Essentials of Freight Forwarding P1.2 (1) 4.30.pptx

1. Essentials of
Freight
Forwarding
Export Packaging and Warehousing

2. IMPORTANT
DATES
ASSSIGNMENTS – May 3 (Fri)
MIDTERM – May 10 (Fri)
FINAL EXAM: May 17 (Fri)

3. International
Warehouses
and Distribution
Centers

4. Introduction
▶ The logistics manager faces the decision
of choosing the optimal point of origin for
goods in international trade.
▶ Goods can be sourced directly from the
supplier or shipped from a global
warehouse or distribution center.
▶ Warehouses serve both upstream
(procurement) and downstream (sales)
functions in the supply chain.
▶ Distribution centers specifically refer to
warehouses used in the downstream
supply chain.
▶ International warehouses present unique
challenges compared to those in domestic
supply chains, requiring careful
consideration by logistics managers.

5. Introduction
For an international logistics manager, using a warehouse
located indifferent country is an option that can present
several advantages:
▶ There are transportation savings: the cost of making
many small shipments to a customer located overseas
may be much higher than the cost of a single
international shipment to a warehouse, even if that
shipment is then followed by several smaller domestic
shipments.
▶ There are response time benefits: delivery times for a
customer order may be much lower if the items ordered
are physically close to the customer’s facilities.
▶ There are manufacturing savings: it is frequently
cheaper to manufacture a larger quantity of certain
goods and store them than it is to produce smaller
quantities of those goods.
▶ There are marketing benefits: for some markets,
adaptations of the product (packaging, labeling,
settings, instructions, . . . etc.) are necessary and better
managed in an environment that is close to the
customer.
▶ There may be other reasons that are specific to
international trade: for example, the duty rates to import
from the country of manufacturing may be higher than
the duty rates to import from the country in which the
warehouse is located, or there may be quotas that limit
imports of a product, and the timing of import has to be
carefully determined so that the product is imported
before the quota runs out.

6. Warehouses: The
Versatile Hubs of
International Trade
1. Storage of Goods: At its core, a warehouse serves as a secure and
organized space for storing goods. Whether these are raw materials,
finished products, or inventory for future sales, the storage function
ensures that companies can efficiently manage their stock, reducing
the risk of stockouts and enabling timely deliveries.
2. Consolidation of Orders: In the realm of international trade, orders
can come from various sources, including suppliers, customers, and
distribution centers. Warehouses offer a central point where these
orders can be consolidated, allowing for streamlined and cost-
effective transportation. This consolidation function is particularly
valuable for businesses that engage in just-in-time inventory
management.
3. Order Fulfillment: Warehouses are integral to the order fulfillment
process. They house products ready for shipment, and when an
order is received, items can be quickly retrieved, packed, and
dispatched to the end customer, enabling swift and efficient delivery.
4. Packaging Services: Some warehouses provide value-added
services, such as packaging and labeling. This is particularly
important for international shipments, where goods may need
specialized packaging to ensure safe and secure transit. Proper
packaging also helps meet international regulatory and customs
requirements.
5. After-Sale Services: Warehouses can serve as centers for after-
sale services, including repair, refurbishment, and warranty
processing. In some cases, returns management is also handled
within the warehouse, streamlining the process for both businesses
and customers.
6. Returns Handling: Dealing with returns is a critical part of
international trade. Warehouses can efficiently manage returned
goods, inspect them for resale, refurbish if necessary, and route
them back into the supply chain.

7. Inventory
Holding
Companies hold inventory for several reasons:
▶ When a raw material is produced seasonally (generally an
agricultural product, such as cereal or fruits), but is sold year-
round, it is necessary to purchase the raw material when it is
available and hold it in inventory before it can be used in
production.
▶ When a raw material’s price fluctuates significantly and
unpredictably (as with commodities such as sugar, chocolate,
copper, or gold), and if the company can purchase the material
at a low price, it can store it until the material is used in
production.
▶ When a product is sold only seasonally (a product such as a
lawnmower, greeting cards, or snow skis), but the company
wants to operate year-round without fluctuations in its
manufacturing planning, it needs to accumulate goods in low-
sales months and ship them during high-sales months. In the
interim, goods are warehoused.
▶ When marketing activities generate a significant increase in
sales volume, the company must anticipate that volume change
and store additional items to satisfy customer demand.
▶ Because international supply chains can be affected by
significant unforeseen events (such as bad weather, strikes, or
natural disasters), firms can absorb these disruptions by storing
goods in warehouses beyond the normal safety-stock levels of a
manufacturing facility (see Chapter 18).
▶ When the company anticipates that it will need to fulfill more
retail orders, because it operates an online business selling
directly to some customers, and these customers expect very
short lead times before delivery.2

8. Warehouses as Distribution
Centers: Facilitating Global
Trade and Supply Chains
▶ Warehouses have evolved into
multifunctional hubs with diverse roles in the
global market.
▶ Consolidation is a critical function of
warehouses, especially when dealing with
goods from multiple manufacturing facilities
across different countries.
▶ Distribution centers, specialized warehouses,
are central to the consolidation process,
helping streamline supply chains.
▶ Their primary role is to enhance the
efficiency of global goods movement and
support product distribution to retailers and
consumers.
▶ Distribution centers are key players in
optimizing supply chain operations and
global logistics.

9. Consolidation in Distribution
Centers: Streamlining Supply
Chains and Enhancing
Efficiency
▶ Distribution centers are vital for modern
supply chain management, particularly in
international trade.
▶ They act as strategic intermediaries, focusing
on the consolidation of goods to streamline
distribution.
▶ Distribution centers receive full-truck-load or
full-container-load shipments from
manufacturers, often containing single
products or limited item ranges.
▶ Their main role is to create smaller,
consolidated shipments that consist of
multiple products for distribution to
downstream stakeholders.
▶ The consolidation process's core goal is to
enhance distribution efficiency, leading to
cost savings and quicker transit times.

10. Efficiency through
Consolidation:
Consolidation in distribution centers is
rooted in the principle of efficiency. By
receiving full-truck-load or full-container-
load shipments, these centers can
maximize the use of available
transportation capacity. Rather than
transporting individual products
separately, which would be both costly
and environmentally unsustainable,
consolidation allows for the efficient
utilization of valuable space within
trucks and containers. The approach
essentially reduces the number of
individual shipments, contributing to
significant cost savings.

11. Reducing Costs:
Cost reduction is one of the primary
motivations for consolidation. When
products are consolidated in
distribution centers, the cost of
transportation, including fuel, labor,
and vehicle maintenance, is greatly
optimized. Fewer trips are needed to
distribute goods, and the overall cost
per unit decreases, benefiting both
manufacturers and end consumers.
This reduction in transportation
expenses often translates into
competitive pricing for consumers and
improved profit margins for
businesses.

12. Shortening
Transit Times:
Consolidation not only enhances cost
efficiency but also contributes to
shorter transit times. The streamlined
process of consolidating goods at
distribution centers minimizes delays
associated with handling and
transportation. Reduced transit times
are particularly significant for
businesses aiming to meet
consumers' expectations for quick
and reliable delivery. Shorter lead
times also support lean inventory
management practices, allowing
businesses to respond to market
demand more swiftly.

13. Flexibility and
Adaptability:
Distribution centers offer the flexibility
to handle various product types and
SKUs, making them versatile
components of modern supply chains.
Their adaptability ensures that
products from different sources can
be consolidated efficiently, benefiting
a broad spectrum of industries, from
retail to manufacturing. The ability to
handle diverse products makes
distribution centers suitable for
businesses with a wide range of
SKUs and production origins.

14. Environmental
Impact:
The environmental impact of
consolidation in distribution centers
should not be understated. By
reducing the number of
transportation trips, these centers
contribute to lower carbon
emissions, which is a significant
concern in an era of increasing
environmental awareness.
Sustainable practices, such as
consolidation, align with the global
commitment to reduce the carbon
footprint associated with supply
chains.

15. Global Reach:
In the context of international trade,
distribution centers play a crucial
role in facilitating the movement of
goods across borders. By
consolidating products from
different manufacturing facilities,
often located in different countries,
they enable the streamlined
distribution of these goods to
retailers and consumers worldwide.
This supports the global reach of
businesses, helping them access
and serve diverse markets.

16. Flexibility in Distribution:
FLEXIBILITY IN
MANAGING THE
FLOW OF GOODS
CENTRAL HUBS FOR
COORDINATING
PRODUCT
DISTRIBUTION
RESPONDING TO
DYNAMIC MARKET
DEMANDS
FULFILLMENT
CENTERS FOR E-
COMMERCE

17. Flexibility in
Distribution:
Distribution centers offer businesses a
number of benefits, including:
▶ Reduced inventory costs
▶ Improved customer satisfaction
▶ Shorter delivery times
▶ Reduced transportation costs
▶ Improved efficiency
▶ Increased flexibility
▶ The ability to respond to dynamic
market demands

18. Supporting International Distribution
Channels with Distribution Centers
Centralizing
Inventory
Management
Reducing
Transportation
Costs
Efficient Service to
Partners and
Customers
Market Expansion
and Adaptability
Global Integration

19. The Adaptive Role of
Warehouses in
International Trade
▶ Warehouses serve a crucial role in
international trade by providing specific
distribution services to exporters.
▶ These services may include adapting
packaging, labeling, or products to
meet legal, cultural, or practical
requirements of different countries.
▶ This adaptability enables businesses to
navigate global markets effectively and
meet the diverse needs of international
customers.
▶ Warehouses are dynamic centers that
go beyond storage and actively
facilitate international trade.

20. Packaging and
Labeling Adaptations
▶ Warehouses assist exporters by adapting
packaging and labeling to meet varying
regulations in different countries.
▶ Differences in regulations can impact the
packaging, such as the need for
consumer-friendly blister packs or plain
boxes for pharmacists.
▶ Labeling requirements and product
instructions may vary based on language,
legal, and cultural distinctions in different
countries.
▶ Warehouses play a crucial role in
ensuring products comply with
international packaging and labeling
standards.

21. Value-Added
Services
▶ Warehouses offer value-added
services like price-labeling, small
repairs, and parts sales for
retailers.
▶ Efficient processing of returns and
exchanges enhances customer
satisfaction.
▶ International markets benefit from
local warehouse services for
warranty claims and customer
support.
▶ Proximity to customers allows for
faster and more personalized
service.

22. Value-Added
Processes:
▶ Value-added processes in
warehousing go beyond storage and
include activities like customization,
quality control, and product
assembly.
▶ These processes add value to
products and enhance the
distribution process.
▶ They help meet the unique
requirements of diverse markets and
ensure products are market-ready.
▶ Value-added processes are integral
to optimizing supply chain efficiency.

23. The Crucial Decision
of Warehouse Location
The decision to establish a
warehouse within a supply chain is a
strategic move that can significantly
impact a company's operations and
cost structure. However, it's not just
the decision to have a warehouse that
matters; it's also the location of the
warehouse that plays a critical role in
determining the efficiency and cost-
effectiveness of the entire supply
chain. This decision can be broken
down into three levels: regional or
national, municipal, and parcel, each
with its own set of considerations and
implications.

24. Regional or National Level
▶ The first level of the warehouse location
decision involves choosing the region or
country where the warehouse will be
located.
▶ This choice significantly impacts the
company's supply chain and is influenced
by factors like target markets,
transportation access, trade regulations,
and supplier proximity.
▶ For a company primarily serving the North
American market, locating the warehouse
within the United States can reduce
shipping distances and streamline
customs processes.
▶ In contrast, a company serving various
European markets might opt for a central
European location to efficiently serve
multiple regions.
▶ The regional decision affects the overall
logistics network and impacts landed
costs, encompassing transportation
expenses and import/export duties.

25. Municipal Level
▶ At the municipal level, the decision involves
selecting the specific city or area for the
warehouse's operation.
▶ Factors considered at this level include
transportation infrastructure, labor availability,
customer proximity, and local regulations.
▶ The choice of municipality significantly affects
the warehouse's operational efficiency,
especially regarding distribution within the area.
▶ For e-commerce companies prioritizing rapid
delivery, opting for a location within or near a
major urban center can reduce last-mile delivery
times.
▶ Conversely, cost-efficient goals may lead to
choosing an area with lower labor and real
estate costs, directly impacting operating
expenses and service quality for customers.

26. Parcel Level
▶ The most detailed level of the warehouse
location decision focuses on choosing a
specific building or parcel of land.
▶ Factors considered at this level include real
estate availability, building condition,
proximity to transportation hubs, and
expansion capacity.
▶ The choice of building or parcel is crucial
because it directly impacts daily warehouse
operations, including storage, order
fulfillment, and workforce management.
▶ Specific requirements, such as temperature-
controlled storage for certain products, must
be accommodated by the chosen facility.
▶ The parcel choice also influences the
warehouse layout, affecting goods flow
efficiency and the ability to adapt to changing
operational demands.

27. Warehouse
Ownership
There are three ways to manage the
ownership of a warehouse; the
exporter can purchase or build the
warehouse and handle it as a sales
subsidiary, or it can use the services
of a third-party logistics provider—a
3PL—, such as a public warehouse or
a contract warehouse.

28. Public
Warehouses
▶ Public warehouses offer warehousing space
and services to multiple companies for a
predetermined fee.
▶ Public warehouses provide flexibility to
exporters as their costs are variable, and
they can easily adjust space and services as
needed.
▶ The location of a public warehouse is
determined by the warehouse owner,
potentially serving as both an advantage and
disadvantage to exporters.
▶ The warehouse's location might be optimized
for the owner's customers but may not align
perfectly with the exporter's needs.
▶ Careful analysis of the warehouse's location
relative to the exporter's requirements is
essential before entering into an agreement
with a public warehouse.

29. Contract
Warehouses
▶ A contract warehouse is operated by a third-
party logistics provider under a long-term
contract with an exporter.
▶ Contract warehouses are often dedicated to a
single customer, the exporter, and are suited for
exporters needing predetermined warehouse
space without the responsibility of ownership or
management.
▶ Contract warehouses offer exporters the
expertise of the third-party logistics provider in
site selection, size, and operational design.
▶ While contract warehouses offer less flexibility
compared to public warehouses, they are a
recurring monthly expense for the exporter.
▶ Exporters may opt for contract warehouses
when they lack managerial expertise for
warehouse operations and aim to reduce
exposure to foreign labor contracts.

30. Private
Warehouses
▶ A private warehouse in a foreign country is owned
and operated by the exporter, utilizing its own
resources and personnel.
▶ This option requires capital investment, as well as
hiring management and labor to run the warehouse.
▶ Private warehouses are suitable when the exporter
possesses the necessary expertise in warehouse
management and when the quality of service justifies
the incurred costs.
▶ They are also preferred when the exporter foresees
significant market growth that public or contract
warehouses cannot accommodate.
▶ In rare cases, private warehouses are used when no
other viable alternatives, such as public warehouses,
are available, or when the contract warehouse
providers' capabilities do not meet the exporter's
standards.

31. Warehouse
Activities
Once a warehouse is selected, its
operations can be divided into five broad
categories:
▶ Receiving
▶ Storage
▶ Picking
▶ Packaging and Shipping
▶ Other Operations

32. Receiving
▶ The acceptable pallet sizes—A pallet necessitates mechanical equipment to be moved.
While pallet sizes are somewhat standardized in some industries and countries, they are not
universally uniform. European pallets are 1.2 meters by 0.8 meters (approximately 48 inches
by 32 inches),but other sizes exist in those countries. U.S. pallets are more varied, with the
most common pallet size being the one used by the Grocery Manufacturer Association,
which is 40 inches by 48 inches (approximately 1.01 meters by 1.22 meters), but many other
options exist. Australian pallets are completely standardized domestically but are a size that
is not used anywhere else in the world, as they are square, 1.16 meters (approximately 46
inches). It is important that the pallets be the correct size so that goods are not moved from
one pallet to another as they are received.
▶ The markings and other labeling requirements of the warehouse—Proper labeling
prevents delays in accepting the goods. Most warehouse operate with a barcode system
that must be able to read whatever information is on the received goods.
▶ The time at which the goods should arrive—While it is sometimes difficult to enforce in an
international environment, a time of arrival allows the warehouse to plan for proper receipt
of the goods with the appropriate personnel and equipment, so that there are no delays for
the delivery driver.

33. Receiving
▶ The initial warehousing activity receiving involves receiving goods for storage.
▶ Prior to receiving the goods, the warehouse communicates essential
information to the supplier, including acceptable pallet sizes, labeling
requirements, and the expected time of arrival.
▶ Correct pallet sizes are important to prevent the need to move goods between
pallets during receipt.
▶ Proper labeling ensures efficient acceptance of goods and aligns with the
warehouse's barcode system.
▶ Receiving goods occurs on a dock, often from a truck trailer or a container;
containers from abroad should be opened with care, including inspecting the
seal, securing doors with a chain, and checking the quantities and types against
purchase orders and transport documents before storage.

34. Storage
▶ After receiving goods, they are placed in storage in various
ways within a warehouse.
▶ Some warehouses, like e-commerce facilities, store goods in
their primary packaging on low shelves for easy manual access.
▶ Most warehouses store goods in secondary or tertiary
packaging, with secondary packaging being corrugated
paperboard boxes and tertiary packaging being pallets of
secondary-packaging boxes.
▶ Stacks of pallets can be placed directly on the warehouse floor,
but they are limited in height to prevent crushing the bottom
pallet's secondary packaging.
▶ Goods can also be stored on metallic racks, which can hold
pallets or merchandise in secondary packaging on shelves. The
design and height of these racks depend on the warehouse's
configuration and equipment.

35. Storage
▶ Warehouses in regions with high land costs use
higher racks and narrower aisles to optimize
space.
▶ High racks and narrow aisles require stronger
floors, increasing installation and operational costs
but reducing land usage.
▶ Lower racks and wider aisles are cost-effective but
demand more land.
▶ The choice between rack height and land usage
represents a trade-off in warehouse design.
▶ In areas with expensive land or limited expansion
options, specialized racking systems have been
developed to maximize space utilization, despite
being more costly than traditional systems.

36. Storage
Pallet-flow racks or gravity-fed racks
are designed to store pallets on rollers
rather than fixed shelves (see Figure
15.5). The bays are inclined so that the
pallets or boxes can be loaded in the
back of the racks and flow
automatically to the front of the rack
when a pallet is removed. These racks
allow for a greater density of goods in
the warehouse, but each bay can only
store one type of item. Rollers are
more expensive than fixed shelves and
demand more maintenance.

37. Storage
Mobile racks are wheeled racks that can
move on rails, so that the aisles between
racks can be eliminated. Whenever an
item needs to be stored or retrieved, the
racks are moved to create an aisle. Even
heavy-duty racks for pallets can operate
on this basis. The racks move using
electric motors or human power. The cost
of installing and operating mobile racks is
higher than static racks, but the capacity
of the warehouse can increase by as
much as 100 percent without a change in
its size.

38. Storage
Very-High-Bay racks can be as high as
60 meters high (180 feet), and are built
as part of the structure of the
warehouse; that is, unlike traditional
racks that are built inside a warehouse,
the very high- bay racks are built before
the roof of the warehouse is installed,
and they help hold the roof in place. It
also gives the racks more rigidity.
Therefore, existing warehouses cannot
be retrofitted to use very-high-bay racks.
These warehouses utilize their space
very well, but the high costs of
construction and operation make this
option only attractive in areas in which
land is very expensive.

39. Storage
Automated Storage and Retrieval Systems or
ASRS operate in warehouses that use conveyor belts,
lifts, and other automated devices to place full pallets
in high-bay or very-high-bay racks. Their speed and
ability to work concurrently (each aisle has its own
devices) allows ASRS to be very quick and accurate.
Automated Storage and Retrieval Systems must
utilize uniform pallet sizes that are all in perfect
condition; any deviation from the standard makes it a
challenge for the system to handle. ASRS warehouses
are very expensive to build and operate, and they are
only built in areas where land is limited, and labor
prices are high. The Mansueto Library of the
University of Chicago holds its collection in an ASRS
warehouse that handles the books in identically sized
bins and stores them in a 50-foot-deep (15 meters)
underground area. This system allows the library to
keep its entire collection on-site rather than keep the
less frequently used books off-site, as other libraries
must do to save shelf space. Books can be retrieved
in minutes.

40. Storage: Robots
▶ Warehouses are increasingly using robots
for efficient operations, with Amazon leading
the way by acquiring over 45,000 robots.
▶ In robotic warehouses, goods are stored in
small "pods" on metallic racks with multiple
shelves, each with a 2x2-foot footprint.
▶ Robots in these warehouses retrieve and
transport pods for storage and retrieval,
circulating under them.
▶ Human workers pick products from the pods
at the front of the warehouse to fulfill orders.
▶ Robots autonomously recharge their
batteries when running low by moving to
dedicated charging areas.

41. Picking
Once the goods have been received and
placed in storage, the next activity in a
warehouse is picking the items to fulfill
customer orders. The picking activity
consumes most of the labor costs of a
warehouse or distribution center. There are
two main points to consider in determining
the best picking alternative for a
warehouse; the overall strategy, which
includes selecting a method to fulfill the
strategy, and the technique utilized to
support that combination of strategy and
method.

42. Picking Strategies
▶ Picking strategies in a warehouse are determined by the type
and size of orders it fulfills.
▶ Different strategies are used for orders involving full pallets,
pallet layers, single boxes, consumer items, or individual items.
▶ One less common strategy is the "goods to picker" approach,
where goods are brought to the picker using automated systems
like Kiva robots or Automated Storage and Retrieval Systems
(ASRS).
▶ Carousel storage systems are also used for small products,
such as in pharmaceutical warehouses, where the entire product
range is stored on rotating carousels.
▶ With the increasing use of robots in warehouses, the "goods-to-
picker" strategy is likely to become more prevalent.

43. Picking
Strategies
▶ Warehouses can use a "picker-to-goods" strategy where
employees retrieve goods from the storage system.
▶ This is the most commonly used picking strategy but can
be inefficient as much as 50% of the picker's time is
spent on travel within the warehouse.
▶ The stationary location where a picker makes selections
is called a "pick face."
▶ The simplest way to implement this strategy is "picking
by order," where employees retrieve items for one order
at a time.
▶ "Picking by order" is less effective for small orders with
items scattered across the warehouse.
▶ A more efficient approach is "cluster picking," where
employees handle multiple orders at once, typically two
to ten different orders.
▶ Employees place the items from these orders into
different boxes or totes on a cart.
▶ After picking, the orders are taken to the shipping area
for packaging and shipment.

44. Picking
Techniques
▶ Warehouse managers must employ a picking technique for
accurate order fulfillment.
▶ Traditional paper list picking technique involves printing
each order on paper, and the picker manually checks and
marks items as they are placed in the cart.
Label picking is an improvement where the pick list is
printed on labels, and the picker attaches labels to items
found, allowing for accuracy and quantity checks.
▶
▶ Barcode picking employs barcodes on both items and pick
faces, with the picker using a barcode reader and screen to
identify the next item to pick, its quantity, and location.
Barcode picking ensures that the picker scans the correct
product in the correct quantity before moving on to the next
item.
▶
▶ Barcode picking is the most frequently used technique in
warehouses.
These techniques increase productivity and reduce errors,
especially in complex order environments or with less-
educated employees.
Technology-based techniques rely less on the picker's
skills and more on technological aids.
▶
▶

45. Picking
Techniques
▶ Voice picking is introduced to enhance the efficiency of the barcode
technique in warehouses.
▶ In voice picking, the warehouse computer communicates instructions
for the next pick and its location via a headset with an artificial voice.
▶ Earlier voice-picking systems required picker confirmation with a
hand-held barcode scanner, but newer systems use voice-recognition
software, allowing pickers to confirm verbally and work with both
hands.
▶ Voice recognition technology benefits cold warehouses where gloves
are necessary and warehouses where both hands are needed for
handling goods.
▶ In warehouses with a zone picking approach, light picking is
employed, featuring lights and small display units with numbers at
each pick face.
▶ Light picking directs the picker to the lit pick face, where they pick the
products as indicated on the display and place them in totes or on a
conveyor belt.
▶ Light picking provides free hands and no headset for pickers, but it
involves higher costs due to the equipment required, making it
suitable for warehouses with high transaction volumes.
▶ Various picking techniques offer options for improving productivity
and adapting to the specific needs of different warehouse operations.

46. Packaging and Shipping
▶ Meeting National Requirements: The goods shipped by a
warehouse may be subject to national regulations and standards that
dictate size, weight, and labeling.
▶ Packaging and Labeling: In addition to legal constraints, the choice
of packaging materials and labeling is critical. Packaging must not
only adhere to national regulations but also protect the products
during transit.
▶ Customization for Customer and Carrier Requirements: Shipping
managers must also consider the unique requirements of customers
and carriers.
▶ Minimizing Shipping Costs: The effective consolidation of orders
involves reducing shipping costs.
▶ Ensuring Safe Transit: Ultimately, the overarching goal of order
consolidation and shipping is to ensure the goods arrive at their
destination without any damage.
▶ Domestic and International Considerations: The global economy
and interconnected supply chains mean that even domestic
shipments may need to adhere to international standards or cater to
the preferences of international customers.

47. The Versatility of Warehouses: Beyond
Storage to Additional Services
▶ Returns Processing: Warehouses play a crucial role in
handling returns, a task that has become increasingly
important in the world of e-commerce.
▶ After-Sales Services: Warehouses may have dedicated
areas for after-sales services. These services encompass
warranty claims processing, spare parts storage and
distribution, inspections, and repairs of defective or
damaged products.
▶ Value-Added Services: Warehouses often go the extra
mile by offering value-added services that can simplify the
supply chain for their customers.

48. Warehouse
Layout Options
▶ The physical size of the building and its other
characteristics (age, construction, height, floor
characteristics).
▶ The cost of land and other environmental constraints
(maximum height, road access, utilities, location).
▶ The physical characteristics (weight and volume) of the
products.
▶ The way goods are packaged when they are received
(pallets, secondary packages) and when they are
shipped out (pallets, secondary packages, or single
units).
▶ The variety of products.
▶ The velocity of products (how long they stay in the
warehouse, from receiving to shipping).
▶ The number of shipments, both incoming and outgoing.
▶ The average size of shipments.
▶ The additional services that the warehouse provides.
▶ The possible expansion of the warehouse.

49. Fixed Areas
▶ Warehouses have essential areas that
remain consistent across different facilities.
▶ Loading docks are vital for both receiving and
shipping operations, ideally separated to
prevent confusion.
▶ Receiving docks should include an
inspection area for goods, even if most
shipments are trusted or certified.
▶ An isolated area for inspecting and handling
irregular shipments is necessary.
▶ A staging area near the shipping dock is
crucial for assembling goods to ensure
efficient loading onto trucks or rail cars.
▶ Service space is allocated for ancillary
warehouse activities, such as returns and
repairs, separated from main operations.
▶ Maintenance space is needed for recharging,
repairing forklift trucks, and maintaining
various equipment, with additional office
space often located on a mezzanine level.

50. A-B-C Rules
▶ Most warehouses apply an A-B-C rule based on Pareto's Law, which
states that roughly 80% of costs come from 20% of items.
▶ The A-B-C rule in warehousing categorizes inventory into three
classes: A-class (high cost, 20% of products), B-class (moderate cost,
30% of products), and C-class (low cost, 50% of products).
▶ Warehouse layout follows a similar A-B-C rule, with A-class items
stored closer to loading docks to reduce handling time.
▶ B-class items are located further from the docks, and C-class items
are furthest away.
▶ Different interpretations of the A-B-C rule can categorize storage
based on volume, value, or the velocity of goods (speed of
movement).
▶ Some warehouses also classify items based on their speed of
movement, with frequent movers (A-class) closer to shipping docks.
▶ Warehouse layout design often involves consulting firms' expertise
and may draw from similar warehouses' experiences with the same
product mix.
▶ The A-B-C concept offers flexibility in organizing warehouse space,
allowing for various interpretations based on specific needs and
circumstances.

51. Security
▶ Warehouse security primarily focuses on protecting goods
from theft and damage.
▶ Theft can occur in three forms: pilferage (opportunistic
theft), organized theft (planned operations), and system's
theft (utilizing information systems to manipulate
paperwork).
▶ Effective theft prevention involves careful employee
screening, visitor monitoring, and implementing processes
that divide responsibilities to minimize collusion. Reward
systems can also motivate employees to prevent theft.
▶ Damage prevention, caused by factors like forklift accidents
or poor storage practices, relies on workforce training and a
culture of care fostered by management.
▶ Damage can also result from poor warehouse maintenance,
such as roof leaks or misplaced products, which can be
mitigated through proper processes and procedures.
▶ Warehouse security measures designed to prevent theft are
generally adequate to deter potential terrorist activities.
▶ International supply chain processes further reduce the risk
of terrorism within warehouses.
▶ A combination of security and preventative measures helps
protect goods and maintain overall warehouse safety.

52. Leveraging
Warehouses for Export
Success
▶ Reducing Lead Times: Proximity to customers is a
key advantage that a strategically located warehouse
can provide. When an exporter's warehouse is near
its target market, it can offer lead times comparable to
those of domestic competitors.
▶ Meeting Unforeseen Demand: In the dynamic world
of international trade, an exporter may experience
unexpected surges in demand for their products. In
such scenarios, a well-managed warehouse stocked
with inventory can prove to be a lifesaver.
▶ Providing Value-Added Services: Warehouses can
offer an array of value-added services, which can be
highly beneficial to customers. These services
include product customization, kitting, labeling, and
quality checks, among others.
▶ Efficient Aftermarket Services: The ability to
provide aftermarket services is another key aspect of
gaining a competitive advantage. With a local
warehouse, exporters can efficiently offer warranty
work, repairs, and spare parts replacement to their
customers.

53. You Are Ready for Robots in the Warehouse