STORAGE & WAREHOUSE

A Supply Chain Perspective

Rana Talal Zahid 11663

Synopsis
Evolving Supply Chain Storage & Warehouse-the Difference Storage Systems Warehouse Functions & Techniques

Role of Storage & Warehouse in Supply Chain Network

References

Evolving Supply Chain

Only a few years ago, most marketing professionals would have answered the question:

How do you compete? AS Through our brands of course

However, the marketplace has changed radically over the last decade. No longer is it enough to rely on the strength of : Consumer Pull as Brand Loyalty is now a fairly rare phenomenon

Now focus is much more on value and, in particular, availability SCM ensures an integration of supply and distribution network, controlling and improving the flow (information, material, FG) for LEAN (minimal wastage) operations and improved productivity and value

Marketing and Supply Chain Converge -the interplay of three key competitive elements

Where the Money Is

Supply-Chain generally accounts for between 60% and 90% of all company costs A 2% improvement in process efficiency for supply-chain processes has 3000% - 5000% the impact of a 2% improvement in efficiency for IT, HR, Finance, Sales Most Process Methodologies or techniques had their origin primarily in Supply-Chain Management? Examples: Six-Sigma, Lean, BPR, ERP, ISO, MRP-II, TQM
Fortune-10 Company Supply-Chain Cost (% Total Cost) GM 94% Ford 93% Conoco 90% Wal-Mart 90% Chevron 88% IBM 77% Exxon 75% GE 63% Citi 0% AIG 0%

Source: Hoovers 2006 Financial Data, Supply-Chain Council 2006 ,SCM Benchmark data on SCM

Storage & Warehouse Supply Chain Imperatives

Storage

Storage is simply the physical holding of materials (stocks or supplies)awaiting issue to customers (could be internal and external)-Can be applied to personal use

Warehouse

A warehouse is a commercial building/area that is used for the storage of goods (raw materials and commodities) with all the associated facilities for efficient storage and delivery-Applicable to Industrial and Commercial use on quantity or value basis

Distinction

In general, storage never requires any designated space while, Warehouse needs specific room and other facilities to store goods

Storage
Storage has a number of processes which vary from company to company but typically include: Goods receipt (which typically includes some inspection prior to full acceptance) Recording issues to customers Providing periodic maintenance and auditing of the stock Disposal of surplus materials

This all incorporates efficient material handling for improved operations and increase in productivity

Storage
Storage Systems:
Bulk storage
Rack systems

Shelving and Bins

Drawer storage Automated storage and retrieval systems

Hot & Cold Storage (Temperature-Controlled used mostly for commodity products and food items)

Storage

Bulk Storage

Rack system

Shelving & Bins

Drawer storage

Automated Storage

Types of Stock/ Inventory

Cycle Stock

In-transit inventory
Safety or buffer stock Speculative stock

Seasonal stock
Dead stock

Warehouse
Warehouses are of use to wholesalers, retailers, exporters, manufacturers, transporters and so on Warehouses have loading docks too and unlike the regular storage units, warehouses sometimes have forklifts and cranes for loading and unloading bulk products Furthermore, warehouses come with climate-controlled facility to store perishable items

Basic Warehouse Functions

Unloading, receiving, checking, and marking of inbound merchandise Internal horizontal or vertical product movement (transportation) to the storage-pick area, workstation or outbound staging area Storage (deposit, withdrawal, and replenishment) Order-pick (distribution), sorting and checking Packing, sealing, weighing and shipping preparation Loading and shipping Handling returns, out-of-season product and store transfers Maintenance, sanitation, and loss prevention

Inbound and outbound truck and vehicle movement control

Warehouse Product and Information Flow

Vendor Deliveries Several/Day

Distribution/Warehouse Facility

Customer orders Several hours/day

Distribution /Warehouse activities

Transportation/ Delivery Product Mix Vendor trucks Manufacturing Containers Returns Railroad Receive Package/Ticket In-house Transportation Store (deposit/ replenishment) Pick Sort Pack Load/ship

Customer Location

The warehouse and distribution product and information flow has a pattern that is similar to water flowing through a funnel.

Warehouse Objectives
The two major objectives of a warehouse and distribution facility are to improve profits and customer service.

To achieve these objectives Warehouse perform activities:

Maximization of Storage utilization (Space / Cube) Maximization of Warehouse equipment utilization Maximization of Labor utilization Reduce SKU handlings, maintain required SKU accessibility Minimization of company's operating expenses Assures the protection of companys assets

The Changing Role of Warehousing

MANAGING INVENTORIES (The old mission)

Warehouse Computerization

Warehouse Employee Skill Development

Warehouse Equipment Automation

Development of an Integrated Perspective of Warehousing

MANAGING INVENTORY AND INFORMATION (The new mission)

Warehouse Techniques
A few of the Warehouse techniques employed these days are as follows: Material Handling Inventory Management Quality Control KANBAN (Kanban Cards)

Order picking (Customized picking)

Just-in-time Warehouse Management System (WMS)RF Coding & Tracking (Bar Code Readers) Automated Conveyer Systems Automated Storage & Retrieval Systems

Role of Storage & Warehouse in Supply Chain

Storage and Warehouse are an integral part of the supply chain of an organization and help achieve the goal of LEAN operations They are vital to an effective logistics system and cover majority of the costs involved in the network (primarily fixed cost) Implementation of proper storage and warehouse techniques like material handling & Inventory management, etc can reduce lead time, avoid repetition of unnecessary actions, decrease labor costs, enhance efficiency and thus, ensure effective, timely and quality delivery to the customer Warehouse management ensures efficient storage and therefore, real-time inventory delivery, tracking, monitoring and replenishment to guarantee supply at any time So, for an improved supply chain and thereby, increased quality delivery and value to the customers, storage and warehouse facilities have to be proficient

References
Hoovers Financial Data, Supply-Chain Council, SCM Benchmark data on SCM,2006-10 Mentzer, J.T. et al. (2001): Defining Supply Chain Management, in: Journal of Business Logistics, Vol. 22, No. 2, 2001, pp. 125 Effectively Slotting a Warehouse or Distribution Center by Paul Hansen and Kelvin Gibson. Supply and Demand Chain Executive. Accessed 2010-08-06 http://www.ism.ws/pubs/journalscm/index.cfm

What drives perishable inventory management performance? Lessons learnt from the UK blood supply chain by Sebastian H.W. Stanger, Richard Wilding, Nicky Yates, Sue Cotton (pp. 107 - 123)Supply Chain Management: An International Journal