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The Storage and Handling System

The Storage and Handling System. “The day soldiers (subordinates) stop bringing you their problems is the day you have stopped leading them.” Colin Powell. Chapter 11. CR (2004) Prentice Hall, Inc. Inventory Strategy. Inventory Strategy. •. •. Forecasting. Forecasting.

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The Storage and Handling System

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  1. The Storage and Handling System “The day soldiers (subordinates) stop bringing you their problems is the day you have stopped leading them.” Colin Powell Chapter 11 CR (2004) Prentice Hall, Inc.

  2. Inventory Strategy Inventory Strategy • • Forecasting Forecasting Transport Strategy Transport Strategy • • Inventory decisions Inventory decisions • • Transport fundamentals Transport fundamentals • • Purchasing and supply Purchasing and supply • • Transport decisions Transport decisions Customer Customer scheduling decisions scheduling decisions service goals service goals Storage fundamentals Storage fundamentals • • The product The product • • • • Storage decisions Storage decisions ORGANIZING ORGANIZING PLANNING PLANNING CONTROLLING CONTROLLING Logistics service Logistics service • • • • Ord Ord . proc. & info. sys. . proc. & info. sys. Location Strategy Location Strategy • • Location decisions Location decisions • • The network planning process The network planning process Storage Fundamentals in Inventory Strategy CR (2004) Prentice Hall, Inc.

  3. The Storage System Except where customer service is a concern: Storage is an economic convenience, not a necessity Reasons for storage Transportation and production costs can be reduced · Better coordination of supply and demand · Storage can be an integral part of the production process · Storage may enhance sales · Storage Functions Holding · Consolidation · Break-bulk · Mixing (merge-in-transit) ·

  4. The Storage System (Cont’d) NoteStorage functions are performed in an attempt to reduce transportation, production, and purchasing costs, which justify their added expense. Storage Space Alternatives Ownership · Leasing · Rental · In - transit · CR (2004) Prentice Hall, Inc.

  5. Balancing the Load on a Public Warehouse 120 Manufacturer A, B, C & D 100 80 Manufacturer A, B & C Percentage of usablewarehouse capacity 60 Manufacturer A & B 40 20 Manufacturer A 0 J F M A M J J A S O N D Time, months CR (2004) Prentice Hall, Inc.

  6. 10,000 lb. A Manufacturer A 8,000 lb. B Manufacturer B 40,000 lb. A B C D 15,000 lb. Customer Consolidation warehouse C Manufacturer C 7,000 lb. D Manufacturer D Consolidation Warehouse Similar to a merge-in-transit facility 11-6

  7. LTL Distribution, Break Bulk, or Pool Point Warehouse Customer A LTL Low rate TL shipment Manufacturer Distribution warehouse Customer B LTL Warehouse may or may not hold inventories Customer C CR (2004) Prentice Hall, Inc. 11-7

  8. Storage Cost Savings Direct shipments to customers 11-8 CR (2004) Prentice Hall, Inc.

  9. Storage Cost Savings (Cont’d) Shipments through a distribution center 11-9

  10. 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 CR (2004) Prentice Hall, Inc.

  11. Materials - Handling Considerations · Load unitization · Space layout · Storage equipment · Movement equipment The Materials Handling System Materials Handling Functions · Loading and unloading · Movement to and from storage · Order filling CR (2004) Prentice Hall, Inc.

  12. Semipermanent storage bay Inbound and outbound A Low Throughput, Holding Warehouse Product CR (2004) Prentice Hall, Inc.

  13. A High Throughput, Distribution Warehouse Semi-permanent storage bay Product C A Replenishment B Order-picking route A Inbound C D Outbound Order picking and product mixing bays CR (2004) Prentice Hall, Inc. 11-13

  14. Storage/Handling Systems • Manual handling system • Forklift truck-pallet system • Conveyorized system • Automated storage and retrieval system CR (2004) Prentice Hall, Inc.

  15. Semipermanent storage bay Product A B C Order-picking route Inbound and outbound Order PickingArea System CR (2004) Prentice Hall, Inc.

  16. Semipermanent storage bay Product A C Replenishment B Order-picking route A Inbound C D Outbound Order picking and product mixing bays Order PickingModified Area System 11-16 CR (2004) Prentice Hall, Inc.

  17. An Automated Warehouse CR (2004) Prentice Hall, Inc.

  18. Leased warehousing Public warehousing Private warehousing, Private warehousing, automated handling pallet-forklift truck handling Cost to company, $ a b c d 0 Annual system throughput, cwt. Economical range for public warehousing. a Economical range for leased warehousing, manual handling. b c Economical range for private warehousing, pallet-forklift truck handling. Economical range for private warehousing, automated handling. d Economics of Storage/Handling Alternatives CR (2004) Prentice Hall, Inc.

  19. Virtual Warehousing • Don’t hold all inventories needed for sale in company’s warehouse • Ship selected items directly from suppliers • Reduces investment in inventories • Requires a first-rate order management system • May require sharing critical information with vendors CR (2004) Prentice Hall, Inc.

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