Warehouse And Inventory Management - Report Example

WAREHOUSE AND INVENTORY MANAGEMENT CONTENTS S/No Page Business Report Introduction 2 Study for a Distribution Centre in Australia 2 Centre of Gravity Method Load Distance Technique Scoring Model 2 Warehouse Space & Layout Planning 4 Space Optimization Layout According to Needs Warehouse Efficiency 3 Warehouse Operations Management 5 Microsoft DynamicsTMAX Ideal Warehouse Management 4 Case Study: Use of Information Technology 6 Les Wood Associates Management Consultants Common Faults of Big Companies 5 Modern Methods of Inventory Management 7 6 Conclusion 7 7 References 8 8 Appendices 9 - 14 Grid Map of Australia Excel Calculations for Centre of Gravity Load-Distance Calculations Minilya, Port Hedland, Bundanberg and Gladstone Location Factors WAREHOUSE AND INVENTORY MANAGEMENT Business Report Proper warehousing and good inventory are some of the prerequisites of good business and a firm’s advancement. Before we can go on with answering the needs of our clients and other business partners or customers, we have to see to it that goods are in properly handled, the quality has never faded since the manufacturing stage, and the customers and partners are dealt with like they are special to the company. We are producing this business report because our company is in the process of growing up, and growing up means expansion, more facilities, more people, responsible people to handle new facilities and warehouses. On the outset, here’s the report. 1. A prospective distribution centre in Australia was carefully studied using the following techniques: a. Centre of gravity method Given were customer and supplier locations and annual weights shipped and grid map of Australia. A general geographical area for distribution centre was identified based on the Centre of Gravity principle, taking into consideration socio-economic and other factors. Following was also taken into consideration: Taken and measured from the grid map were the X and Y distances (please see appendices and grid map), for the customer and supplier locations and the four potential distribution centres: Port Hedland, Minilya, Gladstone and Bundaberg. Measured were the grid map coordinates, then calculating the centre of gravity using Microsoft Excel resulted in the different data for the various distribution sites. In calculating the centre of gravity, we had the following approach: locate facility with respect to the centre of geographic area, based on weight & distance traveled, establish grid-map area, identify coordinates & weights shipped for each location. The distances from zero point were individually measured using the map’s scale in kilometres. Each was solved using Microsoft Excel, finding the sums and square roots with respect to the four potential sites. In locating the centre of gravity, we have: X, Y = coordinates of the new facility at center of gravity; X1, Y1 = coordinates of existing facility i, W1 = annual weight shipped from facility i. We get the calculation from Excel: by multiplying each of the distance by the annual weight, add all of the sums of the multiplied weight and distance of all the customer suppliers, and all over the added weights in kilograms of all the suppliers, the result is the centre of gravity. This can be expressed in simplified formula, such as x = (weight x distance) + (weight x distance) + (weight x distance) and so on, all over the added weights. b. Load-Distance Technique Load-distance technique was computed for each of the different sites. Having determined the distances for the customer and supplier locations in the grid map using straight lines in Microsoft Excel, this was calculated. Potential site Minilya resulted a load-distance of 242118226.01, nearest the centre of gravity which is 2280.52 on X, and 2353.13 on Y. Computing this in Excel, the sum and square roots, the result was 2193.16, for Darwin. The given formula for LD = Load-Distance value has square roots for X and Y, and, X1 and Y1, as follows: l1 = the load expressed as a weight, number of trips or units being shipped from the proposed site and location; d = the distance from the proposed site and location; d1 is equal to the square root of (x1 – x)2 + (y1 – y)2, where: (x,y) = coordinates of proposed site; and (x1, y1) are coordinates of existing facility. Computing this in Excel, the square roots and the sums of the squares, for Darwin the following results could be gleaned: Minilya = 7676099.27; Port Hedland = 5638830.22; Bundanberg = 8693819.14; and Gladstone = 8330900.69. The results of these computations, meaning the summation of the load distances for suppliers with respect to each of the potential sites, Minilya got a low score, therefore it is more preferred among the customer suppliers. This result was acquired after all the other computations had been done in each of the respective customer suppliers. The x and y axis gave particular distances, measured according to the scale in the grid map, with zero beginning. c. Scoring model Location factors were added and multiplied for each of the four sites namely: Canberra, Perth, Sydney and Melbourne. Calculation was simple at Excel, each earned a weighted score. Perth has a weighted score of 80.70 and is therefore more preferred. Using the centre of gravity method, it is highly recommended that Minilya be given weight and recommendation, it is nearest to the centre of gravity. As shown in the grid map, it was established, through the various calculations, that Minilya has the nearest proximity, more cost effective. 2. WAREHOUSE SPACE AND LAYOUT PLANNING Handling in a warehouse or distribution centre will have a major impact on how effectively materials flow through the system. It will affect both the resource usage and the costs of those resources. Various methods of moving goods through a warehouse are used. Space and layout planning however are paramount in a smooth flow of goods. Added with this are transportation costs and proximity to markets, the factors to warehouse location. There must be optimization in warehouse layout to increase efficiency and accuracy. Also obtain a complete overview of inventory to help improve customer service. Streamline warehouse processes to reduce costs or maintenance expenses. With efficient men and resources, we can find ways to allocate warehouse space efficiently based of items and warehouse zones. Warehouse layout and sizing is a critical aspect of planning a new facility or re-designing an existing building. Many times organisations start from a fixed view of what size the facility will be, and most of the times the square footage is based on affordability. The problem with this, is that the building may end up to be too big, and therefore more expensive or too small and put operational constraints into the facility before the design even gets off the ground. Warehouse layout must be executed according to the changing needs, so you can achieve optimum warehouse efficiency. Establish high- and low-priority storage areas for optimum placement of goods and block locations to restrict movement of goods. The warehouse must be divided into zones to accommodate different storage needs such as temperature requirements or the rate of turnover of various items. Warehouse locations can be specified according to: warehouse, aisle, rack, shelf and bin. Then, they can be defined based on parameters such as space and pallet type. Control and flexibility can be done with it. Increase warehouse efficiently by automatically identifying optimal storage locations for items, based on the characteristics of items and warehouse zones. All warehouse activities are recorded in journals, so you can recreate a complete history of actions and item identifiers. 3. WAREHOUSE OPERATIONS MANAGEMENT A software can also be incorporated in the operations for maximum efficiency, less costs and quality-oriented service to the customers. One is recommended known as Warehouse Management in Microsoft DynamicsTMAX. This helps allocate warehouse space efficiently by automatically identifying optimal storage locations for items, based on the characteristics of items and warehouse zones. Some other factors include: all warehouse activities are recorded in journals, and a complete history of actions and item identifiers using an audit trail. An ideal warehouse operations management helps: to optimize warehouse layout to increase efficiency and accuracy; obtain a complete overview of inventory to help improve customer service; and, streamline warehouse processes to reduce costs. 4. Provide a detailed case study of the use of information technology (IT) in the warehouse. Use this as a basis for a review of how technology can help the warehouse manager achieve his objectives. A company with warehouse operation in trouble consulted Les Wood Associates Management Consultants. A case history was presented to the Consultants, and the following was found out: The company was closing its southern operation and consolidating in the northeast. They needed more warehouse space than the current 80,000 sq. ft. warehouse to their manufacturing operation. The Consultants were asked to help them to locate a new site and set up the warehousing there. Before looking for a new site, they studied the operation, and found that they could use the existing warehouse space more effectively, eliminate excess inventories, make use of other space within the building and eliminate the need for an outside operation. They added more information technology features, eliminated unnecessary costs, installed necessary and new software to help the warehouse manager manage the warehouse effectively, and the result was a $300,000 saving per year, and no upheaval to the operation. This is very important in a warehouse operation. Big companies ignore ordinary business activities, and if they see that they are growing, they just keep on expanding and expanding, without the necessary inventory. Inventory is very important. And this must be done with the right people or right Consultancy firm to conduct the survey. What must be done and looked at are the present sites and facilities, that is, if they are really that crowded or insufficient for new expansion. What happened in this case conducted by the Management Consultants was that they really looked at the reality of warehousing, and then they also saw to it that proper handling and adequate information technology features were in place. With these taken into consideration, extra costs can be avoided and savings earned. Instead of spending thousands, or millions, of dollars for expansion, earnings flow in, without going into the necessary expansion and extra costs. These are things that are normally ignored in big companies with huge facilities and a large manpower. Proper and reputable consultancy firms are just there waiting and ready to give ideal and detail recommendations. They have to be employed when expansion problems or in warehousing take place. 5. What do you understand by modern methods of inventory management? Compare these with more traditional models such as re-order point and EOQ. Discuss when it would be more appropriate to use one system or another. Inventory Management maybe conducted when as a result of rapid expansion in a particular company and some facilities maybe overflowing, or other activities may have to be ended or further expanded. Products, expansion, business activities will have to be investigated so as to accommodate other business deals. Les Wood Associates Management Consultants conducted an inventory management in a particular molding plant. The Company complained that their warehouse was overflowing and they were considering ending a lease to a long time tenant who was paying them considerable rent. They were asked to look at the layout and see if they would improve the space utilization. Their initial investigation revealed that the plant produced much. This led to large inventories. They then recommended a change of strategy. By holding supplies of the major packaging materials, it was possible to start manufacturing any product with 24 hours notices. There was then a reduction in finished goods inventory with associated financial and space benefits. The facility was enough, the warehouse was big enough, and manpower was sufficient and efficient enough. A change of strategy was the solution. With the current trend, this is more preferable than any other method of inventory. References: 1. www.microsoft.com/BusinessSolutions 2. http://www.lwassoc.com/Histories.htm. 3. http://www.microsoft.com/dynamics/ax. 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