Lm slide chapter 5

LEARNING OBJECTIVESAfter the completion of this chapter, students should be able to: ü Explain the roles of warehouse ü List the added values created by warehouses ü Explain the warehous

CHAPTER 5:

WAREHOUSE MANAGEMENT

1

HO CHI MINH CITY UNIVERSITY OF TRANSPORT

LEARNING OBJECTIVES

After the completion of this chapter, students should be able to:

ü Explain the roles of warehouse

ü List the added values created by warehouses

ü Explain the warehouse-related decisions

ü Review the general activities of warehouse and warehousing

ü Describe the basic layout of a warehouse

CHAPTER OUTLINE

5.1 Roles of warehouses in the Logistics system

5.2 Added values of warehouses

5.3 Basic warehouse decisions

5.4 Warehouse operations

5.5 Principles of a warehouse layout

REFERENCE LIST

[4]-Douglas M.lambert James R.Stock,Lisa M Ellram, Fundamentals of Logistics

Management, McGraw-Hill,1998 – Chapter 4

[10]-Đặng Đình Hào, Trần Văn Bảo, Phạm Cảnh Huy, Đặng Thị Thúy Hằng (2018), Giáo

trình Quản trị logistics, Nxb Tài Chính – Chapter 3

[12]-Trường đại học Kinh tế Tp HCM (2012), Quản trị hậu cần, Nxb Đại học kinh tế quốc

dân – Chapter 7

[15]-James C Johnson, Donald F Wood, Daniel L Wardlow, Paul R Murphy,Jr (1999),

Contemporary Logistics, Prentice Hall – Chapter 8

[18]-Ronald H Ballou (1999), Business Logistics Management, NXB Prentice Hall, 1999

– Chapter 8, 10, 12

5.1 ROLES OF WAREHOUSES IN THE LOGISTICS SYSTEMS

- Warehouses act as nodes in the Logistics system and in the Supply

chain in general

- Warehouses store the materials, WIP and finished goods

- Warehouse and warehousing incur cost to the Logistics activity

- Warehouse and warehousing create added values rather than

adding cost to products

CASE STUDY

6

The national office of Combined Charities

provided materials for the fundraising campaigns

of a number of well-known charitable and

political organization When a job was contracted,

the typical procedure was to dedicate the entire

workplace and printing equipment of the

company to preparing the materials for a single

campaign After the production was completed,

the document was sent by UPS directly from the

printing site to local distribution points.

The company’s president though that overall

costs might be lower if warehouse space could be

rented at various regional locations around the

country Although warehousing would be an

added expense, he thought that he could ship

truckload quantities to the 35 warehouses to the

local areas.

Production costs could also be reduced because the local areas could draw from warehouse stocks rather than placing orders directly on the printing operation, which often caused a change in the production schedule.

The president made following rough cost calculations for a typical campaign in which 5 million pieces of literature would be produced.

Ship Direct from Plant

Ship Through 35 Warehouses

Change in Costs

Production costs $500,000 $425,000 -$75,000 Transportation costs:

To warehouse 0 $50,000 +$50,000

To local area $250,000 $100,000 -$150,000 Warehouse cost 0 $75,000 +$75,000

TS Lê Phúc Hòa, ThS Nguyễn Thị Bảo Khánh 7

v Warehouse categories

TS Lê Phúc Hòa, Ths Nguyễn Thị Bảo Khánh 8

v Some types of warehouses in import/export

5.2 ADDED VALUES OF WAREHOUSES

1 Consolidation Transportation

2 Product mixing Order filling

3 Service Lead times, Stockouts

4 Contingency protection Stockouts (supply, distribute)

5 Smooth operation Production

Source: John J.Coyle; Edward J Bardi; C.John Langley Jr ( (2003)

TS Lê Phúc Hòa, ThS Nguyễn Thị Bảo Khánh 10

Supplier

Supplier

Plant

Volume shipment

Transport consolidation

Plant

Plant

Warehouse

Market Market

Market

Plant

Warehouse

Volume shipment

break volume in transport

TS Lê Phúc Hòa, ThS Nguyễn Thị Bảo Khánh 11

Supply and Product Mixing

Plant I: A&B

Plant I: B&C

Plant I: D&E

Plant I: F&G

Warehouse

Customer X Customer Y Customer z Customer W

A,B,C B,C,F,G

A,G

A,B,C,D.E

Product Mixing

Raw Material A

Raw Material B

Vendor source C

Vendor source D

A,B,C,D

Supply Mixing

5.3 BASIC WAREHOUSE DECISIONS

Ownership (private, lease)

How many (Centralized, Decentralized)

What size Where (location) Interior layout What product, where

Source: John J.Coyle; Edward J Bardi; C.John Langley Jr ( (2003)

(Based on cost trade-off)

TS Lê Phúc Hòa, ThS Nguyễn Thị Bảo Khánh 13

• Mixed attributes of contract and public warehouse, whose number of clients range from 2 to a dozen

• A second option for renting

warehouse which provides

tailored warehouse to one

client only

• Warehouse is owned by the firm to store goods

• Space is rented by all

legitimate users

• Normally on a

month-to-month basis

Public warehousing Private warehousing

Multiclient warehousing Contract

warehousing

GROUP DISCUSSION

WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF (1) PRIVATE WAREHOUSE AND (2)

PUBLIC WAREHOUSE?

ADVANTAGES

DISADVANTAGES

Dr Le Phuc Hoa, MSc Nguyen Thi Bao Khanh 15

v Warehouse location decision

- Natural resources

- Population characteristics

- Tax and incentives

- Transportation factors

- Proximity to Industry Cluster

- Trade patterns

- Quality-of-life considerations

- …

Some factors that affects the decision to selection a warehouse’s location:

5.4 WAREHOUSE OPERATIONS

- Inventory and warehousing are closely related

- Warehouses are designed to be compatible with different inventory methods

- There are 3 main inventory methods for warehouse operations:

+ Unit storage (traditional method): all products of the same type are stored together

(simple, efficient)

+ Cross-docking: Wal-Mart innovates to improve supply chain efficiency According to this

method, product is not actually in stock The trucks coming from the suppliers carry a large

number of different products The consignment is then divided into smaller lots Small

batches of different products according to daily needs and quickly loaded onto another

truck to carry products to final delivery point

+ Functional storage: all the different products related to the needs of a certain type of

customer or related to a specific task are stored together (effectively picking and packing,

taking up storage space)

Dr Le Phuc Hoa, MSc Nguyen Thi Bao Khanh 17

v Basic warehouse operations:

Receiving ( in dock):

+Schediule carrier +Unload vehicle +Inspect for damage +Compare Percase Order

Put-away:

Identify product; Identify storage

location; Move product; Update

record

Storage:

Equipment; Stock location (popularity, Unit size, cube)

Shipping preparation:

Packaging; Labeling; Staging

Order picking:

Information; Walk & Pick;

Batch Picking

Shipping: Schedule carrier; Load vehicle; B/L;

Record update Output

Intput

Warehouse process

Dr Le Phuc Hoa, MSc Nguyen Thi Bao Khanh 18

Figure 5.2: Cross-docking operations

5.5 PRINCIPLES OF A WAREHOUSE LAYOUT

- The layout of a warehouse should serve its functions, providing the most suitable working

conditions for people, goods and equipment.

- In warehouse design, understanding how trade-offs work shall help managers to make more

efficient decisions Some trade-offs might be fixed vs variable slot location, vertical vs

horizontal build, aisles width, dock layout, and so on.

Figure 5.3: Basic layout of a warehouse

and preparation

Shipping

Dr Le Phuc Hoa, MSc Nguyen Thi Bao Khanh 20

v FAST principle in warehouse operations

• Prevent bottlenecks

• Place similar processes

or subsequent inventory

processes closer to each

other

How easy is it to retrieve or reach inventory?

How the warehouse would

recalibrate or adjust to

order volumes for different

types of inventory?

• Space allocation

• Space utilization