WAREHOUSING AND LOCATION DECISION

IN
SUPPLY CHAIN MANAGEMENT

Presented
By

Govinda Gowda.H.G
INTRODUCTION
Warehouse is a location to store inventory with adequate facilities. Every company
stores its goods while they wait to be sold. Thus, the ability to meet customer
demand by getting the right products to the right place, at the right time, and in
the right condition is an essential competency with bottom-line implications.
Location decision
• crucial element in logistics planning.
• High costs associated with property acquisition
and facility construction
• facility location or relocation is strategic
investments.
• The location decision is meant to adapt the
dynamic changes in business environments
surrounding the firm's supply - chain
operations.
Importance of warehouse &
location decision
• A Warehouse is typically viewed as a place to store
inventory, However in many logistical system designs,
the warehouse is more properly viewed as a switching
facility as contrasted to a storage facility.
• While effective distribution systems should not be
designed to hold inventory for an excessive length of
time, there are occasions when inventory storage is
justified.
Potential warehouse locations
1. It is important to identify potential locations
for new warehouse. Typically these locations
must satisfy a variety of conditions.
• Geographical & infrastructure conditions
• Natural resources & labour availability
• Local industry & tax regulations
• Public interest
An optimum location satisfy this four criteria
to the maximum extent.
Most of the firms using 3PL
Technique for warehousing

What is 3PL(Third-party logistics)

• A third-party logistics provider (abbreviated 3PL) is a
firm that provides outsourced or "third party"
logistics services to companies for part, or
sometimes all of their supply chain management
function. Third party logistics providers typically
specialize in integrated warehousing and
transportation services that can be scaled and
customized to customer’s needs based on market
conditions and the demands and delivery service
requirements for their products and materials.
BDP International 3P Delivery
The Bender Group A.N. Deringer
Big C.H. Robinson Access Logistics
Cardinal Logistics AFN
CaseStack Agility
Caterpillar Logistics AIMS Solutions
CEVA Logistics AmeriCold Logistics
COGISTICS APL Logistics
Comprehensive Logs. Artisan/NLM
Corporate Traffic Aspen Alliance
CRST Logistics `ATC Logistics
CT Logistics ADS
CTSI
Dog Logistics Averitt
BNSF Logistics
DSC Logistics GENCO
Dupre Transport Greatwide Logistics

Echo Global
EGL Eagle Global TBB Global Logistics
Elite Supply Chain TLC
Evans Distribution TMSi Logistics
Exel/DHL Transfreight
Expeditors TransGroup Worldwide Logs. Transplace
Tucker Company
FedEx Global SC
Foreway
3PL warehouse management
system helps companies to

- Optimize resource utilization and reduce labor

costs
- Lower supply chain costs
- Reduce working capital
- Gain visibility and accuracy in warehouse
inventory
- Enhance customer service
- Improve revenue
Role &Operations of 3PL Warehousing
firms

• Receiving goods
• Identifying goods
• Sorting goods
• Dispatching goods
• Holding goods
• Dispatching goods
• Preparing records &
advices
Cost Associated with 3PL Warehousing
Handling costs:
This include labour & utility costs
that are proportional to annual flow through the
warehouse.
Fixed costs:
Capture cost components that are not
proportional to the amount of material that flows
through the warehouse. The fixed cost is typically
proportional to warehouse size (capacity).
• Storage costs:
Represent inventory holding costs,
which are proportional to average positive inventory
levels .
Types of Warehouse
• Firms either own private warehouses or rent
space in public warehouses or both. Both have
their own merits & demerits. Owning a private
warehouse brings more control, ties up capital,
and is less flexible if locations change.

• On the other hand, public warehouses charge

for rented space, provide additional services
for inspecting, packaging, shipping and
invoicing goods but at a cost, and offer wide
choice of locations and warehouse types
Types Continues……..
• Private warehouses: a private warehouse is
operated by the firm owning the product. The
actual facility, however, may be owned or leased.
The strategic decision that fits best to the
individual firm depends on its financial aspects.
Firms with very specialized customers or products
are often motivated to develop their own
warehouse facility.

• Public warehouses: Public warehouses are used

extensively in logistic systems. The classification of
public warehouses has been developed on the basis
of the range of specialized operations performed
Continues………….
General merchandise: are designed to handle general
package commodities such as paper, small appliances,
and house hold supplies.
– Refrigerated: handle & maintain food, medical items &
chemical products.
– Special commodity: are designed to handle bulk
material or items with special handling considerations,
such as tiers or clothing.
– Bonded: are licensed by the government to store goods
prior to payment of taxes or duties.
– Household goods: these are designed to handle and
store large , bulky items such as appliances & furniture

• Contract warehouse: This combines the best

characteristics of both private & public operations.
Who should be the “right”
In-Charge for The Warehouse?
• Whether they are happy about it or not, it is becoming
more and more common for purchasing professionals to
be made responsible for management of the warehouse.
Therefore, do not be surprised if warehouse management
is added to their scope of responsibilities in the near
future. To prepare for this trend, let’s explore the
similarities between purchasing and warehouse
management.
• Like Purchasing, warehouse management has many best
practices. A couple of best practices recommend the use
of effective slotting tools and bar coding.
Continues….
• Effective slotting tools include the placement of high-volume items close to the
point of shipping, use of clear slotting information under each item on the shelf,
using the same slotting information on pick documents, and sorting the slot
numbers into a sequence that supports a “no-backtrack” path for the picker.
Bar codes can help in ensuring the right incoming product put in the right place
and that the right outgoing product is picked in the right quantities. “By using bar
code picking, not only one can pick faster, but he can also pick with virtually 100%
accuracy.” In this method bar code implementations pay for themselves within six
months, which leads to the most attractive aspect of warehouse management for
purchasing professionals that offers the opportunity for cost savings.
 Suggestions
• Contract warehousing is recommended as a
long term, mutually beneficial arrangement
which provides unique and specially tailored
warehousing and logistics services to the
client.

• Either effective slotting or bar codes can be

used for the accuracy of information.

• The location decisions can be adapted to

dynamic changes in business environments
surrounding the firm's supply - chain
operations .
conclusion
• Warehousing & location
facilities help in better
storage & provides
greater accuracy.
• The storage in
warehouse should be for
a short period of time &
occationally for
optimizing the costs.
The End Thank You