Chapter 9: warehousing (ownership warehousing)

Private Warehouse

-A storage facility that is owned by the company that owns the goods being stored in the facility. -a large volume or highly valuable goods, or the need for some type of specialized storage or handling.

Contract warehouse

-A variation of public warehousing that handles the shipping, receiving, and storage of goods on a contract basis -Usually requires a client to commit to services for years rather than months -The fee structure may be fixed cost, cost-plus, or a combination of both. -The company providing the space handles the employees, equipment, and maintenance.

Advantages of private warehouse

-Control: Offers greater flexibility in designing the warehouse and gives users significant control over operations. -Visibility: inventory, material flow, handling, supervision, and associated costs. -Cost: Operating cost can be 15% - 25% lower if the company achieves at least 75% utilization.

Disadvantages private warehouse

-High Start-up Cost: Capital to build or buy a warehouse. Long, risky investment. Cost of hiring and training employees. Purchase of material handling equipment. -Fixed Location: Not easy to move to another location if the market changes. -Fixed Size and Costs: When volume is low, the company still assumes the fixed costs.

Advantages of a public warehouse

-No capital investment or property taxes -Flexibility: Can be short or long term contract -Lower costs and reduced risk -Access to special features and services: Temperature-controlled storage Customer Service, Inventory Ordering, etc. Office space for customer's sales, accounting, etc.

Disadvantages of public warehouse

-Potential for incompatible computer systems -Specialized services may not be what is required/needed -Space may not be available when/where needed

Advantages of contract warehouse

-Services: client can obtain specialized services tailor-made to suit their needs. -Cost: can be bundled in the contract and negotiated at a lower cost. -Control: contract warehousing offers a degree of control at a reasonable price

Functional(3)

-consolidation -break bulk -cross decking

Public warehouse

-provides storage and related warehouse functions to companies on a short or long-term basis, generally from month-to-month -own the equipment and hire own staff to manage facility -fees: monthly storage fee + pallet in and pallet out fee (size/weight pallets, stacks, fragile, value--risk of theft, hazards)

Ownership (3)

-public -contract -private

Functions of a warehouse

-quality inspections -repackaging -assembly operation: puts products together with other items before shipping them out to final customer (spare parts, advertising materials)

5 primary functions of a warehouse

-receiving -storage -picking -packing -shipping

Drivers of warehouse management (5)

-site selection -# warehouse facilities in network -layout of warehouse -methods of receiving, storing, retrieving, and distributing products and materials

Warehouse

A facility used to store purchases, work-in-process (WIP), and finished goods inventory.

Disadvantage of contract warehouse

Duration: The client company is expected to enter into a contract for a specific period of time; generally three years.

Warehousing

Function that allows a company to receive, store, breakdown, repackage, and distribute items to a manufacturing location, or finished products to a customer

Shipping

Outgoing shipment of parts, components, and products. Includes packaging, marking, weighing, and loading for shipment.

Types of warehouses

Ownership and functional

Receiving

Physical receipt of material, identification, inspection for conformance with the purchase order (quantity and damage), put-away, and preparation of receiving reports

Packing

Placing one or more items of an order into an appropriate container for safe shipping , and marking and labeling the container with customer shipping destination data, and other information that may be required.

storage

The safe and secure retention of parts or products for future use or shipment.

Picking

Withdrawing components from stock to make assemblies or finished goods, or to ship to a customer.