Supply Chain Logistics Management Chapter 13 Warehouse Management

Supply Chain Logistics Management Chapter 13: Warehouse Management Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

ECONOMIC BENEFITS OF WAREHOUSING • • Consolidation Break-bulk or cross dock Processing/Postponement Stockpiling Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

WAREHOUSE BENEFITS CONSOLIDATION Plant A Plant B Consolidation Warehouses Customers A B C Plant C Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

WAREHOUSE BENEFIT DISTRIBUTION ASSORTMENT Plant A Plant B Plant C Customer A Distribution Center Customer B Customer C Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

WAREHOUSE BENEFIT BREAK BULK OPERATION Customer A Plant A Break Bulk Warehouse Customer B Customer C Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

SERVICE BENEFITS OF WAREHOUSING • • • Spot stock Assortment Mixing Production support Market presence Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

WAREHOUSING BENEFITS IN-TRANSIT MIXING Customer W A-B-C-D Plant A Plant B Warehouse Transit Mixing Point Product D Plant C Customer X A-B-C-D Customer Y A-B-C Customer Z A-B Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

WAREHOUSING BENEFITS MANUFACTURING SUPPORT Vendor A Vendor B Manufacturing Warehouse Assembly Plant Vendor C Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

WAREHOUSING ALTERNATIVES • Options – Private – Public – Contract – Other • Select warehousing option with best strategic fit Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

SHARE OF WAREHOUSE BUSINESS Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

DECISION FACTORS • • • Strategy Type of need Information system Control Product characteristics Culture Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

STRATEGY • • • Full line Centralized postponement Utilization of current capacity and resources Market presence Segment focused Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

USE OF ALTERNATIVES (Percent of Facilities) Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

WHO USES THE MOST FACILITIES? Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

TYPE OF NEED • • • Turn inventory Promotional inventory Speculative inventory Custom services and activities Seasonal Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

INFORMATION SYSTEM • • Communication capabilities System compatibility Handling technologies Activity based costing Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

CONTROL • • Customs and bonding Temperature Secrecy Lot control and recall Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

PRODUCT CHARACTERISTICS • • Handling characteristics Storage characteristics Speed of movement Flexibility Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

NEW WAREHOUSES WILL BE: Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

CULTURE • Unionization • Expertise • Industry experience and economies Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

VALUE-ADDED WAREHOUSING • Packaging • Refined unitization – Adjust pallets or shrink-wrap – Change containers • • Production specialization Product climatization Recall capability Market confidentiality Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

TRADITIONAL HANDLING • Palletizing, put away, storage, replenishment, selection and loading for shipment • Food industry products handled up to 17 times in SC and in DC 4. 3 times Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

CROSS-DOCKING • Products received, selected, repackaged, loaded for shipment w/o storage • Enabled by conveyors & sortation equipment • Used with general merchandise & food • Fast moving products replenished using POS/planagram systems • Used in large (800 K to 1, 200 K sq. ft. . ) DCs Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

FOOD INDUSTRY Less Impediments to C-D • Scanning data-

CROSS-DOCKING RESULTS • MFG. added costs +$. 10 /case • Average distributor cost savings $. 35 /case • Break down store sorted cases saves $. 50 to $. 55/case Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

ECR PILOT C-D TESTS RETAIL & WHOLESALE • Logistics savings to product sales support Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

STUDY OF C-D IN INDUSTRY • Only 76% space of traditional • Only 57% of direct labor • Case/hour increases Up to 75% • Excellent payback periods Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

CONTRACT WAREHOUSING • Storage space, software systems, labor & management dedicated to a specific shipper’s logistics system • Resources customized to a specific client’s requirements Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

DIFFERENTIATION CONTRACT VS. PUBLIC • Productivity sharing • Real estate arrangements • Business relationships • Pricing agreements Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

INTEGRATED LOGISTICS SERVICES • Mission-Provide services to meet all or significant part of a shipper’s total logistical requirements • Titles-Third party logistics, contract logistics, logistics utilities, and integrated logistics service providers Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

CONSIDERATION OF QUALITATIVE DECISION FACTORS Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

TECHNOLOGY • • • Remote Computing Automatic Trailer. UL EDI Radio Frequency Sortation Systems Hi. Density Unit Load Automatic Storage • Scanning • Pick-to-Light • M’tl Handling Auto. Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

WAREHOUSING IN FUTURE TOPIC OF WORKSHOP • Evolutionary cycles – Become paperless – Become shelfless – Become seamless • External factors – Global networks – People – Third party – Technology • Reverse logistics • Company examples Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

CONCLUSION • Warehouse strategy is evolving to more focused and flexible • Technology and expertise are key warehouse alternative determinants • Operating and industry synergies are more important factors Logistics in Supply Chain Management, First Edition , Bowersox, Closs, and Cooper Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.