FreeQuality.org Training Presentation Consolidation Warehousing Burke Alder November 29, 2005 BYU Marriott School

FreeQuality.orgTraining Presentation

Consolidation Warehousing

Burke AlderNovember 29, 2005

BYU Marriott School


• Definition

• Brainstorming Exercise

• Nuts and Bolts

• How it Works

• Tools of consolidation warehousing

• Benefits

• Real World Example

Outline


• An Exercise

• Summary

• Reading List

Outline - continued

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.*

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

Brainstorming Exercise

How can you use Consolidation Warehousing in your organization?

Consolidation Warehousing – Nuts and Bolts

• Increase global expansion• Meet demand for increased customization of orders• Decrease costs of distribution activities

The goal of many organizations today


• Duplicate or excessive inventories across network • Changing market conditions • High costs to operate multiple facilities*

*www.warehousing.cc

Reasons for Warehouse Consolidation


• Redundancies in network due to acquisition • Ability to leverage automation technology with higher consolidated volume*

*www.warehousing.cc

Reasons for Warehouse Consolidation


“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

The Solution

Consolidation Warehousing – How it works

Without (CW): Direct Process Problems

1. Cost

2. Time Efficiency

3. What a mess

Shipments in…

…Shipments out

Consolidation Warehousing – How it works

Diagram of (CW) Process

Small shipments in…

…large, economical shipments out

Tools of Consolidation Warehousing

• Warehousing Management Systems (WMS)

Ex. Microlise

• Hand Held Terminals

• Vehicle Mounted Terminals

• Just In Time Inventory

Benefits of Consolidation Warehousing

• Reduction in order processing • Reduction in systemwide inventory

costs • Key Component of the logistic strategy


Benefits of Consolidation Warehousing

• Increased efficiencies• Loads from multiple customers

combined • Higher productivity


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.


Company:

Situation: Decision to consolidate its warehouse operations into one national site.

Do the benefits justify the costs?


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


Second Step: Use (WMS) tools• Hand Terminals• Vehicle Mounted Terminals

• Software Microlise


Success

• Increase to 98% Customer Service

• More flexibility within system

• Increased Visibility of Stock

• Reduced Stock Holdings

Consolidation Warehousing - Exercise

Customer Shipment Weight

Bob's Copy Paper 300 boxes, plain white paper 5,000 lbs.

Dave's Exercise Bikes 200 bikes, 15 lbs a piece 3,000 lbs.

Jonny's Relax BeanBags 400 bags 2,000 lbs.

Total: 10,000lbs

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

Consolidation Warehousing – ExerciseInformation 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?

Consolidation Warehousing - Summary

• New trend in global logistics management

• Reduces inventory costs

• Helps improve the bottom line

• Increases customer satisfaction

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/>.

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 .



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/



Consolidation Warehousing - Reading listPearson Specter, Sara. “Warehousing Giants” Modern Materials Handling; Oct2004, Vol. 59 Issue

10, p29-31 ABI Inform Global. ProQuest Direct .


<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/>.


http://www.dictionary.com/

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FreeQuality.org Training Presentation Consolidation Warehousing Burke Alder November 29, 2005 BYU Marriott School