Logistics and Warehouse
Table of Content
Agenda Page
Introduction 3
Economic Benefits of Warehousing 4-12
Service Benefits of Warehousing 13-16
Conclusion 17
Reference 18
2. Introduction
While effective logistics systems should not be designed to hold inventory for extended times, there are occasions when inventory storage is justified on the basis of cost and service. Storage has always been an important aspect of economic development. In the preindustrial era, storage was performed by individual households forced to function as self- sufficient economic units. Consumers performed warehousing and accepted the attendant risks. Warehouses stored inventory in the logistics pipeline, serving to coordinate product supply and consumer demand. Because the value of strategic storage was not well understood, warehouses were often considered necessary evils that added cost to the distribution process.
2. Economic Benefits of Warehousing
Economic benefits of warehousing occur when overall logistic costs are reduced. For example, if adding a warehouse in a logistical system reduces overall transportation cost by amount greater than required investment and operational cost, then the total cost will be reduced. When total cost reductions are achievable, the warehouse is economically justified. Four basic economic benefits are:
1) Consolidate and break-bulk
2) Sorting
3) Seasonal storage
4) Reverse logistic
2.1 Consolidate and break-bulk
The economic benefits of consolidation and break-bulk are to reduce transportation cost by using warehouse capability to group shipments.
Consolidation occurs when a warehouse receives materials from a number of sources and combines them into exact quantities for a specific destination
Break-bulk occurs when a warehouse receives a single large shipment and arranges for delivery to multiple destinations
Both consolidation and break-bulk
Agenda Page
Introduction 3
Economic Benefits of Warehousing 4-12
Service Benefits of Warehousing 13-16
Conclusion 17
Reference 18
2. Introduction
While effective logistics systems should not be designed to hold inventory for extended times, there are occasions when inventory storage is justified on the basis of cost and service. Storage has always been an important aspect of economic development. In the preindustrial era, storage was performed by individual households forced to function as self- sufficient economic units. Consumers performed warehousing and accepted the attendant risks. Warehouses stored inventory in the logistics pipeline, serving to coordinate product supply and consumer demand. Because the value of strategic storage was not well understood, warehouses were often considered necessary evils that added cost to the distribution process.
2. Economic Benefits of Warehousing
Economic benefits of warehousing occur when overall logistic costs are reduced. For example, if adding a warehouse in a logistical system reduces overall transportation cost by amount greater than required investment and operational cost, then the total cost will be reduced. When total cost reductions are achievable, the warehouse is economically justified. Four basic economic benefits are:
1) Consolidate and break-bulk
2) Sorting
3) Seasonal storage
4) Reverse logistic
2.1 Consolidate and break-bulk
The economic benefits of consolidation and break-bulk are to reduce transportation cost by using warehouse capability to group shipments.
Consolidation occurs when a warehouse receives materials from a number of sources and combines them into exact quantities for a specific destination
Break-bulk occurs when a warehouse receives a single large shipment and arranges for delivery to multiple destinations
Both consolidation and break-bulk