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Warehousing & inventories. Definitions. Warehouse - is a building or a land area used for the storage and security of goods and raw materials. Warehousing - an activity that includes storing, securing and managing of raw materials, or goods in a warehouse.
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Definitions • Warehouse- is a building or a land area used for the storage and security of goods and raw materials. • Warehousing- an activity that includes storing, securing and managing of raw materials, or goods in a warehouse. • Cross-docking-is the action of unloading materials from an incoming truck or rail car and immediately loading these materials in outbound trucks or rail cars, thus eliminating the need for warehousing.
Main warehousing phases are • Receiving- includes providing the assurance that the quantity and quantity of materials are as ordered, as well as processing the receipts of all materials coming into warehouse and repacking in order to increase storage-cube efficiency. • Storage- includes placing of coming good and materials in storage, material handling, location verification. • Order picking- includes picking of goods from storage, packing and accumulation of distributed picks into complete orders • Shipping- includes checking of the order completeness, preparing shipping documents, choosing the carrier and preparing goods for loading.
Warehousefunctions • Goodsinwards, • Reservestorage, • Replenishment, • Order picking, • Sortation, • Secondarysortation, • dispatch
Material flow in warehouse can be organized as follows: • U- shape (see picture below)-when materials enter and exit warehouse at the same side of the facility • Straight-thru (see picture below)- when materials is enter and exit warehouse at the opposite side of the facility • Multistory flow pattern- when in order to save space goods are stored at different level in warehouse.
Advantages: • good utilization of dock resources e.g. dock doors, equipments and space • easy cross-docking operations • good truck utilization due to the closest location of receiving and shipping docks especially essential by fast moving goods handling • high security because entry and exit is at the same side.
Advantages: • fast flow of materials thru warehouse • reductions of congestion of reviving and shipping operation due the fact that they are executed at separate side of a facility • can be used for cross-docking operation
barcodes • Barcode symbol – Dark bars or stripes (some narrow some wide) printed side-by-side on merchandise and other items. Each bar represents a number, and together they represent a code that can be read by machines called bar code readers or scanners (such as those used at supermarket checkout counters). The data read by the reader is passed on to a computer which matches the code with the stored information such as the item's name, price, size, quantity in stock. Out of about a dozen internationally-recognized bar code symbologies, the four most common are Universal Product code (UPC), and its newer European Article Numbering (EAN) version called UPC/EAN-128 (both used in retail industry), and Code 39 and Interleaved 2 Of 5 (both used in most other industries).
Barcode reader (scanner) – Electronic device that scans a barcode by shining a laser beam on it. Barcode readers (unlike magnetic-stripe readers) are 'non-contact' automatic data capture devices, operate only at short distances (a few inches), and (unlike in radio frequency identification) do not provide 'out of line of sight' reading. Also called barcode scanner or just scanner. • RFID (Radio Frequency Identification) Automatic identification of packages, products, machinery, etc., through attached transponders. RFID provides 'out of line of sight' identification, and at distances much greater than that can be scanned by barcode readers.
Bar code structure: • Country number – 3 • Coding organization number – 4 • Individual item number – 5 • Check-point -1 Start/6 data signs/’coma’/6 data signs/stop
BARCODES - USE EDI – using computers and the net to exchange information customer supplier
The bar-code differ on account of their use: • EAN 13 (European Article Number): main code, • EAN 128: gives additional data concerning serial number, date of manufacturing etc. What are the advantages of bar codes?
Materials handling- a way in which materials are moved through the warehouse area. • Materials handling equipment- is all kind of equipment that is used for movement, storage and control of materials and goods in warehouse.
Handling in warehouse has a major impact on how effectively materials flow through the logistics system. It has big influence on the cost, resource and time needed for order completion. Handling equipment is very often capital-intensive but reduce the labor-intensive activities in warehouse. Moreover there is a number of goods to have to be moved manually.
There is a number of methods that are used for handling materials in warehouse. Among the most common are: • manual handling – done by hand without usage of any special equipment • manually operated trucks and trolleys (see table below), • operator-controlled and driven power trucks (see table below), • driverless and computer-controlled power trucks and trolleys • crane systems (see table below) • conveyors (see table below)
Summary Warehousing management takes 3 factors into consideration: • Space • Equipment • Organization.
Definitions • Inventories – goods or materials held available in stock • Inventory management – specifying the size and placement of stocked goods. The scope of inventory management includes the following issues: replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting. • Delivery cycle – time period between acceptance of an order and final delivery of the product.
Buffer/safety stock – stock kept to ensure continuity of processes • Anticipation stock – extra stock for periods of forecasted increased demand • Pipeline stock – goods still in transit or in the process of distribution • Raw materials - materials and components scheduled for use in making a product. • Work in process, WIP - materials and components that have begun their transformation to finished goods • Finished goods - goods ready for sale to customers • Forecasting – assessing or calculating future demand
stock 1. ………. 2. ………. time 3. ………. Inventories rotation Information stock – a level of stock at which ordering some goods is recommended Safety stock – a level of stock lower than information stock Delivery cycle – time period between acceptance of an order and final delivery of the product
Paretoanalysis • Pareto analysis (sometimes referred to as the 80/20 rule and as ABC analysis) is a method of classifying items, events, or activities according to their relative importance. It is frequently used in inventory management where it is used to classify stock items into groups based on the total annual expenditure for, or total stockholding cost of, each item. Organisations can concentrate more detailed attention on the high value/important items. Pareto analysis is used to arrive at this prioritisation.
Theprecise shape of a Pareto curve will differ for any analysisbut the broad shape remains similar - following 'the 80/20 rule'. Vilfredo Pareto was a 19th century economist who observed that 80% of Italy's wealth was owned by 20% of the population. • The alternative term ABC analysis stems from the fact that the first 20% of important items are known as Category A items, the next, typically 40% are Category B items and the relatively unimportant, though larger in number, 40% are Category C items. • Close control is more important for fast moving items with a high unit value. Conversely, for slow moving, low unit value items the cost of the stock control system may exceed the benefits to be gained and simple methods of control should be substituted. • Taking inventory as an example, the first step in the analysis is to identify those criteria which make a significant level of control important for any item. Two possible factors are the usage rate for an item and its unit value. • These two factors can be multiplied to give the annual requirement value (ARV) - the total value of the annual usage.
If the stock items are then listed in descending order of ARV, the most important items will appear at the top of the list. If the cumulative ARV is then plotted against number of items then a graph known as a Pareto curve is obtained. • In this case, typically, the first 20% of items in the list will account for approximately 80% of cumulative ARV. For a company with a stock list of 1,000 different items this means that paying more attention to the top 200 items (with a sophisticated stock control system) will give close control of about 80% of total stock investment. • The next, say, 40% of items, will, typically, account for a further 15% of cumulative ARV. These can be subject to less precise control methods. • The last 40% of (low value of low usage) items then account for a mere 5% of ARV and can be controlled with a simple system.
