Warehousing, Part One.

Marketing Logistics
Advance manually to begin.

Warehousing

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The storing of products, including raw

materials, parts, goods-in-process,
finished goods at and between point-oforigin and point-of-consumption.
Provides information on status of goods.
Distribution centers are a type of warehouse which
hold minimum inventory of high-demand goods.
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Warehousing: Storage of
inventories all through logistics
process.

Raw materials, components, parts.

Finished goods.

Physical supply

Warehouse

The storing of products, including raw

materials, parts, goods-in-process, finished
goods at and between point-of-origin and pointof-consumption.
Provides information on status of goods.

Distribution

Warehouse

Inventory in a Warehousing Context

Achieves transportation economies.

Transportation Economies

Economies of scale
.

Supplier

Transportation
carriers usually
give discounts
for bigger loads.

Warehouse

Transportation Economies

Economies of scale
.

Supplier

Warehouse

Inventory in a Warehousing Context

Achieves transportation economies.
Achieves production economies.

Achieves Production Economies

Economies of scale

Warehouse

Assembly line

Inventory in a Warehousing Context

Achieves transportation economies.
Achieves production economies.
Quantity purchased discounts, forward
buy discounts.
Maintain source of supply.
Support customer service policies.
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Inventory in a Warehousing Context

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To meet changing market conditions.

Seasonality.
Demand fluctuations.
Competition.

To overcome time and space differentials

between producers and consumers.
To minimize logistics costs while meeting
customer service goals.
To support just-in-time inventory programs.

End of Part One.

Scroll Down to Part Two.

Warehousing Part Two

Three Basic Warehouse

Functions
Movement.
Storage.
Information.

Movement
Receiving, putting away

Warehouse

Movement
Receiving, putting away

Warehouse

Movement
Receiving, putting away
Picking, staging, loading

Warehouse

Movement
Receiving, putting away
Picking, staging, loading
Cross-docking

Warehouse

Movement
Receiving, putting away
Picking, staging, loading
Cross-docking
Packaging

Warehouse

Movement
Receiving, putting away
Picking, staging, loading
Cross-docking
Packaging
Light assembly, blending, kitting *
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Warehouse

Vendorseek.com

Movement
Receiving, putting away
Picking, staging, loading
Cross-docking
Packaging
Light assembly, blending, kitting *
*Kits are how some manufacturers sell parts. By selling the
parts. in a kit, the manufacturer gains economies of scale in
things like transportation costs. It also saves administrative
costs because rather than billing for and keeping track of
each part, the manufacturer only has to keep track of the kit.
Warehouse
Kitting is also a light manufacturing technique in which
assembly workers, sometimes in a warehouse, get all the
component parts of what they are assembling in a single
kit so that time is not lost looking for parts.
Vendorseek.com

Movement
Receiving, putting away
Picking, staging, loading
Cross-docking
Packaging
Light assembly, blending, kitting
Labeling, shrink wrapping
.

Label
Label
Label
Label

Warehouse

Movement
Receiving, putting away
Picking, staging, loading
Cross-docking
Packaging
Light assembly, blending, kitting
Labeling, shrink wrapping
.

Warehouse

Movement

Receiving, putting away

Picking, staging, loading
Cross-docking
Packaging
Light assembly, blending, kitting
Labeling, shrink wrapping
Breakbulk, consolidation
Warehouse

Movement

Receiving, putting away

Picking, staging, loading
Cross-docking
Packaging
Light assembly, blending, kitting
Labeling, shrink wrapping
Breakbulk, consolidation
Transportation
Warehouse

Movement

Receiving, putting away

Picking, staging, loading
Cross-docking
Packaging
Light assembly, blending, kitting
Labeling, shrink wrapping
Breakbulk, consolidation
Transportation
Import, export services
Warehouse
(also an information function)

Storage

Warehouse

Information
Inventory tracking
Order entry
Proof of delivery
Tracing/customer service billing.
Service reporting/carrier monitoring
Site location
.

Real estate management

Network analysis
Systems analysis
Display building/promotions

Warehouse

Warehouses versus Distribution

Centers:

Warehousing

.
.
.

The storing of products, including raw

materials, parts, goods-in-process,
finished goods at and between point-oforigin and point-of-consumption.
Provides information on status of goods.
Distribution centers are a type of warehouse which
hold minimum inventory of high-demand goods.
.
.
.
.

Warehouses versus Distribution

Centers:
Warehouse

Distribution Center

--Receives.
--Stores.
--Picks
--Ships
Distribution Center

Warehouse

Warehouses versus Distribution

Centers:
Distribution Center
Receives
Ships

Distribution Center

www.perotdevelopment.com

www.arvinmeritor.com

www.arvinmeritor.com

Warehouses versus Distribution

Centers:
Other Differences

Warehouses

--Minimal adding of
value.
--Data collection in
batches.
--Aim at minimizing
shipping costs.

Distribution
Centers
--Maximum adding of
value (including
final assembly).
--Real-time data
collection.
--Aim at maximizing
profit of demand

End of Part Two.

Scroll Down for Part Three.

Warehousing.
Part Three.

Uses of Warehouses:
Support manufacturing.
Mix products from multiple production
facilities to a single customer.
Break bulk.
Consolidate small shipments into large
shipments.
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Logistics Concepts

S
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p
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i
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r
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Inbound Logistics

Outbound Logistics

C
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t
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m
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Manufacturing Support
(inbound logistics)
Carload or truckload shipments

Supplier A
Supplier B
Supplier C
Supplier D

Warehouse

Mixing Warehouse
(outbound logistics)
1
Plant A, Product 1
Plant B, Product 2
Plant C, Product 3

Plant D, Product 4
.

4
Customer W
1

Customer X
1

Customer Y
1

Mixing Warehouse
(outbound logistics)
Plant A, Product 1

Plant B, Product 2

22

Plant C, Product 3

Plant D, Product 4 44

Customer W
1

Customer X
Mixing Warehouse

Customer Y
1

ConsolidationWarehouse
(outbound logistics)
Customer

Plant A
Plant B

Customer
Consolidation Warehouse

Plant C

Plant D

Customer

Breaking bulk

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BreakbulkWarehouse
(outbound logistics)
Customer 1

Customer 2
Plant

Breakbulk Warehouse

Customer 3

Types of Warehousing
Direct store delivery.
Private warehousing.
Advantages:
Control
Flexibility in design and operation
Long-term cost
Better use of human resources.
Tax benefits: depreciation.
Intangibles: image of stability.
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XYZ Company Warehouse

Disadvantages
Fixed costs, especially if built for peak seasons.
Investment. Return may be better if money is
placed elsewhere.

Types of Warehousing
Direct store delivery.
ABC
XYZ Public
Company
Warehouse
Warehouse
Private warehousing.
Public warehousing.
Advantages:

Disadvantages

Conservation of capital.

Incompatible communications systems.

Able to increase capacity when needed.

Lack of specialized services..

Reduced risk of obsolesence.

May be unavailable when needed.

Economies of scale due to warehouse companys investment
Flexibility
Tax advantages: some states have no inventory taxes for products in public warehouses.
Specific knowledge of costs.

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Types of Public Warehousing

General merchandise
Refrigerated or cold storage
Bonded warehouses.
Household goods, furniture.
Special commodity

ABC Public Warehouse

Types of Public Warehousing

General merchandise

ABC Public Warehouse

Refrigerated or cold storage

Bonded warehouses.
Household goods, furniture.
Special commodity
Bulk storage.
Cross-docking facilities (3PL concept).
Contract warehousing (can be used in 3PL).
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Warehouse Characteristics
Increase the number of warehouses and
the average size of warehouses
decreases.
Factors influencing the number of
warehouses:
Cost of lost sales.
Inventory costs.
Warehousing costs.
Transportation costs.
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Warehouse Locations
Market-based nearest the final
customer.
Production positioned collection points
or mixing facilities.
Intermediate positioning between producer
and final customer.

Factory

Warehouse

Customer

Cross-docking:
Movement from an inbound dock directly to an outbound dock
Movement directly from an inbound dock to a sorting process
to an outbound dock.
Outbound

Inbound

Outbound
Outbound

Inbound

Outbound

Inbound

Sorting area

Crossdock in at least two of these

conditions:

Product destination is known upon receipt.

Destination is ready for immediate delivery.
You daily ship to less than 200 locations.
More than 70% of products fit conveyors.
You receive large quantities of individual items.
Products arrive pre-labeled.
Some products are time-sensitive.
Distribution center is near capacity.
At least some inventory is pre-priced.

End of Program.