Supply Chain Management Storage and Warehousing

1. 1
SUPPLY CHAIN
MANAGEMENT
Storage & Warehousing
Warehouse
A location where inventory is stored
Based on the time horizon:
short-term
extended time
Warehousing
Warehousing is management of materials
while they are in storage.
Warehousing activities include:
Storing
Dispersing
Ordering
Accounting

2. 2
Warehousing
Record keeping within warehousing requires
stock record for each item that is carried in
inventories.
The individual item is called a stock-keeping unit
(SKU).
Stock records are running accounts that show:
On-hand balance
Receipts & expected receipts
Promises, & allocations
Warehousing
The objectives (as with other elements in a
distribution system):
minimize cost while maximize customer
service
Characteristics:
providing timely customer service
keep track of items so they can be
identified & found readily & correctly
minimize the total physical effort = cost of
moving goods
provide communication links with
customers
Types of Warehouse
Based on the service functions:
1. General warehouse
– To protect goods until they are needed
– Minimal handling, movement & relationship
to transportation
2. Distribution warehouse
- dynamic movement & mixing
- goods received in large-volume lots, stored
briefly, broken down into small individual
orders
- emphasis on movement and handling rather
than on storage
Mission of Warehouse
A warehouse may serve any of the following:
Factory Warehouse: holds inventory that is
used to balance and buffer the variation
between production schedule and demand
located near the point of manufacture
Consolidation Warehouse: used to accumulate
or consolidate product from various point of
manufacture within a single firm or several
firm, for combined dispatch
Local Warehouse: distributed in the field in
order to shorten the transportation distances to
permit rapid response to customer demand

3. 3
Warehouse Types
Plant 1
Plant 2
Plant 3
Consolidation
Warehouse Store B
Store C
Store A
Plant
Break-Bulk
Warehouse
Store B
Store C
Store A
Plant 1
Plant 2
Plant 3
Distribution
Center
Store B
Store C
Store A
Sorting by Distribution Center Cross Docking

4. 4
Plant
Producing
Product 1
Transit Mixing Point Store B
Products 1, 2, 3
Store C
Products 1, 2, 4
Store A
Products 1, 3, 4
Sorting by In-Transit Mixing
Plant
Producing
Product 2
Plant
Producing
Product 3
Product 4
Supplier/
Vendor of
Component A
Order Assembly by
Sorting/Sequencing
Manufacturing
Plant 1
Components A,B,C
Order Assembly by Sorting/Sequencing
Supplier/
Vendor of
Component B
Supplier/
Vendor of
Component C
Manufacturing
Plant 1
Components C, B
Manufacturing
Plant 1
Components C,B,A
Warehouse Activities
1. Receive goods
2. Identify the goods
3. Dispatch good to storage
4. Hold Goods
5. Pick goods
6. Marshal the shipment
7. Dispatch the shipment
8. Operate an Information System
Warehouse Activities
1. Receive goods
accepts goods from outside transportation or attached
factory
accepts responsibility for them
it must:
check the goods vs. order / bill
check the quantities
check for damage damage reports
Inspect goods, if required

5. 5
Warehouse Activities
2. Identify the goods
- Stock-Keeping-Unit Number (Part Number)
- Qty receive is recorded
3. Dispatch good to storage
- sorted & put away
4. Hold Goods
- kept in storage, protection
Warehouse Activities
5. Pick goods
6. Marshal the shipment
- goods making up a single order are brought together
& checked for errors. Order records updated
7. Dispatch the shipment
- orders are packaged, shipping documents are
prepared, goods loaded to vehicles
8. Operate an Information System
items record must be maintained (qty on hand,
quantity received, quantity issued & location)

6. 6
Receiving and Shipping Space
Planning
The steps required in determining the
space requirement for receiving and
shipping:
Determine what is to be received and
shipped
Determine the number and type of
docks
Determine the space requirement for the
receiving and shipping area
Receiving and Shipping Space
Planning
Once the number of docks is determined,
the dock configuration must be designed.
The first consideration is the flow of
carriers. Carrier (truck) guideline must be
followed
Receiving and Shipping Space
Planning
Dock Location
Consider these:
1. Labor
requirement for
each facility
2. Material Flow
Pattern
3. Operating
Capacity
4. Energy
Consideration
5. Shipping and
receiving

7. 7
Determining internal receiving and
shipping area requirements
Receiving and shipping may include space
allocations for the following:
Personnel convenience
Offices
Material handling equipment maintenance
Trash disposal
Pallet and packaging material storage
Trucker’s lounge
Material handling equipment maneuvering
Determining internal receiving and
shipping area requirements
Maximizing productivity, minimize cost:
1. Maximum use of space
space largest capital cost
not only floor space cubic space
2. Effective use of labor & equipment
Effective warehouse management:
1. select the “the best mix” of labor &
equipment
2. ready access to all SKUs. Easy to identify
& find
3. move goods efficiently
most activities : material handling

8. 8
Storage Layout Planning
Layout planning objectives:
Utilize space effectively
Provide efficient materials handling
Minimize storage cost while providing
the required level of service
Provide maximum flexibility
Provide good housekeeping
Factors influence effective use of
warehouses:
1. cube utilization & accessibility
2. stock location
3. order picking
4. packaging
Factors influence effective use of
warehouses
– Cube Utilization
Calculating the capacity of the warehouse:
>> AREA ?
NO
VOLUME <<
cube utilization
Warehouse Equipment
Rolling Ladders
Forklift
Hi-Lo
Pallet Jacks
Hand Trucks

9. 9
Warehouse Supplies
Strapping Material
Bubble Wrap
Corrugated cartons
Tape Guns
Shrink Wrap
Pallet ???
Factors influence effective use of warehouses
– Cube Utilization
Warehouse capacity cubic space
Space is required for:
goods
aisles
receiving & shipping docks;
offices,
order picking & assembly

10. 10
Stock Location
Concerned with the location of individual items
in the warehouse
No single universal stock location system
suitable for all occasions
Depends on:
- type of goods stored
- type of storage facilities needed
- size of orders
LIFO and FIFO
LIFO - Last in, first out
FIFO - First in, first out
LIFO and FIFO are terms commonly used
in inventory control, in cost accounting and
in computer science. They all stand for
literally the same phrases, but it means
something different in each application.
LIFO/FIFO-1
In inventory control, they simply mean how
you handle your merchandise.
Do you restock the shelves by pushing the
old items back to make room for new
items of the same kind? Then the last
items stocked will be the first items sold, or
LIFO.
This would be a typical stocking method
for items that have no 'sell-by' date
associated with them, or at least one that
is in the distant future, such as canned
good.

11. 11
LIFO/FIFO-2
Perishable items such as milk and
eggs are restocked from the back, so
that the old items are pushed to the
front and are the first selected by
shoppers; this is a FIFO restocking
method.
This is why most convenience stores
have walk-in coolers behind their cold
displays, so that they can stock from
the rear.
Stock location- grouping
Basic systems of locating stocks:
1. Group functionality related items together
- order picking is easier
- warehouse personnel – familiar with
the items' locations
2. Group fast-moving items together
- placed close to the receiving &
shipping area
- Slower-moving items remote
Stock location- grouping
Basic systems of locating stocks:
3. Group physically similar items together
- frozen products freezer
- small items vs. heavy items
4. Working stock + reserve system
- small quantity close
- remaining items remote
order picking compact area
Stock Location - Individual
Basic systems of assigning specific locations
to individual items:
1. Fixed Location
an SKU is assigned a permanent location(s),
no other items are stored there.
lesser record keeping
for small warehouses
poor cube utilization, why ?

12. 12
Stock Location - Individual
2. Floating Location
goods are stored wherever there is appropriate space
for them
Same SKUs can be stored in
- several locations at the same time
- different locations at different times
(+) improved cube utilization
Needs accurate & up-to-date information on
- item location
- availability of empty storage spaces
- usually computer-based
Stock Location - Individual
Basic systems of assigning specific
locations to individual items:
3. Point-of-use storage
Stored close to where it will be used
JIT, repetitive manufacturing
(+) materials readily accessible
material handling is reduced
central storage cost is reduced
Stock Location - Individual
4. Central Storage
all inventory in one central location.
(+) ease of control
(+) inventory control accuracy
(+) specialized storage can be
used
(+) reduced safety stock, since
users do not need to carry
their own safety stock
Order Picking
Retrieving items on the order from the warehouse,
assembling and preparing for shipment
Systems:
1. Area system
Order pickers circulate throughout the
warehouse
Selecting the items
Taking them to the shipping area
Small warehouse, fixed items location
2. Zone system
- Broken down into zones
- Order pickers work only in their own area
3. Multi-order system
- Zone system + orders are gathered together