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Supply Chain Management summary chapter 10-15 18
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- Saxion Hogeschool (Saxion)
This is a summary of Supply Chain Management eached in IBMS Enschede Saxion for chapters 10, 11, 12, 13, 14, 15 and 18
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Supply Chain Management 2 summaryChapter 10
WAREHOUSING IN GLOBAL SUPPLY CHAINS
Global supply chain commonly requires multiple echelons,
spread across various international locations (10.1). Storage
solutions are very depending on the volume, variety and
throughput of freight in a warehouse or distribution centre.
Value-adding activities are those supply chain activities that enhance products to increase the
customer’s perceptions of those product’s benefits. Customer value can be added to a product by
improving its quality storage. Warehousing operations can achieve each
of these objectives in various ways, such as (see figure):
1. Creating bulk consignments
2. Breaking bulk consignments
3. Combining freight
4. Smoothing supply to meet demand
Furthermore, warehousing plays an increasingly important role in
manufacturing and logistics postponement. With the recognized benefits
of postponing final assembly and combining freight and/or packaging,
downstream distribution centers today offer much more than just storage and handling. Hence such
facilities include assembly and packaging processes to ensure that order fulfilment can occur as close
to the end customer as possible, postponing stock handling until the order is confirmed. In this way,
the number of product lines that needs to be held only comprises those of the base components
rather than all the varieties of the final goods that could be demanded. This postponement concept
can therefore be used to reduce inventory significantly where appropriate.
Warehouses should aim to provide value-adding services as well as minimize operating costs.
Increasingly, global supply chains are as concerned with information flows as they are with material
flows. Information related value-adding activities such as product tracking and cycle counting are also
essential warehousing functions that improve supply chain performance.
WAREHOUSE LAYOUT AND DESIGN
All activities within a warehouse can be associated with one of the four functions illustrated in the
figure above. At the freight receiving area, core activities include (1) unloading, (2) unpacking, (3)
quality control inspection, and (4) recording the receipt of freight. From here freight will follow one of
two possible routes; moved to a reserved location (‘put away’) or directly to freight dispatch (‘cross-
docking’). Replenishment is the moving of products from a storage location to a pick-up location. This
is triggered by the quantity at the pick locations falling below a determined level (re-order point).
Minimizing the distance that freight travels through the warehouse and/or through automated
handling systems, reduces human error and therefore maintain the quality of the freight. Cranes,
conveyors and AGVs (automated guided vehicles) are such handling systems.
Cross-docking bypasses the storage areas in warehouses and distribution centers. Storage should be
avoided unless the freight requires one of the four value-adding activities in Figure 10.2, otherwise
storage is costly and non-value adding. Cross-docking reduces cost and improves customer service by
accelerating the processing of freight requiring reshipment.
WAREHOUSE MANAGEMENT SYSTEMS
1
,A management information system such as enterprise resource planning
(ERP) system defines the material requirements that are transmitted to
the warehouse or distribution centre for a warehouse management
system (WMS) to manage the information processes within the
warehouse. A warehouse system manages the complexity to trigger the
right work at the right time across the operation to meet demand.
MATERIALS HANDLING AND STORAGE
The term MHE – materials handling equipment - is commonly used to
describe the various types of equipment for handling freight. As in
automated information tasks, automated materials handling improves
standardizes warehouse performance by minimizing human intervention.
A further consequence is the optimization of warehouse space. See table 10.1.
In the case of palletized storage, the alternatives may be classified into ‘dense’ storage systems and
‘individual access’ systems. The former, are suitable where there are many pallets of a product line
and where it is acceptable for any of these to be accessed. On the other hand, ‘individual access’
systems are suitable where there are few. The simplest and cheapest form of ‘dense’ storage is block
stacking, where boxed and palletized freight is stacked in blocks on the floor. This enables excellent
use of floor space, but has restrictions based on the weight of the freight.
Drive-in racking offers a basic frame to support block stacking. This prevents load crushing because
palletized loads are not stacked directly on top of each other. Pushback racking offers high-density
storage by storing palletized freight in rows on each track. Pushback racking is being effective in
storing multiple pallets, and their accessibility is limited.
Pallet Storage
Pallet live storage employs racks equipped with rollers inclined at a gradient to enable palletized
freight to be out away at the back of the rack and roll down towards the front, where it is retrieved.
This facilitates FIFO retrieval. Powered mobile racking offers racking that can be moved along tracks in
the floor to offer access to specific rack locations whilst maintaining high-density storage. This is a
high-cost solution that requires floor reinforcement. Although this solution offers both ‘dense’
storage and ‘individual access’, it can be slow to operate. Adjustable pallet racking (APR) is the most
common ‘individual access’ solution. This basic form of racking is an affordable and flexible solution,
but floor space utilization is poor. Narrow aisle racking is like APR but the aisles are much narrower.
Because special trucks are required, equipment costs are high. The advantage of the trucks is that
they can reach higher. Automated storage and retrieval systems (AS/RS) are common when storing
high volumes and high variety in high densities. They are mostly used for finished goods.
Non-pallet storage
Goods may be stored in variety of formats for example, in cartons, plastic bottles. An advantage of
some of these storage systems is that the product can be delivered and displayed in a shop without
being removed from the storage device.
Order picking
The simplest sequence is pick-to-order, where the generated pick list will direct the picker to retrieve
freight from multiple locations along a pick face or in storage in the warehouse to fulfil an order. This
is the most effective in low-volume operations and situations where a customer may order many
products. Batch picking is an alternative sequence whereby many orders are combined and the picker
then retrieves all goods for those orders at the same time. This is effective but does require the
subsequent sortation of goods to orders. This sequent is suitable for large-scale operations.
2
, Pick-to-zero or pick-by-line sequences are most effective when cross-docking freight. Zone picking is a
method of dividing up the warehouse for picking purposes, with each zone containing the pick stock
of groups of products, and pickers allocated to each zone. Zone picking is adopted in operations
containing a wide product range. Wave picking refers to how orders are released to the picking area.
It is a sophisticated sequencing method suitable for the inherent complexities of warehouses storing
high volumes and varieties of high-throughput freight bring packed into multiple shipments (as in
FMCG).
The way in which the picking occurs can be classified as picker-to-goods, goods-to-picker or
automated picking. Where the operation is small or pick density is high (lot of different product lines),
the picker-to-goods is most effective. Goods-to-picker delivers the freight to the picker who will select
items on their pick list. This increases effectiveness where pick density is low. Automated picking may
be employed where high variety and throughput coexist.
Storage and picking combinations
Despite the obvious benefits of automation, technologies must be
fit-for-purpose. Different warehouses and distribution centers serve
different purposes. The picture summarizes the ways of prioritizing
storage versus picking.
WORK ORGANIZATION AND JOB DESIGN
The picture describes the socio-technical systems theory. Another important consideration in
implementing warehousing technologies is the impact of those technologies on the workforce. This is
the focus of socio-technical systems (STS) theory. The fundamental principles of
STS theory are:
1. Joint optimization of the technical and social system
2. Quality of work life
3. Employee participation in system design
4. Semi-autonomous work groups
Automation and computerization is reducing human intervention in the physical
handling of freight, and increasing information interaction. This has implications for job design.
Work organisation and structure are important considerations in contemporary warehousing. Market
pressures drive down operational costs, bust at the same time demand greater responsiveness.,
reliability and resilience.
Chapter 10 – vocabulary
Cross-docking: a method in which the goods flow in an unbroken sequence from receiving to
shipping, thus eliminating storage, also called flow through distribution.
AGVs: automated guided vehicles, materials handling system that uses automated vehicles
such as carts, pallets or trays which are programmed to move between different
manufacturing and warehouse stations without a driver, these systems are used to increase
efficiency, decrease damage to goods and reduce overhead by limiting the number of
employees required to complete the job.
Value-adding activities: are those supply chain activities that enhance products to increase
the customer’s perceptions of those procedure benefits.
MHE: materials handling equipment, commonly used to describe the various types of
equipment for handling freight.
STS theory: socio-technical systems theory, an approach to understanding the relationship
between technology, individuals, organisations and society in work place design, This systems
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