3/10/2014

1

Warehouse management

(Manajemen Pergudangan)

Week 5

Storage Fundamentals in Inventory

Strategy4-37

PLA

NN

ING

OR

GA

NIZ

ING

CO

NTR

OLL

ING

Transport Strategy

• Transport fundamentals

• Transport decisionsCustomer

service goals

• The product

• Logistics service

• Ord . proc. & info. sys.

Inventory Strategy

• Forecasting

• Inventory decisions

• Purchasing and supply

scheduling decisions

• Storage fundamentals

• Storage decisions

Location Strategy

• Location decisions

• The network planning process

PLA

NN

ING

OR

GA

NIZ

ING

CO

NTR

OLL

ING

Transport Strategy

• Transport fundamentals

• Transport decisionsCustomer

service goals

• The product

• Logistics service

• Ord . proc. & info. sys.

Inventory Strategy

• Forecasting

• Inventory decisions

• Purchasing and supply

scheduling decisions

• Storage fundamentals

• Storage decisions

Location Strategy

• Location decisions

• The network planning process

3/10/2014

2

Why firm need storage and material

handling?11-38

Do firm really need storage and material handling as a part of the Logistics system?

Storage is an economic convenience not a necessity

Inventory to improve supply and demand coordinations warehouse and material handling are needed maintaining inventories

Reasons for storage11-39

To reduce transportation-production costs

To coordinate supply and demand

To assist in the production process

To assist in the marketing process

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3

Transportation-production costs

reductions11-40

Ship Direct

from Plant

Ship through 35

warehouses

Change in

costs

Production costs 500,000 425,000 -75,000

Transportation costs

- To warehouse 0 50,000 50,000

- To local area 250,000 100,000 -150,000

Warehouse costs 0 75,000 75,000

Total 750,000 650,000 -100,000

Coordination of supply and demand

Food, beverage and cigarette

Steel industry

11-41

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4

Production needs

Warehousing may be part of the production

process

Wine, cheeses

Cigarette

11-42

Marketing considerations

Warehousing is needed to deliver rapidly to the

customers and improve customer services (out of

stock)

11-43

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5

Storage functions

Holding

Consolidation

Break-bulk

Mixing (merge in translit)

11-44

Consolidation

warehouse

A

A B C D

B

C

D

Manufacturer A

Manufacturer B

Manufacturer C

Manufacturer D

10,000 lb.

8,000 lb.

15,000 lb.

7,000 lb.

40,000 lb.

Customer

Consolidation Warehouse

Similar to a merge-in-

transit facility

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Storage Cost SavingsDirect shipments to customers

MANUFACTURER

SHIPPING

WEIGHT

(lb.)

LTL RATE TO

CUSTOMER COST

A 10,000 $2.00/cwt. $200

B 8,000 1.80 133

C 15,000 3.40 510

D 7,000 1.60 112

Total $966

Storage Cost Savings (Cont’d)Shipments through a distribution center

MANUFACTURER

SHIPPING

WEIGHT (lb.)

LTL RATE TO

DISTRIBUTION

CENTERTOTAL LTL

A 10,000 $0.75 $75

B 8,000 0.60 48

C 15,000 1.20 180

D 7,000 0.50 35

Total 40,000

DISTRIBUTION

WAREHOUSE CHARGE

TL RATE FROM

DISTRIBUTION

WAREHOUSE TO

CUSTOMER TOTAL TL COST

$10 $1.00/cwt. $100 $185

8 1.00 80 136

15 1.00 150 345

7 1.00 70 112

$778 11-9

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Distribution

warehouse

Manufacturer Customer B

Customer C

Customer A

Low rate TL

shipment

LTL

Distribution, Break Bulk, or Pool Point

Warehouse

Warehouse may or

may not hold

inventories

Distribution

warehouse

Manufacturer B

Customer Y

Customer X

Product B

Product Mixing

Manufacturer A

Manufacturer C

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Warehouse functions

as buffer stock to anticipate fluctuations /uncertainties demands

to consolidate transportations for economic scale

to minimise response time for demand fulfillments

to keep quality and safety of raw material/parts/finished products that are stored

Storage functions are performed in an attempt to reduce transportation, production, and purchasing costs, which justify their added expense.

Storage alternatives

Ownership

Leasing

Rental

In-transit

11-51

3/10/2014

9

Types of Warehouse (types of products)

• raw materials

• finished goods

• supplies

• repair/spare parts

Arnold and Chapman 2008

Types of Warehouse (types of level)

• Main warehouse Consumable Item Storage

Critical item storage

Cool room

• Secondary warehouse Customs Process Storage

Empty basket storage

Chemical Storage

Temporary storage

Lube oil storage

Drilling and Completion Storage

Pipe yard

Case in oil company

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10

Types of Warehouse (flows)

Mixing or consolidation warehouse

Breakbulk warehouse

Drilling and Completion Storage

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Pipe Yard

Manufacturer A

Manufacturer A & B

Manufacturer A, B & C

Manufacturer A, B, C & D

Perc

enta

ge o

f usa

ble

wa

rehouse

ca

pa

city

Time, months

Balancing the Load on a Public

Warehouse

0

20

40

60

80

100

120

J F M A M J J A S O N D

Ballou (2004) Prentice Hall, Inc.

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12

Space Comparison

Ownership alternative

•Less expensive under high utilization

•High degree of control over operations

•Benefits of real estate ownership

•Space may be converted to uses other than storage

Rental alternative

•No fixed investment

•Lower cost under seasonal or low utilization of an owned facility

•Location flexibility

Ballou (2004) Prentice Hall, Inc.

Ballou (2004) Prentice Hall, Inc.

A Low Throughput, Holding Warehouse

Semipermanentstorage bay

Product

Inbound andoutbound

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Semi-permanent

storage bayProduct

Order picking and product mixing bays

Inb

ound

Outb

ound

A

B

C

D

C A

Replenishment

Order-picking

route

A High Throughput, Distribution

Warehouse

Ballou (2004) Prentice Hall, Inc.

END