13-Feb-22

Chapter 3: Warehousing Management

Lecturer: M.A. Nguyen Le Dong Xuan
Faculty of Economics, HCMC University of Economics and Finance

Content
Warehousing in Logistics system

The importance of warehousing in logistics

system

Types of warehouse

Design considerations

Warehousing Operations

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LEARNING OUTCOMES

• Understand the role of warehousing in a logistics system

• Understand the way a warehouse operate

• Analyze select considerations when designing warehousing facilities

• Have a thorough understanding of running a warehouse efficiently

Should warehousing be owned, leased, rented, or

some combination of these?

Should the warehousing functions be contracted

out to a third party provider?

Should the company install new materials handling

equipment or continue to hire more labor?

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WAREHOUSING IN LOGISTICS SYSTEM

WAREHOUSE DEFINITION
• Warehousing: that part of the firm’s logistics system that stores products (raw
materials, part, good-in-process, finished goods) at an between points of origin and
point of consumption, and provides information to management on the status,
condition, and disposition of items being stored.

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4 REGROUPING FUNCTIONS OF WAREHOUSING

Accumulating: involves bringing together similar stocks from

different sources.

Allocating: involves breaking larger quantities into smaller

quantities.

Assorting: refers to building up a variety of different

products for resale to particular customers.

Sorting out: Separating products into grades and qualities

desired by different target markets.

ACTIVITIES OF WAREHOUSE

• idenfication • staging and consolidation

• inspection • loading and shipping
• receiving and unloading • documentation
• put-way • housekeeping
• storage • management of material
• replenishment handling equipment
• order selection • assist in stocktaking
• unitizing and shipping
• packaging and marking

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OTHER ACTIVITIES OF WAREHOUSE

CONSOLIDATION ACTIVITY

OTHER ACTIVITIES OF WAREHOUSE

BREAK-BULK ACTIVITY

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CROSS-DOCKING

Cross-docking facilities
• The process of receiving product and shipping it out the same
day or overnight without putting it into storage.
• Emphasis on time reduction in supply chains.
• Allowing products to reach their destinations more quickly,
reduced inventory carrying costs.

CROSS-DOCKING

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CROSS-DOCKING

Cross-docking facilities
• Is differentiated from distribution centers by the length
of time a product is in a facility.
• Design of the facility is an important consideration to
facilitate quick movement of product
– Should be designed with a minimal amount of storage
space and truck doors on two or more sides.
– Some designs include “H”, “I”, “T”, “U” and “E”
configurations.

EXERCISE 1:
Establish the comparision table which distinguish among warehouses,
distribution centers, and cross-docking facilities?

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THE IMPORTANCE OF WAREHOUSING IN

LOGISTICS SYSTEM

THE ROLE OF WAREHOUSE

To match different rates or
volumes of flow when patterns
of production and
consumption do not coincide

To store the surplus product

(avoid material shortage,
The role of warehouse
benefit from a seller’s
advantageously priced deal)

To facilitate the regrouping

function

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THE ROLE OF WAREHOUSE

To ensure the customer gets:
THE RIGHT ITEM
in THE RIGHT QUANTITY
at THE RIGHT PLACE
at THE RIGHT TIME
in THE RIGHT CONDITION
at THE RIGHT PRICE
AT
THE OPTIMUM COST TO THE ORGANIZATION

TYPES OF WAREHOUSE

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EXERCISE 2:
Establish the comparision table which distinguish between private
warehousing and public warehousing?

TYPES OF PUBLIC Cold stores

Bonded warehouse
WAREHOUSING

Tankers
Bulk storage

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CONTRACT WAREHOUSE
Mitigates the negative aspects Contract warehouse:
and accentuates the positive Referred to as third-party
aspects of public and private (3PL) warehousing or
warehousing dedicated warehousing.

• Allows a company to focus on its core competencies

• Both vendor and client share the risks associated with the warehousing.
• Less costly than private warehousing
• Provided more services than public warehousing

MULTICLIENT WAREHOUSE

Mixes attributes of contract

and public warehouses Multiclient warehousing

• Services are more differentiated than those in a public facility

• Services are less customized than those in a contract facility
• Services are purchased through minimum 1 year contracts
• Are attractive to smaller organizations that:
 don’t have sufficient volume to build their own storage facilities;
 don’t have sufficient volume to justify using contract warehoushing;
 have regular, but not continuous, need for specialized equipment or services;
 can benefit from working with other companies that have similar needs or requirements.

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DESIGN CONSIDERATIONS
IN WAREHOUSING

DESIGN CONSIDERATIONS IN WAREHOUSING

• General considerations
– Quantity and characteristics of goods to be handled must
be known - product profiling
– Know the purpose to be served:
– Facility with low rates of product turnover should be laid out in
a manner that maximizes utilization of the cubic capacity of
the storage facility.
– Facility that emphasizes rapid product movement with limited
time in storage should be configured to facilitate the flow of
product into and out of it.

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DESIGN CONSIDERATIONS IN WAREHOUSING

• Trade-offs
– Fixed versus variable slot locations for merchandise
– Build out (horizontal) versus build up (vertical)
– Order-picking versus stock-replenishing functions
– Two-dock versus single-dock layout
– Conventional, narrow, or very narrow aisles
– Other space needs

WAREHOUSING OPERATIONS

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EXERCISE 3:
Students watch the video clip as follows:
https://www.youtube.com/watch?v=7kIs9-2dTUM
and discuss some consideration in term of warehouse operations?
1. Warehouse location?
2. Warehouse layout?
3. Principles for product arrangement?
4. Principles for product protection and safety considerations in
warehouse?
5. Failures/Mistakes in managing warehouse?

WAREHOUSING OPERATIONS
Cases shipped per person/Product lines shipped per
Warehousing
person/Pallets shipped per person/Average
productivity analysis
warehouse capacity used/Forklift capacity used.

- Warehouse safety can by influenced by

Warehousing operations

governmental regulations.
Safety considerations
- Warehouse safety categories include employee,
property, equipment, vehicles.

Hazardous materials Explosives, Flammable liquids, Flammable solids

Theft, Pilferage, Heat and humidity, Vandalism, Fire,

Warehousing security
Loss of electricity.

- Important in the foodservice industry.

Cleanliness and
sanitation issues - Positive impact on employee safety, morale, and
productivity.

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CHAPTER SUMMARY
• A warehouse is any location where stocks of materials are held on their journey
through supply chains.
• A key reason for warehousing is that production and consumption may not
coincide, and warehousing can help smooth out imbalances between them.
• The differences among warehouses, distribution centers, and cross-docking
facilities.
• Types of warehouse include public, private, contract, and multiclient
warehousing.
• Public warehousing managers have a number of established duties regarding the
care of goods, and customers pay only for the space that is actually used to
store their products.
• Private warehousing is owned by the firm using such facilities, and it is best used
when an organization has large and steady demand patterns.

CHAPTER SUMMARY
• Contract warehousing involves specially tailored warehousing services that are
provided to one client on a long-term basis.
• Multiclient warehousing, a relatively new alternative, is a mixture of public and
contract warehousing.
• Various design considerations are relevant to warehousing, with trade-offs among
them. For example, a decision to build up or out can affect a facility’s utilization of
labor, mechanization, and automation. Similarly, organizations that prefer a fixed
slot location for merchandise may have to build larger facilities to have a
sufficient number of storage slots.
• Some key issues in warehousing operations include warehousing productivity
analysis, safety considerations, hazardous materials, warehousing security,
cleanliness and sanitation issues.

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