Chapter 1 Highly competitive warehouse management

Question 1

Why are distribution centers an important part of the supply chain?

Answer 1

1. Makes goods available when and how we need them.
2. Creates efficiency in upstream and downstream activities.
3. If the distribution center can provide competitive service levels with lower costs – it provides organization with an overall advantage.

Question 2

How can the DC have an impact on corporate performance.

Answer 2

1. Logistics costs - Advancements in technology and new management technologies have reduced the cost per man hour leading to decreased production cost. On the other hand, warehousing and transportation costs have increased due to higher demand and more frequent orders. Focusing on reducing inventory, eliminating errors, shortening response times and rationalizing process steps helps to reduce costs and improve efficiency.
2. Customer service - Errors in deliveries cause dissatisfied online customers, empty shelves in stores or downstream warehouses and lost sales. Dissatisfied customers lead to complaints, returns, and extra shipping costs. Keeping customer levels high is very important. It is notable though that the high levels come at a high cost. Therefore, warehouses should find the optimal trade-off between cost and service.
3. Business alignment - DCs are the decoupling point between various business activities. This gives the DC the unique advantage of being able to view the effects of departmental behavior. They should make the implications of their choices and actions transparent to them and help the departments align them with the company objectives.

Question 3

What are the four elements of warehouse management?

Answer 3

1. Business - the warehouse plays a service provider role and other departments are the clients of the warehouse and therefore the strategies and plans of actions must be aligned.
2. People - the warehouse manager must ensure that people in the warehouse execute the processes well by providing them with training, motivating them and guide them through change.
3. Process - the warehouse processes must be transparent and therefore the processes objectives, costs, and performance measures must be defined.
4. Technology - tools can have a breakthrough in the warehouse including conveyors, automated cranes, WMS etc.

Question 4

What are the implementation drawbacks for warehouse optimization?

Answer 4

1. Being absorbed in fire-fighting routing.
2. Introducing new technology before getting the processes right.
3. Deploying supply chain integration initiatives without proper information and systems.

Question 5

What are the conditions for successful supply chain collaboration?

Answer 5

1. The parties involved commit to business and supply chain objectives and possess information to substantiate their actions accordingly.
2. The parties involved are well organized internally. Collaboration increases mutual dependencies so that it becomes vital for the parties to perform according to the agreed standards.
3. The parties involved have proper information technology to cope with the broad scope and the related complexity of decision making.

Question 6

Name the four stages of the maturity grid.

Answer 6

1. Reactive
2. Effective
3. Responsive
4. Collaborative

Question 7

Why is a balanced growth important for warehouse maturity?

Answer 7

Each stage lays the foundation for the subsequent stages. For balanced growth it is therefore preferable to achieve a reasonable level at one stage before attempting major initiatives in the next stage. Each subsequent stage should have a lower percentage score than the previous. For example, a warehouse with an estimated 80% compliance with the effective stage, 40% with the responsive stage and 10% with the collaborative stage shows a healthy pattern since each succeeding stage shows a lower maturity score than its predecessor.