3/10/2014

1
Warehouse management
(Manajemen Pergudangan)
Week 5
Storage Fundamentals in Inventory
Strategy
4-37
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Transport Strategy
Transport fundamentals
Transport decisions
Customer
service goals
The product
Logistics service
Ord . proc. & info. sys.
Inventory Strategy
Forecasting
Inventory decisions
Purchasing and supply
scheduling decisions
Storage fundamentals
Storage decisions
Location Strategy
Location decisions
The network planning process
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Transport Strategy
Transport fundamentals
Transport decisions
Customer
service goals
The product
Logistics service
Ord . proc. & info. sys.
Inventory Strategy
Forecasting
Inventory decisions
Purchasing and supply
scheduling decisions
Storage fundamentals
Storage decisions
Location Strategy
Location decisions
The network planning process
3/10/2014
2
Why firm need storage and material
handling?
11-38
Do firm really need storage and
material handling as a part of the
Logistics system?
Storage is an economic convenience not
a necessity
Inventory to improve supply and
demand coordinations warehouse
and material handling are needed
maintaining inventories
Reasons for storage
11-39
To reduce transportation-production costs
To coordinate supply and demand
To assist in the production process
To assist in the marketing process
3/10/2014
3
Transportation-production costs
reductions
11-40
Ship Direct
from Plant
Ship through 35
warehouses
Change in
costs
Production costs
500,000 425,000 -75,000
Transportation costs
- To warehouse
0 50,000 50,000
- To local area
250,000 100,000 -150,000
Warehouse costs
0 75,000 75,000
Total
750,000 650,000 -100,000
Coordination of supply and demand
Food, beverage and cigarette
Steel industry
11-41
3/10/2014
4
Production needs
Warehousing may be part of the production
process
Wine, cheeses
Cigarette
11-42
Marketing considerations
Warehousing is needed to deliver rapidly to the
customers and improve customer services (out of
stock)
11-43
3/10/2014
5
Storage functions
Holding
Consolidation
Break-bulk
Mixing (merge in translit)
11-44
Consolidation
warehouse
A
A B C D
B
C
D
Manufacturer A
Manufacturer B
Manufacturer C
Manufacturer D
10,000 lb.
8,000 lb.
15,000 lb.
7,000 lb.
40,000 lb.
Customer
Consolidation Warehouse
Similar to a merge-in-
transit facility
3/10/2014
6
Storage Cost Savings
Direct shipments to customers
MANUFACTURER
SHIPPING
WEIGHT
(lb.)
LTL RATE TO
CUSTOMER COST
A 10,000 $2.00/cwt. $200
B 8,000 1.80 133
C 15,000 3.40 510
D 7,000 1.60 112
Total $966
Storage Cost Savings (Contd)
Shipments through a distribution center
MANUFACTURER
SHIPPING
WEIGHT (lb.)
LTL RATE TO
DISTRIBUTION
CENTER
TOTAL LTL
A 10,000 $0.75
$75
B 8,000 0.60
48
C 15,000 1.20
180
D 7,000 0.50
35
Total 40,000
DISTRIBUTION
WAREHOUSE CHARGE
TL RATE FROM
DISTRIBUTION
WAREHOUSE TO
CUSTOMER TOTAL TL COST
$10 $1.00/cwt. $100 $185
8 1.00 80 136
15 1.00 150 345
7 1.00 70 112
$778
11-9
3/10/2014
7
Distribution
warehouse
Manufacturer Customer B
Customer C
Customer A
Low rate TL
shipment
LTL
Distribution, Break Bulk, or Pool Point
Warehouse
Warehouse may or
may not hold
inventories
Distribution
warehouse
Manufacturer B
Customer Y
Customer X
Product B
Product Mixing
Manufacturer A
Manufacturer C
3/10/2014
8
Warehouse functions
as buffer stock to anticipate fluctuations
/uncertainties demands
to consolidate transportations for economic scale
to minimise response time for demand fulfillments
to keep quality and safety of raw
material/parts/finished products that are stored
Storage functions are performed in an attempt to
reduce transportation, production, and purchasing
costs, which justify their added expense.
Storage alternatives
Ownership
Leasing
Rental
In-transit
11-51
3/10/2014
9
Types of Warehouse (types of products)
raw materials
finished goods
supplies
repair/spare parts
Arnold and Chapman 2008
Types of Warehouse (types of level)
Main warehouse
Consumable Item Storage
Critical item storage
Cool room
Secondary warehouse
Customs Process Storage
Empty basket storage
Chemical Storage
Temporary storage
Lube oil storage
Drilling and Completion Storage
Pipe yard
Case in oil company
3/10/2014
10
Types of Warehouse (flows)
Mixing or consolidation warehouse
Breakbulk warehouse
Drilling and Completion Storage
3/10/2014
11
Pipe Yard
Manufacturer A
Manufacturer A & B
Manufacturer A, B & C
Manufacturer A, B, C & D
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Time, months
Balancing the Load on a Public
Warehouse
0
20
40
60
80
100
120
J F M A M J J A S O N D
Ballou (2004) Prentice Hall, Inc.
3/10/2014
12
Space Comparison
Ownership alternative
Less expensive under high utilization
High degree of control over operations
Benefits of real estate ownership
Space may be converted to uses other than storage
Rental alternative
No fixed investment
Lower cost under seasonal or low utilization of an owned facility
Location flexibility
Ballou (2004) Prentice Hall, Inc.
Ballou (2004) Prentice Hall, Inc.
A Low Throughput, Holding Warehouse
Semipermanent
storage bay
Product
Inbound and
outbound
3/10/2014
13
Semi-permanent
storage bay
Product
Order picking and product mixing bays
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B
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D
C A
Replenishment
Order-picking
route
A High Throughput, Distribution
Warehouse
Ballou (2004) Prentice Hall, Inc.
END