Week 8 - Warehousing & Distribution Flashcards
What is transportation?
Is the planning and the undertaking of the movement of goods by a carrier to points in a cost-effective manner that achieves the times and conditions specified by the shipper
Transportation management system
Inbound —> Internal processing —> Outbound
Key drivers of loading/unloading (4)
- Number of items
- Time
- Packaging
- Not always symmetric
Key drivers of line haul (4)
- Distance
- Impacted by network
- Congestion
- Connectivity
Features of transportation (8)
- Transportation entities
- Types and models
- Tracking and vehicle maintenance
- Fuel costing and impact
- Routing and mapping
- Communications
- Carrier selection and management
- Cost drivers
What are the different transportation entities? (5)
- Freight carriers - e.g hauliers, trucking companies, train companies, airlines, shipping companies
- Freight forwarders - company that leases bulk space from other carriers to be resold to firms making smaller shipments
- Carriers - immediate delivery of products
- Integrators - offer a seamless (I.e integrated) end-to-end service from consign or to consignee
- Agencies - companies combine buying power to gain reduced freight transportation rates
Features of third-party logistics (3)
- Holistic service provision - I.e loading, collection, unloading & delivery etc
- Improved delivery speed & reduced risk of unreliable transportation of goods
- Usage of latest freight tracking technology such as EDI, RFID satellite to keep customers informed about driver & deliveries
Features of fourth party logistics (2)
- Lead logistics providers which facilitates freight sharing
- Are asset light players who take on the responsibility for logistics whilst not actually carrying out any of the physical logistics duties themselves
Models of transportation (6)
- Airfreight - air transportation
- Road transformation (motor carrier, trucks)
- rail transportation
- Water transportation
- Pipeline
- Intermodal
What are the three types of transportation?
- Land - I.e road, rail, pipelines
- Water - I.e cargo ships
- Air - airfreight
Advantages of airfreight (3)
- Makes up lost time
- Perishable products
- Urgent deliveries
Disadvantages of airfreight (6)
- Expensive
- Line-haul cost of airfreight service
- Transportation cost
- Transit time
- Increase handling costs
- Increasing loss and damage
Advantages of motor carrier (2)
- Flexibility
* Ability to deliver the product
Disadvantages of motor carrier (3)
- Limitations by highway weight and size
- Speed limitations and hours of service (HOS) rules
- Highway congestion
Types of cargo ships (2)
- Bulk carriers - are designed to transport unpackaged bulk cargo such as cement, ore and coal
- Container ships - carry intermodal containers that can be carried by land
Features of rail transport (4)
- Move commodities over large distances
- High fixed costs in equipment and facilities
- Scheduled to maximise utilisation
- Transportation time can be long
Rail types of freight (3)
- Bulk unit train
- Mixed carload
- Intermodal (container, trailer and automobile)
Features of bulk unit trains (3)
- Moves very high volumes of a single commodity
- Coal, grain, minerals and waste
- One way (shipper to receiver)
Features of mixed carload (2)
- Moves a diverse range of commodities
* Chemicals, food products, forest products, metal auto parts, waste and scrap
Features of intermodal (3)
- Moves truck trainers
- Almost anything that can be pack in a truck or container like: finished consumer goods, refrigerated foods, tools and parts for manufacturing and raw materials
- Two way
Advantages of railroad (5)
- Adds transportation system capacity and reduces highway costs
- Promotes economic development, productivity and supports international trade
- More fuel efficient and generates less air pollution per ton mile than trucks
- Rail road improves safety and security by offering a naturally selected right-of-way for freight
- Reduces truck travel, congestion’s and highway costs
Disadvantages of railroad (2)
- Unless a manufacturing facility has a direct connection to the railroad rest of the trip must be handles by truck
- Rail shipment sometimes cannot meet the rapid and flexible demand of an industry
Features of pipeline transport (4)
- High fixed cost
- Primarily for crude petroleum, redefined petroleum products, natural gas
- Best for large and stable flows
- Pricing structure encourages use for predictable component of demand
Reasons for warehousing (6)
- Achieve transportation and production economies of scale
- Take advantage of quality purchase discounts and forward buys
- Maintain source of supply
- Support the firm’s customer service policies
- Meet changing market conditions: seasonality, demand fluctuations and competition
- Provide temporary storage of materials to be disposed of or recycled
Roles of warehousing (4)
- Buffer
- Consolidation center
- Cross-docking
- Value-added-processing
Buffer - roles of warehousing:
• Typical sources/examples of system variation (2)
• Typical sources of random variation (2)
• Typical economies of scale
• Typical sources/examples of system variation:
- Product seasonalities
- Cyclical/batched production due to large setup costs
• Typical sources of random variation:
- Variation in transportation times due to weather, traffic congestion
- Variation in production times due to unreliable operations and unreliable suppliers
• Typical economies of scale involved:
- Price breaks in bulk purchasing
Consolidation Center - role of warehousing
• Consolidation allows to control the overheads of transportation operations by:
- Allowing the operation of the carriers to their capacity and therefore, the more effective amortising of the fixed transportation costs
- Reducing the number of shipping and receiving operations
Cross-docking - roles of warehousing (2)
- Consolidation without staging
* Warehousing can be manufacturer to retailer or manufacturers to consolidator to retailers
Feature of Value-added-processing (VAP) - role of warehousing (4)
- Pricing and labelling
- Kitting (I.e repackaging items to form a new item)
- Light final assembly (e.g. assembly of a computer unit from its constituent components, delivered by different suppliers
- Invoicing
What are the two Inbound processes in major warehousing operations
• Receiving: Makes up 10% of warehouse operating costs
- Receipt of all materials coming into the warehouse
- Providing the assurance that the quality and quantity of such materials are as ordered
- Disturbing materials to storage or to other organisational functions requiring them
• Put-away (15% of warehouse operating costs):
- Determine and registering actual storage locations
- Transportation
- Placement
What are the outbound processes in major warehouse operations? (6)
- Processing customer order
- Order-picking (55% of warehouse operating costs)
- Checking
- Packing
- Shipping
- Others
Processing customer order - outbound processes in major warehousing operations
Typically done by the computerised warehouse management system of facility
Order-picking (55% of warehouse operating costs) - outbound processes in major warehousing operations
The set of physical activities involved in collecting from the storage area the materials necessary for the fulfilment of the various customer orders
Checking - outbound processes in major warehousing operations
Checking orders for completeness (and quality of product)
Packaging - outbound processes in major warehousing operations
Packaging the merchandise in appropriate shipping containers, and attacking the necessary documentation/labels
Shipping - outbound processes in major warehousing operations (3)
- Preparing the shipping documents (packaging list, address label, bill of lading
- Accumulating orders to outbound carrier
- Loading trucks (although may be the carriers responsibility )
Others - outbound processes in major warehousing operations (2)
- Handling returns
* Performing the additional value added processing supported by contemporary warehouses
3 types of warehouses
- Public
- Private
- Other (bonded, cooperative)
Features of public warehouses (5)
- Serve all legitimate users
- Bonded storage warehouses (special commodities)
- A bonded warehouse (sometimes referred to as a customs warehouse) - is a warehouse tightly regulated by customs, where imported goods that are intended for export can be stored in the uk without actually entering the uk market
- Refrigerated warehouses
- Bulk storage warehouses
Features of Private warehouses (4)
- Owner or occupied on a long-term lease
- Offers control to owner
- Assumes both sufficient demand volume and stability so that warehouse remains full
- High fixed costs
Types of cargo unification (7)
- Boxes
- Pallets
- Euro pallets
- Pallet boxes
- Roll pallets
- Bags
- Injuries
3 types of storage policies
- Dedicated storage - every SKU gets a number of storage locations, exclusively allocated to it
- Randomised storage - each unit from any SKU can be stored in any available location
- Class-based storage - SKU’s are grouped into classes with each class being assigned a dedicated storage area, but SKUs within a class and stored according to randomised storage logic
What is used to determine storage equipment? (4)
- Space utilisation
- Access
- Speed of operation
- Costs
3 warehouse systems
- Storage racks
- Cantilever racks
- Pallet racks
Ways or reducing warehouse running costs (6)
- Training
- Process improvement
- Utilities management
- Use of technology
- Damage reduction
- Use of tools such as six sigma, kaizen, ABC classification
3 Trends in distribution centres
- Local distribution structure
- Centralised distribution structure
- Growing importance of regional distribution
What is the difference between warehouse and distribution centre?
- Storage
- Flow/movement of goods
- value adding activities
- data
- emphasis
- Warehouse store all products where as distribution centres hold minimal inventory and high demand items
- Warehouse: receive > store > pick > ship distribution centres: receive > pick > ship
- Warehouse have minimal value adding activities but distribution centres use many value adding activities
- Warehouses have their data in batches and have real time data
- Warehousing emphasis storage of products and distribution centres emphasis sets rapid mov,emf of products throughout the facility
What is cross docking?
Is the activity whereby goods are received out a warehouse or DC and dispatched without putting them away in storage
When is cross docking appropriate? (8)
- With perishable products requiring immediate shipment
- With high quality items that do not require extensive quality checks during receipt
- Pre-tagged, pre ticketed and ready for sale products
- Items for promotional events and initial products launches
- Products with continuous, consistent demand, such as “staple” items like milk, toilet paper etc
- Product moving from one retail store to another
- Pre-picked, pre-packaged orders from another facility
- Back-ordered items
