MBA

WAREHOUSE MANAGEMENT
INTRODUCTION

 Supply chain management (SCM) is the backbone of the retail industry. All other
functions revolve around SCM. Supply chain management is the integration of
business procedures from end consumer through suppliers that offer products,
services and information so that it provides value addition to consumers.

 A supply chain consists of all the parties involved directly or indirectly in

fulfilling a customer request. The supply chain includes not only manufacturers
and suppliers but also transporters, warehouses, retailers and even customers.

 Warehousing is a critical part of the chain of transportation of goods from the

manufacturer to the retail store. Warehousing processes ensure procurement,
distribution and movement of materials up to the point of sale to the customers.
A supply chain is the group of components (suppliers, distribution points,
transportation providers) necessary to bring your product from its raw material state
to the end user.
Supply chain management is the term used for controlling and regulating your supply
chain.
DDC replaces supply chain consultants for the Warehouse / Distribution center piece
of your supply chain puzzle. We will talk to you about your needs, assess your
current warehousing and distribution needs, and make recommendations on how you
can make simple adjustments to save you time and money while increasing your
service levels and efficiency. We even offer transition assistance to help you notify
suppliers, vendors, and clients.
OBJECTIVES

At the end of this unit, you will be able to:

 describe the impact of supply chains on retail

stores and warehousing

 describe retail logistics

 explain retail transportation

 explain the issues involved in retail logistics

 describe the management of retail shrinkage

SUPPLY CHAIN PROCESSES IN NEW PRODUCT DEVELOPMENT

 New product development is a growing area in Chinese manufacturing as

both foreign and local companies develop further strategies for sustained
viability. From Intel in Dalian to Ford in Nanjing, the R&D investment by
foreign firms in the past couple of years has been significant. At the same
time, Chinese companies are building their own capabilities by seeking out
partners with specialized knowledge to help develop operational processes
even further
 The second area we will consider is the application of supply chain processes
into the new product development phase. How can the ideas behind supply
chain theory help companies develop more efficient models of collaboration?
Here we will consider four specific areas, 1. Early Involvement of
Contributors, 2. Creating a Clear Design, 3. Multiple Stages of Quality
Testing, and 4. Understanding the Process of Each Contributor.
COLLABORATION IN NEW PRODUCT DEVELOPMENT SUPPLY
CHAINS

 The answer is to begin supply chain development during the new product
creation phase. As marketing creates forecasted demand figures, and
product engineers play with the design and development, including
integral stakeholders such as the purchasing group and more importantly
suppliers can be a critical step to better understanding both the product
and the supply chain as it unfolds. In retail, potential customers should
also be included to establish stocking and shipping methods.
 A warehousing facility in a location close to larger customers is another
potential solution. In this case, a number of factors should be accounted
for such as existing inventories that could be moved and the impacts on
holding costs, the customers purchasing history, and potential
transportation cost savings.
COLLABORATION THROUGH SUPPLY CHAIN PROCESSES

 After considering the role of supply chain

operations in new product development, let us
turn our attention. By better understanding supply
chain processes, we can now begin to see how
these ideas apply to the development system
itself. Impacts such as lead time, inventory and
costs are all present during product innovation,
but now we are thinking in terms of information
as opposed to material flow
EARLY INVOLVEMENT OF CONTRIBUTORS
 Common models of new product development take a very top
down approach. Engineers and designer produce the product
specifications and send these on to the purchasing depart. This is
slowly changing however. More and more companies are now
involving suppliers or supplier managers to obtain alternative
solutions to common problems. Consider the example of IBM's
new product development. Historically, IBM operated in the old
supply chain model where supplier managers and product
development teams worked in isolation. This created a lack of
information flow between the departments and meant longer
delivery times as communication took longer.
CREATING A CLEAR DESIGN
 When it comes to new product development there are many cases
where clear design frameworks are not established or if they are,
they are not strictly held to. As a result, processes generally take
longer than anticipated, delays impact customer satisfaction, and
costs begin to build. To change this, companies should begin to ask
themselves how can a design framework actually improve each
phase of development? At the same time, an important part of the
process is involving each contributor in the supply chain as the
design develops. What becomes most critical to new product
development is information flow. When we discuss supply chain
design maps, commonly the diagram will include both material and
information flows such as this simple one:
MULTIPLE STAGE OF QUALITY TESTING
 Supply chains consider quality testing at optimal levels to
ensure that defective products are kept at a minimum. As
just one example, Wal-Mart spokesman Kevin Gardner
explains, “product samples are tested systematically before
and during production by third-party testing labs, and our
own quality-control staff conducts product inspections, as
well.” Defective products generally mean poor customer
satisfaction and increased costs due to downtime, inefficient
operating levels, and increased lead times. The same exact
factors impact new product development.
IMPORTANCE OF RETAIL LOGISTICS

The unceasing demands of the retail industry can lead to firms in this sector being
overwhelmed extremely quickly. After all, sales in the sector are constantly rising and falling,
as technology also changes the landscape of how these businesses conduct themselves. For
example, their efforts in delivery need to constantly be re-evaluated and updated – down to
every meticulous detail.
The rulebook is constantly being rewritten each year, and it takes a lot for retail businesses to
keep up! Therefore, both logistics and technology take center stage; they provide some
semblance of stability and cohesion in an industry that is largely wild and unpredictable.
Consequently, here’s a quick insight into the importance of logistics in the retail industry and
how it provides new delivery methods.
 Infrastructure availability
It would be wrong to assume that retail businesses simply dump their
goods in a box and send it out from their store in a little van. Instead,
delivery is a big facet of what makes these firms tick, and there’re many
things to consider; warehouse storage, what fleet vehicles are to be
used, level of inventory, administration, etc. Obviously, there’s a lot of
moving parts, all of which are concerned with how goods are moved.
Not only this, but retail businesses are increasingly paying greater
consideration to the technology of the future too. For example, the
possibility of drones and driverless cars being eventually introduced
into the industry is turning heads, so even now individual firms are
reassessing their business and delivery models to see if they can,
somewhere down the line, seamlessly incorporate these newer
technologies into their procedures.
 Customer data
These days, retail businesses constantly have an eye to the future. They’ll
carry out surveys, look at buying trends and look at customer activity on their
website to accumulate their data. What will our customers eventually want
from us? Are they confident to spend considering current political and
economic factors? Are website bots and AI applications easy for them to use?
How will the markets change in the forthcoming months or years?
Changes in retail delivery can be derived from these lines of enquiry. The way
customers think and behave influences how retail companies get their
merchandise from point A to point B in a smooth transition; from the
conception of a product to the product being in the customers possession.
Technology is used to gauge just how interactive and open a customer will be,
because if their money is close to their chest, then obviously no deliveries will
be made.
 Reducing costs
Technology can be used in logistics to help reduce costs and
improve customer service. For example, companies such as DWF
 provide such services. Their software platform, EvoSuite, uses
market leading risk mitigation software that can help retail
companies make smarter decisions and refine their planning
process. It’s a level of insight unlike no other.
Consequently, retail businesses can get help with their logistics
from elsewhere, using third party technology to boost their
efficiency. Delivery costs can be carefully controlled and
minimized, and customers can potentially get more for less at the
end game.
5 KEY COMPONENTS OF LOGISTICS MANAGEMENT

 Logistics management today is a complex task that involves five inter-linked components
to reduce functional barriers.
 Storage Facilities: proper freight storage in warehouses and distribution centres with
customized care ensures freshness and quality control.
 Accurate Inventory: retailers must stock enough supplies to meet product demands. As
consumer demand changes, stocks need to be upgraded to align with the needs as soon as
possible.
 Transportation: from manufacturing to delivery, products need to be transported in
containers of different sizes and vehicles. The choice of transportation determines costs,
delivery time, and impact on the environment.
 Packaging: packaging plays a big part in attracting consumer interest. Retailers must
ensure that products are well packaged, cost-effective, and easily to handle.
 Communication: inter-communication helps in timely delivery. Retailers need to keep
track of the vehicle, stay updated about weather changes, keep an eye on the volumes,
prices, and movement for operational efficiency.
DIFFERENCE BETWEEN LOGISTICS AND SUPPLY CHAIN

DEFINITION
Logistics Supply Chain

The branch of military science and operations

dealing with the procurement, supply, and
maintenance of equipment, with the A channel of distribution beginning with the
movement, evacuation, and hospitalization of supplier of materials or components,
personnel, with the provision of facilities and extending through a manufacturing process to
services, and with related matters the distributor and retailer, and ultimately to
the consumer
The planning, implementation, and
coordination
of the details of a business or other operation
 PROCESSES

Logistics Supply Chain Management

•Inbound and Outbound Transportation •Procurement

•Warehousing •Supply Planning
•Reverse Logistics (Returns) •Demand Planning
•Protective Packaging •Enterprise Resource Planning
•Fulfillment •Inventory Management
•Manufacturing
•Logistics
•Optimization
 PURPOSE
Logistics Supply Chain Management

The purpose of logistics is to provide just-in- The goal of supply chain management is
time delivery for the primary sake supply chain optimization for the sake
of customer satisfaction. of competitive advantage, as in the most
efficient and cost-effective methods for those
working within a supply chain.
JOB DESCRIPTIONS
Logistics Manager Supply Chain Manager

Job responsibilities for a logistics manager Job responsibilities for a supply chain manage
 include: r
•Managing and planning for logistics policies,  include:
objectives, and initiatives. •Overseeing and managing overall supply
•Creating procedures for logistics chain and logistics operations, to maximize
management to optimize product workflow efficiency and minimize cost.
and minimize cost. •Collaborating with multiple-functional
•Monitoring vendor selection and negotiation, managers to
distribution, transportation, and inventory plan and execute the development of a
control. distribution center operational process to
enable seamless transfers.
•Managing and monitoring vendors'
qualifications and performances to ensure they
meet the company's requirements.
 TECHNOLOGY
Logistics Supply Chain Management
•Transportation Management System (TMS): a logistics •Enterprise Resource Planning (ERP) software:
platform enabling users to manage and optimize daily functions similar to a central nervous system, for a
operations of their transportation fleets business, by collecting information about the activity
•Warehouse Management System (WMS): software and and state of various divisions of the body corporate, and
processes enabling organizations to control and administer making this available to other parts, where it can be
warehouse operations from the time goods or materials used productively and . added, in real-time, by users
enter until they move out •Radio Frequency Identification: the use of radio waves
to read and capture information stored on a tag attached
to an object, which can be read from up to several feet
away, and doesn't need to be within direct line-of-sight
of the reader to be tracked
•Customer Relationship Management (CRM) Software:
a category of software covering a broad set of
applications, designed to help businesses manage many
of the following processes: customer data, customer
interaction, information access, and sales automation
•“Big Data”: extremely large data sets that may be
analyzed computationally to reveal patterns, trends and
associations, especially relating to human behavior and
interactions
ROLE OF WAREHOUSING IN LOGISTICS
 Warehousing is just one part of an effective logistics
management system for businesses, but without it,
businesses are likely to face all sorts of problems.
 A warehouse’s value is sometimes exactly what you
think – for sorting goods and keeping them safe and
secure.
 But equally, there are some less obvious social and
economic benefits to having a warehouse, so they have a
bigger role than you think in the logistics of a business.
 Inventory control
By having a warehouse, it is much easier for businesses to manage a
large amount of inventory. Warehouses can help when a company
needs to match supply with demand in a fast-changing environment.
So if you’re trying to get more organized and improve the success
of your UK logistics, warehousing is a great place to start.
 For economic reasons

Because of their efficient operations, warehouses offer many

economic benefits to businesses, which is a key reason to invest in
one.
Costs such as transportation, outbound delivery and shipping are
massively reduced with a warehouse. Also, by building up products
in a warehouse, as mentioned above, you have a buffer in the supply
and demand of these goods, which can only be a good thing for the
profit of your business.
 Centralising the products
With all its products in one place, a business will have a much
easier time of receiving, storing and distributing its goods.
This also reduces transport costs associated with the business
as staff at the warehouse can organize the goods straight from
the premises, including identifying, sorting and dispatching.
 An emergency buffer

Warehouses have an unusual role in maintaining the integrity

of a business. Why? Because if an emergency strikes, such as
faulty products or delays to transportation, the business has
spare goods in stock to turn to.
 Adding value
Warehousing is just one part of an efficient logistics
system. All goods are kept together in one place, available
to access whenever the time is right. They are there, ready,
for other necessary activities to take place, such as order
consolidation and mixing products. They are also a key
part of the packing and shipment stages of logistics.
 Keeping goods safe

This is a pretty obvious one, but a warehouse’s role is also

to protect a business’s goods. Warehouses have both
security personnel and excellent security technology to
ensure sites can’t be accessed without permission.
 Transportation and Logistics
 Transportation means movement of products from the
beginning of the supply chain to the customer. Transportation
plays a significant role in any supply chain because products
are rarely produced and consumed at the same location. An
object produced at one point has very little value to the
prospective customer unless it is moved to the consumption
point. The success of any supply chain is closely linked to the
appropriate use of transportation. Every company makes use
of different modes and routes of transportation for maximum
profitability.
 Factors influencing Transportation Decision
 There are two key players within any supply chain, one called the shipper and the other
called the carrier.  Shipper is the party that requires the movement of the product
between two points in the supply chain and the carrier is the party that transports the
products for the shipper.
 Factors affecting transportation vary depending on whether one takes the perspective
of a carrier or shipper – A shipper uses transportation to minimize the total cost of the
product to be delivered while providing an appropriate level of responsiveness to the
customer. Whereas a carrier makes investment decisions regarding the transportation
infrastructure and makes operating decisions to try and maximize the return from these
assets.
 Factors affecting decisions of carriers include – Vehicle related costs, Fixed costs, Trip
related costs, Quantity related costs and Overhead costs
 Factors affecting shippers decision include – Transportation cost, Inventory cost,
Facility cost,  Processing cost and Service costs
 Modes of Transport
 Truck Transport – It is one of the most dominant mode of transport. The truck
industry consists of two sectors i.e. TL – Truck load and LTL – Less than truck
load
 Package Carriers – It carry small packages ranging from letters to shipment
weighing about 200-250 kgs.
 Railways – Railways are priced to encourage large shipment over a long distance
 Water Ways – It includes transportation by ships and boats used for bulk products
 Air Transport – includes small packages which are costly and time specific
 Pipeline – used for transport of natural gas, petroleum, oil and water
 Intermodal Transport – It uses more than one mode of transportation eg – truck and
rail
 Transportation network design options
 There are various transportation-network design options that a company may
implement to achieve the desired degree of response and lower costs associated
with it. Types of Design Options –
 Direct shipping – Involves shipping of products from the supplier to all its
retail stores.

 Direct shipping with milk runs – A Miik Run is a route in which a truck either
delivers a product from a single supplier to multiple retailers or goes from
multiple suppliers to a single retailer.
 Shipments via DC (distribution center) – In this type of transportation design network,
suppliers need not send shipments directly to the retailers. Retail chains are divided
into common geographical areas and a centrally located DC is built for each of these
regions. Suppliers then send their shipments to the DC and then the DC transfers the
appropriate shipments to every retailer within its geographical region.

 Shipping via DC using Milk Runs – Milk runs are used from a DC when the lot sizes
to be delivered to retailers are small. Milk runs are most important because they
reduce the outbound transportation costs by consolidating small shipments.

 Customized tailored network – The transportation uses a combination of cross-

docking, milk runs, truck loads and less than truck load carriers, along with package
carriers in some cases.