Warehousing Decisions

The Role of the Warehouse in the

Logistics System: A Basic Conceptual
Rationale
 Functions of
 The warehouse is
where the supply warehousing include:
 Transportation
chain holds or stores consolidation
goods.  Product mixing

 Cross-docking

 Service

 Protection against

contingencies
 Smoothing

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Table 8-1
Warehouse Value-Adding Roles

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Transportation Consolidation

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Supply and Product Mixing

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Basic Warehouse Decisions:
A Cost Trade-off Framework
 Ownership
 Public versus contract versus private

 Centralized or Decentralized Warehousing

 How many

 Location

 Size

 Layout

 What products where

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Basic Warehousing Decisions

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The Ownership Decision
 Factors to consider
 Throughput volume

 Stability of demand

 Density of market area to be served

 Security and control needs

 Customer service needs

 Multiple use needs of the firm

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The Number of Warehouses
 Factors Affecting the
Number of Warehouses
 Inventory costs

 Warehousing costs

 Transportation costs

 Cost of lost sales

 Maintenance of

customer service levels

 Service small quantity

buyers

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 Factors Affecting the Number of
Warehouses
Factor Centralized Decentralized
Substitutability Low High
Product Value High Low
Purchase Size Large Small
Special Warehousing Yes No
Product Line Diverse Limited
Customer Service Low High

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Basic Warehouse Operations
 Movement
 Receiving

 Put-away

 Order picking

 Shipping

 Storage
 Stock location

 Warehouse Management System

(WMS)
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Basic Warehouse Operations

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The Computerized Warehouse

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Warehouse Layout and Design
 Develop a demand
forecast.
 Determine each item’s
order quantity.
 Convert units into cubic
footage requirements.
 Allow for growth.
 Allow for adequate aisle
space for materials
handling equipment.

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 Warehouse Layout and Design
 Provide for the
transportation interface.
 Provide for order-
picking space.
 Provide storage space.
 Provide recouping,
office, and
miscellaneous spaces.

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Warehouse Space Requirements

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Principles of Warehouse Layout
Design

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Warehouse Layout and Design
 Basic needs:
 Receiving

 Basic storage area

 Order selection

and preparation
 Shipping

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 Warehouse Layout and Design
 Layout and Design Principles:
 Use one story facilities

where possible.
 Move goods in a straight-

line.
 Use the most efficient

materials handling
equipment.
 Minimize aisle space.

 Use full building height.

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Warehouse Layout and Design:
Layout and Design Objectives

 Cubic capacity
utilization
 Protection
 Efficiency
 Mechanization
 Productivity

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Warehouse Productivity Metrics
 Rs or units per day
 Employees per Rs moved
 Rs unloaded per hour
 Rs picked per hour
 Rs loaded per hour
 Percentage of orders correctly filled
 Productivity ratio = Rs handled/day divided by
labor hours/day
 Throughput = amt of material moved through the
system in a given time period

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 Materials Handling
 Definition: Efficient short distance movement
in or between buildings and a transportation
agency.
 Four dimensions
 Movement

 Time

 Quantity

 Space

 Coordination
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Objectives of Materials Handling
 Increase effective capacity
 Minimize aisle space
 Reduce product handling
 Develop effective working
conditions
 Reduce heavy labor
 Improve logistics service
 Reduce cost
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Utilization of a Warehouse’s Cubic
Capacity: Principles of Warehouse Layout
Design

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Packaging
 Interest in packaging is widespread
 Logistics

 Warehousing

 Transportation

 Size

 Marketing

 Production

 Legal

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The Role of Packaging
 Identify product and provide information
 Improve efficiency in handling and
distribution
 Customer interface
 Protect product

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What Is Packaging?
 Consumer packaging
 Marketing managers primarily concerned with

how the package fits into the marketing mix.

 Industrial packaging
 Logistics managers primarily concerned with

efficient shipping characteristics including

protection, ability to withstand stacking when
on a pallet, cube, weight, shape and other
relevant factors.

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Packaging Materials
 Basic considerations include:
 Soft materials

 Plastic

 Environmental issues

 Recycling (reverse logistics)

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Table 8-6
Comparison of Cushioning Materials

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Bar Coding
 Standard markings that can be read by automatic
or handheld scanners that allow for labor saving
logistical activities for all supply chain members.
 Bar Codes contain information regarding:
 Vendor

 Product type

 Place of manufacture

 Product price

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