Storage & Handling Systems

1. Storage & Handling Systems

2. Reasons for Storage • Reduce transportation – production costs • Coordinate supply and demand • Assist in the production process • Assist in the marketing process

3. Storage System Functions • Holding • Consolidation • Break-bulk • Mixing

4. Consolidation Warehouse 10,000 lbs. Manufacturer A 10,000 lbs. Manufacturer B 40,000 lbs. 10,000 lbs. Consolidation Warehouse Retailer Manufacturer C 10,000 lbs. Manufacturer D

5. Break-bulk Warehouse LTL Low rate TL shipment Customer A LTL Distribution Warehouse Manufacturer Customer B LTL Customer C

6. Distribution Warehouse used for Product Mixing Product A Manufacturer A Products A, B, & C Customer X Product B Manufacturer B Distribution Warehouse Product C Products A, B, & C Manufacturer C Customer Y

7. Materials-Handling Functions • Loading & Unloading • Movement to and from storage • Order filling

8. Storage Alternatives • Space Ownership • Rented Space • Leased Space • Storage in Transit

9. Advantages of Space Ownership • Less expensive warehousing than renting or leasing (especially if have high utilization of the space) • Higher degree of control over warehousing operations • May be only practical alternative if products require specialized personnel or equipment (i.e., pharmaceuticals) • Benefits from real estate ownership • May use space for other purposes in the future • Space may serve as base for sales office, private fleet, or purchasing department

10. Renting Space in Public Warehouses • 6 most common types of Public Warehouses • Commodity warehouses • Limit services to storage & handling of commodities that spoil easily (lumber, cotton, tobacco, grain, etc.) • Bulk storage warehouses • Store & handle bulk products (i.e., liquid chemicals, oil, syrups, etc.). Also mix products & break-bulk as part of their service) • Temperature-controlled warehouses • Regulate temperature & humidity in the storage space.

11. Renting Space in Public Warehouses • 6 most common types of Public Warehouses • Household goods warehouses • Specialize in storage & handling of household items and furniture. • General merchandise warehouses • Most common type. Store merchandise that does not require special facilities or special handling • Miniwarehouses • Small warehouses having unit space from 20 to 200 square feet. Often grouped in clusters. Intended as extra space – hence, few services provided.

12. Advantages of Public Warehouses • No fixed investment • Lower cost if utilization of private space would be low • Location flexibility

13. Leased Space • Intermediate choice between short-term space rental in public warehouse and long-term commitment of private warehousing. • Typically can achieve lower rate in leasing than in renting the space • Lose some location flexibility since lease contract will be for specified period of time • Leasing might offer the opportunity to have control over the storage space

14. Storage in Transit • Refers to the time that the goods remain in the transportation equipment during delivery • Requires coordination between owner of the goods and provider of the transportation service • May reduce or even eliminate the need for conventional warehousing • Attractive to firms dealing in seasonal merchandise or shipments over long distances

15. Materials-Handling Considerations • Load Unitization • Palletization • Containerization • Space Layout • Storage • Order picking • Storage Equipment Choice • Racks, shelf boxes, bins, U-frames • Movement Equipment Choice • Manual equipment • Power-assisted equipment • Fully-mechanized equipment