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Training Presentation

Consolidation Warehousing

Burke Alder
November 29, 2005
BYU Marriott School
 Consolidation Warehousing
Outline
Definition
Brainstorming Exercise
Nuts and Bolts
How it Works
Tools of consolidation warehousing
Benefits
Real World Example
 Consolidation Warehousing
Outline - continued
An Exercise
Summary
Reading List
Definition of Consolidation Warehousing

What is consolidation?
The merger of two or more commercial interests or

corporations.*
What is warehousing?
A place in which goods or merchandise are stored;

a storehouse.*
Definition of Consolidation Warehousing

Pulls together shipments

Same geographical area
More economical shipping loads

*Bozarth and Handfield, Intro to operations and supply chain management, pg 344
 Brainstorming Exercise

How can you use Consolidation Warehousing

in your organization?
Consolidation Warehousing Nuts and Bolts

The goal of many organizations today

Increase global expansion
Meet demand for increased customization of ord
Decrease costs of distribution
activities
Consolidation Warehousing Nuts and Bolts

Reasons for Warehouse Consolidation

Duplicate or excessive inventories across network
Changing market conditions
High costs to operate multiple facilities*

*www.warehousing.cc
Consolidation Warehousing Nuts and Bolts

Reasons
Redundancies for Warehouse
in network Consolidation
due to acquisition
Ability to leverage automation technology with higher consolidated volume *

*www.warehousing.cc
Consolidation Warehousing Nuts and Bolts

The Solution

For over 10,000 systems, consolidation into a

single warehouse system was always found to

be optimal.*
 Consolidation Warehousing How it works
Without (CW): Direct Process
Problems

Shipments in 1. Cost

2. Time Efficiency

3. What a mess

Shipments out
 Consolidation Warehousing How it works
Diagram of (CW) Process

Small shipments in

large, economical shipments out

 Tools of Consolidation Warehousing
Warehousing Management Systems (WMS)
Ex. Microlise
Hand Held Terminals
Vehicle Mounted Terminals
Just In Time Inventory
Benefits of Consolidation Warehousing

Reduction in order processing

Reduction in systemwide inventory
costs
Key Component of the logistic strategy

*Wei-Shi Lim; Ou; Chung-Piaw Teo, Operations Research, pg 668

Benefits of Consolidation Warehousing

Increased efficiencies
Loads from multiple customers
combined
Higher productivity

*Wei-Shi Lim; Ou; Chung-Piaw Teo, Operations Research, pg 668

 Consolidation Warehousing
Real World Example

Matthew Clark is the largest independent wholesaler serving the

pubs, club, hotels and restaurants of the UK. The business

regularly delivers to over 20,000 accounts, ranging from small

 Consolidation Warehousing
Real World Example

Company:
Situation: Decision to consolidate its
warehouse operations into one national
site.
Do the benefits justify the costs?
 Consolidation Warehousing

First Step: Consolidated warehouses to

one new national distribution center.
 Consolidation Warehousing

Second Step: Use (WMS) tools

Hand Terminals
Vehicle Mounted Terminals
Software Microlise
 Consolidation Warehousing
Real World Example

Success
Increase to 98% Customer Service
More flexibility within system
Increased Visibility of Stock
Reduced Stock Holdings
 Consolidation Warehousing - Exercise
Big Hope Logistics handles shipments from businesses in the Portland area. Big

Home has three shipments to deliver

Customer to the Houston area:
Shipment Weight
Bob's Copy Paper 300 boxes, plain white paper 5,000 lbs.
Dave's Exercise Bikes 200 bikes, 15 lbs a piece 3,000 lbs.
Jonny's Relax BeanBags 400 bags 2,000 lbs.
Total: 10,000lbs

Info about each method of shipping (Direct Method)

Max load per truck is 20,000 lbs.

Direct shipping for each customer costs $2,000, or total of $6,000

Weight Utilization across all 3 trucks is 10,000/60,000 or 17%

 Consolidation Warehousing Exercise
Information if Big Hope uses (Consolidation Warehousing)

Benefits of consolidation are that loads of different customers can be combined

into one truck.

Cost of consolidation below:

Cost of running warehouse is $90 per 1,000 lbs., or in logistics lingo, $9 per

hundred-weight

Cost of breaking up shipments is $200 for each customer

Consolidation Warehousing - Summary

New trend in global logistics management

Reduces inventory costs
Helps improve the bottom line
Increases customer satisfaction
Consolidation Warehousing - Reading list
Wei-Shi, Lim. Inventory Cost Effect of Consolidating Several One-Warehouse Multireatailer systems

Operations Research Jul/Aug 2003 ABI Inform Global. ProQuest Direct .

Harold B.Library, Brigham Young University, Provo Utah. 21 Nov 2005

<http://www.um.com/proquest/>.
Macklin, Gary. Glazier Consolidates Warehouses Operations Refrigerated Transporter; Feb2005, Vol. 40

Issue 9, p14-17, 4p ABI Inform Global. ProQuest Direct . Harold B. Lee Library, Brigham Young

University, Provo Utah. 21 Nov 2005

<http://www.um.com/proquest/>.
Unknown. Warehouses That Think With Their Hands

Frontline Solutions Europe; Feb2000, Vol. 9 Issue 1, p24, 1p,

30 Sep 2005 ABI Inform Global. ProQuest Direct .

Harold B.Library, Brigham Young University, Provo Utah. 17 Nov 2005

<http://www.um.com/proquest/>.
Consolidation Warehousing - Reading list
Pearson Specter, Sara. Warehousing Giants Modern Materials Handling; Oct2004, Vol. 59 Issue 10,

p29-31 ABI Inform Global. ProQuest Direct .

Harold B.Library, Brigham Young University, Provo Utah. 18 Nov 2005

<http://www.um.com/proquest/>.
Cecil C. Bozarth and Robert B. Handfield, Intro to operations and supply chain management, pg 344

Defintions. Homepage. 17 Nov 2005 <http://www.dictionary.com/>.

Consolidation Warehousing. Homepage. 21 Nov 2005<http://www.warehousing.cc/>.