MA4850 Supply Chain &

Logistics Management

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 Lesson Overview
T1 Introduction
T4 Warehousing, Packaging &
Material Handling
T2.1 Forecasting Time Series T5.1 Transportation

T2.2 Forecasting Causal Models

T5.2 Transportation Costs & Logistics Network
T3.1 Inventory Management Introduction
T6.1 Supply Chain & Contracting
T3.2 EOQ Models
T6.2 Supply Chain & Product Architecture
T3.3 Newsvendor Model
T7 Global Supply Chain & Logistics
T3.4 QR Model

T3.5 Base Stock Policy T8 Supply Chain & Risk Management

T3.6 Inventory Management & Accounting T9 Information Technology

MA4850: Supply Chain & Logistics Management 2

 Topic 4
Warehousing, Packaging
& Material Handling

MA4850: Supply Chain & Logistics Management 3

 Learning Objectives
By the end of this course, you should be able to:
• Identify what is warehousing
• Explain what packaging involves
• Discuss material handling

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 Evolution of Warehouses
• Economic benefits: Overall logistics
costs are reduced
• Service benefits: Sales improvements
more than offset added cost

Traditional: Contemporary:
Passive Storage Strategic Assortment

• Distribution centers
• Consolidation terminals
• Break – Bulk facilities
• Cross - docks

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 Storage

Seasonal Production
Example: Agricultural products

Seasonal Demand Seasonal Storage

Example: Allows production efficiencies
Example: Furniture and toys within the constraints of seasonality

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 Consolidation
Consolidation occurs when a warehouse receives materials from a number
of sources and combines them into exact quantities for a specific
destination.
Consolidation

Plant A
Customer A

Plant B Customer B

Consolidation Warehouses

Plant C Customer C
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 Break Bulk
Break-bulk occurs when a warehouse receives a single large shipment and
arranges for delivery to multiple destinations.
Break-Bulk

Customer A

Customer B

Plant A Break – Bulk Warehouse

Customer C
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 Cross Docking different products

Cross-docking combines inventory from multiple origins into a pre-specified

assortment for a specific customer.
Cross - Dock

Plant A
Customer A

Plant B Customer B

Distribution Center

Plant C Customer C
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 Cross Docking after cross docking:
1. 12 shipment become 7 shipment
2. increase loading condition (LTL become TL)
Illustration
Distribution Center Before Cross - Docking
Suppliers
Suppliers

LTL

Customers
Receiving
Sorting After Cross - Docking
Shipping

TL
Cross-Docking
TL DC

Customers

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 e.g. labeling in different
Mixing language to ship to
different country

Mixing combines inventory from multiple origins (like cross-docking) but

also adds items that are regularly stocked at the mixing warehouse.
Mixing
Customer W

Transit A B C D
Plant A mixing
Customer X
point
A B C D
Customer Y
Plant B
A
A B
B C
C
Customer Z
Product D
A A B B
Plant C
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 Assembly
Assembly occurs when products or components from second-tier suppliers
are assembled by a warehouse located near manufacturing plant, e.g.
packaging and color customizing.
Order Assembly

Vendor A

Lead Supplier
Distribution Assembly
Vendor B
Center Plant
Center

B
Vendor C

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 Packaging

Consumer: Industrial:
For marketing purposes For logistics reasons

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 Packaging in Logistics
• Unitization: Group cartons into unit
loads; modular packaging
• Handling: Appropriate for automation e.g. can use forklift...

• Security: Sealed to detect break-in

• Stowability: Cube efficiency e.g. pack in same shape
so to fully utilize the space

• Communication: Information
identification and tracking
• Protection: Spoilage or damage

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 Modular Cartons
An Illustration
W

L
Single
Module
Depth Half
Module Quarter
module

Length
½
L ¼L
2 width W W W

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 Benefits of Containerization
• Improves overall material movement
efficiency
• Reduces damage in handling and transit
• Reduces pilferage / steal

• Reduces protective packaging requirements

• Provides greater protection from
environment
• Provides a shipment unit that can be reused
many times

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 Communication
• Identification displays key logistical info, e.g.
manufacturer, product, etc.
• Tracking provides the ability to determine the
exact location of an item
• Special handling instructions: e.g. glass,
temperature restrictions, stacking Case
considerations, or environment/safety
concerns
• Technologies facilitating communication
include
Case RFID
− Bar Coding, RFID, GPS Tags
− “Nested RFID” for items in a unit
Pallet RFID Tag Pallet
Product
Product RFID Tag
Packages
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 Material Handling Systems

Manual Sorting Mechanized

Semi-automated Automated Smart

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 Value-Added Services
• Cross-dock/transloading • Order fulfillment
• Customer returns • Pick/pack
• Home delivery • Pool distribution

• In-transit merge • Repair/refurbish

• Kan Ban • Returnable container management

• Reverse logistics
• Kitting
• RFID tag application
• Labeling/preticketing
• Sequencing/metering
• Lot control
• Specialty packaging
• Mass customization/postponement
• Store support/direct store delivery
• Manufacturing support (DSD)
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 Case Illustrations
• Amazon
– https://www.youtube.com/watch?v=dAXdeqcHBp4

• L’Oreal Centralized Warehouse

– http://www.youtube.com/watch?v=rqaLqYeL2T8&feature=PlayList&p=
97939D6386E58E7B&index=16&playnext=2&playnext_from=PL

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Thank you

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