exchange
Portal
EDI
Internet
POS
Scanner Data
TMS
Manufacturing
Execution
System
Retail Customers
With POS Scanners
RFDC or Barcode
Scanner or Pager
EDI
Internet
or RFDC
EDI
Internet
or RFDC
RFDC or Pager
YMS
Transportation
Manufacturing to Warehouse
Warehouse
(WMS)
RFDC
EDI
Internet
RFDC
Warehouse
(WMS)
YMS Transportation
Warehouse to Customer
RFDC
Scanners
The Role of the Warehouse in the Logistics

System: A Basic Conceptual Rationale
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
32
Table 8-1
Warehouse Value-Adding Roles
33
Figure 8-1
Transportation Consolidation
34
Figure 8-2
Supply and Product Mixing
35
Basic Warehouse Decisions:
A Cost Trade-off Framework
Ownership
Public versus contract versus private
Centralized or Decentralized Warehousing
How many
Location
Size
Layout
What products where
36
Figure 8-3
Basic Warehousing Decisions
37
The Ownership Decision
Public warehousing costs

mostly all variable.
Private warehousing costs
have a higher fixed cost
component.
Thus private warehousing
virtually requires a high
and constant volume.
38
The Ownership Decision
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
39
Table 8-2
Firm Characteristics Affecting the Ownership Decision
40
Public Warehousing
Rationale for Public Warehousing

Limited capital investment
Flexibility
Public Warehousing Services

Bonded warehousing
Field warehouses
41
Public Warehousing
Public warehousing
regulation:
Liability
Receipts
Public warehousing rates based

upon:
Value
Fragility
Potential damage to other
goods
Volume and regularity
Weight density
Services required
42
Contract Warehousing
Up 23% per year in 2000 to $20.4 billion.

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.
43
The Number of Warehouses
Factors Affecting the

Number of Warehouses
Inventory costs
Warehousing costs
Transportation costs
Cost of lost sales
Maintenance of customer
service levels
Service small quantity
buyers
44
Table 8-3: Factors Affecting the Number of Warehouses
Factor
Centralized
Decentralized
Substitutability
Low
High
Product Value
High
Low
Purchase Size
Large
Small
Special Warehousing
Yes
No
Product Line
Diverse
Limited
Customer Service
Low
High
45
Basic Warehouse Operations
Movement
Receiving
Put-away
Order picking
Shipping
Storage
Stock location
Warehouse Management System (WMS)
46
Figure 8-6
Basic Warehouse Operations
47
Figure 8-7
The Computerized Warehouse
48
Warehouse Layout and Design
Develop a demand forecast.

Determine each items order
quantity.
Convert units into cubic
footage requirements.
Allow for growth.
Allow for adequate aisle
space for materials handling
equipment.
49
Provide for the

transportation
interface.
Provide for orderpicking space.
Provide storage space.
Provide recouping,
office, and
Supply Chain
Logistics Management
miscellaneous
spaces.
50
Figure 8-8
Warehouse Space Requirements
51
Figure 8-9
Principles of Warehouse Layout Design
52
Basic needs:
Receiving
Basic storage area
Order selection and
preparation
Shipping
53
Layout and Design Principles:

Use one story facilities where
possible.
Move goods in a straightline.
Use the most efficient
materials handling
equipment.
Minimize aisle space.
Use full building height.
54
Warehouse Layout and Design: Layout and Design Objectives
Cubic capacity
utilization
Protection
Efficiency
Mechanization
Productivity
55
Table 8-4: Warehouse Productivity Metrics
Pounds or units per day

Employees per pound moved
Pounds unloaded per hour
Pounds picked per hour
Pounds loaded per hour
Percentage of orders correctly filled
Productivity ratio = pounds handled/day divided by
labor hours/day
Throughput = amt of material moved through the system in
a given time period
Chapter 8 SupplyManagement
Business
Chain LogisticsofManagement
56
Materials Handling
Definition: Efficient short distance

movement in or between buildings and a
transportation agency.
Four dimensions
Movement
Time
Quantity
Space
Coordination
57
Objectives of Materials Handling
Increase effective capacity

Minimize aisle space
Reduce product handling
Develop effective working
conditions
Reduce heavy labor
Improve logistics service
Reduce cost
58
Utilization of a Warehouses
Cubic Capacity: Principles of Warehouse
Layout Design
Figure 8-12
59
Guidelines and Principles for Materials Handling
To effectively plan and control materials

handling, the logistics manager should
recognize some guidelines and principles.
Table 8-5 lists 20 of the most commonly
accepted principles of effective materials
handling. Asterisks mark those deserving
special attention.
60
Table 8-5
Principles of Materials Handling
Chapter 8 SupplyManagement
Business
Chain LogisticsofManagement
61
Packaging
Interest in packaging is widespread

Logistics
Warehousing
Transportation
Size
Marketing
Production
Legal
62
The Role of Packaging
Identify product and provide information

Improve efficiency in handling and
distribution
Customer interface
Protect product
63
What Is Packaging?
Consumer packaging
Marketing managers primarily concerned with
how the package fits into the marketing mix.
Industrial packaging
Logistics managers primarily concerned with
efficient shipping characteristics including
protection, ability to withstand stacking when
on a pallet, cube, weight, shape and other
relevant factors.
64
Packaging Materials
Table 8-6 presents a comparison of various

packing material characteristics.
Basic considerations include:
Soft materials
Plastic
Environmental issues
Recycling (reverse logistics)
65
Table 8-6
Comparison of Cushioning Materials
66
Bar Coding
Standard markings that can be read by automatic or

handheld scanners that allow for labor saving logistical
activities for all supply chain members.
Bar Codes contain information regarding:
Vendor
Product type
Place of manufacture
Product price
67

SCM Warehousing

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Supply Chain Logistics Management

Supply Chain Logistics Management

Warehousing - more complex than other

Supply Chain Logistics Management

Supply Chain Logistics Management

Supply Chain Logistics Management

Supply Chain Logistics Management

Lowest freight, timely & controlled delivery,

Supply Chain Logistics Management

Supply Chain Logistics Management

Supply Chain Logistics Management

Sorting by Distribution Center Cross Docking

Supply Chain Logistics Management

Sorting by In-Transit Mixing

Transit Mixing Point

Supply Chain Logistics Management

Order Assembly by Sorting/Sequencing

Supply Chain Logistics Management

Supply Chain Logistics Management

Consolidation and Break-Bulk

Supply Chain Logistics Management

Supply Chain Logistics Management

Order verification & loading of transport eqpt. (low vol)

Supply Chain Logistics Management

Supply Chain Logistics Management

Warehouse Ownership Arrangements

Supply Chain Logistics Management

Supply Chain Logistics Management

Warehouse Management Systems (WMS)

Supply Chain Logistics Management

Yard Management Systems (YMS)

Supply Chain Logistics Management

The Role of the Warehouse in the Logistics

Supply Chain Logistics Management

Supply Chain Logistics Management

Supply Chain Logistics Management

Supply Chain Logistics Management

Basic Warehouse Decisions:

A Cost Trade-off Framework

Centralized or Decentralized Warehousing

Supply Chain Logistics Management

The Ownership Decision

Public warehousing costs

Supply Chain Logistics Management

The Ownership Decision

Firm Characteristics Affecting the Ownership Decision

Supply Chain Logistics Management

Rationale for Public Warehousing

Public Warehousing Services

Supply Chain Logistics Management

Public warehousing rates based

Supply Chain Logistics Management

Up 23% per year in 2000 to $20.4 billion.

Supply Chain Logistics Management

The Number of Warehouses

Factors Affecting the

Table 8-3: Factors Affecting the Number of Warehouses

Supply Chain Logistics Management

Basic Warehouse Operations

Supply Chain Logistics Management

Supply Chain Logistics Management

Warehouse Layout and Design

Develop a demand forecast.

Supply Chain Logistics Management