Warehousing

fill rate

% of demand filled from on-hand inventory

in-stock rate

% of order cycles with no stock-outs

Selecting a New Facility steps:

- Step 1: What type of site do I need? FC? DC? Sort? Omni-Channel? - Step 2: Identify the important location factors and categorize them as dominant or secondary. - Step 3: Consider alternative regions; then narrow to alternative communities and finally specific sites. - Step 4: Collect data on the alternatives. - Step 5: Analyze the data collected, beginning with the quantitative factors. - Step 6: Bring the qualitative factors pertaining to each site into the evaluation

requirements of good metrics

- Strategically Oriented - ease of measurement - easily understood - attainability - provides value - provides guidance

Key performance indicators (KPIs)

- The quantifiable metrics a company uses to evaluate progress toward critical success factors - how people and suppliers are judged in business settings

Omni-channel

- combines both brick-and-mortar and online retailing in a seamless customer experience - more SKUs - more returns - different types of infrastructure - facilitates more responsive service

Network Optimization

- given the cost of shipping from each of the DC's to the customer bases, use solver to determine the quantity that should be shipped from each DC to each customer base - the primary goal is to minimize total costs

applying load distance method

- identify and compare candidate locations - like weighted distance method - select a location that minimized the sum of the loads multiplied by the distance the load travels - time may be used instead of distance

racks in warehouse

- minimize aisle space - maximize use of height

Poor metrics can result in

- primary business processes not being manageable - poor outcomes - lower morale - need for increased external regulation - high costs and low efficiency when employees rush for perfection

swift even flow

- speed increases efficiency - repetitive processes with only a few decision points

visual management

- visual markers to help "see" a process for clarity - poka-yoke: simple tool to avoid mistake

calculating load distance score

1. Varies by industry. 2. Use the actual distance to calculate load distance score. 3. Use rectangular or Euclidean distances. 4. Find one acceptable facility location that minimizes the load distance score.

traditional warehouse operations

1. receiving and unloading 2. storage placement 3. order selection 4. final processing/packaging 5. checking and verifying orders 6. consolidating and staging 7. loading and shipping 8. administrative 9. facility maintenance 10. equipment maintenance

GIS (geographic information system)

A system of computer software, hardware, and data that the firm's personnel can use to manipulate, analyze, and present information relevant to a location decision.

Break-Bulk Warehouse

Allows firms to minimize less-than-truckload shipments

Pareto Principle

Dedicate space to your 10% highest-volume, fastest-moving items. You can store less-frequently moved (B and C) items in random storage slots. This decision rule will help you balance distances moved with the total amount of rack space required.

5S philosophy

LEAN depends on 5S to accomplish standardization Sort Set in Order Shine Standardize Sustain

In-transit mixing

Product from multiple sources is mixed to form orders shipped to multiple customers

bonded warehouse

Public or private warehouses that store products requiring the payment of a federal tax.

system of metrics

a collection of measurements used to evaluate a process, person, company, etc. from multiple perspectives

Sort Center (SC)

a facility in which in-transit inventory is re-routed and grouped with inventory moving from divergent point of origin is group in route to a common destination

Six Sigma

a rigorous statistical analysis process that reduces defects in manufacturing and service-related processes - produces 3.4 defects per million

metric

a single performance measurement used to evaluate, motivate, improve, etc.

Fulfillment center (FC)

a warehouse or stocking point where goods are stored for subsequent delivery to customers - combination of distribution center and classic retail store - higher cost because lose economies of scale and distance

Distribution center (DC)

a warehouse or stocking point where goods are stored for subsequent distribution to manufacturers, wholesalers, retailers, and customers

menu pricing

acquiring logistics services a-la-carte

Warehouse Management System (WMS)

an automated system that runs the day-to-day operations of a warehouse or distribution center and keeps track of inventory

Cross-docking

combines inventory from multiple origins into a pre-specified assortment for a specific customer advantage - transportation opportunities

Create a smooth flow

design the facility so that product moves in and out in a straight line: receive at one end, store in the middle, and ship from the other end - want to avoid bottlenecks and cross traffic to minimize congestion

private warehouse

firm owns the warehouse - better for higher throughput

public warehouses

firm rents space in shared warehouse - better for lower throughput, uneven demand, or expansion into new markets

Center of Gravity Method

given location and load, find optimal supplier location - find x coordinate, x* by multiplying each point's x coordinate by its load (l), summing these products and dividing by the load - not optimal location, just a guideline

structure drives behavior (Performance Measures)

people always follow their incentive structure

minimize distances

place fast-moving items on the pick floor or closer to the docks and at heights that make them easy to reach

Staging Area

receiving dock schedules planned out weeks in advanced

facility location

the process of determining geographic sites for a firm's operations