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1、Chapter Seven Warehousing I. Learning objectives and requirements 1. to know how strategic warehousing serves to achieve a competitive advantage 2. to know how a warehouse can provide economic and service benefits 3. to know how to establish the warehouse operations 4. to understand how warehouses a
2、re classified based on ownership II. Learning contents Section I. Warehouse Strategy and Functionality 1. Main contents 1) Strategic Warehousing Storage has always been an important aspect of economic development. For manufacturers, strategic warehousing offered a way to reduce holding or dwell time
3、 of materials and parts. On the outbound side of manufacturing, warehouses can be used to create product assortments for customer shipment. An important charge in warehousing is maximum flexibility. 2) Warehouse Functionality Ideally a warehouse will simultaneously provide economic and service benef
4、its. a) Economic Benefits Five basic economic benefits are: (1) consolidation and break- bulk, (2) assortment, (3) postponement, (4) stockpiling, and (5) reverse logistics. i) Consolidation and Break-Bulk The economic benefits of consolidation and break-bulk are to reduce transportation cost by usin
5、g warehouse capability to increase shipment economies of scale. ii) Assortment The basic benefit of assortment is to reconfigure freight as it flows from origin to destination. Three types of assortments-cross-docking, mixing, and assembly-are widely used in logistical systems iii) Postponement Ware
6、houses can also postpone commitment to final product configuration by completing final packaging, labeling, and light manufacturing. Postponement provides two economic benefits. First, risk is minimized；Second, total inventory can be reduced by using inventory of the base product to support multiple
7、 customers labeling and package requirements. iv) Stockpiling The direct economic benefit of stockpiling is to accommodate seasonal production or demand. Stockpiling provides an inventory buffer, which allows production efficiencies within the constraints imposed by material sources and consumers. v
8、) Reverse Logistics Reverse logistics is concerned with controlled and regular inventory. Controlled inventory consists of hazardous materials and product recalls that have potential consumer health or environmental considerations. Less attention has traditionally focused on reclamation of regular i
9、nventory.b) Service BenefitsWarehouse service can provide benefits through enhanced revenue generation. When a warehouse is primarily justified on service, the supporting rationale is that sales can be increased, in part, by such logistical performance.i)Spot Stocking Spot stocking is typically used
10、 to support market distribution. Manufacturers of highly seasonal products often spot stock. Rather than maintaining inventory in a warehouse year-round, or shipping to customers direct from manufacturing plants, responsiveness in peak selling periods can be enhanced through temporary inventory posi
11、tioning in strategic markets.ii)Full Line Stocking The full line stocking warehouse is more often restricted to a few strategic locations and operates year-round. Full line stocking warehouses improve service by reducing the number of suppliers that a customer must deal with. The combined assortment
12、s also make economical larger shipments possible. iii)Product Support Production support warehouses stock inventory to support manufacturing operations. Safety stocks on items purchased from outside vendors may be justified because of long lead times, potential supply discontinuity, and significant
13、variations in usage rates. In production support warehousing, average inventory is higher and turnover is lower.iv) Market Presence While the market presence factor is a frequently discussed strategy, little solid research exists to confirm or refute its existence. In addition, more reliable transpo
14、rtation and technology-based order processing are closing the response time gap regardless of distance. Unless a warehouse is economically or service justified it is unlikely that local market presence will favorably influence operational results. 2. Key concepts and points Strategic Warehousing, Wa
15、rehouse Functionality, Economic Benefits, Consolidation and Break-Bulk, Assortment, Postponement, Stockpiling, Reverse Logistics, Service Benefits, Spot Stocking, Full Line Stocking, Product Support, Market Presence 3. Issues of application While effective logistics system should not be designed to
16、hold inventory for extended times, there are occasions when inventory is justified on the basis of cost and service. Students shall understand that an important change in warehousing is maximum flexibility, and know how such flexibility can be achieved through information technology. Section II. Warehouse Operations 1. Main contents 1) Handling The first consideration focuses on movement continuity and scale economies throughout the warehouse. Movement con
