STRATEGIC WAREHOUSING

- In the preindustrial era, storage was performed by individual households forced to function as self –
sufficient economic units.

- Product storage shifted from households to retailers, wholesalers, and manufacturers.

- Just in Time (JIT)

- JIT is to reduce work in process inventory, such Manufacturing Strategies need dependable logistics.

Economic Benefits of Warehouse

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

Receiving – physical receipt of material, identification, inspection for conformance with the purchase
order (quantity and damage), put – away and preparation of receiving reports.

Breaking the bulk – is a warehouse operation similar to consolidation in which no storage function is
performed

Sorting – is to reconfigure freight as it is being transported from origin to destination.

Cross docking – is a logistics technique that eliminates the function of storing and collecting orders of a
warehouse.

Of the four main functions of warehouse operations (Receiving, storing, collecting orders and sending
goods) the two most expensive functions are storage (due to storage cost of inventory) and collection.
Goods (due to labour costs).

Types of Cross Docking

- Napolitano (2000) proposed the following classification of Cross Docking:

Manufacturing Cross Docking – supporting and collecting input sources to support Just-in-time in
production. For example, a manufacturer may rent a warehouse near their factory, and use it to prepare
for assembling or gathering the necessary components of each part together.

Cross Docking Distributor – collecting input products from different suppliers into pallet of mixed
products. This pallet will be delivered to the customer as soon as the final component is received. For
example, computer parts of distributors can source components from different suppliers and combine
them into a single shipment of customers.

Transportation Cross Docking – this activity combines shipments from a number of different carriers in
LTL form or in small packages for economic advantages of scale (Economies of scale).
Retail Cross Docking – this process involves taking products from multiple suppliers and sorting them
into output trucks for a number of retail stores.

Opportunistic Cross Docking – can be used in any warehouse, moving a product directly from the
receiving area to the shipping area in order to meet a known need such as a single order Customer’s
order.

Mixing – is usually performed at an intermediate location between origin and destination, also mixing
combines inventory from multiple origins (like cross docking) but also adds items that are regularly
stocked at the mixing warehouse.

Assembly – occurs when products or components from second tier suppliers are assembled by a
warehouse located near manufacturing plant.