Principles of Warehouse Layout Design

Document Sample
Principles of Warehouse Layout Design Powered By Docstoc
					Chapter 8

            Warehousing Decisions
Contents: Warehousing
   General concept of warehousing
     A) Deciding warehousing..

     B) Its environment …

        Basic Warehouse Operations

        Warehouse Layout and Design

        Materials Handling




Chapter 8     Management of Business Logistics, 7th Ed.   2
1. Warehousing
   Why we need warehousing
         Warehousing provides time and place utility
            
         for raw materials, industrial goods, and
         finished products, allowing firms to use
         customer service as a dynamic value-adding
         competitive tool.
   In 1999, $75 billion, or 0.8 percent of GDP was
    spent on warehousing.
   The total supply of U.S. warehousing space in
    1999 was 6.1 billion square feet, an increase
    from 1990 of 700 million square feet of space.

Chapter 8       Management of Business Logistics, 7th Ed.   3
   A general environment of
    Warehouse in a business setting,
    how complex is it …




Chapter 8   Management of Business Logistics, 7th Ed.   4
    Logistics Profile:
    Grainger Industrial Supply
   Grainger is dedicated to providing excellent
    customer service using an effective network of
    warehouses and distribution centers providing
    same day or next day service.
   13.6 million square feet in one national
    distribution center, two regional and six zone
    distribution centers, and 373 local branches
   1.5 million customers, 220k SKUs, $4.5 billion
    in sales, 60k to 80k daily customer orders
    Chapter 8    Management of Business Logistics, 7th Ed.   5
The Role of the Warehouse in the
Logistics System: A Basic Conceptual
Rationale

   The warehouse is       Functions of

    where the supply        warehousing include:
                              Transportation
    chain holds or stores      consolidation
    goods.                    Product mixing

                              Cross-docking

                              Service

                              Protection against
                               contingencies
                              Smoothing


Chapter 8      Management of Business Logistics, 7th Ed.   6
A) Deciding warehousing..

   The role of warehousing in:
      1. Transportation

         Inbound Versus outbound logistics

               ….see next slide
        2. Supply and product mixing
           Product mix Versus Supply mix




Chapter 8           Management of Business Logistics, 7th Ed.   7
Figure 8-1
Transportation Consolidation




Chapter 8   Management of Business Logistics, 7th Ed.   8
Figure 8-2
Supply and Product Mixing




Chapter 8   Management of Business Logistics, 7th Ed.   9
Managerial Questions:

   The ownership of Warehousing:

        Shall we own or rent a warehouse, how to
         management them?
           Based on “trade-off” vlaue




Chapter 8        Management of Business Logistics, 7th Ed.   10
Basic Warehouse Decisions:
A Cost Trade-off Framework
   1. Ownership
        1a Public versus 1b contract versus 1c private
   2. Centralized or Decentralized
    Warehousing
        How many
        Location
        Size
        Layout
        What products where

Chapter 8         Management of Business Logistics, 7th Ed.   11
1. The Ownership Decision:
   1a Versus 1c
                                      1a. Public warehousing
                                       costs mostly all variable.
                                      1c. Private warehousing
                                       costs have a higher
                                       fixed cost component.
                                      Thus private
                                       warehousing virtually
                                       requires a high and
                                       constant volume.


Chapter 8   Management of Business Logistics, 7th Ed.          12
1. The Ownership Decision:
   1a Vs 1c
   Other Factors to consider for 1a or 1c:
      Throughput volume

      Stability of demand

      Density of market area to be served

      Security and control needs

      Customer service needs

      Multiple use needs of the firm

   Their characteristics … see next slide

Chapter 8      Management of Business Logistics, 7th Ed.   13
Table 8-2    Firm Characteristics
Affecting the Ownership Decision




Chapter 8   Management of Business Logistics, 7th Ed.   14
1a Vs 1b
   characteristics of:

        1a Public Warehouse
        1b contract Warehouse




Chapter 8       Management of Business Logistics, 7th Ed.   15
1a. Public Warehousing
   Rationale for Public Warehousing
      Limited capital investment

      Flexibility

   Public Warehousing Services
      Bonded warehousing tax/tariffs deferment pay only when ready to sell

      Field warehouses co uses inventory as a form of collateral for a loan

   its regulations & rate based requirement
      … next slide


Chapter 8            Management of Business Logistics, 7th Ed.             16
1a. Public Warehousing
   Public warehousing                Public warehousing rates
    regulation:                        based upon:
      Liability                            Value

      Receipts                             Fragility

                                            Potential damage to

                                             other goods
                                            Volume and

                                             regularity
                                            Weight density

                                            Services required


Chapter 8       Management of Business Logistics, 7th Ed.      17
    1b.Contract Warehousing
     Up 23% per year in 2000 to $20.4 billion.
     Compensation for seasonality in products.
     Increased geographical coverage.
     Ability to test new markets.
     Managerial expertise and dedicated resources.
     Less strain on the balance sheet.
     Possible reduction of transportation costs.
     Other issues discussed in Chapter 11.
    Chapter 8     Management of Business Logistics, 7th Ed.   18
2a Centralized Vs 2b
Decentralized Warehousing
Their decision features include:
  1.  Substitutability alternative choices
  2.  Product Value capital cost
  3.  Purchase Size dimensional of goods
  4.  Special Warehousing special facility
  5.  Product Line special equipment?
  6.  Customer Service % of customer satisfaction
See next slide for comparison ….


Chapter 8           Management of Business Logistics, 7th Ed.   19
2a Centralized Vs 2b
Decentralized Warehousing
            Factor                Centralized                    Decentralized
    Substitutability                     Low                         High
     Product Value                       High                        Low
     Purchase Size                      Large                        Small
       Special
                                          Yes                         No
     Warehousing
      Product Line                    Diverse                       Limited
  Customer Service                       Low                         High
Chapter 8            Management of Business Logistics, 7th Ed.                20
How many warehouses should
we have?
  Their decision features include:
  1.  Inventory costs
  2.  Warehousing costs
  3.  Transportation costs
  4.  Cost of lost sales
  5.  Maintenance of customer service levels
  6.  Service small quantity buyers
Their comparison ….
Chapter 8    Management of Business Logistics, 7th Ed.   21
The Number of Warehouses
                                   Factors Affecting the
                                    Number of Warehouses
                                      Inventory costs

                                      Warehousing costs

                                      Transportation costs

                                      Cost of lost sales

                                      Maintenance of

                                       customer service levels
                                      Service small quantity

                                       buyers

Chapter 8   Management of Business Logistics, 7th Ed.       22
   The logical flow for selecting type of
    warehousing…..




Chapter 8      Management of Business Logistics, 7th Ed.   23
Figure 8-3
Basic Warehousing Decisions




Chapter 8   Management of Business Logistics, 7th Ed.   24
B) Its environment …
   B1.     Basic Warehouse Operations
   B2.     Warehouse Layout and Design
   B3.     Materials Handling + appendix
   B4.     Packaging
   B5.     Bar Codes




Chapter 8         Management of Business Logistics, 7th Ed.   25
B1. Basic Warehouse Operations
   Movement
      Receiving

      Put-away

      Order picking

      Shipping

   Storage
      Stock location

      Warehouse Management System
       (WMS)
Chapter 8    Management of Business Logistics, 7th Ed.   26
Figure 8-6
Basic Warehouse Operations




Chapter 8   Management of Business Logistics, 7th Ed.   27
Figure 8-7
The Computerized Warehouse




Chapter 8   Management of Business Logistics, 7th Ed.   28
B2. Warehouse Layout and
Design
                          1.   Develop a demand
                               forecast.
                          2.   Determine each item’s
                               order quantity.
                          3.   Convert units into cubic
                               footage requirements.
                          4.   Allow for growth.
                          5.   Allow for adequate aisle
                               space for materials
                               handling equipment.

Chapter 8   Management of Business Logistics, 7th Ed.     29
     B2. Warehouse Layout and
     Design
6. Provide for the
   transportation interface.
7. Provide for order-
   picking space.
8. Provide storage space.
9. Provide recouping,
   office, and
   miscellaneous spaces.
… see next slide for layout ….


     Chapter 8               Management of Business Logistics, 7th Ed.   30
Figure 8-8
Warehouse Space Requirements




Chapter 8   Management of Business Logistics, 7th Ed.   31
    Principles of Warehouse Layout
    and Design
   Layout and Design Principles:
    1. Use one story facilities
       where possible.
    2. Move goods in a straight-
       line.
    3. Use the most efficient
       materials handling
       equipment.
    4. Minimize aisle space.
    5. Use full building height.
    Chapter 8     Management of Business Logistics, 7th Ed.   32
   Their level of significant ……




Chapter 8      Management of Business Logistics, 7th Ed.   33
Figure 8-9  Principles of
Warehouse Layout Design

                                                             Most
                                                             Common
                                                             Acceptable

                                                             priority
                                          (see next slide)




Chapter 8   Management of Business Logistics, 7th Ed.              34
The flow of Warehouse Layout
and Design
                                      Basic needs:
                                         Receiving

                                         Basic storage

                                          area
                                         Order selection

                                          and preparation
                                         Shipping


                              One dimensional design

Chapter 8   Management of Business Logistics, 7th Ed.       35
Warehouse Layout and Design:
Layout and Design Objectives

        Cubic capacity
         utilization
               Max use od space


        Protection
               Stay away hazardous materials

        Efficiency
               1 space, 2 labor cost

        Mechanization
               Automation vs obsolescence

        Productivity
               Materials/labor cost
               See next slide …..


Chapter 8                      Management of Business Logistics, 7th Ed.   36
Table 8-4: Warehouse
Productivity Metrics
                                                            Pound handled

   Pounds or units per day
   Employees per pound moved
   Pounds unloaded per hour
                                          Labor cost
   Pounds picked per hour
   Pounds loaded per hour
   Percentage of orders correctly filled
   Productivity ratio = pounds handled/day divided by
    labor hours/day
   Throughput = amt of material moved through the
    system in a given time period

Chapter 8       Management of Business Logistics, 7th Ed.                   37
    B3. Materials Handling
     Definition: Efficient short distance
      movement in or between buildings and a
      transportation agency.
     Four dimensions
      1. Movement
           1.   Horizontal vs vertical


      2.   Time
           1.   Traveling time between locations


      3.   Quantity
           1.   How much can carry/various of goods


      4.   Space
           1.   Required space


     Coordination –                     between all parties involved
    Chapter 8                  Management of Business Logistics, 7th Ed.   38
B3. Objectives of Materials
Handling
1.   Increase effective capacity               see next slide


2.   Minimize aisle space
3.   Reduce product handling
4.   Develop effective working
     conditions
5.   Reduce heavy labor
6.   Improve logistics service
7.   Reduce cost
Chapter 8      Management of Business Logistics, 7th Ed.        39
Figure 8-12    Utilization of a
Warehouse’s Cubic Capacity: Principles of
Warehouse Layout Design




Chapter 8   Management of Business Logistics, 7th Ed.   40
B3. Guidelines and Principles
for Materials Handling
   To effectively plan and control materials
    handling, the logistics manager should
    recognize some guidelines and principles.
   Table 8-5 lists 20 of the most commonly
    accepted principles of effective materials
    handling. Asterisks mark those deserving
    special attention. …. See next slide….



Chapter 8      Management of Business Logistics, 7th Ed.   41
Table 8-5
Principles of Materials Handling




Chapter 8   Management of Business Logistics, 7th Ed.   42
B4. Packaging
   Interest in packaging is widespread
     1. Logistics
         Warehousing

         Transportation

         Size

     2. Marketing attractiveness
     3. Production related costs on how goods are placed
     4. Legal confine with env. Rules and regulations
Chapter 8           Management of Business Logistics, 7th Ed.   43
B4. The Role of Packaging
1.   Identify product and provide information
     Make it more appearing to customers


2.   Improve efficiency in handling and
     distribution
     physical dimensions, strength, shapes


3.   Customer interface
     Integrate/compatible with customers’ handling systems


4.   Protect product
     Adequate of product production




Chapter 8                   Management of Business Logistics, 7th Ed.   44
What Is Packaging?
1. Consumer packaging
     Marketing managers primarily concerned

      with how the package fits into the
      marketing mix.
2. Industrial packaging
     Logistics managers primarily concerned

      with efficient shipping characteristics
      including protection, ability to withstand
      stacking when on a pallet, cube, weight,
      shape and other relevant factors.
Chapter 8      Management of Business Logistics, 7th Ed.   45
Packaging Materials
     Table 8-6 presents a comparison of various
      packing material characteristics.
     Basic considerations include:
     1. Soft materials
     2. Plastic
     3. Environmental issues
     4. Recycling (reverse logistics)


Chapter 8      Management of Business Logistics, 7th Ed.   46
Table 8-6
Comparison of Cushioning Materials




Chapter 8   Management of Business Logistics, 7th Ed.   47
B5. Bar Coding
   Standard markings that can be read by automatic or
    handheld scanners that allow for labor saving logistical
    activities for all supply chain members.
   Bar Codes contain information regarding:
      Vendor

      Product type

      Place of manufacture

      Product price

   An important system for SCM
     environment

Chapter 8         Management of Business Logistics, 7th Ed.    48
           Chapter 8:
   Summary and Review Questions

Students should review their knowledge of the chapter
by checking out the Summary and Study Questions for
                     Chapter 8.
Table 8-1
Warehouse Value-Adding Roles




Chapter 8   Management of Business Logistics, 7th Ed.   50
End of Chapter 8 and 8A Slides


   Warehousing Decisions

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:30
posted:12/17/2012
language:English
pages:51