Chapter 4: Warehouseing

Chapter 4: Warehouseing

1. The Role of Warehousing

   • Warehouses and distribution centers fulfil a critical role in the SC
   • Link between Production, Transportation, Final end customer
   • Raw materials stored in warehouses before processing and finished goods
     • General needed for raw materials & finished goods

2. Key functions performed by Warehousing

   • Provide a level of customer service at the total lowest cost
   • Link the producer and the supplier as the intermediary
   • Major function
     • Movement fuction
       • Receiving
       • Transfer
       • Order selection
       • Shipping
     • Storage function
       • Semi-permanent
       • Temporary
     • Information transfer
       • Occurs simultaneously with movement and storage function

3. Definition

   • Any system of storing products at any point in the logistics system from the point of origin of goods, through production to the point of consumption.
   • Warehouse and distibution center (DC) are used interchangeably although a DC holds inventory at the downstream end of the supply chain.
   • Warehouses refer to places where raw materials, work-in-process goods and finished goods are stored.

4. Reasons to hold stock or inventory

   • To achieve production economies of scale
   • To obtain purchasing discounts for large scales
   • To maintain the supply source
   • To support firms' customer service policies
   • To meet changing market conditions
   • To overcome time and space differentials
   • To accomplish least total cost logistics
   • To serve customer needs more effectively
   • To support just-in-time (JIT) programs

5. Warehouse location decisions

   • Deciding how many warehouses to build and where to locate them, depends on the following main factors:
   • The firm policy and thinking
     • Do they prefer centralized distribution or many decentralized distribution
   • The cost-time calculation and the trade-offs
     • increase in price of petrol and diesel has become a major factor
   • The actual customer base
   • The geographic nature of the area

6. Warehouse physical layout

   • The physical layout of a warehouse impacts productivity of staff members who pick, pack and move goods and has cost implications when not managed effectively
   • Natural lighting, controlled access points, ergonomic and user-friendly picking design, all contribute to cost effectiveness
   • Seven essential steps and 10 general guidelines should be taken into account when warehouse layout and design are undertaken
   • Critical and non critical items
     • Table 4.1 Page 63

7. Effective storage and control

   • makes careful use of rows, levels and stacks
   • Goods that have been stored, must be found easily if they are picked for outbound distribution to the customer or during stock-taking activity

8. Product groupings within the warehouse

   • Compatibility
     • In terms of similarity
   • Complemetary
     • How often products are ordered together
   • Popularity
     • Dependent on turnover rates or demand rates

9. Categorisation of inventory within the warehouse

   • According to demand frequency
   • According to pick destination
   • According to special storage requirements
     • Hazardous
     • Perishable

10. Steps of the warehousing process:

    • 1. The inbound logistics function
    • 2. Inventory management and storage
      • Putting the right stock in the right place
      • Giving the right code to the right product
      • Developing a coding system
    • 3. The outbound logistics function

11. Cross docking

    • Logistics process that minimises the need for storage

12. Typical Warehousing activities

    • 1. Receiving
    • 2. Put-away
    • 3. Storage
    • 4. Packaging
    • 5. Ship-prep
    • 6. Shipping (transport)

13. The most common warehouse problems

    • Storage space utilisation
    • Product handling problems
    • Equipment problems
    • Labour intensity
    • Information gaps between warehousing, manufacturing or retailing
    • Costing and budgeting

14. Materials handling equipment

    • Category 1: Forklifts and pallet handling equipment
    • Category 2: Turret trucks and reach trucks
    • Category 3: Scanning equipment and new technologies
    • Category 4: Portable storage racks and other devices