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LOGISTICS AND TRANSPORTATION DESIGN WAREHOUSE MANAGEMENT Dr.Eng. Bonivasius Prasetya Graduate School of Industrial Engineering Mercu Buana University
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LOGISTICS AND TRANSPORTATION DESIGN
WAREHOUSE MANAGEMENT
Dr.Eng. Bonivasius Prasetya
Graduate School of Industrial Engineering Mercu Buana University
Chapter 8 Management of Business Logistics, 7th Ed. 2
The Nature and Importance of Warehousing
In 1999, $75 billion, or 0.8 percent of GDP was spent on warehousing.
The total supply of U.S. warehousing space in 1999 was 6.1 billion square feet, an increase from 1990 of 700 million square feet of space.
Warehousing provides time and place utility for raw materials, industrial goods, and finished products, allowing firms to use customer service as a dynamic value-adding competitive tool.
Chapter 8 Management of Business Logistics, 7th Ed. 3
The Role of the Warehouse in the Logistics System: A Basic Conceptual Rationale
The warehouse is where the supply chain holds or stores goods.
Functions of warehousing include: Transportation
consolidation Product mixing Cross-docking Service Protection against
contingencies Smoothing
Chapter 8 Management of Business Logistics, 7th Ed. 4
Warehouse Value-Added Services
Chapter 8 Management of Business Logistics, 7th Ed. 5
Warehouse Value-Adding Roles
Chapter 8 Management of Business Logistics, 7th Ed. 6
Transportation Consolidation
Chapter 8 Management of Business Logistics, 7th Ed. 7
Supply and Product Mixing
Chapter 8 Management of Business Logistics, 7th Ed. 8
Basic Warehouse Decisions: A Cost Trade-off Framework
Ownership
Public versus contract versus private
Centralized or Decentralized Warehousing
How many
Location
Size
Layout
What products where
Chapter 8 Management of Business Logistics, 7th Ed. 9
Basic Warehousing Decisions
Chapter 8 Management of Business Logistics, 7th Ed. 10
The Ownership Decision
Public warehousing costs mostly all variable.
Private warehousing costs have a higher fixed cost component.
Thus private warehousing virtually requires a high and constant volume.
Chapter 8 Management of Business Logistics, 7th Ed. 11
The Ownership Decision
Factors to consider
Throughput volume
Stability of demand
Density of market area to be served
Security and control needs
Customer service needs
Multiple use needs of the firm
Chapter 8 Management of Business Logistics, 7th Ed. 12
Firm Characteristics Affecting the Ownership Decision
Chapter 8 Management of Business Logistics, 7th Ed. 13
Public Warehousing
Rationale for Public Warehousing
Limited capital investment
Flexibility
Public Warehousing Services
Bonded warehousing
Field warehouses
Chapter 8 Management of Business Logistics, 7th Ed. 14
Public Warehousing
Public warehousing regulation:
Liability
Receipts
Public warehousing rates based upon:
Value
Fragility
Potential damage to other goods
Volume and regularity
Weight density
Services required
Chapter 8 Management of Business Logistics, 7th Ed. 15
Contract Warehousing
Up 23% per year in 2000 to $20.4 billion.
Compensation for seasonality in products.
Increased geographical coverage.
Ability to test new markets.
Managerial expertise and dedicated resources.
Less strain on the balance sheet.
Possible reduction of transportation costs.
Other issues discussed in Chapter 11.
Chapter 8 Management of Business Logistics, 7th Ed. 16
The Number of Warehouses
Factors Affecting the Number of Warehouses
Inventory costs
Warehousing costs
Transportation costs
Cost of lost sales
Maintenance of customer service levels
Service small quantity buyers
Chapter 8 Management of Business Logistics, 7th Ed. 17
Table 8-3: Factors Affecting the Number of Warehouses
Factor Centralized Decentralized
Substitutability Low High
Product Value High Low
Purchase Size Large Small
Special Warehousing Yes No
Product Line Diverse Limited
Customer Service Low High
Chapter 8 Management of Business Logistics, 7th Ed. 18
Basic Warehouse Operations
Movement
Receiving
Put-away
Order picking
Shipping
Storage
Stock location
Warehouse Management System (WMS)
Chapter 8 Management of Business Logistics, 7th Ed. 19
Figure 8-6 Basic Warehouse Operations
Chapter 8 Management of Business Logistics, 7th Ed. 20
Figure 8-7 The Computerized Warehouse
Chapter 8 Management of Business Logistics, 7th Ed. 21
Warehouse Layout and Design
Develop a demand forecast.
Determine each item’s order quantity.
Convert units into cubic footage requirements.
Allow for growth.
Allow for adequate aisle space for materials handling equipment.
Chapter 8 Management of Business Logistics, 7th Ed. 22
Warehouse Layout and Design
Provide for the transportation interface.
Provide for order-picking space.
Provide storage space.
Provide recouping, office, and miscellaneous spaces.
Chapter 8 Management of Business Logistics, 7th Ed. 23
Figure 8-8 Warehouse Space Requirements
Chapter 8 Management of Business Logistics, 7th Ed. 24
Figure 8-9 Principles of Warehouse Layout Design
Chapter 8 Management of Business Logistics, 7th Ed. 25
Warehouse Layout and Design
Basic needs:
Receiving
Basic storage area
Order selection and preparation
Shipping
Storage Plan Based on Product Movement
Chapter 8 Management of Business Logistics, 7th Ed. 26
Chapter 8 Management of Business Logistics, 7th Ed. 27
Warehouse Layout and Design
Layout and Design Principles:
Use one story facilities where possible.
Move goods in a straight-line.
Use the most efficient materials handling equipment.
Minimize aisle space.
Use full building height.
Chapter 8 Management of Business Logistics, 7th Ed. 28
Warehouse Layout and Design: Layout and Design Objectives
Cubic capacity utilization
Protection
Efficiency
Mechanization
Productivity
Chapter 8 Management of Business Logistics, 7th Ed. 29
Table 8-4: Warehouse Productivity Metrics
Pounds or units per day
Employees per pound moved
Pounds unloaded per hour
Pounds picked per hour
Pounds loaded per hour
Percentage of orders correctly filled
Productivity ratio = pounds handled/day divided by labor hours/day
Throughput = amt of material moved through the system in a given time period
