SCM 373 Lecture Notes - Lecture 6: Break Bulk Cargo, Papercutting, Reverse Logistics

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6 Feb 2017
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Warehousing
Warehousing Definition
That part of a fir’s logistis sste that stores products at and between
point-of-origin and point of consumption, and provides information to
management on the status, condition, and disposition of items being
stored.
Traditionally viewed as a place to hold or store inventory
Contemporary view: Functions to mix inventory assortments (inventory
mixing) to meet customer requirements
Storage of products is held to
a minimum
Warehousing - Fundamentals: Why?
Warehouses primarily help buffer against uncertainty and allow other costs to be
minimized.
Reasons for warehousing
Demand / supply / lead time uncertainty
Manufacturing economies: production smoothing
Transportation economies: volume discounts
Customer service support
Three Basic Functions of Warehousing
Movement (Handling)
Receiving: Unloading arriving vehicles
In-Storage Handling: moving goods for storage (transfer) or order
selection (picking)
Shipping: verifying orders and loading departing vehicles
Storage
Active storage/Flow-through distribution
Extended storage
Information Transfer
Warehousing Fundamentals: What are the Benefits?
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There are two primary types of benefits for warehouses: economic and service.
Economic Benefits operational strategy to save money by using a storage
point
Service Benefits operational strategy to add value within the supply chain
process
Economic Benefits
There are four primary economic benefits in using warehouses.
Seasonal storage / stockpiling
Reverse logistics
Consolidation and break-bulk
Cross-docking / In-transit mixing
Warehouses must manage two classes of storage
Active Storagestorage for basic inventory replenishment
Focuses on quick movement
Includes flow-through or cross-dock distribution
Extended Storagestorage for inventory held in excess of period for
normal replenishment
E.g. seasonal, speculative, or even commodities
Consolidation and break-bulk reduce transportation cost
Consolidation occurs when a warehouse receives materials from a number
of sources and combines them into exact quantities for a specific
destination
Break-bulk occurs when a warehouse receives a single large shipment and
arranges for delivery to multiple destinations
Consolidation Example
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Break-Bulk Example
Cross-Dock
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