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Ch08 Warehousing
Ch08 Warehousing
Warehousing Decisions
In 1999, $75 billion, or 0.8 percent of GDP was spent on warehousing. The total supply of U.S. warehousing space in 1999 was 6.1 billion square feet, an increase from 1990 of 700 million square feet of space. 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.
Management of Business Logistics, 7th Ed. 2
Chapter 8
Rationale
Functions of The warehouse is warehousing include: where the supply Transportation chain holds or stores consolidation goods. Product mixing Cross-docking Service Protection against contingencies Smoothing
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Table 8-1
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Figure 8-1
Transportation Consolidation
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Figure 8-2
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Figure 8-3
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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.
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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
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Chapter 8
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Public Warehousing
Rationale for Public Warehousing Limited capital investment Flexibility Public Warehousing Services Bonded warehousing Field warehouses
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Public Warehousing
Public warehousing rates based upon: Value Fragility Potential damage to other goods Volume and regularity Weight density Services required
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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. Other issues discussed in Chapter 11.
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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
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Number of Warehouses
Factor
Substitutability Product Value Purchase Size Special Warehousing
Centralized
Low High Large Yes
Decentralized
High Low Small No
Diverse Low
Management of Business Logistics, 7th Ed.
Limited High
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Movement Receiving Put-away Order picking Shipping Storage Stock location Warehouse Management System (WMS)
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Figure 8-6
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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.
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Provide for the transportation interface. Provide for orderpicking space. Provide storage space. Provide recouping, office, and miscellaneous spaces.
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Figure 8-8
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Basic needs: Receiving Basic storage area Order selection and preparation Shipping
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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.
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Productivity Metrics
Pounds or units per day Employees per unit moved Units unloaded per hour Units picked per hour Units loaded per hour Percentage of orders correctly filled Productivity ratio = units handled/day divided by labor hours/day Throughput = amt of material moved through the system in a given time period
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Chapter 8
Materials Handling
Definition: Efficient short distance movement in or between buildings and a transportation agency. Four dimensions Movement Time Quantity Space Coordination
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Increase effective capacity Minimize aisle space Reduce product handling Develop effective working conditions Reduce heavy labor Improve logistics service Reduce cost
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Figure 8-12
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Packaging
Interest in packaging is widespread Logistics Warehousing Transportation Size Marketing Production Legal
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Chapter 8
Identify product and provide information Improve efficiency in handling and distribution Customer interface Protect product
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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.
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Packaging Materials
Table 8-6 presents a comparison of various packing material characteristics. Basic considerations include: Soft materials Plastic Environmental issues Recycling (reverse logistics)
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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
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Chapter 8
End of Chapter 8
Warehousing Decisions