Lean Management

Warehousing Decisions & Layouts.

The Nature and Importance of Warehousing

Warehousing provides time and place utility (primarily time) for raw materials, industrial goods, and finished products, allowing firms to use customer service as a dynamic value-adding competitive tool.

Warehouse Operations

Warehouse:

A warehouse is a commercial building used for storage and distribution of goods.

Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, etc.

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

Table 8-1

Warehouse Value-Adding Roles

Figure 8-1

Transportation Consolidation

Figure 8-2

Supply and Product Mixing

Figure 8-3

Basic Warehousing Decisions

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

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.
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The Ownership Decision

Factors to consider

Throughput volume

(because of fixed costs)

Stability of demand Density of market area to be served Security and control needs Customer service needs Multiple use needs of the firm
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Table 8-2 Firm Characteristics

Affecting the Ownership Decision

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Figure 8-6

Basic Warehouse Operations

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Public Warehousing

Rationale for Public Warehousing

Limited capital investment Flexibility Bonded warehousing Field warehouses

Public Warehousing Services

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Public Warehousing

Public warehousing regulation:

Public warehousing rates based upon:

Liability Receipts

Value Fragility Potential damage to other goods Volume and regularity Weight density Services required

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Contract Warehousing

Increasing phenomenon 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.
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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

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Table 8-3: Factors Affecting

the Number of Warehouses

Factor
Substitutability Product Value Purchase Size Special Warehousing

Centralized
Low High Large Yes

Decentralize d
High Low Small No

Product Line
Customer Service

Diverse
Low

Limited
High
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Basic Warehouse Operations

Movement

Receiving Put-away Order picking Shipping Stock location Warehouse Management System (WMS)
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Storage

Warehouse Layout and Design

Develop a demand forecast. Determine each items order quantity. Convert units into cubic footage requirements. Allow for growth. Allow for adequate aisle space for materials handling equipment.
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Warehouse Layout and Design

Provide for the transportation interface. Provide for order-picking space. Provide storage space. Provide recouping, office, and miscellaneous spaces.
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Warehouse Layout

Warehouses must be laid out so they can function in the most efficient manner possible Different industries have different warehouse layouts

EXAMPLE: Food warehouses may have a freezer section, cooler section, and dry foods area.
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Warehouse Layout

Racking and isles always runs toward the dock doors when in the same room as the dock doors. Racking must also take in consideration any I-beams or other obstructions.
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Warehouse Layout

Each section of racking is called a bay. Each bay usually holds 2 or more pallets. Racking is usually 1 to 6 bays high (depending on how much space is available in the warehouse. Each bay usually has a label with a identification number.

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Warehouse Layout

Each section must have 3 on each side (front and back) free for the pallets to hang over the racking.

This is a OSHA Standard

3 inches for each pallet

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Warehouse Layout
This is an example of what happens when the racking does not have 3 on each side!
A standard pallet is usually 40 wide by 48 deep Most pallets cannot be stacked higher than 60
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Warehouse Layout

A functional design must also take into consideration the isle space (area between the racks.) If the isle does not allow enough space for the material handling equipment (fork lifts and pallet jacks) to function properly, productivity goes down greatly.

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Figure 8-8

Warehouse Space Requirements

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Warehouse Layout and Design

Basic needs:

Receiving Basic storage area Order selection and preparation Shipping

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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. Use an effective storage plan Minimize aisle space. Use full building height.
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Warehouse Layout and Design:

Layout and Design Objectives

Cubic capacity utilization Protection Efficiency Mechanization Productivity

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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

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Materials Handling

Definition: Efficient short distance movement in or between buildings and a transportation agency. Four dimensions

Movement Time Quantity Space

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Coordination

Objectives of Materials Handling

Increase effective capacity

Use buildings height and minimize aisle space Reduce product handling

Improve operating efficiency

Develop effective working conditions Reduce heavy labor Improve logistics service Reduce cost
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Table 8-5: Principles of Materials Handling

To effectively plan and control materials handling, the logistics manager should recognize some guidelines and principles.

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Packaging

Interest in packaging is widespread

Logistics

Warehousing Transportation Size

Marketing Production Legal

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The Role of Packaging

Identify product and provide information Improve efficiency in handling and distribution Customer interface Protect product

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What Is Packaging?

Consumer (interior) packaging

Marketing managers primarily concerned with how the package fits into the marketing mix. Logistics managers primarily concerned with efficient shipping characteristics including protection, ability to withstand stacking when on a pallet, cube, weight, shape and other relevant factors.
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Industrial (exterior) packaging

Packaging Materials

Table 8-6 presents a comparison of various packing material characteristics. Basic considerations include:

Soft materials Plastic Environmental issues Recycling (reverse logistics)

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Bar Coding

Standard markings that can be read by automatic or handheld scanners that allow for labor saving logistical activities for all supply chain members. Bar Codes contain information regarding:

Vendor Product type Place of manufacture Product price

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Appendix 8A
Materials-Handling Equipment

Dock Equipment

Forklifts Dock bumpers Dock levelers Dock seals Trailer restraint systems Pallets
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Pallets and Pallet Movers

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Figure 8A-1

Forklift Truck

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Figure 8A-2

Pallet Types

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Other Materials Handling Equipment: Conveyors

Types

Disadvantages

Roller or gravity style Belt style

Very expensive Relatively inflexible

Advantages

Assist in keeping inventory records an location Ability to move goods quickly and efficiently
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Other Materials Handling Equipment: Other

Types

Advantages

Cranes (overhead and wheeled) Packers (COFC and TOFC) Automatic guided vehicles

Ability to handle special movements quickly and efficiently Very expensive and limited use

Disadvantages

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Cranes

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Materials-Handling Equipment Top-running

Figure 8A-3

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Order-picking and Storage Equipment

Picker-to-part systems - order picker must travel to the pick location within the aisle.

Bin shelving Modular storage drawers Flow racks Mobile storage systems Order-picking vehicles
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Order-picking and Storage Equipment

Part-to-picker systems - the pick location travels through an automated machine to the picker. Carousels Horizontal Vertical Mini-load automated storage and retrieval systems (AS/RS)
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Figure 8A-4 Order-Picking Equipment

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Figure 8A-5

Mezzanines

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Types of Materials Handling Equipment A Design Perspective

Flexible path

Fork lifts, power lifts/skids Very flexible, but usually labor intensive Conveyors, track-guided vehicles Expensive but capable; limited flexibility; need high volumes to be efficient Rail-mounted cranes

Continuous-flow fixed path

Intermittent-flow fixed path

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Equipment Selection Factors

Physical attributes of the product and its packaging Characteristics of the facility Time requirements Sources of information

Vendor sales force Company engineers Consultants Similar site visitation and inspection

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