28. Values-Add Roles of Warehouses

[MUSIC] Welcome back to our lesson on value-added roles of warehouses.
Upon completion of this lesson, learners should be able to discuss how warehouses add value in the supply chain.
There are a wide variety of reasons that warehouses exist. In summary, they exist to add value in the supply chain. Let’s take a look at a number of ways in which warehouses can add value in the supply chain.
Transportation consolidation involves combining smaller shipments to form a larger quantity to realize lower transportation rates. Firms will sometimes need to transport less than truckload, or LTL shipments of materials or products. Shipping goods long distances at LTL rates is more costly than shipping full truckloads. LTL requires multiple, costly delivery stops, to effectively utilize the truck. But a full truckload requires only one stop.
Moving LTL amounts relatively short distances, to or from warehouses, can allow firms to consolidate smaller shipments into larger shipments. Such as full truckloads, with significant transportation savings. Below is a simple example of consolidation. For the inbound logistics system, warehouses would consolidate different vendors in LTL shipments and ship a volume shipment to the firm’s plants.
For outbound logistics, warehouses would receive a consolidated volume shipment from various plants and ship LTL shipments to various nearby markets.
Warehouses can also be used to add value in customer order product mixing.
Companies often produced product lines containing thousands of different products, considering color, size, shape and other variations. Such as a shirt manufacturer that manufactures and distributes a style of shirt in a multiple range of colors and sizes. When placing orders, customers often require a product line mixture. Such as a clothing store requiring different shirts from a manufacturer In different sizes, long and short sleeve, etc.
Companies often produce items at different physical locations. So companies with warehouses would have to fill orders from several different locations. Causing several different arrival times, and opportunities for errors to occur. Therefore, product mixing functions at warehouses, for multiple product lines, leads to efficient order filling and reduced transportation cost through a consolidating mixed loads.
Break bulk, the warehouse can also be used to add value through break bulk services. In break bulk, large shipments of manufacturer’s products are broken down into smaller units, which are shipped to multiple customers. For example, a firm can purchase hand cleaning fluids in bulk containers, such as barrels, and repackage this fluid into smaller plastic bottles. The firm then distributes these new bottles to various automotive service centers around the United States, for use by automotive mechanics.
The radio frequency terminal or RFT, communicates to the central computer, that the shipment has been received. The container or load may need to be broken up in the receiving area and assembled into a unit load, in which they are required for placement into the storage system. For example, a full pallet load consisting of 20 packs, or cartons, of a dozen hiking boots in each carton is received into the receiving area. But the storage area is configured to hold 10 packs of cartons of boots.
Cross-Docking, in a cross-docking operation, products from different suppliers arrive to a relatively simple facility with little storage space. Instead of being placed into storage for later picking, products are moved from the receiving area directly to the staging area. And sorted to a weight being loaded into outgoing vehicles or a place directly into the outgoing vehicles, for particular customers or delivery routes. An example of cross-docking materials can be presented by a chain of office supply retailers. Their incoming materials, say copier paper, is picked from delivery trucks or from temporary storage locations to fill specific orders and is moved across the dock to trucks destined for particular stores. The whole process can be completed in a matter of hours or less, reducing the need for storage space, and reducing inventory holding costs. Excess product and small items that come in can also be stored temporarily to await scheduled store deliveries and to permit sorting of inbound loads of mixed products. Cross-docking is focused on an efficient movement of goods from inbound receiving to outbound shipping. A major benefit of cross-docking is the elimination of the put away and retrieval functions. These are costly operations which also increase exposure to damage.
Manufacturing also uses cross-docking to move materials directly from receiving to work in process. This eliminates the same costs and risks as traditional cross-docking. Once goods are manufactured, there’s an additional cross-docking opportunity to move finished goods directly to shipping.
Protection against contingencies, such as transportation delays, vendor stock outs, strikes, inclement weather, these are all another function of warehousing.
This particular function is important for physical supply warehouses because delays in the delivery of raw materials can delay production. An example of the contingency benefit in action is when an automotive manufacturer is able to continue operations after a disaster, like a tsunami strikes supplier operations, by utilizing stockpiles of materials kept in a warehouse near the plant.
Smoothing out production and distribution operations is another warehouse function. Seasonal demand and the need for production runs long enough to ensure that reasonable cost and quality are attained are examples of smoothing. In this case, preventing operations under overtime conditions. In the case of seasonal demands, say, bottled water in the summer, manufacturers must begin producing product well in advance of the season and must store the product in warehouses until it is needed.
Staging, in some industries, a wide variety of products, material, equipment are required to be gathered over a period of time to meet customers’ requirements. This is sometimes referred to as project logistics. Fitting out furniture in a new office building is an example of the need for staging. Because the furniture company gathers all the needed products prior to delivery and installation, so that they can fit out the new office building in a nice, efficient manner.
Kitting is a value added process performed in warehouses, where individual items are packaged together to create a special single item which will be used or purchased as a unit by customers. For example, a toothpaste, toothbrush, razor, comb, and nail clippers can be combined, assembled, packaged in a small travel bag for use by airlines for their customers.
And now we have a question. If you receive an order containing multiple different products, manufactured at different plants, delivered from a single Amazon Fulfillment Center. What type of Value Add Service is the Amazon Fulfillment Center providing?
In this lesson, we have discussed how warehouses add value in the supply chain.
Thank you for watching and we’ll see you on the next lesson. [MUSIC]

Jim Rohn Sứ mệnh khởi nghiệp