Question

Answer all the question 1. Warehousing provides time and place utility for three types of inventory (raw materials-semi finished items-stocks), allowing firms to provide customer service and optimize costs. Classify the factors affecting a company's decisions on the number of warehouses to be used, and give two examples. (6 marks) 2. The function of Warehousing aims typically to satisfy customers' needs and requirements while utilizing space, equipment, and labor effectively. Discuss the role of Warehouse operations in satisfying customers? (Minimum 50 words) (5 marks) 3. Normally most of the companies keep a certain amount of safety stock on hand against stockout during replenishment time. How would this affect warehouse space utilization? (4 marks) 4. Operational Decisions comprise storage and retrieval planning as well as order assembly, but because of orders randomness, these decisions have to be made in real-time. How can real-time decisions be made? (5 marks) 5. Differentiate between the Break-bulking and Consolidation operations taking place in a warehouse (Minimum 50 words) marks) 6. How can you evaluate the effects of Warehouse Location on Transportation Costs (Inbound and Outbound Transport Costs) (Discuss in minimum 50 words by giving examples) (6 Marks) 7. Consider your self as a warehouse manager, and you have a product that has been located in more than one location. At the picking stage, explain the process of picking from one location or many locations? (5 marks)

Answer 1

Warehousing is one of the most cruicial function for an organisation dealing manufacturing or distribution of products. It defines the costs and revenue a company can generate. A proper warehousing strategy can help in saving a lot of money for the organisation and thereby reducing overall cost.

1. The factors affecting a company's decision on the number of warehouses to be used are:

a. Consumer locations - The location of consumers plays a very important role in defining the number of warehouses to be deployed. Of the consumers are concentrated in few locations, then warehouses can be deployed on those locations.

b. Cost involved - Another important factor is the cost involved in setting up a warehouse in a particular location. The company should analyse the revenue generated in a particular location where the warehouse is planned. In case, the costing of setting up a warehouse is lesser than the revenue generated, then the company can consider setting up the warehouse. The cost can be determined through factors like rent, taxes, logistics charges, labour charges and other expenses like inventory management.

An example of warehousing locations can be that of Amazon. Amazon chooses the low cost operational locations which is also in close proximity to their consumers. Since Amazon has a huge consumer base, they should be able to put in asany warehouses as possible.

2. The role of warehouse operations in ensuring customer satisfaction is the response or lead time taken in delivering the product. With a well located warehouse, and proper management of warehousing services like inventory management and logistics, the lead time taken in delivering the material to the customer will be less. This helps in increasing customer satisfaction. In today's scenario where firm's are promising same day delivery to major locations means that they are looking at satisfying their consumers and keeping them happy. To do that, they are keeping their backend operations ready and we'll planned to ensure the promises are lived up to thereby leading to consumer satisfaction.

3. Warehouse space utilisation is an art which many companies fail to excel in. There are few organisations who end up utilising their warehouse space to the best of its capability. Having said that, the companies also keep in mind the risk of stock shortage and thereby keep additional stocks in their warehouse as a backup during stockout. This effects in warehouse space utilisation if there is lack of initial planning while designing the warehouse. This warehouse designing is done prior to setting up new warehouses and organisations plan a multi-use space kept separately for such situations. For those who have planned initially, it won't pose much problem, but for those who haven't it becomes a matter concern as they are left with no or little space. They have to analyse the less demand product and reduce the storage of those produce and manage that space to stock up this product in discussion.

4. In today's scenario, with the emergence of technology, the real time decision making has become easier when compared to older times. In today's scenario there are cloud solutions and smart solutions which help warehouse and supply chain managers with data immediately bifurcating the costs involved. Some solutions also alarm them on the high costs or low stock availability and guides them to the best alternate option available. This helps them in assessing the situation and making real time decisions quickly and in a more effective manner.

Having said that, there are difficult scarios also that come up and the warehouse managers face challenges in coming up with effective decisions. During this time, the managers have to analyse the data available and collect reliable data to ensure correct decisions are taken.

5. The break bulk and consolidation are two types of warehousing strategies that helps in cost reduction. The difference between a break bulk and consolidation is:

Break bulk - The material from different suppliers is shipped to a warehouse location in bulk. Once the material reaches the warehouse location, the material is bifurcated into different segments and shipped to different customers. The companies ship material in Full Truck Load to the warehouse and the bifurcated material is again shipped to consumers in Less than Truck Load.

Consolidation - Consolidation on the other hand, is almost opposite. In this process, the material is shipped from different suppliers and collated in the warehouse. The material is not necessarily shipped in Full Truck Load, and collected at the warehouse. Once the material from different suppliers is consolidated, the material is shipped as Full Truck Load to the manufacturing facility.

6. The decision of setting up a warehouse in a certain location is defined on the cost involved in terms of various factors like rent, taxes, logistics etc. The major factor is the transport cost. The transport cost is bifurcated into inbound and outbound cost. The inbound cost of transport is mainly between company and its suppliers whereas, the outbound cost of transport is between company and consumer. In both the scenarios costs are incurred to the company and in order to ensure that these costs are minimised, companies plan to setup warehouses in locations which are cost effective and also reduces the transportation cost.

The factors to determine a warehouse location is :

a. Proximity of carriers - The proximity of carriers such as airport or train stations play a major role in both type of logistics. The nearer the warehouse is located to these carriers, the much lesser the cost of the transport is.

b. Location of suppliers and consumers - The location of consumer and suppliers also plays an important role in determining the warehouse location.

7. If a product is located in several locations, the pickup should be planned in such a way which involves lower cost. If the product locations are nearer to each other, the same can be picked from many locations. In case the product is located in different locations which are far from each other, the products can be collected to a single location and then picked up. This helps in reducing the overall cost.