Essentials of Freight Forwarding P1.2 (1) 4.30.pptx

Essentials of Freight Forwarding P1.2 (1) 4.30.pptx

1. Essentials of Freight Forwarding Export Packaging and Warehousing

2. IMPORTANT DATES ASSSIGNMENT S – May 3 (Fri) MIDTERM – May 10 (Fri) FINAL EXAM: May 17 (Fri)

3. International Warehouses and Distribution Centers

4. Introduction ▶ The logistics manager faces the decision of choosing the optimal point of origin for goods in international trade. ▶ Goods can be sourced directly from the supplier or shipped from a global warehouse or distribution center. ▶ Warehouses serve both upstream (procurement) and downstream (sales) functions in the supply chain. ▶ Distribution centers specifically refer to warehouses used in the downstream supply chain. ▶ International warehouses present unique challenges compared to those in domestic supply chains, requiring careful consideration by logistics managers.

5. Introduction For an international logistics manager, using a warehouse located indifferent country is an option that can present several advantages: ▶ There are transportation savings: the cost of making many small shipments to a customer located overseas may be much higher than the cost of a single international shipment to a warehouse, even if that shipment is then followed by several smaller domestic shipments. ▶ There are response time benefits: delivery times for a customer order may be much lower if the items ordered are physically close to the customer’s facilities. ▶ There are manufacturing savings: it is frequently cheaper to manufacture a larger quantity of certain goods and store them than it is to produce smaller quantities of those goods. ▶ There are marketing benefits: for some markets, adaptations of the product (packaging, labeling, settings, instructions, . . . etc.) are necessary and better managed in an environment that is close to the customer. ▶ There may be other reasons that are specific to international trade: for example, the duty rates to import from the country of manufacturing may be higher than the duty rates to import from the country in which the warehouse is located, or there may be quotas that limit imports of a product, and the timing of import has to be carefully determined so that the product is imported before the quota runs out.

6. Warehouses: The Versatile Hubs of International Trade 1. Storage of Goods: At its core, a warehouse serves as a secure and organized space for storing goods. Whether these are raw materials, finished products, or inventory for future sales, the storage function ensures that companies can efficiently manage their stock, reducing the risk of stockouts and enabling timely deliveries. 2. Consolidation of Orders: In the realm of international trade, orders can come from various sources, including suppliers, customers, and distribution centers. Warehouses offer a central point where these orders can be consolidated, allowing for streamlined and cost- effective transportation. This consolidation function is particularly valuable for businesses that engage in just-in- time inventory management. 3. Order Fulfillment: Warehouses are integral to the order fulfillment process. They house products ready for shipment, and when an order is received, items can be quickly retrieved, packed, and dispatched to the end customer, enabling swift and efficient delivery. 4. Packaging Services: Some warehouses provide value-added services, such as packaging and labeling. This is particularly important for international shipments, where goods may need specialized packaging to ensure safe and secure transit. Proper packaging also helps meet international regulatory and customs requirements. 5. After- Sale Services: Warehouses can serve as centers for after- sale services, including repair, refurbishment, and warranty processing. In some cases, returns management is also handled within the warehouse, streamlining the process for both businesses and customers. 6. Returns Handling: Dealing with returns is a critical part of international trade. Warehouses can efficiently manage returned goods, inspect them for resale, refurbish if necessary, and route them back into the supply chain.

7. Inventory Holding Companies hold inventory for several reasons: ▶ When a raw material is produced seasonally (generally an agricultural product, such as cereal or fruits), but is sold year- round, it is necessary to purchase the raw material when it is available and hold it in inventory before it can be used in production. ▶ When a raw material’s price fluctuates significantly and unpredictably (as with commodities such as sugar, chocolate, copper, or gold), and if the company can purchase the material at a low price, it can store it until the material is used in production. ▶ When a product is sold only seasonally (a product such as a lawnmower, greeting cards, or snow skis), but the company wants to operate year- round without fluctuations in its manufacturing planning, it needs to accumulate goods in low- sales months and ship them during high- sales months. In the interim, goods are warehoused. ▶ When marketing activities generate a significant increase in sales volume, the company must anticipate that volume change and store additional items to satisfy customer demand. ▶ Because international supply chains can be affected by significant unforeseen events (such as bad weather, strikes, or natural disasters), firms can absorb these disruptions by storing goods in warehouses beyond the normal safety-stock levels of a manufacturing facility (see Chapter 18). ▶ When the company anticipates that it will need to fulfill more retail orders, because it operates an online business selling directly to some customers, and these customers expect very short lead times before delivery.2

8. Warehouses as Distribution Centers: Facilitating Global Trade and Supply Chains ▶ Warehouses have evolved into multifunctional hubs with diverse roles in the global market. ▶ Consolidation is a critical function of warehouses, especially when dealing with goods from multiple manufacturing facilities across different countries. ▶ Distribution centers, specialized warehouses, are central to the consolidation process, helping streamline supply chains. ▶ Their primary role is to enhance the efficiency of global goods movement and support product distribution to retailers and consumers. ▶ Distribution centers are key players in optimizing supply chain operations and global logistics.

9. Consolidation in Distribution Centers: Streamlining Supply Chains and Enhancing Efficiency ▶ Distribution centers are vital for modern supply chain management, particularly in international trade. ▶ They act as strategic intermediaries, focusing on the consolidation of goods to streamline distribution. ▶ Distribution centers receive full-truck- load or full-container- load shipments from manufacturers, often containing single products or limited item ranges. ▶ Their main role is to create smaller, consolidated shipments that consist of multiple products for distribution to downstream stakeholders. ▶ The consolidation process's core goal is to enhance distribution efficiency, leading to cost savings and quicker transit times.

10. Efficiency through Consolidation: Consolidation in distribution centers is rooted in the principle of efficiency. By receiving full-truck- load or full-container- load shipments, these centers can maximize the use of available transportation capacity. Rather than transporting individual products separately, which would be both costly and environmentally unsustainable, consolidation allows for the efficient utilization of valuable space within trucks and containers. The approach essentially reduces the number of individual shipments, contributing to significant cost savings.

11. Reducing Costs: Cost reduction is one of the primary motivations for consolidation. When products are consolidated in distribution centers, the cost of transportation, including fuel, labor, and vehicle maintenance, is greatly optimized. Fewer trips are needed to distribute goods, and the overall cost per unit decreases, benefiting both manufacturers and end consumers. This reduction in transportation expenses often translates into competitive pricing for consumers and improved profit margins for businesses.

12. Shortening Transit Times: Consolidation not only enhances cost efficiency but also contributes to shorter transit times. The streamlined process of consolidating goods at distribution centers minimizes delays associated with handling and transportation. Reduced transit times are particularly significant for businesses aiming to meet consumers' expectations for quick and reliable delivery. Shorter lead times also support lean inventory management practices, allowing businesses to respond to market demand more swiftly.

13. Flexibility and Adaptability: Distribution centers offer the flexibility to handle various product types and SKUs, making them versatile components of modern supply chains. Their adaptability ensures that products from different sources can be consolidated efficiently, benefiting a broad spectrum of industries, from retail to manufacturing. The ability to handle diverse products makes distribution centers suitable for businesses with a wide range of SKUs and production origins.

14. Environmental Impact: The environmental impact of consolidation in distribution centers should not be understated. By reducing the number of transportation trips, these centers contribute to lower carbon emissions, which is a significant concern in an era of increasing environmental awareness. Sustainable practices, such as consolidation, align with the global commitment to reduce the carbon footprint associated with supply chains.

15. Global Reach: In the context of international trade, distribution centers play a crucial role in facilitating the movement of goods across borders. By consolidating products from different manufacturing facilities, often located in different countries, they enable the streamlined distribution of these goods to retailers and consumers worldwide. This supports the global reach of businesses, helping them access and serve diverse markets.

16. Flexibility in Distribution: FLEXIBILITY IN MANAGING THE FLOW OF GOODS CENTRAL HUBS FOR COORDINATING PRODUCT DISTRIBUTION RESPONDING TO DYNAMIC MARKET DEMANDS FULFILLMENT CENTERS FOR E- COMMERCE

17. Flexibility in Distribution: Distribution centers offer businesses a number of benefits, including: ▶ Reduced inventory costs ▶ Improved customer satisfaction ▶ Shorter delivery times ▶ Reduced transportation costs ▶ Improved efficiency ▶ Increased flexibility ▶ The ability to respond to dynamic market demands

18. Supporting International Distribution Channels with Distribution Centers Centralizing Inventory Management Reducing Transportation Costs Efficient Service to Partners and Customers Market Expansion and Adaptability Global Integration

19. The Adaptive Role of Warehouses in International Trade ▶ Warehouses serve a crucial role in international trade by providing specific distribution services to exporters. ▶ These services may include adapting packaging, labeling, or products to meet legal, cultural, or practical requirements of different countries. ▶ This adaptability enables businesses to navigate global markets effectively and meet the diverse needs of international customers. ▶ Warehouses are dynamic centers that go beyond storage and actively facilitate international trade.

20. Packaging and Labeling Adaptations ▶ Warehouses assist exporters by adapting packaging and labeling to meet varying regulations in different countries. ▶ Differences in regulations can impact the packaging, such as the need for consumer- friendly blister packs or plain boxes for pharmacists. ▶ Labeling requirements and product instructions may vary based on language, legal, and cultural distinctions in different countries. ▶ Warehouses play a crucial role in ensuring products comply with international packaging and labeling standards.

21. Value- Added Services ▶ Warehouses offer value-added services like price- labeling, small repairs, and parts sales for retailers. ▶ Efficient processing of returns and exchanges enhances customer satisfaction. ▶ International markets benefit from local warehouse services for warranty claims and customer support. ▶ Proximity to customers allows for faster and more personalized service.

22. Value- Added Processes: ▶ Value- added processes in warehousing go beyond storage and include activities like customization, quality control, and product assembly. ▶ These processes add value to products and enhance the distribution process. ▶ They help meet the unique requirements of diverse markets and ensure products are market-ready. ▶ Value- added processes are integral to optimizing supply chain efficiency.

23. The Crucial Decision of Warehouse Location The decision to establish a warehouse within a supply chain is a strategic move that can significantly impact a company's operations and cost structure. However, it's not just the decision to have a warehouse that matters; it's also the location of the warehouse that plays a critical role in determining the efficiency and cost- effectiveness of the entire supply chain. This decision can be broken down into three levels: regional or national, municipal, and parcel, each with its own set of considerations and implications.

24. Regional or National Level ▶ The first level of the warehouse location decision involves choosing the region or country where the warehouse will be located. ▶ This choice significantly impacts the company's supply chain and is influenced by factors like target markets, transportation access, trade regulations, and supplier proximity. ▶ For a company primarily serving the North American market, locating the warehouse within the United States can reduce shipping distances and streamline customs processes. ▶ In contrast, a company serving various European markets might opt for a central European location to efficiently serve multiple regions. ▶ The regional decision affects the overall logistics network and impacts landed costs, encompassing transportation expenses and import/export duties.

25. Municipal Level ▶ At the municipal level, the decision involves selecting the specific city or area for the warehouse's operation. ▶ Factors considered at this level include transportation infrastructure, labor availability, customer proximity, and local regulations. ▶ The choice of municipality significantly affects the warehouse's operational efficiency, especially regarding distribution within the area. ▶ For e- commerce companies prioritizing rapid delivery, opting for a location within or near a major urban center can reduce last- mile delivery times. ▶ Conversely, cost- efficient goals may lead to choosing an area with lower labor and real estate costs, directly impacting operating expenses and service quality for customers.

26. Parcel Level ▶ The most detailed level of the warehouse location decision focuses on choosing a specific building or parcel of land. ▶ Factors considered at this level include real estate availability, building condition, proximity to transportation hubs, and expansion capacity. ▶ The choice of building or parcel is crucial because it directly impacts daily warehouse operations, including storage, order fulfillment, and workforce management. ▶ Specific requirements, such as temperature- controlled storage for certain products, must be accommodated by the chosen facility. ▶ The parcel choice also influences the warehouse layout, affecting goods flow efficiency and the ability to adapt to changing operational demands.

27. Warehouse Ownership There are three ways to manage the ownership of a warehouse; the exporter can purchase or build the warehouse and handle it as a sales subsidiary, or it can use the services of a third- party logistics provider— a 3PL— , such as a public warehouse or a contract warehouse.

28. Public Warehouses ▶ Public warehouses offer warehousing space and services to multiple companies for a predetermined fee. ▶ Public warehouses provide flexibility to exporters as their costs are variable, and they can easily adjust space and services as needed. ▶ The location of a public warehouse is determined by the warehouse owner, potentially serving as both an advantage and disadvantage to exporters. ▶ The warehouse's location might be optimized for the owner's customers but may not align perfectly with the exporter's needs. ▶ Careful analysis of the warehouse's location relative to the exporter's requirements is essential before entering into an agreement with a public warehouse.

29. Contract Warehouses ▶ A contract warehouse is operated by a third- party logistics provider under a long- term contract with an exporter. ▶ Contract warehouses are often dedicated to a single customer, the exporter, and are suited for exporters needing predetermined warehouse space without the responsibility of ownership or management. ▶ Contract warehouses offer exporters the expertise of the third- party logistics provider in site selection, size, and operational design. ▶ While contract warehouses offer less flexibility compared to public warehouses, they are a recurring monthly expense for the exporter. ▶ Exporters may opt for contract warehouses when they lack managerial expertise for warehouse operations and aim to reduce exposure to foreign labor contracts.

30. Private Warehouses ▶ A private warehouse in a foreign country is owned and operated by the exporter, utilizing its own resources and personnel. ▶ This option requires capital investment, as well as hiring management and labor to run the warehouse. ▶ Private warehouses are suitable when the exporter possesses the necessary expertise in warehouse management and when the quality of service justifies the incurred costs. ▶ They are also preferred when the exporter foresees significant market growth that public or contract warehouses cannot accommodate. ▶ In rare cases, private warehouses are used when no other viable alternatives, such as public warehouses, are available, or when the contract warehouse providers' capabilities do not meet the exporter's standards.

31. Warehouse Activities Once a warehouse is selected, its operations can be divided into five broad categories: ▶ Receiving ▶ Storage ▶ Picking ▶ Packaging and Shipping ▶ Other Operations

32. Receiving ▶ The acceptable pallet sizes— A pallet necessitates mechanical equipment to be moved. While pallet sizes are somewhat standardized in some industries and countries, they are not universally uniform. European pallets are 1.2 meters by 0.8 meters (approximately 48 inches by 32 inches),but other sizes exist in those countries. U.S. pallets are more varied, with the most common pallet size being the one used by the Grocery Manufacturer Association, which is 40 inches by 48 inches (approximately 1.01 meters by 1.22 meters), but many other options exist. Australian pallets are completely standardized domestically but are a size that is not used anywhere else in the world, as they are square, 1.16 meters (approximately 46 inches). It is important that the pallets be the correct size so that goods are not moved from one pallet to another as they are received. ▶ The markings and other labeling requirements of the warehouse— Proper labeling prevents delays in accepting the goods. Most warehouse operate with a barcode system that must be able to read whatever information is on the received goods. ▶ The time at which the goods should arrive— While it is sometimes difficult to enforce in an international environment, a time of arrival allows the warehouse to plan for proper receipt of the goods with the appropriate personnel and equipment, so that there are no delays for the delivery driver.

33. Receiving ▶ The initial warehousing activity receiving involves receiving goods for storage. ▶ Prior to receiving the goods, the warehouse communicates essential information to the supplier, including acceptable pallet sizes, labeling requirements, and the expected time of arrival. ▶ Correct pallet sizes are important to prevent the need to move goods between pallets during receipt. ▶ Proper labeling ensures efficient acceptance of goods and aligns with the warehouse's barcode system. ▶ Receiving goods occurs on a dock, often from a truck trailer or a container; containers from abroad should be opened with care, including inspecting the seal, securing doors with a chain, and checking the quantities and types against purchase orders and transport documents before storage.

34. Storage ▶ After receiving goods, they are placed in storage in various ways within a warehouse. ▶ Some warehouses, like e-commerce facilities, store goods in their primary packaging on low shelves for easy manual access. ▶ Most warehouses store goods in secondary or tertiary packaging, with secondary packaging being corrugated paperboard boxes and tertiary packaging being pallets of secondary- packaging boxes. ▶ Stacks of pallets can be placed directly on the warehouse floor, but they are limited in height to prevent crushing the bottom pallet's secondary packaging. ▶ Goods can also be stored on metallic racks, which can hold pallets or merchandise in secondary packaging on shelves. The design and height of these racks depend on the warehouse's configuration and equipment.

35. Storage ▶ Warehouses in regions with high land costs use higher racks and narrower aisles to optimize space. ▶ High racks and narrow aisles require stronger floors, increasing installation and operational costs but reducing land usage. ▶ Lower racks and wider aisles are cost- effective but demand more land. ▶ The choice between rack height and land usage represents a trade- off in warehouse design. ▶ In areas with expensive land or limited expansion options, specialized racking systems have been developed to maximize space utilization, despite being more costly than traditional systems.

36. Storage Pallet- flow racks or gravity- fed racks are designed to store pallets on rollers rather than fixed shelves (see Figure 15.5). The bays are inclined so that the pallets or boxes can be loaded in the back of the racks and flow automatically to the front of the rack when a pallet is removed. These racks allow for a greater density of goods in the warehouse, but each bay can only store one type of item. Rollers are more expensive than fixed shelves and demand more maintenance.

37. Storage Mobile racks are wheeled racks that can move on rails, so that the aisles between racks can be eliminated. Whenever an item needs to be stored or retrieved, the racks are moved to create an aisle. Even heavy- duty racks for pallets can operate on this basis. The racks move using electric motors or human power. The cost of installing and operating mobile racks is higher than static racks, but the capacity of the warehouse can increase by as much as 100 percent without a change in its size.

38. Storage V ery- High- Bay racks can be as high as 60 meters high (180 feet), and are built as part of the structure of the warehouse; that is, unlike traditional racks that are built inside a warehouse, the very high- bay racks are built before the roof of the warehouse is installed, and they help hold the roof in place. It also gives the racks more rigidity. Therefore, existing warehouses cannot be retrofitted to use very-high- bay racks. These warehouses utilize their space very well, but the high costs of construction and operation make this option only attractive in areas in which land is very expensive.

39. Storage Automated Storage and Retrieval Systems or ASRS operate in warehouses that use conveyor belts, lifts, and other automated devices to place full pallets in high- bay or very-high- bay racks. Their speed and ability to work concurrently (each aisle has its own devices) allows ASRS to be very quick and accurate. Automated Storage and Retrieval Systems must utilize uniform pallet sizes that are all in perfect condition; any deviation from the standard makes it a challenge for the system to handle. ASRS warehouses are very expensive to build and operate, and they are only built in areas where land is limited, and labor prices are high. The Mansueto Library of the University of Chicago holds its collection in an ASRS warehouse that handles the books in identically sized bins and stores them in a 50- foot- deep (15 meters) underground area. This system allows the library to keep its entire collection on-site rather than keep the less frequently used books off- site, as other libraries must do to save shelf space. Books can be retrieved in minutes.

40. Storage: Robots ▶ Warehouses are increasingly using robots for efficient operations, with Amazon leading the way by acquiring over 45,000 robots. ▶ In robotic warehouses, goods are stored in small "pods" on metallic racks with multiple shelves, each with a 2x2- foot footprint. ▶ Robots in these warehouses retrieve and transport pods for storage and retrieval, circulating under them. ▶ Human workers pick products from the pods at the front of the warehouse to fulfill orders. ▶ Robots autonomously recharge their batteries when running low by moving to dedicated charging areas.

41. Picking Once the goods have been received and placed in storage, the next activity in a warehouse is picking the items to fulfill customer orders. The picking activity consumes most of the labor costs of a warehouse or distribution center. There are two main points to consider in determining the best picking alternative for a warehouse; the overall strategy, which includes selecting a method to fulfill the strategy, and the technique utilized to support that combination of strategy and method.

42. Picking Strategies ▶ Picking strategies in a warehouse are determined by the type and size of orders it fulfills. ▶ Different strategies are used for orders involving full pallets, pallet layers, single boxes, consumer items, or individual items. ▶ One less common strategy is the "goods to picker" approach, where goods are brought to the picker using automated systems like Kiva robots or Automated Storage and Retrieval Systems (ASRS). ▶ Carousel storage systems are also used for small products, such as in pharmaceutical warehouses, where the entire product range is stored on rotating carousels. ▶ With the increasing use of robots in warehouses, the "goods- to- picker" strategy is likely to become more prevalent.

43. Picking Strategies ▶ Warehouses can use a "picker-to- goods" strategy where employees retrieve goods from the storage system. ▶ This is the most commonly used picking strategy but can be inefficient as much as 50% of the picker's time is spent on travel within the warehouse. ▶ The stationary location where a picker makes selections is called a "pick face." ▶ The simplest way to implement this strategy is "picking by order," where employees retrieve items for one order at a time. ▶ "Picking by order" is less effective for small orders with items scattered across the warehouse. ▶ A more efficient approach is "cluster picking," where employees handle multiple orders at once, typically two to ten different orders. ▶ Employees place the items from these orders into different boxes or totes on a cart. ▶ After picking, the orders are taken to the shipping area for packaging and shipment.

44. Picking Techniques ▶ Warehouse managers must employ a picking technique for accurate order fulfillment. ▶ Traditional paper list picking technique involves printing each order on paper, and the picker manually checks and marks items as they are placed in the cart. Label picking is an improvement where the pick list is printed on labels, and the picker attaches labels to items found, allowing for accuracy and quantity checks. ▶ ▶ Barcode picking employs barcodes on both items and pick faces, with the picker using a barcode reader and screen to identify the next item to pick, its quantity, and location. Barcode picking ensures that the picker scans the correct product in the correct quantity before moving on to the next item. ▶ ▶ Barcode picking is the most frequently used technique in warehouses. These techniques increase productivity and reduce errors, especially in complex order environments or with less- educated employees. Technology- based techniques rely less on the picker's skills and more on technological aids. ▶ ▶

45. Picking Techniques ▶ Voice picking is introduced to enhance the efficiency of the barcode technique in warehouses. ▶ In voice picking, the warehouse computer communicates instructions for the next pick and its location via a headset with an artificial voice. ▶ Earlier voice- picking systems required picker confirmation with a hand- held barcode scanner, but newer systems use voice- recognition software, allowing pickers to confirm verbally and work with both hands. ▶ Voice recognition technology benefits cold warehouses where gloves are necessary and warehouses where both hands are needed for handling goods. ▶ In warehouses with a zone picking approach, light picking is employed, featuring lights and small display units with numbers at each pick face. ▶ Light picking directs the picker to the lit pick face, where they pick the products as indicated on the display and place them in totes or on a conveyor belt. ▶ Light picking provides free hands and no headset for pickers, but it involves higher costs due to the equipment required, making it suitable for warehouses with high transaction volumes. ▶ Various picking techniques offer options for improving productivity and adapting to the specific needs of different warehouse operations.

46. Packaging and Shipping ▶ Meeting National Requirements: The goods shipped by a warehouse may be subject to national regulations and standards that dictate size, weight, and labeling. ▶ Packaging and Labeling: In addition to legal constraints, the choice of packaging materials and labeling is critical. Packaging must not only adhere to national regulations but also protect the products during transit. ▶ Customization for Customer and Carrier Requirements: Shipping managers must also consider the unique requirements of customers and carriers. ▶ Minimizing Shipping Costs: The effective consolidation of orders involves reducing shipping costs. ▶ Ensuring Safe Transit: Ultimately, the overarching goal of order consolidation and shipping is to ensure the goods arrive at their destination without any damage. ▶ Domestic and International Considerations: The global economy and interconnected supply chains mean that even domestic shipments may need to adhere to international standards or cater to the preferences of international customers.

47. The Versatility of Warehouses: Beyond Storage to Additional Services ▶ Returns Processing: Warehouses play a crucial role in handling returns, a task that has become increasingly important in the world of e-commerce. ▶ After- Sales Services: Warehouses may have dedicated areas for after- sales services. These services encompass warranty claims processing, spare parts storage and distribution, inspections, and repairs of defective or damaged products. ▶ Value- Added Services: Warehouses often go the extra mile by offering value- added services that can simplify the supply chain for their customers.

48. Warehouse Layout Options ▶ The physical size of the building and its other characteristics (age, construction, height, floor characteristics). ▶ The cost of land and other environmental constraints (maximum height, road access, utilities, location). ▶ The physical characteristics (weight and volume) of the products. ▶ The way goods are packaged when they are received (pallets, secondary packages) and when they are shipped out (pallets, secondary packages, or single units). ▶ The variety of products. ▶ The velocity of products (how long they stay in the warehouse, from receiving to shipping). ▶ The number of shipments, both incoming and outgoing. ▶ The average size of shipments. ▶ The additional services that the warehouse provides. ▶ The possible expansion of the warehouse.

49. Fixed Areas ▶ Warehouses have essential areas that remain consistent across different facilities. ▶ Loading docks are vital for both receiving and shipping operations, ideally separated to prevent confusion. ▶ Receiving docks should include an inspection area for goods, even if most shipments are trusted or certified. ▶ An isolated area for inspecting and handling irregular shipments is necessary. ▶ A staging area near the shipping dock is crucial for assembling goods to ensure efficient loading onto trucks or rail cars. ▶ Service space is allocated for ancillary warehouse activities, such as returns and repairs, separated from main operations. ▶ Maintenance space is needed for recharging, repairing forklift trucks, and maintaining various equipment, with additional office space often located on a mezzanine level.

50. A-B- C Rules ▶ Most warehouses apply an A- B- C rule based on Pareto's Law, which states that roughly 80% of costs come from 20% of items. ▶ The A- B- C rule in warehousing categorizes inventory into three classes: A-class (high cost, 20% of products), B-class (moderate cost, 30% of products), and C- class (low cost, 50% of products). ▶ Warehouse layout follows a similar A- B- C rule, with A-class items stored closer to loading docks to reduce handling time. ▶ B- class items are located further from the docks, and C-class items are furthest away. ▶ Different interpretations of the A- B- C rule can categorize storage based on volume, value, or the velocity of goods (speed of movement). ▶ Some warehouses also classify items based on their speed of movement, with frequent movers (A-class) closer to shipping docks. ▶ Warehouse layout design often involves consulting firms' expertise and may draw from similar warehouses' experiences with the same product mix. ▶ The A- B- C concept offers flexibility in organizing warehouse space, allowing for various interpretations based on specific needs and circumstances.

51. Security ▶ Warehouse security primarily focuses on protecting goods from theft and damage. ▶ Theft can occur in three forms: pilferage (opportunistic theft), organized theft (planned operations), and system's theft (utilizing information systems to manipulate paperwork). ▶ Effective theft prevention involves careful employee screening, visitor monitoring, and implementing processes that divide responsibilities to minimize collusion. Reward systems can also motivate employees to prevent theft. ▶ Damage prevention, caused by factors like forklift accidents or poor storage practices, relies on workforce training and a culture of care fostered by management. ▶ Damage can also result from poor warehouse maintenance, such as roof leaks or misplaced products, which can be mitigated through proper processes and procedures. ▶ Warehouse security measures designed to prevent theft are generally adequate to deter potential terrorist activities. ▶ International supply chain processes further reduce the risk of terrorism within warehouses. ▶ A combination of security and preventative measures helps protect goods and maintain overall warehouse safety.

52. Leveraging Warehouses for Export Success ▶ Reducing Lead Times: Proximity to customers is a key advantage that a strategically located warehouse can provide. When an exporter's warehouse is near its target market, it can offer lead times comparable to those of domestic competitors. ▶ Meeting Unforeseen Demand: In the dynamic world of international trade, an exporter may experience unexpected surges in demand for their products. In such scenarios, a well- managed warehouse stocked with inventory can prove to be a lifesaver. ▶ Providing Value- Added Services: Warehouses can offer an array of value- added services, which can be highly beneficial to customers. These services include product customization, kitting, labeling, and quality checks, among others. ▶ Efficient Aftermarket Services : The ability to provide aftermarket services is another key aspect of gaining a competitive advantage. With a local warehouse, exporters can efficiently offer warranty work, repairs, and spare parts replacement to their customers.

53. You Are Ready for Robots in the Warehouse