Supply Chain Management 12e - LO3 - Role of Warehouses PDF

Supply Chain Management, 12e LO3: Role of Warehouses Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Ceng...

Supply Chain Management, 12e LO3: Role of Warehouses Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1  Learning Objectives 3.1 The role and functionality of distribution facilities 3.2 Warehouses by role in the SCM 3.3 Value added role warehouses play in SCM 3.4 Key distribution tradeoffs and challenges 3.5 Distribution planning and strategy 3.6 Warehouses features 3.7 Warehouse design layout ( tips for designing a warehouse) 3.8 Distribution execution and metrics 3.9 Distribution technology Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2  The Role and Functions of Distribution Facilities  Warehouse is a facility in the supply chain to consolidate products / materials to reduce transportation cost, achieve economies of scale in manufacturing or in purchasing or provide value-added processes and shorten response time  Warehousing is the process of storing goods or raw materials in a warehouse for the purpose of distribution, sale, or manufacturing.  Distribution process of moving the products from the manufacturer or supplier to the end consumer. “ Distribution channel is viewed as one of the key operations element where companies can provide tailored services for their customers and gain competitive advantage” Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3 The Role of Distribution Facilities in SCM 7 Promote Enhance transport customer 1 economies service 6 Fulfill omni- Balance channel supply & demand demand 2 Support Protect 5 production against require- Allow uncertainty ments quantity purchase discounts 3 4 Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 44 Distribution Facility Functionality 1. Accumulation Primary 2. Sortation Functions 3. Allocation 4. Assortment Distribution Facility Assembly Services Functionality Product kitting Inventory Management Value- Product postponement Adding Sequencing Roles Quality Control Recycle / Returns Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 55  Primary Function: Accumulation The DC serves as a collection point for product coming from multiple origins and provides required transfer, storage, or processing services, allowing firms to consolidate orders and shipments for production and fulfillment processes. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 66  Primary Function: Accumulation Direct Delivery – No Accumulation DC – Accumulation Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 77  Cost Importance of Distribution Center A B A B With “A” vendors and B stores the There are only A+B shipments through an transportation plan consists of AxB intermediate aggregator, such as a direct shipments, each relatively small distribution center or cross dock. shipment and likely subject to the higher, less- is larger and more likely to qualify for the than-truckload. lower, full-truckload rates. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8  Primary Function: Sortation  Sortation focuses on assembling like products together for storage in the distribution facility, processing or transfer to customers.  Proper sortation is essential for effective inventory & order fulfillment. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 99  Primary Function: Allocation  Allocation focuses on matching available inventory to customer orders for an SKU.  This break-bulk capacity promotes product availability for multiple customers and in desired quantities. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10 10  Primary Function: Assortment  Assortment involves the assembly of customer orders for multiple SKUs held in the distribution facility.  This mixing capability avoids the expenses related to placing numerous orders and having them shipped from a variety of locations. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11 11  Primary Function: Assortment Supplier ships DC Retailer receives in bulk mixes & ships variety Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12 12  Value-Added Roles of Value-Adding Distribution Roles Facilities  Assembly services  Inventory management and visibility  Product kitting, bundling, and unbundling  Product postponement  Production sequencing  Quality control  Recycling, repair, and returns management Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13 13  Source: Brian J. Gibson, Ph.D. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning,14 Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14 Classification of Warehouses by Role in the Supply Chain Function of warehouse has evolved from storage to speed, cost reduction, flexibility, and efficiency. This has resulted to the following types of warehouses. 1. Distribution Centers (DC) 2. Consolidation 3. Break-bulk 4. Cross-docking 5. Reverse logistics Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15  1. Distribution Center (DC) Facility stocked with finished goods. They are:  Demand driven  Order fulfillment if they supply goods directly to customers  Retail distribution center if they distributes goods to retailers, wholesalers and directly to consumers. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16  Eg: Distribution Center Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17 Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18  2. Consolidation Receive materials from a number of sources and combine them into an exact quantity for a specific destination Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 19  Eg: Dell Consolidation Warehouse Dell Consolidating Warehouse: Adapted from expert warehouse Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20  3. Break Bulk Warehouse receive single large shipment and arrange them for delivery to multiple destinations  It sorts or splits individual orders and arranges for local delivery Image courtesy Pearson Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 21  4. Cross Docking A practice in which materials are unloaded from an incoming semi-trailer truck or a rail cars, with little or no storage in between.  This may be done to change type of conveyance, or to sort material intended for different destinations, or to combine material from different origins. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 22 Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 23 Advantages  Reduced Handling and warehousing Costs at the DC and other facilities  Shortened Lead time  Retailers have the ability to streamline the supply chain from point of origin to point of sale  Reduced Inventory Level  Turns warehouse into transfer nodes rather than storage nodes Disadvantages  Difficult to coordinate due to complexity of managing Cross Docking.  High precision required for successful mixing is highly dependent on information technology. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 24  5. Reverse Logistics Process of moving goods from their destination for the purpose of capturing value, or proper disposal, and may also include remanufacturing and refurbishing activities Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25  Image from Hekla Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 26 group  Key Distribution Tradeoffs Functional Tradeoffs How to best balance customer service and costs.  Transportation COSTS  Warehouse Customer Service  Inventory Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 27  No: of Warehouses Vs Costs Warehouse vs. Transportation Warehouse vs. Inventory Logistics Cost Logistics Cost Inventory Warehousing cost cost Warehousing Transport cost cost Number of Warehouses Number of Warehouses Logistics Cost Warehouse vs. Customer Service Warehousing cost Cost of lost sales Number of Warehouses Source: Figure 10.3 Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 28 28 Facility-Level Tradeoffs How to best balance financial resources and performance.  Space  Equipment  People Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 29 29  Space vs. Equipment. The larger the facility and the more space used for distribution operations, the more equipment will be needed in the facility. Equipment vs. People vs. Space People. The (Throughput) Space greater the use of Equipment The larger the facility equipment to workforce, the larger automate materials the facility size and handling and throughput possible. distribution activity, the lower the labor People requirements of a facility. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 30 30  Key Challenges in Distribution Labor Availability Demand Variation Issues  Seasonal demand creates challenges in effectively utilizing the space and equipment resources and retaining labor throughout the year.  Solution: Balancing the DC requirements of seasonal products with products that have alternate primary selling seasons and/or stable year-round demand products. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 31 31  Increasing Customer Requirements  Growth in additional capabilities and services.  Lean strategies creating expectation of smaller, more frequent, and faster fulfillment of orders.  Solution: Flexible fulfillment processes Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 32 32  Labor Availability Issues  Nature of DC operations work creates ongoing turnover challenge  Smaller labor pool due to aging demographic trend in Europe and the United States.  Solution: DC automation Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 33 33  Distribution Planning and Strategy Distribution strategies should tailor to products being handled, customer requirements, and available internal expertise and resources.  A series of interrelated planning decisions must be made to ensure that the strategy can be executed at a reasonable cost while supporting supply chain demands. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 34  Distribution Planning - Framework Network Design Product Size of operations attributes Interior layout Flow Inventory positioning Product location requirements Number of facilities Roles to be Location of facilities fulfilled Facility ownership Capability Facility Requirements Considerations Strategic Tactical Planning Planning Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 35 35  Capability Requiremen ts Product Attributes Climate Controlled Warehouse For products that need special climate conditions. Bulk Storage Storing large quantities of a single product, such as grains, chemicals, or raw materials Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 36 36 Product Flow requirements  Direct shipments to Customer (Cross Docking, Trans Shipments)  Need of a Distribution Facility Automated Warehouse Advance computer and Robotics. It levels ranges from small conveyor belts transporting product to fully automated Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 37 37 Cross-Docking Facilities Serve as transfer points for goods, where products are quickly unloaded from inbound trucks and loaded onto outbound trucks, reducing storage time. Cross-Docking: Low-Tech Option Heavy reliance on manual labor. Receive Sort/stage Load Deliver Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 38 38  Cross-Docking: High-Tech Option Heavy reliance on automation. Freight is received, Cartons travel Barcode reader Cartons checked for accuracy thru facility on identifies products are & prepared (auto ID conveyor system & deliver cartons loaded in trailer. labels applied to to reduce labor & down appropriate Load of mixed cartons) for speed transfer of loading line. product is shipped to induction. goods. retail outlet when full. Roles to be fulfilled Accumulation, Sortation, Assortment..etc Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 39 39  Network Design Number of Warehouses & Location  Determining the number of facilities needed for a supply chain involves the evaluation of cost tradeoffs with other functional areas.  Effective location selection requires analysis of the DC’s intended function, sources and volume of supply, customer locations and demand patterns, and related fulfillment costs. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 40 40  Number of Warehouses Vs Total Costs Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 41 41 Facility Ownerships Decisions on facility ownerships – private facilities, public facilities, or contract facilities – should be made based on the organization’s expertise vs. scope of tasks required & financial resources relative to the number and size of facilities needed. Types of Warehouse : 1. Public warehouse 2. Private warehouse 3. Contract warehouse 4. Bonded warehouse 5. Government warehouse 6. Co-operative warehouse Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 42 42  Public Warehouses  Available for companies to hire (Eg: 3PL, 4PL)  Overheads gets distributed over a large customer base  Offers expertise in management since warehousing is their core business. Key Advantages :  Conservation of capital  Use of space to meet peak requirements  Reduced risk  Economies of scale  Flexibility  Tax advantages  Specific knowledge of storage and handling costs Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 43 Disadvantages :  Effective communication may be difficult because of system incompatibility  Specialized services may not always be available.  Space may not be available on demand. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 44  Private Warehouse  Owned and operated by the large business firm  Used for their own distribution activities Key Advantages :  Control  Flexibility  Less costly  Better use of Human resources  Tax benefits  Intangible benefits Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 45  Contract Warehouse  Handle shipping, receiving and storage on contract basis.  Clients should be committed to a specific period of time.  Clients pay for storage and material handling. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 46  Bonded Warehouse  Licensed by the government to accept imported goods for storage before payment of customs duties.  Can act as a distribution center for duty free stores.  Storage area for goods in transit  Goods are under the supervision of customs officers. Benefits:  Avoid the need to pay duties for goods on transit  Goods owners avoid losses due to inflation form time the goods enter the country to the time they are sold.  Minimizes the risk of paying taxes for products that may not be sold at all. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 47  Government Warehouse  Owned control and managed by the government, public corporation or local authorities  Usually located closed to a sea port Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 48  Cooperative Warehouse  Owned managed and control by cooperative societies  Provides warehousing facilities at the most economic rates of their society. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 49  Warehouse Strategy (Ownership)  Warehouse strategy varies from by industry, volume, seasonality pattern, and their competitive strategy.  Many firms utilize a combination of private, contract and public facilities.  A private may be used to used to cover basic year round requirement  Public facilities may be used to handle peak seasons. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 50  Facility Ownership Strategy Public warehousing cost Private warehousing cost Total cost Use public Use private warehousin warehousing g Throughput volume Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 51 51 Factors Affecting Distribution Facility Ownership Favors Private Favors 3PL Firm Characteristics Distribution Distribution Throughput volume Higher Lower Demand variability Stable Fluctuating Market density Higher Lower Special physical control needs Yes No Security requirements Higher Lower Customer service requirements Higher Lower Multiple user needs Yes No Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 52 52  Facility Considerations Size of Warehouse  Typically, the more facilities in the distribution network, the smaller they need to be.  Demand forecasts for the facility can be used to create a rough estimate of space requirements.  Given forecasted demand, each facility must be large enough to: Accommodate the distribution activities that will be performed within the four walls.  Interface with the transportation network. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 53 Warehouse Design & Layout  The layout of a warehouse should be designed to maximize flow of material, people, equipment and even information.  Material handling, pallet positioning and pilferage and deterioration should be considered as factors in the layout decision.  Three factors that need to be considered in the design process:  Number of Stories in the Facility  Cube Utilization  Product Flow Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 54 Tips for Good Warehouse Design  Understand the business requirement  Consider external factors (All stakeholders)  Understand the product types  Know the peak requirement  Ensure the yard supports the warehouse  Work on 3D, Verify it, Keep it simple  Use Warehouse management system  Use Warehouse design tools  Future proof your investment Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 55 Introduction to warehouse design https://www.youtube.com/watch?v=HcNHehFhcOY Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 56 56 Warehouse Layout The company must make decisions regarding aisle space, shelving, materials-handling equipment, and interior dimensions of the facility Facility Layout Principle Benefits Use a one-story facility  Provides more usable space per investment dollar  Results in lower construction costs Use vertical capacity  Reduces building footprint and land requirements Minimize aisle space  Provides more storage and processing capacity Use direct product flows  Avoids backtracking and costly travel time Deploy warehouse  Improves facility productivity and safety automation solutions  Reduces travel time  Reduces labor needs Use an appropriate product  Maximizes space utilization and product protection storage plan Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 57 57 Eg: Warehouse Layout Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 58 Product Location (Slotting) Slotting is defined as the placement of product in a facility for the purpose of optimizing materials-handling and space efficiency. Popularity. Locate high volume (popular) items 1 near the shipping area and the low volume (unpopular) items away from the shipping area. Commonly Unit size. Locate small-size items (cubic Used 2 dimensions) near the shipping area and larger- size items farther away from the shipping area. Criteria Cube. Locate the items with smaller total cubic 3 space requirements (item cube multiplied by the number of items held) near the shipping area and those with larger space requirements farther away from the shipping area. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 59 59  Slotting (Key Benefits) Proper product slotting can improve fulfillment performance and generate other advantages for the organization & its customers. Load building Ergonomics Efficient (Labor replenishment Efficiency) Picking Picking productivity accuracy Work Pre- balancing consolidation Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 60 60  Warehouse Capacity  It should be designed for full capacity utilization between 75% to 85% of the time  15 to 25 % of the capacity, the space needed to meet peak requirement  It will be more efficient to build private facilities to cover the 75% requirement and use public facilities to accommodate peak demand. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 61  Distribution Execution (Product Handling) Storage locations Receiving Put-away Replenishment Re-supply pick slots Schedule carriers Identify product Move pallet quantity orders Unload vehicles Verify location Inspect freight Fill storage/pick slots to shipping dock Verify moves Verify order Direct fill orders Picking locations Shipping Order Picking Travel to pick slots Schedule carrier Load vehicle Customer Validate SKU & qty Secure freight delivery Fill customer orders Complete paperwork Prep & deliver product Call for dispatch to shipping dock Source: Figure 10.8 Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 62 62  For many organizations, order picking is the most labor- intensive and expensive distribution activity, often accounting for more than 50% costs. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All © 2016 Cengage Learning. AllRights RightsReserved. Maynot Reserved. May notbe bescanned, scanned, copied copied or duplicated, or duplicated, or posted or posted to a publicly to a publicly accessible accessible website,website, in whole in or whole in part.or in part. 63 63  Other Support Functions Support functions that provide coordination between key processes and across the supply chain, protect the organization’s inventory investment, and improve working conditions within the facility. Inventory control Key support Safety, maintenance, and sanitation functions Security Performance analysis Information technology Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 64 64  Distribution Metrics Many aspects of distribution performance can be evaluated across customer service and DC order fulfillment activities. Customer-Facing Formula Metric Examples Unit Fill Rate Total Units Shipped / Total Units Ordered Case Fill Rate Total Cases Shipped / Total Cases Ordered Order Value Fill Rate Total Value Shipped / Total Value Ordered Order Accuracy Total Correct Units Shipped / Total Units Shipped Document Accuracy Total Correct Customer Invoices / Total Customer Invoices On Time Dispatch Total Orders ready by Deadline / Total Orders Dispatched Complete Order % x Damage Free % x Billing Accuracy % x On- Perfect Order Index Time Dispatch % Source: Tables 10.5 and 10.6 Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 65 65 Distribution Operation Formula Metric Examples Distribution cost per Total Distribution Cost / Total number of units processed unit Distribution cost ratio Total Distribution Cost / Total cost of goods sold Capacity utilization Total Storage slots used / Total Storage slots available Equipment utilization Total Operational Time / Total time available Labor productivity Total number of cases processed / Total Hours paid Distribution efficiency Task Completion time / Standard time allowed Source: Tables 10.5 and 10.6 Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 66 66  Distribution Technology Barcode Types UPC-A GS1 DataBar GS1 QR Code barcode Warehouse Management Automatic Identification (Auto- Systems (WMS) ID) Tools Core software used to manage Auto-ID technologies help machines fulfillment processes, with value-added identify objects. Examples: Bar codes, capabilities, including labor smart cards, voice recognition, management, automated data biometric technologies, radio-frequency collection, task interleaving, fulfillment identification (RFID). flexibility, and systems convergence. Langley/Novack/Gibson/Coyle, Supply Chain Management - A Logistics Perspective, 12e, © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 67