33. What issues impact the choice of Warehousing w.r.t. Retailing and how?

Click to edit Master subtitle style Explain with examples.

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Reasons for warehousing:

To support the companys customer policy. To maintain a source of supply without interruptions. To achieve transportation economies. To support changing market conditions and sudden changes in demand.
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To support any JIT programs.

Types of warehouses:-

Private warehouses

A private warehouse is operated by the firm owning the product.

It is recommended to go in for a private when the utilization of the warehouse

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Public warehouses These are warehouses whose facility can be

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Contract Warehouse:

There is a long-term contract signed between the company and a party providing warehousing services.

The long-term contract could help in lowering the cost. It also provides for expertise in
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warehousing and flexibility.

Co-operative Warehouses:

These warehouses are owned, managed and controlled by co-operative societies. They provide warehousing facilities at the most economical rates to the members of their society

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Warehousing Strategy

An integrated warehouse strategy focuses on two questions.

1) The 1st concerns how many warehouses should be employed. 2) The 2nd question concerns which warehouse types should be used to meet market requirements.

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Many firms utilize a combination of private, public, and contract facilities.

Warehousing Strategy:-

A private or contract facility may be used to cover basic year round requirements, while public facilities are used to handle peak seasons. In other situations, central warehouses may be private, while market area or field warehouses are public facilities.

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Warehousing Strategy

Full warehouse utilization throughout a year is a remote possibility. As a planning rule, a warehouse designed for fullcapacity utilization will in fact be fully utilized between 75 to 85 % of the time. Thus from 15 to 25 % of the time, the space needed to meet peak requirements is not utilized.
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Warehousing Strategy
Other qualitative factors that should be considered include:

1) presence synergies: Inventory located nearby in a building that is clearly affiliated with the enterprise. 2) industry synergies: Refer to the operating benefits of with other firms serving the same industry. 3) operating flexibility: Refers to the ability to adjust internal policies and procedures to meet product and customer needs. 4) location flexibility: Refers to the ability to quickly adjust warehouse location and number in accordance with seasonal or permanent demand changes. 5) scale economies: Refer to the ability to reduce material-handling and 10/26/12 storage through application of advanced technologies.

Qualitative Decision Factors:Private Contract Public Presence synergies Industry synergies Operating flexibility
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The Warehouse location strategies:1) Market positioned: a) Order Cycle time b) Transportation cost c) Sensitivity of the product d) Order sizes 2) Product positioned:
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a) Perishability of the raw materials

Site Selection:

Location of the major markets. Nature of the products being distributed. Quality & Variety of carriers serving the proposed site. Quality & Quantity of labour available. Cost of industrial land.

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Contd

Potential for expansion. Local tax structures. Cost of construction. Cost & availability of utilities . Any local govt. tax concessions or incentives.

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Product-Mix Coiderations:-

Each product should be analyzed in terms of annual sales, stability of demand, weight, and packaging. It is also desirable to determine the total size and weight of the average order processed through the warehouse.

Expansion:

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Well-managed organizations often establish five- to ten-year expansion plans.

Warehouse Layout:

Layout of a warehouse depends on the proposed material handling system and requires development of a floor plan to facilitate product flow. If pallets are to be utilized, the first step is to determine the pallet size.

Pilferage Protection:

Protection against theft of merchandise has become a major factor in warehouse operation As standard procedure, only authorized personnel should be permitted into the facility and surrounding grounds.

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Product Deterioration:

The most obvious form of product deterioration is damage from careless transfer or storage. Another major form of deterioration is non-compatibility of products stored in the same facility. Product deterioration from careless handling within the warehouse is a form of loss that cannot be insured against and constitutes a 100 percent cost with no compensating revenue.
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