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Chapter 8: Storage and Handling

Chapter 8: Storage and Handling. Also Chapter 12 pp. 470-475 Warehousing Purposes Warehouse Alternatives Public, Private, Direct Materials Handling Costs Warehouse Layout Order Picking. Inventory. Inventory (storage) is movement in time. Transportation is movement in space.

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Chapter 8: Storage and Handling

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  1. Chapter 8: Storage and Handling Also Chapter 12 pp. 470-475 • Warehousing Purposes • Warehouse Alternatives • Public, Private, Direct • Materials Handling • Costs • Warehouse Layout • Order Picking

  2. Inventory • Inventory (storage) is movement in time. • Transportation is movement in space. • Inventory cost is 2nd largest component of logistics cost. • Generally 10-40% of total. • $328 billion in U.S. in 2001 • Large companies have billions of $ in inventories. • Nearly all logistics cost savings since 1987 have been from reduced inventories!

  3. Why Store Goods? • Economies of scale in production & transportation. • Coordinate supply and demand. • Seasonal products. • For example: 60% of toys are sold in holiday season. • Note: <5% of toys are produced in U.S. • Speculation. • Feb. 2002 - Ford wrote off $1 billion in precious metals. • Customer service. • Part of production.

  4. Warehouse Purposes • Holding inventory. • Safe storage of goods. • Transshipment. 1. Consolidation. 2. Breakbulk. LTL LTL TL LTL TL LTL

  5. Warehouse Purposes - cont. • Transshipment. 3. Mixing. TL LTL

  6. Velocity • Cycle time and transit time are decreasing. Cycle TimeTransit Time 1990 83 hrs 54 hrs 1995 58 hrs 41 hrs 2000 49 hrs 37 hrs • Turnover ratios are increasing. Plant Field Warehouse Warehouse 1990 8.8 8.9 1995 10.7 9.4 2000 11.2 10.2

  7. Warehouse Alternatives • Direct shipping (no warehousing). • Private warehousing. • Better control, Special needs, Future use of space. • High fixed cost, Constant size and location. • Public warehousing. • Inexpensive for small amounts, Can vary size and location, Can provide additional services (customs,etc.). • Less control. • Combination of public and private. • Storage in transit.

  8. Products & Warehouse Alternatives Private Public Direct Durable goods 67% 20% 13% Food products 57% 31% 12% Paper 65% 10% 25% Chemical 40% 38% 22% Automotive 86% <10% <10% Electronics 84% <10% <10%

  9. Materials Handling • Loading and unloading. • Movement to and from storage. • Order picking. • Economies of scale: Larger loads are more efficient. • Pallets: 40” x 48” x 6” • Slipsheets: 40” x 48” • Containers: 8’ x 8’ x 20’, 8’ x 8’ x 40’ • Containers also function as warehouses.

  10. Materials Handling Equipment • Hand trucks. • Forklifts. • Automated systems: • Conveyers, Draglines, Automatic guided vehicles. • ASR (Automated storage and retrieval systems). • Container handling. • Expensive special purpose equipment. • Bulk handling (coal, grain, etc.) requires special equipment.

  11. Warehouse Costs FixedVariable • Public 1 5 • Leased 2 4 • Private - Manual handling 3 3 • Private - Pallet/Forklift 4 2 • Private - Automated 5 1 • 1 = lowest cost

  12. Warehouse Costs Public Private - Manual handling Private - Automated Total Cost cwt Handled

  13. Warehouse Costs Public Private - Manual handling Private - Automated Total Cost Use Private - Manual handling Use Private - Automated Use Public cwt Handled

  14. Warehouse Layout • Divide floor space into areas for storage, aisles, packing, offices, etc. • Tradeoff: • Ease of handling vs. Utilization of space. • Minimize handling and maximize space utilization. • Storage Layout for low turnover items. • Narrow aisles, wide and deep storage, high shelves. • Layout for order picking. • Wide aisles, easy access to products. • Guidelines on pp. 447-455 (Chapter 12).

  15. Combination Layout • Have one area for order picking with small amounts of fast moving products. • Have another area for storage. receiving inbound Longer term storage Longer term storage shipping Longer term storage outbound offices

  16. Order Picking Strategies • Minimize travel time/distance in warehouse to fill orders. • Sequence items for single pass order picking. • Zoning: Divide stock into separate zones for different pickers. • Divide order into sub-orders for each zone. • Batching: Collect several orders and fill in one pass. • Interleaving: Replace stock and fill orders on same pass.

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