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Lecture 5 Warhousing

Warehousing plays a key role in logistics by facilitating the movement of goods between production and consumption. There are various types of warehouses like distribution centers that emphasize rapid movement and cross-docking facilities that receive and ship goods within a day. When designing a warehouse, trade-offs must be made between space, labor, and automation based on factors like the volume and flow of goods. Efficient warehouse operations and safety are important challenges to address.

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136 views31 pages

Lecture 5 Warhousing

Warehousing plays a key role in logistics by facilitating the movement of goods between production and consumption. There are various types of warehouses like distribution centers that emphasize rapid movement and cross-docking facilities that receive and ship goods within a day. When designing a warehouse, trade-offs must be made between space, labor, and automation based on factors like the volume and flow of goods. Efficient warehouse operations and safety are important challenges to address.

Uploaded by

Moahmed sheikh abdullahi
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Lecture 5

Warehousing Management
Lecture Objectives
• To understand the role of warehouses and
distribution centers in a logistics system
• To identify the various types and functions of
warehouses
• To distinguish the various alternatives available
in warehouse design
• To examine the different types of handling
equipment available
• To analyze the issue of employee safety in
warehousing
The Role of Warehousing in Logistics System
• Warehousing
 refers to “that part of the firm’s logistics system that
stores products (raw materials, part, good-in-
process, finished goods) at and between points of
origin and point of consumption.”
• Warehousing and transportation are substitutes
for each other, with warehousing having been
referred to as “transportation at zero miles per
hour.”
The Role of Warehousing in Logistics Syste
The Role of Warehousing in Logistics System
• Key reason for warehousing
 because patterns of production and consumption do
not coincide
• Warehousing
 serves to match different rates or volumes of flow
when patterns of production and consumption do not
coincide
• Warehousing facilitates the regrouping function
in a supply chain
 Involves rearranging the quantities and assortment
of products as they move through the supply chain
The Role of Warehousing in Logistics System
• Warehousing facilitates the regrouping function
in a supply chain – can take place in four forms
 Accumulating (bulk making)
 involves bringing together similar stocks from different
sources
 Allocating (bulk breaking)
 involves breaking larger quantities into smaller quantities
 Assorting
 refers to building up a variety of different products for resale
to particular customers
 Sorting out
 “separating products into grades and qualities desired by
different target markets”
The Role of Warehousing in Logistics System

• Warehousing can be provided by


 Warehouses
 Emphasize the storage of products
 Primary purpose is to maximize the usage of
available storage space
 Distribution centers
 Emphasize rapid movement of products
through the facility
 Attempt to maximize throughput
– Throughput is defined as the amount of product
entering and leaving a facility in a given time period
The Role of Warehousing in Logistics System
• Warehousing can be provided by
 Cross-docking facilities
 Has grown due to the increased emphasis on time reduction
in supply chains
 Defined as “the process of receiving product and shipping it
out the same day or overnight without putting it into storage”
 Key benefits include improved service by allowing products
to reach their destinations more quickly as well as reduced
inventory carrying costs from less stock because of faster
product delivery2
The Role of Warehousing in Logistics System
• Warehousing can be provided by
 Cross-docking facilities
 Is differentiated from distribution centers by the length of
time a product is in a facility (24 hours or less for cross-
docking facility)
 Design of the facility is an important consideration to
facilitate quick movement of product
– Should be designed with a minimal amount of storage
space and truck doors on two or more sides
– Some designs include “H”, “I”, “T”, “U” and “E”
configurations
Public, Private, Contract, and Multiclient
Warehousing
• Organizations must also decide the proper mix
in terms of warehouse ownership
 Owning
 Private warehousing
 Renting
 Public warehousing
 Contract warehousing
 Multiclient warehousing
Public, Private, Contract, and Multiclient
Warehousing
• Public warehouses
 Serve all legitimate users
 Require no capital investment on the user’s part
 Allows users to rent space as needed
 Can be rented on a month-to-month basis
 Warehousing companies have responsibility for
personnel decisions and regulatory issues
 Offers more locational flexibility
 May provide specialized services
Public, Private, Contract, and Multiclient
Warehousing
• Potential drawback of public warehouses
 Lack of control by the user
Public, Private, Contract, and Multiclient
Warehousing
• Private warehousing
 Owned by the firm storing goods in the facility
 Generates high fixed costs
 Should only be considered by companies dealing
with large volumes of inventory
 Largest uses of private warehousing are retail chain
stores
 Offers control to owner
 Assumes both sufficient demand volume and stability
so that warehouse remains full
Public, Private, Contract, and Multiclient
Warehousing
• Private warehousing potential drawbacks
 High fixed cost of private storage
 Necessity of having high and steady demand
volumes
 Less attractive when interest rates are high
 May reduce an organization’s flexibility
 Internally
 Externally
Public, Private, Contract, and Multiclient
Warehousing
• Contract warehousing
 Also referred to as third-party (3PL) warehousing or
dedicated warehousing
 “a long term, mutually beneficial arrangement which
provides unique and specially tailored warehousing
and logistics services exclusively to one client, where
the vendor and client share the risks associated with
the operation.
 Both vendor and client share the risks associated
with the warehousing
 Less costly than private warehousing and more
costly than public warehousing
Public, Private, Contract, and Multiclient
Warehousing
• Multiclient warehousing
 Mixes attributes of contract and public warehouses
 Services are more differentiated than those in a
public facility
 Services are less customized than those in a
contract facility
 Services are purchased through minimum 1 year
contracts
 Are attractive to smaller organizations
Public, Private, Contract, and Multiclient
Warehousing

• Multiclient warehousing
 Are attractive to smaller organizations that don’t
have sufficient volumes to:
 Build their own storage facilities
 Use traditional one client contract warehousing services1
Design Considerations in Warehousing
• General considerations
 Quantity and character of goods to be handled must
be known—product profiling
 Know the purpose to be served
– Facility with low rates of product turnover should be laid
out in a manner that maximizes utilization of the cubic
capacity of the storage facility
– Facility that emphasizes rapid product movement with
limited time in storage should be configured to facilitate
the flow of product into and out of it
Design Considerations in Warehousing
• Trade-offs
 Must be made among space, labor, and
mechanization with respect to warehouse
design
 Fixed versus variable slot locations for
merchandise
 Infixed slot locations each SKU has one or more
permanent slots assigned to it
 Variable slot location involves empty storage slots
being assigned to incoming products based on
space availability
Design Considerations in Warehousing
• Trade-offs
 Build out (horizontal) versus build up (vertical)
 General rule of thumb is that it is cheaper to build up than
build out
 Illustrates the importance of understanding interfunctional
trade-offs when thinking about warehousing design

 Order-picking versus stock-replenishing functions


 Organizations must decide whether workers who pick
outgoing orders and those who are restocking storage
facilities should work at the same time or in the same area
Design Considerations in Warehousing
• Trade-offs
 Two-dock versus single-dock layout
 generally has receiving docks on one side of a facility and
shipping docks on the other side, with goods moving
between them
 In single-dock system, each and every dock can be used for
both shipping and receiving
 Conventional, narrow, or very narrow aisles
 As aisle space increases, storage space decreases
 Easier to operate mechanical equipment in wider aisles
 Reduce the chances of accidents and product damage with
wider aisles
 Narrower aisles require specialized storage and handling
equipment (more expensive
Design Considerations in Warehousing
• Trade-offs
 Degree of warehouse automation
 Refers to utilizing mechanical or electronic devices to
substitute for human labor
 Examples include narrow aisle forklifts, automated
guided vehicles, automated storage and retrieval
systems, and radio frequency identification, and others
 Offers the potential to reduce labor costs and to
improve warehouse productivity
 Managers must ensure that automation results in
noticeable improvement in warehousing effectiveness
and efficiency
Design Considerations in Warehousing

• Trade-offs
 Other space needs
 Only approximately 10 percent of a facility’s cubic capacity is
actually occupied by product1
 Warehousing facilities set aside space for nonstorage
activities such as employee washrooms, lunchrooms, office
space, specialized storage for hazardous items,
warehousing supplies, and many more
Warehousing Operations
• Efficient and effective warehousing
management can be an exacting task
• Workforce motivation can be difficult because
the work can be:
 Repetitive in nature
 Strenuous and physically demanding
 On occasion dangerous
Warehousing Operations
• Some prominent operational issues include:
 Warehousing productivity analysis
 Safety considerations
 Hazardous materials
 Warehousing security
 Cleanliness and sanitation issues
Warehousing Operations
• Warehousing productivity analysis
 Productivity is a measure of output/input
 Numerous productivity metrics can be used to
assess warehouse productivity, but not all are
relevant to all facilities
 Examples of representative measures include:
 Cases shipped per person
 Product lines shipped per person
 Pallets shipped per person
 Average warehouse capacity used
 Forklift capacity used
Warehousing Operations
• Safety considerations
 Warehouses, distribution centers, and cross-docking
facilities can be dangerous workplaces
 Fatality rate in warehousing is higher than the average rate
for all industries
 Warehouse safety can by influenced by
governmental regulations
 In the U.S. safety standards have been set for warehousing
equipment and operations and are enforced by OSHA
 Warehouse safety categories include:
 Employee
 Property
 Motor vehicles
Warehousing Operations
• Hazardous materials “hazmat”
 Examples include:
 Explosives
 Flammable liquids
 Flammable solids

 Government regulations often require shipping


documents indicating the hazardous materials
 Government regulations require the use of safety
data sheets (SDS)
Warehousing Operations
• Warehousing security
 Example potential threats include:
 Theft
 Pilferage
 Heat and humidity
 Vandalism
 Fire
 Loss of electricity

 Focuses on protecting products and preventing their


theft
Warehousing Operations
• Cleanliness and sanitation issues
 Particularly important in many industries, such the
foodservice industry
 Can have a positive impact on employee safety,
morale, and productivity while also reducing
employee turnover
 Requires common sense and due diligence
END

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