FreeQuality.org Training Presentation

1. FreeQuality.orgTraining Presentation Consolidation Warehousing Burke AlderNovember 29, 2005 BYU Marriott School

2. Consolidation Warehousing Outline • Definition • Brainstorming Exercise • Nuts and Bolts • How it Works • Tools of consolidation warehousing • Benefits • Real World Example

3. Consolidation Warehousing Outline - continued • An Exercise • Summary • Reading List

4. Definition of Consolidation Warehousing What is consolidation? The merger of two or more commercial interests or corporations.* *dictionary.com What is warehousing? A place in which goods or merchandise are stored; a storehouse.*

5. Definition of Consolidation Warehousing • Pulls together shipments • Same geographical area • More economical shipping loads *Bozarth and Handfield, Intro to operations and supply chain management, pg 344

6. Brainstorming Exercise How can you use Consolidation Warehousing in your organization?

7. Consolidation Warehousing – Nuts and Bolts The goal of many organizations today • Increase global expansion • Meet demand for increased customization of orders • Decrease costs of distribution activities

8. Consolidation Warehousing – Nuts and Bolts Reasons for Warehouse Consolidation • Duplicate or excessive inventories across network • Changing market conditions • High costs to operate multiple facilities* *www.warehousing.cc

9. Consolidation Warehousing – Nuts and Bolts Reasons for Warehouse Consolidation • Redundancies in network due to acquisition • Ability to leverage automation technology with higher consolidated volume* *www.warehousing.cc

10. Consolidation Warehousing – Nuts and Bolts The Solution “For over 10,000 systems, consolidation into a single warehouse system was always found to be optimal.”* *Wei-Shi Lim; Ou; Chung-Piaw Teo, Operations Research, pg 668

11. Shipments in… …Shipments out Consolidation Warehousing – How it works Without (CW): Direct Process Problems 1. Cost 2. Time Efficiency 3. What a mess

12. Small shipments in… …large, economical shipments out Consolidation Warehousing – How it works Diagram of (CW) Process

13. Tools of Consolidation Warehousing • Warehousing Management Systems (WMS) Ex. Microlise • Hand Held Terminals • Vehicle Mounted Terminals • Just In Time Inventory

14. Benefits of Consolidation Warehousing • Reduction in order processing • Reduction in systemwide inventory costs • Key Component of the logistic strategy *Wei-Shi Lim; Ou; Chung-Piaw Teo, Operations Research, pg 668

15. Benefits of Consolidation Warehousing • Increased efficiencies • Loads from multiple customers combined • Higher productivity *Wei-Shi Lim; Ou; Chung-Piaw Teo, Operations Research, pg 668

16. Consolidation Warehousing Real World Example Matthew Clark is the largest independent wholesaler serving the pubs, club, hotels and restaurants of the UK. The business regularly delivers to over 20,000 accounts, ranging from small single operations to some of the largest and most familiar national accounts.

17. Consolidation Warehousing Real World Example Company: Situation: Decision to consolidate its warehouse operations into one national site. Do the benefits justify the costs?

18. Consolidation Warehousing First Step: Consolidated warehouses to one new national distribution center.

19. Consolidation Warehousing Second Step: Use (WMS) tools • Hand Terminals • Vehicle Mounted Terminals • Software Microlise

20. Consolidation Warehousing Real World Example Success • Increase to 98% Customer Service • More flexibility within system • Increased Visibility of Stock • Reduced Stock Holdings

21. Consolidation Warehousing - Exercise Big Hope Logistics handles shipments from businesses in the Portland area. Big Home has three shipments to deliver to the Houston area: Info about each method of shipping (Direct Method) Max load per truck is 20,000 lbs. Direct shipping for each customer costs $2,000, or total of $6,000 Weight Utilization across all 3 trucks is 10,000/60,000 or 17% Next Page

22. Consolidation Warehousing – Exercise Information if Big Hope uses (Consolidation Warehousing) Benefits of consolidation are that loads of different customers can be combined into one truck. Cost of consolidation below: Cost of running warehouse is $90 per 1,000 lbs., or in logistics lingo, $9 per hundred-weight Cost of breaking up shipments is $200 for each customer Under these conditions calculate the cost of the direct method vs. the consolidation method. Which one is best business decision? What is the weight utilization of the consolidated shipments?

23. Consolidation Warehousing - Summary • New trend in global logistics management • Reduces inventory costs • Helps improve the bottom line • Increases customer satisfaction

24. Consolidation Warehousing - Reading list Wei-Shi, Lim. “Inventory Cost Effect of Consolidating Several One-Warehouse Multireatailer systems” Operations Research Jul/Aug 2003 ABI Inform Global. ProQuest Direct . Harold B.Library, Brigham Young University, Provo Utah. 21 Nov 2005 <http://www.um.com/proquest/>. Macklin, Gary. “Glazier Consolidates Warehouses Operations” Refrigerated Transporter; Feb2005, Vol. 40 Issue 9, p14-17, 4p ABI Inform Global. ProQuest Direct . Harold B. Lee Library, Brigham Young University, Provo Utah. 21 Nov 2005 <http://www.um.com/proquest/>. Unknown. “Warehouses That Think With Their Hands” Frontline Solutions Europe; Feb2000, Vol. 9 Issue 1, p24, 1p, 30 Sep 2005 ABI Inform Global. ProQuest Direct . Harold B.Library, Brigham Young University, Provo Utah. 17 Nov 2005 <http://www.um.com/proquest/>.

25. Consolidation Warehousing - Reading list Pearson Specter, Sara. “Warehousing Giants” Modern Materials Handling; Oct2004, Vol. 59 Issue 10, p29-31 ABI Inform Global. ProQuest Direct . Harold B.Library, Brigham Young University, Provo Utah. 18 Nov 2005 <http://www.um.com/proquest/>. Cecil C. Bozarth and Robert B. Handfield, Intro to operations and supply chain management, pg 344 “Defintions.” Homepage. 17 Nov 2005 <http://www.dictionary.com/>. “Consolidation Warehousing.” Homepage. 21 Nov 2005<http://www.warehousing.cc/>.