Storage methods and location systems

1. STORAGE METHODS AND
LOCATION SYSTEMS
Navindu Munidasa
MSc Logistics and Supply Chain (UK) (Reading); BSc Operations and Logistics
Management (UK); Dip in Computer Hardware and Networking ; Certificate in Motor
Mechanism (CGTTI); Certificate in Workshop Practices (CGTTI)

2. LEARNING OBJECTIVES
• Factors considered in location of storehouses
• Factors considered in laying out a storehouse
• Location systems

3. THE MAIN PURPOSE OF A STORE
“to make available a balanced flow of raw materials, components, tool,
equipment and other materials necessary to meet the operational
requirements”

4. PLANNING A STORE
HOUSE

5. • Nature of the business
• Processes involved
• Items to be stored
• Storage conditions required
by the respective materials
• Ability of stocks to withstand
forces of nature
• Bulk storage or Break-bulk
storage
• Quantities
• Volume (cbm)
• Frequency of
Issuing/Receiving
• Any MHE’s required
• Cadre requirement
• Store type
(Central/Regional/Sub/etc)
• Store placement proximity to
users
FACTORS TO BE CONSIDERED WHEN PLANNING A
STOREHOUSE

7. SITE SELECTION

8. SITE SELECTION
Process broken down
into 3 separate focus
areas
Macro-analysis
Microanalysis
Specific site selectionBoeing Case Study
Brandix India Apparel
City

9. MACRO-
ANALYSIS ISSUES
Service Requirements
Transportation
Materials Handling
Fixed Costs
Inventory Costs
Number & Location of Facilities

10. MACRO-ANALYSIS APPROACH
Microanalysis
Evaluate Alternatives
Identify Optimal Location
Identify Optimal Number of Facilities
Define Trade-off Components
Define Objective

11. MACRO-ANALYSIS MODELING
Three major types of modeling used
 Computer spreadsheet models
 Uses various programs for the input of data and manipulation, to
provide quick results
 Spreadsheets allow for the view and compilation of volumes of data
 Mathematical models
 Everything is placed into a mathematical formula for solving
 Network simulation models
 Solves various models automatically to provide a listing of all
potential sites and which is best

12. MACRO-ANALYSIS
RESULTS
• The macro-analysis may
yield an answer such as
“the mid-western” region
or “southeast” region

13. MICRO-
ANALYSIS
• Identifies a particular
sector, district or area
located in a geographic
region identified in the
previous Macroanalysis.

14. MICRO-ANALYSIS –
POINTS OF FOCUS
 Availability of existing sites locations
 Population: Labor availability
 Taxes and Subsidies
 Competitive Climate.
 Suppliers availability
 Local Utilities
 Potential as a distribution hub
 Highway access
 Business activity
 Quality of Life considerations
 Weather threats.
 Proximity to Airports and seaports.

15. TOOLS FOR MICRO-ANALYSIS:
(GRID SYSTEMS)
• Analysis of spatial
relationships using
Mathematical Tools.
• Center of Gravity
• Weighted Center of Gravity

16. CENTER OF GRAVITY (C-O-G)
APPROACH
Patterns are set on a map.
Grid: horizontal-axis
refers to miles east and
vertical axis are set to
miles north.
Points are assigned to the
different locations.
Average distances east-
west (x displacement) and
north-south are found (y-
displacement)
The average is divided by
the number of existing
facilities.
The best location is one
with
•the coordinates of the above
•averages (x,y)

17. WEIGHTED CENTER-OF-
GRAVITY APPROACH: SIMILAR
TO C-O-G
• Takes into account the volume a
particular facility receives.
• The location is multiplied by the
monthly volume received.
• The average is calculated.
• The Weighted center of gravity is
determined for the location.

18. Results of Macroanalysis
Potential Facility Locations
Collect Information
Labor
Tax
Locations
Business Activities
Utilities
Competitors
Support Services
Comparative Analysis
Recommendation

19. MICRO-ANALYSIS
 Key issues
 Socioeconomic area
 Government services
 Transportation
 Highway congestion
 Proximity to air, rail, sea
 Availability of labor
 Unemployment rate
 Land Value
 Competitive climate

20. SITE SELECTION
Common
Elements

21. COMMON
ELEMENTS
Labor Pool
• Skill level distribution
• Competition, Present
and Future
• Neighborhoods and
Surrounding Areas
• Union Presence
Utilities and
Communications
• Potential limitations
• Long lead time for
hook ups
• Service Interruptions
• Potential
development that
can restrain
resources

22. COMMON
ELEMENTS
• Principle use of area surrounding site
• Availability of support services and labor
• Absence or dominance of similar facilities
Surrounding
Neighbors and
Tenants
• Absence of services causes higher cost for self
sufficiency and downtime
• Examples: waste disposal, computer equipment
service, fire protection, and sanitation
Local Support
Services
• Examples: parcel deliveries, proximity to parts and
air freight terminals, local cartage
Transportation
Pick Up
Services

23. COMMON ELEMENTS
Local Taxes
• All taxes may not be reflected in real
estate appraisal
• Could add sufficient cost to operating
budget
• Personal taxes may require a higher wage
to offset
• Examples: corporate, local, regional,
personal, property, inventory, fees,
licenses
Fire Codes and Protection
• Interpretation of codes may vary in
different jurisdictions which can impact
insurance
• Type of protection provided – volunteer,
professional
Union Activity
• Avoidance or alliance
• Avoid locations know for unions with
militant activity, work interruptions, or
excessive grievance filing

24. NEW CONSTRUCTION
VERSUS EXISTING
FACILITY
Availability of existing facility
Make vs. buy financial
analysis
Sufficient lead time to
construct and occupy facility
Customization requirement
s of existing facility
Do not limit to one or the
other

25. EVALUATION OF
POTENTIAL
CONSTRUCTION
SITES
• Acreage
• Zoning
• Support Services
Inventory sites for construction (list of sites meeting minimum requirements)
• Land preparation
• Weather effects
• Regional roof requirements
• Local construction practice and cost
• Construction methods
• Building Codes
Familiarization with local building practices and preparation procedures
Specific Site Evaluations

26. SPECIFIC EVALUATION
FOR CONSTRUCTED
OR EXISTING SITES
Zoning and zone appeal process
Construction permits, code
requirements, exceptions, and
appeal process
Building site restrictions
Environmental Impact
Topographical maps
Incentives

27. EXISTING
FACILITIES
CONSIDERATION
Second a list of recently sold or leased
properties in the same geographical areas
should be reviewed
First sites must meet minimum requirements in
terms of square footage, land use, and other
non-correctable physical characteristics

28. EXISTING FACILITIES
CONSIDERATION
 Total square footage
 Type of construction
 Additions
 Number of dock doors
 Space on site for expansion
 Sprinkler systems
 Ceiling Height
 Date of Construction
 Square footage of office
space
 Paved yard area
 Presence or availability of rail
connections
 Building occupancy and use
zoning
 Third the physical characteristics of the properties should be
included

29. EXISTING FACILITIES
CONSIDERATION
 Sprinkler systems
 Safety requirements
 Situation of building on property
 Building appearance
 Previous tenants and building
history
 Building’s original construction
design and intended use
 Expansion capabilities
 Building modification
requirements
 Building maintenance
 Physical examination (walls, floors,
roofs, paved areas)
 Insulation
 Docks, doors, and dock levelers
 Lighting
 Skylights
 HVAC
 Office space
 Trailer parking
 Sanitation
 Final research of potential sites includes

30. CASE STUDY: BOEING 787
FACILITY
• Selection Criteria:
• Transportation
• Suitable runway provisions
• Proximity to a port capable of around-the-clock
operations
• Continuous availability of heavy traffic ways between
plant site and port
• Proximity to railways, interstate highways
• Facilities
• Available land, buildings, related infrastructure to
accommodate 787 final assembly

31. CASE STUDY: BOEING 787 FACILITY
Cost of Doing Business - $1 bill/US
• Cost of land, buildings
• Construction cost
• Site preparation cost
• Support services (fire, police, emergency and medical services)
• Taxes, utilities, insurance, other recurring, non-recurring costs
Work Force – 3800 employees
• Training infrastructure, partnering opportunities with local
agencies or governments
• Absenteeism. turnover rates for other local companies
• Available labor pool
• Quality of local public schools

32. CASE STUDY: BOEING 787 FACILITY
Environmental Considerations
• Local flying weather
• Possible extreme temperature impact on manufacturing,
• Susceptibility to natural disasters (earthquakes, tornadoes,
hurricanes, flooding)
Community Support
• Local community, governmental support for manufacturing
businesses
• Support of local, county, state governments for Boeing, its
suppliers
• Environmental regulations, permitting process
• Likelihood of long-term community support
• Ability to expand or modify facilities, infrastructure
• Quality of life that supports employee recruitment

33. CASE STUDY: BOEING 787 FACILITY
• Infrastructure Issues
• Relative cargo, freight costs
• Availability of utilities including water, sewer, power,
waste, telecommunications
• Transportation enhancements that support schedule,
requirements
Final Selection: North Charleston, SC

34. THE SC
FACILITY

35. https://www.youtube.com/watch?v=LD0VqUtBkcI

36. BUILDING TYPE

37. FACTORS TO BE
CONSIDERED WHEN
SELECTING BUILDING TYPE
FOR A STOREHOUSE
Number of stories (Single/Multi)
Structure type
(Prefabricated/Temporary/Permanent)

39. STOREHOUSE LAYOUT

40. FACTORS TO BE CONSIDERED WHEN SELECTING A LAYOUT
FOR A STOREHOUSE
ECONOMY EFFICIENCY

42. STORAGE
FACILITIES

43. FACTORS TO BE CONSIDERED WHEN SELECTING
STORAGE FACILITIES FOR A STOREHOUSE
Easy identification of items
within the storehouse
1
FIFO should be able to be
practiced without undue effort
2
Items should be in good
condition when issuing
3
Equipment used should facilitate
easy and quick issue without any
risk to employees or stored
goods
4

44. LOCATION
SYSTEMS

45. FACTORS TO BE CONSIDERED WHEN SELECTING A LOCATION
SYSTEM FOR A STOREHOUSE
RANDOM MIXED FIXED

46. STOREHOUSE
OPERATIONS

47. METHODS OF STOREHOUSE OPERATIONS
FUNCTIONAL UNIT PARTIAL UNIT

48. STOCKYARDS

50. QUESTIONS & ANSWERS SESSION

51. • What are the key factors to be considered when selecting a Layout
for a storehouse?
• What are the factors to be considered when selecting a site for a
storehouse?
• What points should be considered when planning a storehouse?
• What factors should be considered when selecting a location
system for a storehouse?
• What are the methods of storehouse operations?
• What factors should be considered when selecting storage
facilities for a storehouse?

52. THANK YOU