Warehouse And Distribution

Facilities Management

Session - 2
* 1PL/2PL/3PL/4PL/5PL

* Material Flow

* Product Rotation

* WMS

* LIFO & FIFO

* Warehouse Terms
 What is 1PL, 2PL, 3PL, 4PL, 5PL ?

Logistics is a massive chain

network and a detailed
organization responsible for
carrying out various delivery
and shipment related
operations.

Whenever a product is
bought from an online store,
the logistics are the ones,
that takes care of the
shipment and makes sure
that the customer gets the
right product. The rise of e-
commerce has made a
significant contribution in a
world economy and so did Without logistics, a concept of e-commerce could
these logistics. have never been possible to be implemented.
1PL: 1st Party Logistics

* First Party Logistics refers

to logistics handled internally by a
company.

* In this case, the manufacturer does

not outsource transport or other
logistic activities to third parties.

* The manufacturer stores goods in his

warehouse and owns vehicles that will
deliver goods to customers.
2PL: 2nd Party Logistics

* Second-party logistics involves the transport of goods from a particular transport area
of the supply chain like rail, road, sea or air.

* Second-party logistics providers are the asset-based carriers and includes transport
using ships of own lease and airlines that they are contracted with.

* They are mainly used for international transportation of heavy and wholesale goods
and for trading purpose as well.
3PL: 3rd Party Logistics

Third-party logistics is an
organization's use of third-party
businesses to outsource elements of
its distribution, warehousing, and
fulfillment services.
4PL: 4th Party Logistics

* Its a new concept which is coming into the market, and it involves employing an overseer
for managing an entire supply chain of a company.

* These logistics are often called Lead Logistics Provider and they are often treated as a
consulting company for many supply chains. They act as a head administrator and takes
care of every aspect of these supply chain companies.

* They are frequently contracted with many 3rd party logistics and for maintaining neutral
management and for providing feedback regarding various 3pl logistics services.

With increased efficiency 4PL is becoming the next big thing in the logistics sector. They
provide a single invoice solution and streamlines logistic work like no other.
5PL: 5th Party Logistics

* A fifth party logistics provider is also known

as a logistics aggregator.

* They will aggregate

the demands of the
3PL and others into
bulk volume for
getting better rates
with different types
of airlines and 5
shipping companies.

* This type of logistics is not asset based. It

usually works seamlessly across all disciplines.
* A 5PL partner has three key areas of
responsibility: i) Understand the logistics
requirements of the client, ii) Plan the
logistics process & iii) Execute and manage
the entire logistics solutions.
Material Flow / Product Flow is the description of the transportation of raw
materials, pre-fabricates, parts, components, integrated objects and final
products as a flow of entities.
In Fluid Model of Product Flow, Storage Tanks are Warehouses.
Eg. Water, Crude Oil, Milk, Beer, Sewage, etc.

Inbound, In-process, and in fewer cases, Outbound Transportation are

done through interconnecting pipelines.
 Warehouse Material Flows

* Products stay temporarily inside a Warehouse and everything that enters

the structure must exit.

* FLOWS are the movement of the units as they enter the Warehouse, move
around it and finally exit.

* This flow can be Simple or Complex depending on few factors :

 The Company

 Degree of Automated Systems

 In-house Operations Carried Out

 Quantity

 The Way the Product is Moved

 Simple Flows

Simplest possible flow where units sent by the

supplier stays for sometime and moves out.

Medium Flows

Movement of products start to become little

complex. It is normally found in warehouses
with single or combined picking operations,
generally with the supply of full pallets.

Complex Flows

There are warehouses with different working

areas, depending on the types of product and
their consumption. They normally have
intermediate handling areas and can require
various operations that in turn need flows of
certain complexity.
Key Points :

* As the flow increases, cost increases.

* The larger the warehouse, the further the handling machines and personnel have to
travel and greater the final cost of the operation.

* Picking Operation involves more movements than any other operation. It accounts
the largest proportion of total warehouse costs (more than 60%).

Product Rotation

A decisive factor that influences the speed and cost of operations is the demand for a
product. Most demanded items must be close to the loading docks.

A. High Rotation : Items which are in high demand, enter and exit continuously (FMCG /
CPG-Consumer Packaged Goods).

B. Medium Rotation : Items enter and exit in smaller volumes than in A.

C. Low Rotation : Items that are in low demand spend most of the time in warehouse.
 STAGING – Landing Zone &
Intermediate Storage Area.

DYNAMIC – Area for Forward

Pick & section of warehouse
in which items are
consistently picked for order
fulfillment.

STATIC – Section of warehouse

where the overflow of products
is stored on pallets. Also called
as Reserve Storage Area.

Once products in Dynamic

Storage Area are picked, pallets
are retrieved and taken to
Static Storage Area for
Replenishment.
 WAREHOUSE MANAGEMENT SYSTEM (WMS)

* A Software Application, designed to support and optimize warehouse or distribution

centre management.

* It consists of software and processes that allow organizations to control and administer
warehouse operations from the time goods or materials enter a warehouse until they
move out.
 Importance & Functions
* Facilitates management in their daily planning, organizing, staffing, directing and
controlling the utilization of available resources, to move and store materials into, within
and out of the warehouse.

* Supports staff in the performance of material movement and storage in and around a
warehouse.

* Helps the personnel in performing the processes required to handle all of the major
and many minor warehouse tasks such as receiving, inspection, put-away, internal
replenishment to picking positions, picking, packing, order assembly on the shipping
dock, documentation and finally shipping.
More Functions

* Information Saving - helps in directing and validating each step, capturing and recording
all inventory movement and status changes to the data file.

* Cost Savings – optimizes the complete process and reduce overhead expenses, removes
potential operating costs incurred due to any errors which improves profits and cost
reductions.

* Inventory Control and Accuracy – improves stock control and tracking, assist clients with
relevant stock information.

* Warehouse Space – optimization of storage space.

* Enhance Customer Service – reduces paper work thereby reducing customer

complaints.

* Reduce Lost Inventory – tracks each item in the warehouse thereby reducing
misplacement.
Prerequisites for WMS Implementation
* Creating an Implementation Team – Project Manager, Warehouse Manager,
Database Administrator, On staff Engineer, WMS Expert/Trainer.

* Forecast Implementation Cost and Budget - budgeting for implementation,

maintenance costs, training costs, upgrading costs.

* Training the Users - training the staff, selecting the right training types, selecting right
training location.

* Launch & Review – launching & implementing WMS, addressing the changes and
challenges, reviewing and evaluating WMS.

Other Requisites
Zone Logic Fewest Locations
Location Sequence Pick to Clear
Lot Sequence Maximum Cube
Fixed / Random Location Consolidate
Reserved Locations LIFO / FIFO
Nearest Location Unit of Measure or Quantity
FIFO: the method of pallet-less stacking allows the first-in-first-out form of inventory
management, which implies that the goods that enter your warehouse in the first place are
goods that also exit the warehouse primarily as per requirement. Appropriate execution of
FIFO ensures proper rotation of your stock. For example, FMCG products.

LIFO: The last-in-first-out technique to stock management is contrary to the previous

method. LIFO refers to the process where the products that have recently entered the
warehouse are the ones that are cleared first. This method is suitable for products that are
homogenous or imperishable. This method serves considerably well for goods that are
seasonal or perishable. For example, commodities.
WMS Features supports the following functions

* Appointment Scheduling – informs whether there is enough storage space to receive the
incoming quantity of material/stock.

* Receiving – receives data of units/cartons thru RF scanner which are unloaded from the truck.

* Put Away – guides the personnel in storing the materials in appropriate storage area (viz.
shared, dedicated, static, dynamic).

* Picking – helps the picker in tracking the exact location of the materials stored and picking off
the shelf in accordance to the Pick List.

* Packing & Shipping – gives information on selecting appropriate packing material according to
the type and size of the product and the details to be printed on the packing label.

* Cross Docking – directs in transporting the products from one transportation container to
another, completely avoiding storage.

* Consolidation – assists the personnel in receiving the materials from a number of sources and
combining them into a large single shipment.

* Break Bulk – assists the personnel in receiving the materials in bulk and broken down into
individual orders in break bulk warehouse.
 Logistic Terms
* 1PL, 2PL, 3PL, 4PL, 5PL * WMS

* Asset based * Order Assembly

* Lead Logistics Provider * Shipping Dock

* Logistics Aggregator * Zone Logic

* Material Flow / Product Flow * Location & Lot Sequence

* Simple, Medium, Complex Flows * Fast / Forward Pick Area

* High, Medium, Low Rotation * Fixed & Random Locations

* FMCG, CPG * Pick to Clear

* Staging Area * LIFO & FIFO

* Static Location *Cube Maximization

* Dynamic Location * Appointment Scheduling