FreeQuality.org Training Presentation Consolidation Warehousing Burke Alder November 29, 2005 BYU...
-
Upload
melinda-goodwin -
Category
Documents
-
view
214 -
download
1
Transcript of FreeQuality.org Training Presentation Consolidation Warehousing Burke Alder November 29, 2005 BYU...
FreeQuality.orgTraining Presentation
Consolidation Warehousing
Burke AlderNovember 29, 2005
BYU Marriott School
Consolidation Warehousing
• Definition
• Brainstorming Exercise
• Nuts and Bolts
• How it Works
• Tools of consolidation warehousing
• Benefits
• Real World Example
Outline
Consolidation Warehousing
• An Exercise
• Summary
• Reading List
Outline - continued
Definition of Consolidation Warehousing
What is consolidation?
The merger of two or more commercial interests or
corporations.*
*dictionary.com
What is warehousing?A place in which goods or merchandise are stored;
a storehouse.*
Definition of Consolidation Warehousing
• Pulls together shipments
• Same geographical area
• More economical shipping loads
*Bozarth and Handfield, Intro to operations and supply chain management, pg 344
Brainstorming Exercise
How can you use Consolidation Warehousing in your organization?
Consolidation Warehousing – Nuts and Bolts
• Increase global expansion• Meet demand for increased customization of orders• Decrease costs of distribution activities
The goal of many organizations today
Consolidation Warehousing – Nuts and Bolts
• Duplicate or excessive inventories across network • Changing market conditions • High costs to operate multiple facilities*
*www.warehousing.cc
Reasons for Warehouse Consolidation
Consolidation Warehousing – Nuts and Bolts
• Redundancies in network due to acquisition • Ability to leverage automation technology with higher consolidated volume*
*www.warehousing.cc
Reasons for Warehouse Consolidation
Consolidation Warehousing – Nuts and Bolts
“For over 10,000 systems, consolidation into a
single warehouse system was always found to
be optimal.”*
*Wei-Shi Lim; Ou; Chung-Piaw Teo, Operations Research, pg 668
The Solution
Consolidation Warehousing – How it works
Without (CW): Direct Process Problems
1. Cost
2. Time Efficiency
3. What a mess
Shipments in…
…Shipments out
Consolidation Warehousing – How it works
Diagram of (CW) Process
Small shipments in…
…large, economical shipments out
Tools of Consolidation Warehousing
• Warehousing Management Systems (WMS)
Ex. Microlise
• Hand Held Terminals
• Vehicle Mounted Terminals
• Just In Time Inventory
Benefits of Consolidation Warehousing
• Reduction in order processing • Reduction in systemwide inventory
costs • Key Component of the logistic strategy
*Wei-Shi Lim; Ou; Chung-Piaw Teo, Operations Research, pg 668
Benefits of Consolidation Warehousing
• Increased efficiencies• Loads from multiple customers
combined • Higher productivity
*Wei-Shi Lim; Ou; Chung-Piaw Teo, Operations Research, pg 668
Consolidation Warehousing Real World Example
Matthew Clark is the largest independent wholesaler serving the
pubs, club, hotels and restaurants of the UK. The business
regularly delivers to over 20,000 accounts, ranging from small
single operations to some of the largest and most familiar national
accounts.
Consolidation Warehousing Real World Example
Company:
Situation: Decision to consolidate its warehouse operations into one national site.
Do the benefits justify the costs?
Consolidation Warehousing
First Step: Consolidated warehouses to one new national distribution center.
Consolidation Warehousing
Second Step: Use (WMS) tools• Hand Terminals• Vehicle Mounted Terminals
• Software Microlise
Consolidation Warehousing Real World Example
Success
• Increase to 98% Customer Service
• More flexibility within system
• Increased Visibility of Stock
• Reduced Stock Holdings
Consolidation Warehousing - Exercise
Customer Shipment Weight
Bob's Copy Paper 300 boxes, plain white paper 5,000 lbs.
Dave's Exercise Bikes 200 bikes, 15 lbs a piece 3,000 lbs.
Jonny's Relax BeanBags 400 bags 2,000 lbs.
Total: 10,000lbs
Big Hope Logistics handles shipments from businesses in the Portland area. Big
Home has three shipments to deliver to the Houston area:
Info about each method of shipping (Direct Method)
Max load per truck is 20,000 lbs.
Direct shipping for each customer costs $2,000, or total of $6,000
Weight Utilization across all 3 trucks is 10,000/60,000 or 17%
Next Page
Consolidation Warehousing – ExerciseInformation if Big Hope uses (Consolidation Warehousing)
Benefits of consolidation are that loads of different customers can be combined
into one truck.
Cost of consolidation below:
Cost of running warehouse is $90 per 1,000 lbs., or in logistics lingo, $9 per
hundred-weight
Cost of breaking up shipments is $200 for each customer
Under these conditions calculate the cost of the direct method vs. the
consolidation method.
Which one is best business decision?
What is the weight utilization of the consolidated shipments?
Consolidation Warehousing - Summary
• New trend in global logistics management
• Reduces inventory costs
• Helps improve the bottom line
• Increases customer satisfaction
Consolidation Warehousing - Reading list Wei-Shi, Lim. “Inventory Cost Effect of Consolidating Several One-Warehouse Multireatailer systems”
Operations Research Jul/Aug 2003 ABI Inform Global. ProQuest Direct .
Harold B.Library, Brigham Young University, Provo Utah. 21 Nov 2005
<http://www.um.com/proquest/>.
Unknown. “Warehouses That Think With Their Hands”
Frontline Solutions Europe; Feb2000, Vol. 9 Issue 1, p24, 1p,
30 Sep 2005 ABI Inform Global. ProQuest Direct .
Harold B.Library, Brigham Young University, Provo Utah. 17 Nov 2005
<http://www.um.com/proquest/>.
Macklin, Gary. “Glazier Consolidates Warehouses Operations” Refrigerated Transporter; Feb2005, Vol. 40
Issue 9, p14-17, 4p ABI Inform Global. ProQuest Direct . Harold B. Lee Library, Brigham Young
University, Provo Utah. 21 Nov 2005
<http://www.um.com/proquest/>.
Consolidation Warehousing - Reading listPearson Specter, Sara. “Warehousing Giants” Modern Materials Handling; Oct2004, Vol. 59 Issue
10, p29-31 ABI Inform Global. ProQuest Direct .
Harold B.Library, Brigham Young University, Provo Utah. 18 Nov 2005
<http://www.um.com/proquest/>.Cecil C. Bozarth and Robert B. Handfield, Intro to operations and supply chain management, pg 344
“Defintions.” Homepage. 17 Nov 2005 <http://www.dictionary.com/>.
“Consolidation Warehousing.” Homepage. 21 Nov 2005<http://www.warehousing.cc/>.