Practical Handbook. of Warehousing. fourth [DITtON

Transcription

1 Practical Handbook of Warehousing fourth [DITtON

2 Pra(ti(al Handbook of Warehousing fourth [DITION K e n nß. eackerman t ~ K. 8. Ackennan, (0. (olumbus, 00 ~. " SPRINGER-SCIENCE+BUSINESS MEDIA, B.V

3 Library of Congress Cataloging-in-Publication Ackerman, Kenneth B. Practical handbook of warehousing 1 Kenneth B. Ackerman.--4th ed. p. cm. Includes bibliographical references and index. ISBN ISBN (ebook) DOI / Warehouses. I. Title. HF5485.A dc20 CIP British Library Cataloguing in Publication Data available Copyright 1997 by Springer Science+Business Media Dordrecht Origina11y published by Chapman & Hall in 1997 Softcover reprint ofthe hardcover 4th edition 1997 Cover design: Andrea Meyer, emdash inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, mechanical, photo-copying, recording, or otherwise, without the prior written permission of the publisher, Kluwer Academic Publishers, 101 Philip Drive, Assinippi Park, Norwell, Massachusetts Printed on acid-free paper.

4 Foreword This is a fourth edition of a work first published in It contains the same number of chapters as the third edition, published in However, it has a substantial amount of new material. Major changes in warehousing in the last seven years have caused appropriate changes in the content of this text. Nearly three decades have passed since our first published writing about warehousing. The goal of our early writing was to develop a better understanding between the third-party warehouse operator and the user of these services. Today the emphasis has changed to a work that provides the tools that every warehouse manager needs. This book intends to be a comprehensive handbook consisting of everything we know that would help the manager of warehouses. Much of the information is based upon materials previously used in Warehousing Forum, our monthly subscription newsletter. While the work is designed primarily as a handbook for managers, it also serves as a guide for students. It is based upon my experience, both as a warehousing manager and executive, and later as a management advisor. The work is designed as a management reference for anyone involved in operating, using, constructing, or trading in industrial warehouses. v

5 Acknowledgments The dozens of people who made this work possible are credited in endnotes. Our writing could not exist without the generosity of people who have been willing to share their ideas and writings with me. We apologize in advance for names that may have been omitted in error. For nearly a decade, Dewey Abram has been our advisor and coach in the preparation of Warehousing Forum, and his suggestions have greatly improved our writing. William 1. Ransom of Ransom & Associates continues to be one of our most effective advisors, and he contributed important ideas for new material in this edition. This book is a successor to earlier books. A 1972 work titled Understanding Today's Distribution Center was coauthored by R. W. Gardner and Lee P. Thomas. Cathy Avenido and Jane Hill provided word processing and organization of the material. William F. Blinn provided final composition of this material. To all these people we are most grateful. vii

6 Contents FOREWORD v ACKNOWLEDGMENTS... vii Background of the Warehouse Industry 1 THE EVOLVING ROLE OF WAREHOUSING History... 3 Warehousing in the Industrial Era... 5 Warehousing in the Age of Information... 6 The Changing Role of Human Resources Management... 7 Warehousing as Part of a Logistics System Globalization of Warehousing A Profile of Tomorrow's Warehouse THE FUNCTIONS OF WAREHOUSING Functions of Warehousing Warehousing Alternati ves Cost Structure The Balance Between Risk and Costs The Changing Values of Warehousing Elements of Warehousing: Space Equipment, and People THE PROS AND CONS OF CONTRACT WAREHOUSI NG The Historical Perspective Is the Contract Primarily for Lending Institutions? The "Evergreen" Contract The Pricing Challenge in Contracts Contracts and Stability ix

7 4 WAREHOUSING AND CORPORATE STRATEGY A Mission Statement for Warehousing The Make or Buy Decision Dealing with Growth What Business Are You in-or, Should Form Follow Function? Motives for Contracting Out The Elements of Warehouse Management 5 COMMUNICATIONS AND ElECTRONIC DATA INTERCHANGE Warehousing Forms Damages Stock Status Information Communications and Order Picking Dealing with Complaints Developing a Standard Procedure EDI-How it Looks from the Warehouse Justification for EDI How Does It Work? How Widely Has EDI Been Accepted? The Future of EDI PACKAGING AND IDENTIFICATION Functions of a Package How the Package Affects Warehousing Effect on Stacking Packaging for Unitization Identification Container Handling Package Design Choosing a Contract Packager A Series of Compromises TRANSPORTATION Carrier Selection The Bill of Lading x

8 Shipper's Load and Count Released Valuation Terms of Sale-F.O.B Dealing with Claims The Special Problem of Hazardous Materials Integrated Logistics ACCOUNTABILITy Title Inventory Responsibility Product Liability Insurance Summary of Claims Procedures STARTING-UP OR MOVING A WAREHOUSE OPERATION Reasons for Finding Another Warehouse Options for Your Next Warehouse Requirements Definition Finding the Best Location Architectural Features Estimating the Cost of Moving Cost of Transferring Each Load How Long Will It Take? Communications Other Communications Opening the Relocated Warehouse AUDITING WAREHOUSE PERFORMANCE Quantifying Warehouse Space Quantifying Equipment Utilization Quantifying Productivity of People Qualitative Measures Tracking Accuracy Account Profitability xi

9 Real Estate Aspects of Warehousing 11 FINDING THE RIGHT LOCATION Location Theory Outside Advisers Requirements Definition Location Models The Final Selection Process BUILDING OR REHABILITATING YOUR WAREHOUSE The Floor Structural System and Roof Docks and Drive Areas Illumination and Heating Foundations and Building Heights Wall Panels Interior and Exterior Finish The Rehabilitation Alternative Planning for Future Uses THE 21 ST CENTURY LOGISTICS FACILITY Some Definitions and Concepts Who Uses Logistics Facilities? Regional and National Differences The Changing Players in Logistics Seven Megatrends The Location Decision The Building Design Operational Changes Financial Considerations I Conclusion and Recommendations Planning Warehouse Operations 14 PLANNING FOR FUTURE USES Design Structure for Versatility Changes in Basic Function xii

10 Internal and External Changes Managing Change SPACE PLANNING Sizing the Warehouse Storage Requirements Interaction of Storage and Handling Systems Stock Location Systems-Fixed versus Floating Slots Family Groupings A Locator Address System Cube Utilization Lot Size Reducing Aisle Losses Reducing Number of Aisles Managing Your Space PLANNING FOR PEOPLE AND EQUIPMENT The Process of Making Flow Charts The Best Sequence "What If' Questions The Critical Role of the Supervisor Planning for Equipment Use CONTINGENCY PLANNING Strategies Trigger Points Planning for the Impact of Strikes-Your Own Firm's as Well as Others' Strike Against Suppliers Strike Against Customers Trucking Strikes Charting the Planning Process Planning Steps POSTPONEMENT Background of Postponement Types of Postponement Postponement of Commitment xiii

11 Postponement of Title Passage Postponement of Branding Postponement of Consumer Packing Postponement of Final Assembly Postponement of Blending Increased Warehouse Efficiency Potential Challenges Postponement in the Warehouse SELECTING A THIRD-PARTY OPERATOR A Four Step Process Evaluation Criteria The Contract Managing a Continuing Relationship Protecting the Warehouse Operation 20 PREVENTI NG CASUALTY LOSSES Types of Casualty Losses Controlling Fire Risks Wind Storm Losses Flood and Leakage Mass Theft Vandalism Surviving an Insurance Inspection Plant Emergency Organizations "MYSTERIOUS DISAPPEARANCE" Electronic Detectors and Alarms Door Protection Alarms Grounds Security Seals Storage Rack Controlling Collusion Theft xiv

12 Physical Deterrent Restricted Access Confirming Employee Honesty Giving and Checking References Other Collusion Theft Controls Marketability of Product Hiring Honest People Using Supervision for Security Procedures to Promote Security Customer Pick-Ups and Returns Security Audits SAFETY, SANITATION, AND HOUSEKEEPING Accidents in the Warehouse Common Sense for Common Warehouse Operations Redesigning Lifting Tasks Training Safety Behavioral Factors Manual Handling and Safety Management's Role Sanitation Excellence in Housekeeping Benefits VERIFICATION OF INVENTORIES AND CYCLE COUNTING Purpose of Inventories Inventory Carrying Cost Benefits of Improvement Problem Areas How Can a "Physical" Be Improved? Incentives Managing the Inventory-Taking Job Controlling the Count Reconciliation Eliminating Inventory Errors by Cycle Counting xv

13 Cycle Counting, Another Approach What Does the Future Hold? The Human Element 24 ORIENTATION AND TRAINING Some Training Examples Training Lift-Truck Operators Why Training Courses Fail Mentoring Mentoring in the Warehouse Goals of Training LABOR RELATIONS Creating a Union-Free Environment in the Warehouse An Example Public Warehousing Alternative Public Warehouse Strikes Using Subcontractor Warehouse Services Transportation Strikes Inventory Hedging Turning from Union to Union-Free Preemployment Screening Employee Complaints The Role of the Supervisor Arbitration Standards Pertaining to Discharge The Essence of Union-Free Management MOTIVATION Barriers to Productivity Who Gets the Incentives? Union Attitudes Installing and Designing the System Pitfalls The Role of the Supervisor The Importance of Listening Feedback xvi

14 27 IMPROVING PEOPLE PERFORMANCE Maintaining Warehouse Discipline Peer Review-A New Approach to Discipline The Interviewing Process Substance Abuse in the Warehouse Job Performance Appraisal Promotion from Within Pride in the Company Productivity and Quality Control 28 MAKING WAREHOUSING MORE EFFICIENT Establish Targets for Improvement Forecasting Reduce Distances Traveled Increase Unit Load Size Seek Round-Trip Opportunities Improve Cube Utilization Free Labor Bottlenecks Reduce Item Handling Improve the Packaging Forces for Gain in Productivity MONITORING PRODUCTIVITY Is Your Warehouse Economical? Monitoring Public Warehouses Implementation Guidelines for Measurement Systems SCHEDULING WAREHOUSE OPERATIONS Scheduling for Peak Demand Why 40 Hours Is No Longer Enough A New Kind of Work Week CUSTOMER SA TlSFACTION- THE ROLE OF THE WAREHOUSE Who Is YOUR Customer? xvii

15 Why Do Something Well That You Should Not Be Doing At All? The Importance of the Customer's Customer How Will You Use What You Learn? IMPROVING ASSET UTILIZATION Space Utilization Energy Utilization Equipment Utilization The Equipment Utilization Ratio Improving Performance Lift-Truck Rebuild Program Key Points of the Rebuild Program The Value of the Program Inventory Performance The Management Factor Why Measure? Danger Signals Inventory Turnover and Distribution Analysis Case History An Action Plan-And Potential Benefits Summary "JUST-IN-TIME" AND ITS VARIATIONS JIT in Manufacturing JIT in Service Support Quick Response Efficient Customer Response and Other Variations WAREHOUSING COSTS Costs Related to Function Developing a Cost for Warehouse Labor Justifying Purchase of Equipment Establishing a Value of Inventory Cost of Goods At Rest The Influence of Inventory Turns The Influence of Warehouse Layout Cost of Goods in Motion xviii

16 35 MANAGEMENT PRODUCTIVITY Defining Management Why Warehousing Is Different The Effective Manager Measurement Tools for the Manager The Critical Tasks of a Manager The Manager's Hardest Job The Buck Stops Here How Good Are Your Warehouse Supervisors? The Supervisor Promoted from Within The Importance of Clarifying Expectations REDUCING ERRORS The Value of Order Checking Order-Picking Errors Order-Taking Errors A Good Item Location System Clear Item Identification Clear Description of Quantity Required Order Identification "Good" Order-Picking Document Other Factors to Consider Personnel Factors Identification with Work Posting Error Rates Using Case Labels "Picking Rhythm" The Handling of Materials 37 RECEIVING AT THE WAREHOUSE The Process: Eleven Steps Physical Flow Variations in the Receiving Process Equipment Locating the Receiving Function Scheduling of Warehouse Receiving Pitfalls of Receiving xix

17 38 SHIPPING Unit Loads Doors Versus Time Dealing with Shipper's Load and Count (SL&C) Controlling Damage Claims Customer Pick-Ups CROSS-DOCKING IN THE WAREHOUSE Success Factors Pricing Forms Achieving the Goal SPECIALIZED WAREHOUSING Temperature-Controlled Warehousing: The Essential Differences Hazardous Materials Warehousing State and Local Building Inspectors Fulfillment Warehousing Household Goods Storage Modernization Diversification Summary ORDER-PICKI NG Four Kinds of Order Picking Quality in Order-Picking Order-Picking Forms Systems for Order-Picking Fixed versus Floating Slots Order-Picking Methods Single-Order versus Batch Picking Zone System of Picking Designing Your Order-Picking System Summary STORAGE EQUIPMENT Defining the Job Improving Storage with Racks xx

18 Reducing Number of Aisles Other Types of Pallet Rack Live Storage-Gravity Flow Rack When to Use Flow Racks What Flow Racks Will Not Do for You The Carousel-It's More Than a Merry-Go-Round Conveyor Systems Types of Conveyors The Automatic Guided Vehicle Systems (AGVS) Alternative Summary MOBILE EQUIPMENT Choosing Lift Trucks Operator Location Types of Lift Attachments Conventional or Narrow Aisle Trucks Brand Selection Automatic Guided Vehicle Systems What to Look for in Mobile Equipment APPROACHING WAREHOUSE AUTOMATION The Relevance of Technology to Warehouse Operations., 486 The Benefits of Automation The Risks of Automation In Conclusion PALLETS AND UNIT LOADS Standardization The Problem with Pallets New Kinds of Pallets Alternatives to Pallets Tradeoffs in Unit Handling New Ways to Use Pallets DEALING WITH DAMAGE Causes of Damage in Physical Distribution Disposal of Carrier Damage xxi

19 Concealed Damage Warehouse Damage Reducing Warehouse Damage Recooperage and Repair Protecting Damaged Merchandise Storage of Damaged Products Loss and Damage Guidelines Damage Control Ratios Damaged Loads Ratio Preventing Warehouse Damage: A Questionnaire REVERSE LOGISTICS IN THE WAREHOUSE Three Reasons for Returns The Role of the Warehouse Operator in Returns Reconfiguring the Warehouse for Returns Security Issues Reconditioning and Repackaging Running a Warehouse in Reverse Keeping it Simple Handling of Information 48 CLERICAL PROCEDURES Customer Service Standards Location of Clerical Center Office Environment Organizing the Clerical Function Interaction with Marketing Manual and Electronic Data Processing Control of Automation Measuring Clerical Costs Management Information COMPUTERS AND WAREHOUSE MANAGEMENT Some Definitions Hardware versus Software-Then and Now So Which Comes First-Hardware or Software? xxii

20 Choosing Warehousing Software Barriers to Implementation Choosing a Warehouse Management System Selecting a New System How Do You Locate the Right Software Company or Package? How Long Does Implementation Take? Summary ELECTRONIC IDENTIFICATION Bar Codes-What They Are and How They Work Scanners Contact and Noncontact Readers Printing Bar Codes A User's View of Bar Coding What Will Bar Coding Do for Me? The Pitfalls The Training Challenge Bar Coding and Luddites The Future of Electronic Identification ENDNOTES ABOUT THE AUTHOR INDEX xxiii