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Distribution Strategy: Warehousing. Logistics and Supply Chain Management. Warehousing . . . . The storing of products, including raw materials, parts, goods-in-process, finished goods at and between point-of-origin and point-of-consumption. Provides information on status of goods.

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distribution strategy warehousing

Distribution Strategy:Warehousing

Logistics and

Supply Chain Management

warehousing
Warehousing

.

.

.

  • The storing of products, including raw materials, parts, goods-in-process, finished goods at and between point-of-origin and point-of-consumption.
  • Provides information on status of goods.

Distribution centers are a type of warehouse which

hold minimum inventory of high-demand goods.

.

.

.

.

warehousing3
Warehousing

.

.

.

  • The storing of products, including raw materials, parts, goods-in-process, finished goods at and between point-of-origin and point-of-consumption.
  • Provides information on status of goods.

Warehousing: Storage of inventories all through

logistics process.

.

.

.

.

warehousing storage of inventories all through logistics process
Warehousing: Storage of inventories all through logistics process.
  • Raw materials, components, parts.
  • Finished goods.
  • The storing of products, including raw materials, parts, goods-in-process, finished goods at and between point-of-origin and point-of-consumption.
  • Provides information on status of goods.

Physical supply

Distribution

Warehouse

Warehouse

slide5

Inventory

in a Warehousing Context

  • Achieves transportation economies.
transportation economies
Transportation Economies

Economies of scale

Transportation

carriers usually

give discounts

for bigger loads.

.

Warehouse

Supplier

transportation economies7
Transportation Economies

Economies of scale

.

Warehouse

Supplier

inventory in a warehousing context
Inventory in a Warehousing Context
  • Achieves transportation economies.
  • Achieves production economies.
achieves production economies
Achieves Production Economies

Economies of scale

Warehouse

Assembly line

inventory in a warehousing context10
Inventory in a Warehousing Context
  • Achieves transportation economies.
  • Achieves production economies.
  • Quantity purchased discounts, forward buy discounts.
  • Maintain source of supply.
  • Support customer service policies.

.

.

inventory in a warehousing context11
Inventory in a Warehousing Context

.

.

.

  • To meet changing market conditions.
    • Seasonality.
    • Demand fluctuations.
    • Competition.
  • To overcome time and space differentials between producers and consumers.
  • To minimize logistics costs while meeting customer service goals.
  • To support just-in-time inventory programs.
just in time jit
Just-in-Time (JIT)

Assembly line

just in time jit13
Just-in-Time (JIT)

Assembly line

just in time jit14
Just-in-Time (JIT)

Assembly line

just in time jit15
Just-in-Time (JIT)

Assembly line

just in time jit16
Just-in-Time (JIT)

.

Assembly line

just in time jit17
Just-in-Time (JIT)

.

Assembly line

just in time jit18
Just-in-Time (JIT)

.

Assembly line

just in time jit19
Just-in-Time (JIT)

.

Assembly line

three basic warehouse functions
Three Basic Warehouse Functions
  • Movement.
  • Storage.
  • Information.
movement
Movement

Receiving, putting away

.

Warehouse

movement22
Movement

Receiving, putting away

.

Warehouse

movement23
Movement

Receiving, putting away

Picking, staging, loading

.

Warehouse

movement24
Movement

Receiving, putting away

Picking, staging, loading

Cross-docking

.

Warehouse

movement25
Movement

Receiving, putting away

Picking, staging, loading

Cross-docking

Packaging

.

Warehouse

movement26
Movement

Receiving, putting away

Picking, staging, loading

Cross-docking

Packaging

Light assembly, blending, kitting

.

Warehouse

movement27
Movement

Receiving, putting away

Picking, staging, loading

Cross-docking

Packaging

Light assembly, blending, kitting

Labeling, shrink wrapping

.

Warehouse

Label

Label

Label

Label

movement28
Movement

Receiving, putting away

Picking, staging, loading

Cross-docking

Packaging

Light assembly, blending, kitting

Labeling, shrink wrapping

.

Warehouse

movement29
Movement

Receiving, putting away

Picking, staging, loading

Cross-docking

Packaging

Light assembly, blending, kitting

Labeling, shrink wrapping

Breakbulk, consolidation

.

Warehouse

movement30
Movement

Receiving, putting away

Picking, staging, loading

Cross-docking

Packaging

Light assembly, blending, kitting

Labeling, shrink wrapping

Breakbulk, consolidation

.

Transportation

Warehouse

movement31
Movement

Receiving, putting away

Picking, staging, loading

Cross-docking

Packaging

Light assembly, blending, kitting

Labeling, shrink wrapping

Breakbulk, consolidation

.

Transportation

Warehouse

Import, export services

(also an information function)

storage
Storage

.

Warehouse

information
Information

Inventory tracking

Order entry

Proof of delivery

Tracing/customer service billing.

Service reporting/carrier monitoring

Site location

.

Warehouse

Real estate management

Network analysis

Systems analysis

Display building/promotions

warehouses versus distribution centers cycles39
Warehouse

--Receives.

--Stores.

--Picks

Warehouses versus Distribution Centers:Cycles

Warehouse

warehouses versus distribution centers cycles40
Warehouse

--Receives.

--Stores.

--Picks

--Ships

Warehouses versus Distribution Centers:Cycles

Warehouse

warehouses versus distribution centers cycles41
Warehouse

--Receives.

--Stores.

--Picks

--Ships

Distribution Center

Warehouses versus Distribution Centers:Cycles

Warehouse

warehouses versus distribution centers cycles42
Warehouse

--Receives.

--Stores.

--Picks

--Ships

Distribution Center

Warehouses versus Distribution Centers:Cycles

Distribution Center

warehouses versus distribution centers other differences
Warehouses

--Minimal adding of value.

--Data collection in batches.

--Aim at minimizing shipping costs.

Distribution Centers

--Maximum adding of value (including final assembly).

--Real-time data collection.

--Aim at maximizing profit of demand

Warehouses versus Distribution Centers:Other Differences
uses of warehouses
Uses of Warehouses:
  • Support manufacturing.
  • Mix products from multiple production facilities to a single customers.
  • Break bulk.
  • Consolidate small shipments into large shipments.
manufacturing support inbound logistics
Manufacturing Support (inbound logistics)

Supplier A

Carload or truckload shipments

Supplier B

Warehouse

Plant

Supplier C

Supplier D

slide53

Product 1

Product 2

Product 3

Product 4

slide54

1

2

3

4

mixing warehouse outbound logistics
Mixing Warehouse (outbound logistics)

Customer W

Plant A, Product 1

1

1

2

3

4

Plant B, Product 2

2

Customer X

1

2

3

4

Plant C, Product 3

3

Customer Y

Plant D, Product 4

4

1

2

3

4

mixing warehouse outbound logistics57
Mixing Warehouse (outbound logistics)

Customer W

Plant A, Product 1

1

1

2

3

4

Plant B, Product 2

2

Customer X

Mixing Warehouse

1

2

3

4

Plant C, Product 3

3

Customer Y

Plant D, Product 4

4

1

2

3

4

mixing warehouse outbound logistics58
Mixing Warehouse (outbound logistics)

Customer W

Plant A, Product 1

1

1

2

3

4

Plant B, Product 2

2

Customer X

Mixing Warehouse

1

1

2

3

4

Plant C, Product 3

3

Customer Y

Plant D, Product 4

4

1

2

3

4

mixing warehouse outbound logistics59
Mixing Warehouse (outbound logistics)

Customer W

Plant A, Product 1

1

1

2

3

4

Plant B, Product 2

2

Customer X

Mixing Warehouse

1

2

1

2

3

4

Plant C, Product 3

3

Customer Y

Plant D, Product 4

4

1

2

3

4

mixing warehouse outbound logistics60
Mixing Warehouse (outbound logistics)

Customer W

Plant A, Product 1

1

1

2

3

4

Plant B, Product 2

2

Customer X

Mixing Warehouse

1

2

3

1

2

3

4

Plant C, Product 3

3

Customer Y

Plant D, Product 4

4

1

2

3

4

mixing warehouse outbound logistics61
Mixing Warehouse (outbound logistics)

Customer W

Plant A, Product 1

1

1

2

3

4

Plant B, Product 2

2

Customer X

Mixing Warehouse

1

2

3

4

1

2

3

4

Plant C, Product 3

3

Customer Y

Plant D, Product 4

4

1

2

3

4

mixing warehouse outbound logistics62
Mixing Warehouse (outbound logistics)

Customer W

Plant A, Product 1

1

1

2

3

4

Plant B, Product 2

2

Customer X

Mixing Warehouse

1

2

3

4

1

2

3

4

Plant C, Product 3

3

Customer Y

Plant D, Product 4

4

1

2

3

4

mixing warehouse outbound logistics63
Mixing Warehouse (outbound logistics)

Customer W

Plant A, Product 1

1

1

1

2

3

4

Plant B, Product 2

2

Customer X

Mixing Warehouse

1

2

3

4

1

2

3

4

Plant C, Product 3

3

Customer Y

Plant D, Product 4

4

1

2

3

4

mixing warehouse outbound logistics64
Mixing Warehouse (outbound logistics)

Customer W

Plant A, Product 1

1

1

1

2

3

4

Plant B, Product 2

2

Customer X

Mixing Warehouse

1

2

3

4

1

1

2

3

4

Plant C, Product 3

3

Customer Y

Plant D, Product 4

4

1

1

2

3

4

mixing warehouse outbound logistics65
Mixing Warehouse (outbound logistics)

Customer W

Plant A, Product 1

1

1

1

2

2

3

3

4

4

Plant B, Product 2

2

Customer X

Mixing Warehouse

1

2

3

4

1

1

2

2

3

3

4

4

Plant C, Product 3

3

Customer Y

Plant D, Product 4

4

1

1

2

2

3

3

4

4

consolidationwarehouse outbound logistics
ConsolidationWarehouse (outbound logistics)

Customer W

Plant A

Plant B

Customer X

Consolidation Warehouse

Plant C

Customer Y

Plant D

breakbulkwarehouse outbound logistics
BreakbulkWarehouse (outbound logistics)

Customer 1

Customer 2

Breakbulk Warehouse

Plant

Customer 3

types of warehousing
Types of Warehousing
  • Direct store delivery: Mfg. = store
  • Private warehousing
  • Public warehousing.
    • General merchandise.
    • Refrigerated or cold storage.
    • Bonded warehouses.
    • Household goods, furniture.
    • Special commodity.
    • Bulk storage.
    • Cross-docking facilities (3PL concept)
    • Contract warehousing (can be used in 3PL)
public warehousing
Advantages

Conservation of capital.

Able to increase capacity when needed.

Reduced risk of obsolescence.

Economies of scale due to warehouse company’s investment.

Flexibility.

Tax advantages: some states have no inventory taxes for products in public warehouses.

Specific knowledge of costs.

Disadvantages

Incompatible communications systems.

Lack of specialized services.

May be unavailable when needed.

Public Warehousing
private warehousing
Advantages

Control.

Flexibility in design and operation.

Long-term cost.

Better use of human resources.

Tax benefits: depreciation

Intangibles: image of stability, being a real player.

Disadvantages

Fixed costs, especially if built for peak seasons.

Investment. Return may be better if money placed elsewhere.

Private Warehousing
warehouse characteristics
Warehouse Characteristics
  • Increase the number of warehouses and the average size of warehouses decreases.
  • Factors influencing the number of warehouses:
    • Cost of lost sales.
    • Inventory costs.
    • Warehousing costs.
    • Transportation costs.
warehouse locations
Warehouse Locations
  • Market-based – nearest the final customer.
  • Production positioned – collection points or mixing facilities.
  • Intermediate positioning between producer and final customer.
cross docking
Cross-Docking
  • Movement from an inbound dock directly to an outbound dock.
  • Movement from directly from an inbound dock to a sorting process to an outbound dock.
cross docking 2
Cross-Docking (2)

Freight

Outbound

Inbound

Outbound

Outbound

Inbound

Outbound

retail distribution center
Retail Distribution Center

Store 1

Mfg. 1

Store 2

Store 3

Mfg. 2

Store 4

crossdock in at least two of these conditions
Crossdock in at least two of these conditions:
  • Product destination is know upon receipt.
  • Destination is ready for immediate delivery.
  • You daily ship to less than 200 locations.
  • More than 70% of products fit conveyors.
  • You receive large quantities of individual items.
  • Products arrive pre-labeled.
  • Some products are time-sensitive.
  • Distribution center is near capacity.
  • At least some inventory is pre-prices.