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Warehouse decesion model
- 1. Warehouse Decision Model Transforming In To Profit Centre Presentation By Keshar Khadka STEi Institute –Singapore Advance Diploma In Logistics And Supply Chain -2017
- 2. Learning Agenda Importance of Effective Warehouse Decision Model Warehouse selection Decision factors Warehouse Selection Decision Model Warehouse Performance Measurement
- 3. Warehousing Benefits Need of effective warehouse Decision model • The warehouse plays the greater role to create usefulness of goods to the from to-end in logistics pipeline. • The benefits realized from the strategic warehousing are classified on the basis of Economic benefits Service benefits
- 4. Warehousing Benefits Economic Benefits Economic benefits Hold & Consolida tions Processin g & Postpone ment Stockpilin g Beak bulk/cros s docking • Economic benefits directly impact on overall profitability as well cost effectiveness of warehouse • These economics benefits can be derived from the successful planning and controlling of warehouse decision model.
- 5. Warehousing benefits Service benefits Spot stock Producti on support Assortm ent /Packagi ng Market presence • Warehouse department is demand driven and provides the various logistics service to other trade partners in logistics pipe line. Service Benefits
- 6. Warehouse Selection –Strategic Decision Warehouse Selection • Warehouse decision making is strategic decision process which allow to allocation and organization of necessary resource that will have long- term impact on over all warehouse operation for any business firm. • How many warehouse do we need? • Where will our warehouse to be located ? • What will be the size and capacity of them?
- 7. Warehouse Selection -Strategic Decision Numbers of Warehouse • How many warehouse should we have? • The cost of warehousing is directly proportional to the Number of warehouse , while the transport cost goes down with an increase in numbers of warehouse.
- 8. Warehouse Selection -Strategic decision
- 9. Warehouse Selection -Strategy Decision Warehouse location selection • Where should we locate the warehouse ? • The planning of new warehouse set up supply chain management have to do cost benefit analysis • Centre of gravity of area . • Market size • Area coverage by each warehouse • Product type • Demand type –continues /seasonal • Customer service level
- 10. Warehouse Decision Model Product type Product characteristics objectives Resources Solid,liquid,gas Value density, logistical reach, Perisbility ,Hazardous Cost reduction, turnover, customer service, Productivity Finance, system, workforce
- 11. Warehouse Decision Model Product Characteristic • For any product, the value density (unit price per unit weight or volume of a product) and logistical reach will influence decision making on investing in a warehouse facility. • For example, investment in a storage facility is justified for products such as computers, jeweler, luxury goods where the unit price is high, the logistic reach is wide and distribution centers are limited in numbers. • Due to high margins and shorter payback period the heavy investments are justified.
- 12. Warehouse Decision Model Warehouse objective • Objectives have to be clearly defined. • Volumes will justify private warehouses while seasonality will justify public or contract storage places. • For customer satisfaction through reliable delivery, investment in material handling and information processing system is justified.
- 13. Warehouse Decision Model Resource Finance, system & Competency Private PublicContract Strategic -Layout -Handling equipments -Storage system Tactical -Storage allocation -order picking - order packing Operational -Work allocation -Job scheduling -Performance -Monitoring Warehouse Facility Planning Decision Warehouse Networks
- 14. Warehouse Decision Model Strategic Decision Strategic Decision • Layout • Handling equipments • Storage System • Strategic decisions are solely dependent on the objectives, available financial resources, ROI and pay back period. • These decisions will have a long-term effect and help in developing competitive advantage.
- 15. Warehouse Decision Model Tactical Decision Tactical Decision • Storage allocation • Order picking • Packing • Tactical decisions will have an effect on the warehouse performance parameters such as. • Reduction in the order processing cycle • Efficiency in material handling • Packaging to reduce product damages • Reducing customer complaints and enhancing the customer satisfaction level.
- 16. Warehouse Decision Model Operational Decision Operational Decision • Work allocation • Job scheduling • Performance monitoring • Operational decisions will bring efficiency in the warehouse operations and will help in reducing the operation cost.
- 17. The Warehouse Performance Measure • The most common parameters that indicate the efficiency and effectiveness of warehouse operations are: • Stock Turn-Over Ratio • Warehouse Cost-to-Sales Ratio • Warehouse Cost per Unit Handled • Occupancy rate of Warehouse Space
- 18. The Warehouse Performance Measure Stock Turnover ratio • This is a ratio of value of sales volume in a given time to value of stocks in that period. • The more you turn out the stocks, the better the efficiency and effective utilization of warehouse space
- 19. The Warehouse Performance Measure Cost –to sales Ratio • This ratio has a direct link with the throughput of a warehouse or goods handled. • Higher the volumes, lower will be the fixed cost of operations, which is distributed over the number of units dispatched. • A lower ratio indicates the efficiency of a warehouse.
- 20. The Warehouse Performance Measure Warehouse Cost per Unit Handled: • The ratio indicates the total warehouse cost incurred divided by the number of pallets or boxes handled during the period. • The higher ratio indicates the lower throughput or lower material handling efficiency of warehouse operation
- 21. The warehouse Performance Measure Occupancy rate of Warehouse Space: • This ratio indicates the actual space used as a percentage of available warehouse storage space available throughout a year. • The average of the ratios taken periodically throughout the year will indicate the occupancy rate.
Editor's Notes
- Under this concept, a selected amount of firm’s product line is placed or ‘spot stocked’ in a warehouse to fill customer orders during a critical marketing period. Suppliers of agricultural products to farmers often use spot stocking to position their products closer to a service-sensitive market during the growing season. Assortment warehouse which may be utilized by a manufacturer, wholesaler, or retailer- stock product combinations in anticipation of customer orders. The assortments may represent multiple products from different manufacturers or special assortments as specified by customers. In first case, for example, an athletic wholesaler would stock products from a number of clothing suppliers so that customers can be offered assortment A Warehouse sometimes is used as a product mixing point for a company having a number of plants manufacturing different ingredients, which are mixed at a convenient place to make final products. Production support warehousing provides a steady supply of components and materials to assembly plants. Safety stocks on items purchased from outside vendors may be justified because of long lead times or significant variations in usage The market presence factor is based on the perception or belief that local warehouses can be more responsive to customer needs and offer quicker delivery than more distant warehouses. As a result, it is also thought that a local warehouse will enhance market share and potentially increase profitability.