Introduction to Distribution Management

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Distribution Management

Introduction to

What do we mean by Logistics?
• Logistics concerns itself with the movement of the physical flow which begins with the source of supply and ends at the point of consumption. • Logistics is also concerned with: • • • • • • • Plant and warehouse location Inventory levels Production scheduling Materials management Storage Customer order processing Inwards and outwards freight and

• Distribution channels.

History of warehouse
• In early writings, man was described as having stored excess food and kept animals for emergency surplus. • As civilization developed, local warehouses were introduced. Merchandise was stored in connection with shipping, trading, and manufacturing activities. • When transportation branched out from local to cross-country, warehouses became more than local storehouses. • The warehouses were located in the center of the city, usually close to the railroad depot and the wholesale market district.

History of Warehouse
• As the demand for storage space increased and land value rose, multistory buildings were erected to provide more storage space on minimum amount of land. • Technology has created a highly specialized discipline that allows warehouses to store more per square meter, move stock faster and more accurately, and to know where everything is located.

Discussion Connections
Form groups randomly to think about the following questions: • Some people say warehouse is a evil because it is totally a cost-adding activity. Do you agree? • Describe the roles of the refrigerator in your home. What is the implications for the understanding of the value of warehousing.

Why have a warehouse?
• Supply chain imbalances
The supply chain connecting manufacturing with end consumers will never be so well coordinated that warehousing will be completely eliminated. How to increase the flexibility of warehouse operations through process design, system selection and justification, and layout configuration is what we will try to study in the whole course.

Why have a warehouse?
• High speed - zero defect supply chains
Supply chain integration will lead to reduced inventory holdings along supply pipeline. The accuracy and cycle time performance pressures in warehousing are immense.

Warehouse in the Supply Chain

Value adding warehousing
Major Types:
Raw materials and component warehouse
Hold raw materials at or near the point of induction into a manufacturing or assembly process.

Work in progress warehouse
Hold partially completed assemblies and products at various points along an assembly or production line.

Finished goods
Hold inventory used to balance and buffer the variation between production schedules and demand. Located near the point of manufacture Full pallets in and full pallets out

Value adding warehousing
Distribution warehouse and DC
Accumulate and consolidate products from various points of manufacture within a single firm, or from several firms, for combined shipment to common customers. Located central to either the production locations or the customer base.

Fulfillment warehouse and fulfillment center
Receive, pick and ship small orders for individual consumers.

Value adding warehousing
Local warehouse Distributed in the field in order to shorten transportation distances to permit rapid response to customer demand. Single items are picked, and the same item may be shipped to the customer every day. Value-added service warehouse Serve as the facility where key product customization activities are executed, including packaging,labeling, marking, pricing, and return processing.

Value adding warehousing
• Generally, the value of warehousing lies in that having the right product in the right place at the right time. Thus, warehousing provides the time-and-place utility necessary for a company to prosper.

Importance of Warehouse Costs
• Warehousing is expensive • Between 2 and 5 % of the cost of...
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