Discussion Board Q's Chapter 14-20
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David_IL_5e_Chapter15.pptxChapter 15 International Warehousing
International Warehouses and Distribution Centers
Warehousing Functions
Location Decision
Warehouse Ownership
Warehousing Activities
Warehousing Layout Options
Warehousing Security
Warehousing as a Marketing Tool
Warehousing Functions
Warehousing has three functions:
Inventory holding
Absorb differences in seasonal sales or input availability
Prevent disruptions in supply chain
Support marketing activities
Shipment consolidation
Goods manufactured in different locations can be shipped to a single customer from a warehouse
Additional services
After-sale services, warranty, repairs, labeling, re-packaging, for example.
Location Decisions
A warehouse location decision is based on an analysis conducted at three separate levels:
A national or regional level
A municipal level
A parcel or building level
Location Decision: National Level
To determine which country or region of the world, companies consider:
Infrastructure of the country (access to means of transportation, utilities, business services)
Environment of the country (labor-force availability and training, costs, currency strength, overall political support of foreign investments)
Culture of the country (management style compatibility with culture)
Location Decision: Municipal Level
To determine the city or general area, a company considers:
The local infrastructure (access to highways, railroad, ports, airports, utilities, freshwater, sewer)
The environment (local labor pool availability and training, quality of local schools, affordability of housing for employees, existence of a network of public transportation)
The local political environment (local authorities’ support for foreign investment, taxation, operating costs)
Location Decision: Parcel Level
To determine the actual parcel or building to consider for a warehouse, a company considers:
Operating costs (costs of acquiring land or building, construction costs, taxation, road access)
Employee support (public transportation, proximity of child-care facilities, proximity to housing)
Facility quality (building fundamentals, utilities, drainage, room for expansion, parking spaces)
Companies have to consider many factors in a location decision.
A warehouse location with access to water, rail, and road transportation in Turkey.
Warehouse Ownership
Warehouses can be of three types:
A public warehouse rents space to any company seeking it, and the warehouse operates using its own employees and systems. For the user, a public warehouse is a variable cost.
A contract warehouse is owned by the company using the space, but managed by another company that uses its own employees and systems to manage it.
A private warehouse is owned and operated by the company using it, and it employs its own personnel and uses its own systems.
Warehouse Activities
Warehouse activities can be divided into five broad categories:
Receiving
Storage
Picking
Packaging and Shipping
Other Operations
Warehouse Receiving
Chronologically, the first activity in a warehouse.
The supplier should be informed of:
The correct pallet size so that goods do not need to be transferred from one pallet to another
The markings and other labeling requirements of the warehouse
The time at which goods can arrive
Warehouse personnel then inspect goods on arrival, and check quantities against the purchase order, before placing the goods in storage.
Warehouse Storage
Storage is the most significant aspect of a warehouse. Goods can be placed:
On the floor of the warehouse, in small stacks
On low racks
On high racks
On rolling racks
On vertical racks
Several less common options can also be used.
Pallets placed directly on the floor of a warehouse and stacked.
Some goods should not be stacked. Some are, though, by simple negligence.
A warehouse with low-height wide-aisle storage racks.
A warehouse with high-bay narrow-aisle storage racks.
A very-high-bay warehouse under construction.
A high-density movable rack system in a library.
A rolling-rack system for small parts.
A warehouse with a automated storage and retrieval system (ASRS).
Vertical carousel storage alternatives for small parts.
Warehouse Picking Strategies
Warehouse picking involves retrieving the items that a customer purchased from the shelves.
There are two main strategies:
A goods-to-picker strategy has an automated system bring the goods to the picker for retrieval.
A picker-to-goods strategy has the picker sent to the goods’ location to retrieve them.
Kiva robots bring pods to the picker, in an automated goods-to-picker Amazon warehouse.
A horizontal carrousel brings the goods to the picker.
A picker retrieving goods from storage in a picker-to-goods warehouse.
Warehouse Picking Methods
In a picker-to-goods strategy, there can be several alternative methods:
“Pick by order” where the picker picks one order at a time, not unlike what a shopper does in a supermarket
“Cluster picking” where the picker picks multiple orders at a time, filling several carts or totes for different orders
“Batch picking” where the picker picks multiple orders at a time but commingles them in one cart, to be sorted later
“Zone picking” where the picker is responsible for picking goods from an area of the warehouse for all orders; the items are then separated by order later on
Warehouse Picking Techniques (I)
In a picker-to-goods strategy, a warehouse can use several techniques:
The “paper list” technique is simply a printed list given to the picker
The “label picking” technique is a paper list where each label corresponds to an item, decreasing the probability that the picker will forget an item
The “barcode picking” technique uses an electronic display on which the picker sees the next item to be selected, which the picker confirms by scanning the barcode of the item.
Warehouse Picking Techniques (II)
The “voice picking” technique utilizes a headset and an artificial voice to tell the picker what item needs to be selected. The picker confirms the item either with a barcode scanner or by repeating the item into a microphone. The computer records the selection with voice-recognition technology.
The “light picking” technique uses a light display to tell the picker which item to select and in which quantity.
A picker retrieving multiple orders using a paper list in a cluster-picking warehouse (several orders picked at once).
Label picking at Lands End: the top label identifies the item that the customer ordered, and the picker placed it there. The bottom label is the identification of the item, placed by the manufacturer.
Barcode picking: the forklift operator reads the display that instructs him of the next pick, which he confirms with the barcode scanner on the right.
Voice picking: the headset tells the picker the item and the quantity, and the picker confirms his selection by voice.
Light picking: the display tells the picker the location of the pick and the quantity needed.
Warehouse Packaging and Shipping
Chronologically, the last warehouse operation.
The packer selects the correct packaging, its size, and the packing materials so that the goods arrive at their destination without damage.
The shipping department determines the correct carrier for the goods, ensuring they are sent to their destination according to the preferences of the customer (lowest cost or lowest transit time).
Packaging the goods before shipment.
The shipping area where packages are staged before being loaded.
Warehouse Other Operations
Warehouses frequently perform other operations:
Warranty claims processing
Returns
Kitting (creating a kit with parts from several vendors)
Light assembly
Value-added services, such as repackaging or adding instruction booklets in retail packages
Some light assembly or kitting being performed in a warehouse.
Warehouse Layout Options
Warehouses include two different areas:
Fixed areas, such as receiving, packaging and shipping, and ancillary services, which are sized to accommodate the anticipated business volume
Storage areas that are designed in function of the mix of products that the warehouse handles (their size or value) and in the types of orders that it processes (small packages or full pallets).
Warehouse managers organize their storage areas according to variations of the A-B-C rule.
A-B-C Rule
The A-B-C rule distinguishes between three types of products:
The A class is made up of 20 percent of items, but they represent 80 percent of costs
The B class is made up of 30 percent of items, representing 15 percent of costs
The C class is made up of 50 percent of items, representing only 5 percent of costs
Warehouse managers re-interpret this rule to apply to volume of goods, to value, to order size, and other measures that allow them to organize their storage area most efficiently.
Warehouse Security
The two primary security concerns in a warehouse are theft and physical damage to the goods during handling:
Theft can be prevented by screening all employees and visitors and by implementing processes that reinforce security; one employee unloads a truck, another counts the goods.
Physical damage to the goods can be reduced with good maintenance practices (cleanliness, lights, equipment upkeep) and with proper training of employees.
Warehouses as a Marketing Tool
Warehouses reduce lead times and allow a company to provide faster delivery to its customers
Warehouses can provide value-added services to customers.
Warehouses are an integral part of the international supply chain.
