Chapter 10 (Warehouse and DC Management)

4) Cross-dock facilities

- A warehouse where materials from multiple suppliers are unloaded, sorted, and shipped to different destinations. Materials flow through the facility with little or no storage. Cross docking improves shipping efficiencies, enabling you to ship in full truckload quantities - both inbound and outbound - the goal is to keep the products moving—from inbound dock to outbound dock. In many instances, product is only in the cross-dock facility for two or three hours. Thus, cross-docks are often called "flow-through" warehouses.

Cost Categories

1) Cost of Poor Customer Service 2) Inventory Carrying Costs

Warehouses engage in a wide range of value-added services:

1) Mass Customization 2) Final Assembly 3) Repair

The Value of Warehousing

1) Production Economies 2) Transportation Economies

Warehouse Types

1) Warehouse 2) Raw Materials Warehouses 3) Distribution Centers 4) Cross-dock facilities 5) Breakbulk Warehouses 6) Customs Warehouses

Warehouse Management System ("brain of the operations")

1) automates warehouse paperwork, like order receipt and order processing, 2) Directs work activity, like inventory put-away, order picking and packing 3) Helps you optimize space utilization and minimize labor costs by directing work like put-away as well as order picking and packing, 4) Tracks inventory ( Figure 10-3 shows a WMS screenshot for an inventory list). 5) Communicates with all of your other IT systems, including your firm's enterprise resource (ERP) system.

Picking List

A list that documents all the cases or items that need to be picked from the warehouse shelves for specific orders

Portfolio Effect

A situation when some customers order less than expected, and other customers order more than expected, and they cancel each other out

Form Postponement

A strategy that involves delaying giving a product its final form until the exact order comes in

3) Distribution Centers

A warehouse that hold inventory pending distribution to stores

Reserve Storage

An area in a warehouse that holds caseloads of product in reserves until they are needed for picking to fill daily orders

Automated Storage and retrieval system (AS/RS)

Computer controlled equipment system that stores and retrieves cases or pallets from specific storage racks

Public Warehouse

Facilities that provide long-time or short-term warehousing service to companies

5) Breakbulk warehouses

Facilities that receive large truckload shipments that are destined for several customer. These shipments are broken down into smaller quantities and delivered to customers using less than truckload services

Case Pick Warehouse

Facilities where cases of items are stored and picked for customer orders. The picked cases are arranged on pallets before they are shipped.

2) Raw Materials Warehouses

Facilities where raw materials are stored

Warehouse

Facilities where raw-materials, semi-finished goods or finished goods are stored for a short or long term until they are ready to be used.

6) Customs Warehouses

Facilities where you can store imported or exported materials in order to delay the payment of duties (taxes)

1) Warehouse

Facility where raw-materials, semi-finished goods or finished goods are stored for a short or long term until they are ready to be used.

10-1

Great Graph!

Frustrated Freight

Inventory that is left overnight in a cross-dock

First-in First-Out (FIFO)J

Items, cases, or pallets that are received first are the first to be shipped for the purpose of rotating inventory, minimizing the risk of owning out of fashion merchandise.

What happens when your product arrives at a warehouse?

Once the truck backs up to the dock, someone offloads each case or pallet. Your product is scanned, assigned to a rack or bin, and then set in place until it is needed. When an order is received, the warehouse management system (WMS) creates a picking list. Items on the list are then picked, consolidated, packed, and staged for loading. Next, you load the truck and ship your product to its destination.

1) Production Economies

Producing in large lots and storing product until customers want to use it

Forward, or active storage

The act of picking individual cases or items to fill specific orders

Private Warehousing

The act of running one's own warehousing operations, regardless of the ownership status of the warehouse facilities (company owned or rented)

Menu Pricing

The application that allows a customer to pay only for the services received and the space used when working with an outside expert (a public warehouse or 3PL) for warehousing needs.

Warehouse Network

The collection of warehouse locations a company utilizes over a large geographic area.

Final Assembly

The last assembly process a product goes through before it is ready for shipment

For warehousing decisions:

The most important criterion is typically volume of you will handle over time.

Repair

Utilizing central warehouses for repairing items in the reverse logistics flow in order order to shorten the turnaround time for repairs

Pickers

Warehouse workers that pick individual cases or items from the warehouse shelves to fill orders

Why do we invest in so much warehousing?

We have warehouses because we have inventory. Warehouses let you separate production from consumption, enabling you to take advantage of production economies of scale. Costs go down and standards of living go up. Warehousing also provides lots of good jobs.

2) Transportation Economies

You can ship in full truckloads. Inbound shipments are broken down and stored at the warehouse; outbound shipments are consolidated and shipped at the warehouse.

Key Takeaways:

You need to have high, relatively stable volumes to justify the fixed costs of automation.

Total cost analysis for warehousing

the analysis that involves identifying all relevant costs of going through with a decision