Chapter 15: International Warehouses and Distribution Centers

fixed areas of warehouses

1. loading docks 2. inspection area at the receiving dock 3. staging area near the shipping dock - where the goods that are being shipped are assembled before they are loaded onto the shipping trucks or rail cars 4. service space allocated for ancillary warehouse activities (returns and repairs) 5. maintenance space where forklift trucks are recharged or refueled, where they are repaired, and where other materials are repaired and maintained 6. office space for management 7. storage space

overall layout of a warehouse is constrained by many factors

1. physical size of building 2. cost of land 3. physical characteristics of the products 4. how goods are packaged when they are received (pallets, secondary packages) and when they are shipped out 5. variety of products 6. velocity of products (how long they stay in the warehouse 7. number of shipments, incoming and outgoing 8. average size of shipments 9. additional services that the warehouse provides 10. possible expansion of warehouse

reasons for holding inventory

1. raw material is produced seasonally, but is sold year-round because you need to purchase it when it is available 2. when raw material's price fluctuates significantly and unpredictably (sugar, chocolate, copper, gold) purchase at a low price and store until needed in production 3. when a product is sold only seasonally (lawnmower, greeting cards, or snow skis), but the company wants to operate year-round without fluctuations in its manufacturing planning, it needs to accumulate goods in low-sales months and ship them during high-sales months 4. when marketing activities generate a significant increase in sales volume, the company must anticipate the volume change and store additional items to satisfy customer demand 5. to have beyond-normal safety stock levels of manufacturing facilities in events such as bad weather, strikes, or natural disasters 6. when the company anticipates that it will need to fulfill more retail orders, because it operates an online business selling directly to some customers, and these customers expect very short lead times before delivery

advantages of using warehouses in located in a different country

1. transportation savings 2. response time benefits - delivery times for a customer's order may be much lower if the items ordered are physically close to the customer's facilities 3. manufacturing savings - cheaper to manufacture a larger quantity of certain goods and store them than it is to produce smaller quantities of those goods 4. marketing benefits - adaptations of the product (packaging, labeling, settings, instructions) are necessary and better handled in an environment that is close to the customer

warehouse

a building used to store inventory and perform additional inventory-related services

automated storage and retrieval systems (ASRS)

a computerized system that uses conveyor belts, lifts, and robots to store and retrieve goods in a warehouse -places full pallets in high-bay or very-high-bay racks -quick and accurate (able to work concurrently--each aisle has its own devices) -must have uniform pallet sizes that are all in perfect condition (any deviation from the standard makes it hard to handle) -expensive (built where land is limited and labor prices are high)

rack

a metallic storage area in a warehouse used for storing pallets or boxes -can hold one or two pallets in depth and one or two in height -higher racks and narrower aisles are used in warehouses in regions where the costs of land are high

A-B-C classification

a method used to separate inventory items into three categories in function of their costs or their characteristics A=80% of a company's inventory costs and 20% product mix B=15% and 30% C=5% and 50% A is located close to the loading docks

pallet stacking

a method used to store pallets, in which pallets are placed on the floor of the warehouse and on top of one another

packaging

a warehouse activity that consists of assembling the goods that were ordered by a customer into packages so that they can be shipped

shipping

a warehouse activity that consists of organizing the transport of goods that were ordered by a customer

storage

a warehouse activity that consists of placing the goods that were shipped by a supplier on shelves or other means of storage -some goods are held in primary packaging (consumer packaging) -most goods are held in their secondary (corrugated paperboard boxes in which primary-package goods are placed) or tertiary packaging (pallets of secondary-packaging boxes)

picking

a warehouse activity that consists of retrieving from storage goods that were ordered by a customer -consumes most of the labor costs of a warehouse or distribution center

receiving

a warehouse activity that consists of unloading the goods shipped by a supplier and verifying all aspects of the shipment things to be communicated to the supplier before receiving: 1. acceptable pallet sizes - necessitates mechanical equipment to be moved (most common in the US is 40 inches by 48 inches) 2. markings and other labeling requirements of the warehouse - ex: barcode system 3. the time at which the goods should arrive - allows the warehouse to plan for proper receipt of the goods with appropriate personnel and equipment so there are no delays for the delivery driver -takes place on a dock -once the goods have been received, and the quantities and types checked against the purchase order and transport documents, they are placed in storage

private warehouse

a warehouse owned and operated by a business to store its own goods and perform other services -uses its own employees and assets -exporter must hire management and labor to operate the warehouse -used when the exporter has acquired the skills to manage a warehouse, and when it considers that the services that it provides to its customers, and the quality of the services it can provide, justify the costs incurred -supported when the exporter anticipates that there will be substantial market growth

contract warehouse

a warehouse owned by a company, but managed by another, such as a warehouse-management company -warehouse company uses its employees and equipment to provide space and services to a warehouse leased by the exporter (usually only 1 customer in the warehouse) -used when the exporter knows that it will need to utilize a warehouse of a pre-determined size, but does not want the responsibility to own it, manage it, or hire employees for it -monthly expense for exporter -advantage: exporter benefits from the expertise of the third-party logistics provider running the warehouse

public warehouse

a warehouse owned by an independent business in which other businesses can rent space as needed -provide all other services for a pre-determined fee -the space can be shared by many other companies -exporter: advantage of flexibility -there is no overhead and no fixed costs

voice picking

allows the warehouse computer to instruct the picker of the next item to select and its location

value-added process

any activity that is conducted in a warehouse beyond simple storage

very-high-bay racks

can be as high as 60 meters -built as part of the structure of the warehouse (built before the roof is installed to help hold the roof in place -high cost of construction and operation make this option attractive in areas in which land is very expensive

pallet-flow racks or gravity-fed racks

designed to store pallets on rollers rather than fixed shelves -the bay is inclined so when a pallet is removed, another one slides and takes its place

municipal level

determines the city or are in which the warehouse will operate -considers the same issues as regional but at a local level -access to a supply of reliable, clean, freshwater, and to a sewer system -local authorities must be supportive of a foreign investment in the area -sufficient labor pool -local schools must be of a quality level that allows the company to hire employees who are willing to move their families to that location -social infrastructure that allows for recruiting and training young talent

regional level

determines the region of the world or country in which the warehouse is located -considers infrastructure (transportation, communication, utilities (reliable access to electricity), business support infrastructure (banks, third-party logistics providers, transportation companies) -considers the overall environment of a country -quality of labor force, costs of labor force, stability of the government and its openness to foreign investors, economic policies (tariff rates, currency stability), overall cost of operating a business in that country (taxes, interest rates), business climate -considers culture of a country

paper list

each order is printed on a sheet of paper that is given to the picker

light picking

each pick face is equipped with a series of lights and small display numbers (seven-segment display) the picker is directed to the pick face that is lit

zone picking

employees are assigned a zone in the warehouse from which they pick items for an order the size of the zone can be a few aisles or a single-aisle depending on the volume of business that the warehouse experiences 2 types of employees: pickers (remain in their zone) and order assemblers (put the goods of a single order together

barcode picking

every item is labeled with a barcode, and every pick face (location in the warehouse where a pallet can be stored) has a barcode the system does not move on to the next item to pick until the picker has scanned the correct product in the correct quantity *most used technique*

goods to picker strategy

goods are sent to the picker through an automated system -ex: Kiva robots used in Amazon warehouses, ASRS (conveyor belt) -least commonly used strategy

consolidation

goods that are produced in different manufacturing facilities, sometimes in different countries, are consolidated so that they can be sold together to customers -primary purpose of distribution centers

robots

have become more common in warehouses, especially since Amazon purchased Kiva, a manufacturer of robots -goods are kept in their primary packaging in small "pods," which are metallic racks with 3 to 5 shelves, with a footprint of approx. 2ft by 2ft

label picking

instead of printing the pick list on paper, it is printed on a sheet of labels as the picker finds the items on the list, the employee places the label on the item

value-added services

labeling goods for resale, inserting instruction booklets in packages, assembling kits of different parts for customers, placing goods in retail packages, or providing some other small services for their customers

staging

prior to shipment, assembling the goods to be shipped on the floor of the warehouse, so that they can be loaded as quickly as possible

parcel level

refers to which building or parcel of land will be used for a warehouse criteria: -street distance from the warehouse to the points of access to the main means of transportation -cost of the building or land -access to public transportation for employees, proximity of child-care facilities, and other issues of convenience for employees -impact of the warehouse on the neighborhood -quality of construction of an existing building (roof, foundation) -availability of utilities, quality of the access roads, susceptibility to interruptions in service, possible room for expansion -design of the building -building the warehouse: - composition of soil, drainage, access to utilities, room for expansion, construction costs

picker to goods strategy

the employee is sent to retrieve the goods from the storage system -most commonly used picking strategy -disadvantage: large % of the employees' time is spent traveling from one area of the warehouse to another

batch picking

the employee picks several orders at the same time, but the orders are commingled on a single list

pick face

the location at which the picker is stationary and making a selection in a picker to goods strategy

cluster picking

the picker is asked to fill multiple orders at the same time

distribution centers

warehouses used in the downstream supply chain -receives full-truck-load or full-container-load shipments of a single product or a few products from a manufacturer, and then builds smaller shipments of multiple products that are then sent to retailers or other members of the downstream supply chain

after-sales services

warranty claims processing, spare parts, inspections, and repairs of defective or damaged products -generally acts as a separate "business" with its own receiving, storage area, and shipping

mobile racks

wheeled racks that can move on rails, so that aisles between racks can be eliminated -heavy duty racks for pallets can operate on this basis by using electric motors or human power -cost of installing and operating mobile is higher than static, but capacity of the warehouse can increase by as much as 100 percent without a change in size