Logistics

How We Plan to Use the Warehouse Space

The main spaces should be planned are the bulk storage area and the areas for goods receipt, consignment picking and goods dispatch. There are also some possibilities to use more space for the several activities such as:

  • Equipment maintenance
  • Parking area
  • An area for garbage disposal, e.g. empty boxes etc. and goods to be sent back/destroyed and goods for quarantine purposes
  • Employee rest area
  • Administrative office
  • Toilet

WH Layout

Planning consideration to be given to the following:

1. Sizing the bulk storage area.  There are three major factors for consideration:

  • The space occupied by the goods and the equipment on which they are stored.
  • The aisles between the goods, for direct access to the goods.
  • Distance from the wall to the goods.

The space for the goods and any storage equipment will be determined by the characteristics of the product and the volume to be stored for all the goods which are not palletized.

For goods which are palletized, the dimensions of the pallet will be the base factor, when goods are stored within perimeter of the pallet. If the goods overlap the pallet, the dimensions will apply to the area occupied by the goods.

The width of the aisle depends on the use of equipment in the bulk storage area and the method of operations which is used, manually or using handling equipment. If handling equipment will be used, the turning circle of the equipment being used to access the goods must be taken into account. The turning circle or aisle width can normally be obtained from the equipment manufacturer.

2. Sizing the goods receipt area. No specific formula that can be applied to planning this area. Type and size of vehicles to be handled will determine whether loading docks will be required and this will have an impact on the size of the receiving area. Space requirement for marshalling, sorting and quality control need to be calculated with reference to the planned number of loads to be handled in any day.

More space might be required for quality inspection or testing of goods, also we have to consider that goods which are still under inspection cannot be stored pending the result before release it to bulk storage.

Equipment needed to handle the goods will be determined by product characteristics and unit load characteristics. The size of the goods receipt area will also be influenced by the working methods. If goods are unloaded and moved straight to storage, a much smaller area will be required rather than if goods are held in the goods receipt area prior to move to storage. Also there is a possibility to use the same space for both unloading and loading. The advantage of this layout is greater flexibility in the use of people and equipment also reduction in the total space required in the warehouse. The disadvantage is the increase risk of congestion if loading and unloading activities should be done at the same time.

3. Sizing the goods dispatch area. No specific formula that can be applied to planning this area. Almost the same with receipt area, type and size of vehicle to be loaded will determine whether docks will be required and this will impact on the size of the dispatch area. Space requirement for marshalling and checking need to be calculated with reference to the planned number of loads to be handled in daily basis.  Product characteristics and unit load characteristics will determine the type of equipment needed to handle the goods. Adequate space needs to be provided to allow this equipment to operate correctly. The size of the dispatch area will also be influenced by the working methods. If goods are picked and moved straight to the vehicle, a much smaller area will be required rather than if goods are held in a pre-marshalling area prior to loading.

4. Sizing the picking / sorting area.  If the goods are to be received must be selected or sorted before storing then the sorting area should be taken into account. If separate picking area is envisaged, the number of items to be picked will determine the size of the pick-face. The picking method to be used must be considered, i.e. high level, low level etc. Also chosen picking path will influence the aisle width that will be needed. If assembly of goods picked using line or zone picking methods is required, this will require a suitable area to be provided. If a kitting/repacking operation is required, extra space should be planned for this activity.

5. The flow of goods and layout.  The main issues to be considered are:

  • The layout of the space for all activities
  • The physical location of the products in the bulk storage area
  • How the products will flow into and out of the warehouse facility

The objective of defining the flow and layout in the warehouse facility is to optimize the efficiency of the flow of goods through the different operations.

The stages in the movement are:

  • The receipt of goods and rotation
  • Storage of goods in the bulk storage area
  • Movement of the goods from the bulk area to the picking area
  • Selection and reassembly of the goods into loads
  • Dispatch goods

Wherever possible the objective to arrange flow of goods and layout is to achieve a smooth continuous movement through the process and to minimize the travel distance from one stage to the next. The level to which this can be achieved will be directly related to the design, size and shape of the warehouse. The two preferred options which best meet the requirements of the objectives stated above are “through-flow” and “u-flow”.

U-flow provides the following features:U-Flow

  • Because the receipt and dispatch areas are side by side, the space can be used flexibly, particularly if these activities are scheduled to take place at different times in the working day. This can save space overall.
  • Similarly, personnel and equipment can be used in a flexibly way, reducing the requirement for resources overall.
  • Because the main access to the building is in one place, access and security are easier to manage.
  • The building may be extended on the three sides where this is required and where the site allows.

Through – flow as follows:

Through Flow

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General Requirement for Choosing a Warehouse

The selection, design and management of warehouse operation depends on the purpose and operation of a company or business. Same as previous article, below are three important things must be taken into account to choose and decide what type of warehouse to be used:

1. Type of goods to be stored as well as the characteristics of the goods.

The main thing to consider is whether to goods to be stored are food or non food items or both. Key characteristics to be considered as follows:

  • Volume of goods to be stored, for example in tonnage or cubic meters.
  • The frequency and size of deliveries to be received at the warehouse.
  • The frequency and size of dispatches to be made from the warehouse.
  • General environment. It is important that the new warehouse environment provides a condition that ensures there is no deterioration in the quality of goods during the storage period.
  • Temperature sensitivity, whether the goods need to be stored in a special temperature.
  • Whether the goods to be stored is hazardous materials.

2. Total quantity will be stored in order to calculate total space / area required.

  • The size and weight of the goods including packaging.
  • Type of packaging.
  • The need of space for other activities, e.g. repacking, labeling, etc.

3. The storage time requirement.

Warehouse

Beside all those three points above, there are also several points to be taken into consideration:

1. Taking into account about Local Legislation. It is the responsibility of warehouse manager to ensure that the operations complies with Local Regulations and Rules such as:

  • Employment regulation.
  • Health and safety rules.
  • Rules for storage of dangerous materials.
  • Rules for storage of drugs.
  • Building regulations, etc.

2. Selecting a suitable location with the considerations of below factors:

  • Choose a location that is close to the port or geographically closer to the factory or stores or based on the requirement. Ideally, we have to choose a location that minimizes the total time that the goods take from the source to their ultimate destinations.
  • Existing building. The construction should be generally sound, no leak, and well ventilated. The inside wall should be cleaned and painted, preferably white. Check for broken windows and doors. Looks for sign of pest infestation, e.g. dropping and holes in the walls and floor. An assessment should be made to check whether the warehouse is suitable based on the requirement. It is better to select a larger space. The floor should be flat and made by a stable material, ideally concrete. The floor must be capable to support the weight of material which will be stored and applicable to the weight of vehicle that might be entered into the building. If we are going to store food, then it is better to have the building disinfected or fumigated prior the arrival of goods. Check the ownership (legal) of the building.
  • Security. This very important factor for warehouse. The security perimeter of the building and warehouse compound/surrounding areas should provide adequate protections for the building, goods and vehicle also equipment in the warehouse compound.
  • Site location and access. Warehouse compound should be free of flooding and access/road to the warehouse should be passed or suitable for large truck.
  • Access to the services such as electricity, water, telephone links and other services required.
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Monitor and Control the Performance of the Vehicles and the Drivers

Measurement Fleet

In order to improve the performance of Fleet Management System, a system is required to monitor and control the performance of the vehicles and the drivers.

Prior of monitoring and controlling the performance of the vehicles and the drivers, there are three main areas to be considered and implemented:

1. Repair and maintenance of the vehicles. Procedures should be in place to ensure that the work is carried out at the appropriate time, to the appropriate standard and all records should be accurate and kept at vehicle level. Good repair and maintenance procedures are essential to ensure the effectiveness operational of a fleet. There are two things to be considered for this part:

  • Preventive maintenance. This to ensure that the vehicles are serviced and maintained at the correct time. Correctly maintained vehicles will be more efficient and less cost. This also will make the life of the vehicles will be extended and resale value also will be higher. Effective preventive maintenance will also enhance the safety of the drivers and passengers. It is important, therefore that the frequency of inspection of preventive maintenance is correctly established.
  • Repair situation. The procedures should be in place to deal with repairs of vehicles speedily and efficiently. The nature of repair and the reason for the repair needs to be identified. If there is an accident, all report and inspection of the vehicle to be reported in writing and copies of the report should be sent to all respective parties. All reports should be kept in the appropriate vehicle file.

2. Scheduling of the vehicles. This activity is to ensure that the right vehicles are available in the right condition, at the right place and time, to support all the planned of movement. This requires close and on-going liaison with the operational staffs. Information needs to be received from the operation staffs on the required number of vehicles and their movements and changes to activity whether planned or unplanned. Also information of non-availability of the vehicles should also be passed to all relevant parties. If non-availability of the vehicles creates shortage of resource to meet operational needs, then the fleet manager has the responsibility for securing short-term replacement vehicle to ensure operation can continue as planned.

3. Management of spare parts. The level and range of spare parts held in the garage or workshop will be influenced by factors such as the age, variety of vehicle, the usage of vehicles, etc. Procedures for spare parts will differentiate what are consumables and what are defined as spare parts. The procedures need to outline the decision rules to enable staff to decide on which parts are to be held and in what quantity. The procedures will also explain the process to be followed when identifying and requisitioning spared for service and maintenance work and who has the responsibility for re-ordering parts for stock replenishment. Parts should be ordered from authorize dealer or reputable sources that have been approved by the procurement function. The stock of spare parts needs to be accounted for and procedures need to be in place.

Once above three main areas are implemented, it is necessary to measure the performance of the vehicles and the drivers against the budgets that have been set. This monitoring and control will primarily involve measuring the availability and utilization of the vehicles and the running costs of it. The cost of operating a vehicle depends on a variety of factors, these grouped into the two costs, fixed costs – which are incurred whether the vehicle is moving or not and variable or running costs – incurred only when the vehicle is moving.

Cost

Fixed costs are easily recorded. This include wages, licenses, establishment costs for garaging of the vehicle, vehicle tax, insurance, depreciation or interest on the capital cost of the vehicle and any other fixed costs.

Running costs will be gathered from data related to the day to day activities of the vehicle. Running costs include fuel, lubricants, tires, maintenance, parking fee, toll fee etc. The level of maintenance costs is often directly attributable to the replacement policy. Fuel consumption will depends on the way that the vehicle is driven, the nature of the terrain over which it is driven and the age also fuel efficiency of the vehicle. In addition to those costs, there may be also being some capital costs and overhead costs which will complete the overall total cost figure. All information above should be completed in the vehicle logbook by the driver for every journey made. This logbook should be checked by fleet manager minimum once a week.

Vehicle Utilization and Performance

Productivity of the vehicles and the drivers are related to the utilization of those resources and the manner in which they performed.  Measuring performance of resources gives the required information that those resources are being used as effectively and efficiently as possible. In the planning stages for transportation resources, the calculations was made for required fleet size and the needs of the driver based on estimates of work to be done. Inefficient will result in unnecessary costs being occurred.

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Fleet Management for Land Transport

Fleet management for land transport is the activity that supports the various land transport activities. This could relate to the management of vehicles involved in the movement of goods/cargoes/materials, the management of light vehicle fleets used in the transportation of people and light cargo, possible motorbikes and also other equipment such as warehouse handling equipment. Fleet management supports these activities through the management of the assets that are used.

Fleet Management

In general, the functions of fleet management for land transport as follows:

  1. Maintaining the assets/vehicles in an acceptable condition to ensure the safety and security of the goods and personnel to be moved.
  2. Make an appropriate systems and procedures that enable effective management controls to be in place. This includes vehicle maintenance, driver management, fuel management, vehicle tracking, also health and safety management.
  3. Monitoring and measurement of costs and the utilization and performance of the vehicles concerned. Fleet cost effectiveness involves not only the control of vehicle operating costs, but also their maintenance and repair, the spare parts stocks and also the replacement of vehicles at optimum point in their life.
  4. Ensuring that the vehicle, in terms of both numbers and composition, is balanced with the level of activity required.

There are number of areas to consider when setting up a vehicle fleet. Initially it is necessary to understand what will be done by the vehicles, what volume of work is envisaged and the area as well as environment in which the vehicles will operate. Once those are understood, suitable vehicles need to be selected and the support infrastructure decided. Procedures and systems need to be put in place to manage the fleet and measure, monitor and control its performance.

The physical condition of the road and environmental situation in which the fleet is to be used will influence the fleet composition. There will also be both general and specific operational needs to be considered. It is necessary to consider what is going to be transported, and any legislative or regulatory influences that may impact the use of vehicle in a fleet. It is also important to know the lead time that will elapse before the vehicles will actually be delivered as it may be necessary to rent vehicles.

Simple fleet report should provide data as below:

  1. Driver’s name
  2. Driver’s licence
  3. Plate / registration number
  4. Passenger or cargo
  5. Origin
  6. Destination
  7. Purpose of the travel
  8. Signature of passenger or receiver of goods/cargo
  9. Mileage
  10. Fuel consumption
  11. Maintenance / repair
  12. Remarks

This report should be checked on daily basis or at least weekly basis by fleet manager or person in charge.

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Transportation Management – Monitoring, Control and Evaluation

The mission of transport is to execute the movement at the right time, in the right quantity and condition, to the right place, at an acceptable cost. There has to be a structured approach to the selection and subsequent monitoring and control of the providers to achieve that mission.

Previously, we have seen the selection of transport mode is based on four key criteria and operational factors which very influential in this selection.

MNE

Movement of goods or materials raises a number of issues to be dealt with. Ideally movements should be managed by a dedicated staffs or unit.

Below are the tasks that must be executed by the staffs or the unit that monitors and controls during the movement:

  1. Track the progress of the goods/materials and update delivery times accordingly.
  2. Manage the staffs involved or required in the movement.
  3. Deal with any issues that arise.
  4. Produce the required documentation to cover the transit, responsible for collecting the required documents prior the dispatch.
  5. Where the movement of goods/material is to an area under the control of the local public authority or Customs, a clear understanding of the requirements covering movement of goods/material must be gained from the appropriate authority prior to initiating any movement.
  6. Maintain an information flow between all parties involved to ensure the safety and security of the goods/material and the adherence to service promise.
  7. Provide input to the management as soon as possible if there are urgent matters, for example, there must be a change of route or time of delivery.

In addition to monitoring and control of the above, it is also important to measure the performance of the transport providers / transporters to ensure that they are performing to the service requirements laid down in the contract/agreement. The source documentation usually from transporter consignment notes. Depending on the nature of the contract and the ability of the transporters to provide feedback, data may be provided by them to confirm that the contract level of performance is being met.

Performance data should be collected on an ongoing basis and presented weekly or monthly depending on the requirements of the company and the level of activity of the provider. Performance data will be both “hard” and “soft”. Hard data will relate to such things as on time delivery, in full delivery, damage and costs. It may be possible to gather some soft data related to the dispatching and receiving companies’ perception of the service provided by the transporter in terms of such attributes as driver attitude, condition of vehicles and flexibility.

The report produced will act as a basis for providing feedback to providers on their performance and service delivery level. Some transporters will also compile performance reports for clients. These reports should provide the basis for regular discussion and review between the provider and the company. It is important the feedback is given in a constructive way. If there are service failures often, these will have been dealt with at the time. Discussion at review should be attempted to identify common reasons for failures and to jointly agree what must be done to prevent re-occurrence in the future. This is best done in the spirit of supply chain partnership rather than the traditional, more confrontational supplier – customer relationship. The feedback should also highlight successes and things done well.

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Transportation Management – Decision Making

In the planning phase as previously, we know that there are four key criteria for selecting the mode of transport, i.e. speed, reliability, cost and flexibility. We have also seen that operational factors, terms and conditions as well as environmental, political, social and security factors will affect for decision making.

Transport pengambilan keputusan

Below are some examples of goods or materials to be transported, and we will see how the judgments made in taking a decision which mode of transport to be used.

1. A telecommunications company’s HQ in the city of A wants to send 5 device servers that are urgently needed by one of their branch office located in the city of B. Total weight of the goods to be delivered is 100kg and the distance from city A to city B is 3,000 km. City A and city B both have the airport facilities, railway lines and roads across the province are quite good. What mode of transport should be used?

For this case we will use air transport because the goods to be delivered urgently needed and total weight of the goods is suitable to be transported by air. Air transport is particularly suited to low weight and low volume of consignments, it is also good for perishable goods and in circumstances where the delivery requirement is urgent. Air transport also will be one of the best options for emergency situation. Currently there are a lot of major airlines and other global logistics service providers also an opportunity to ship consignment on passenger routes have made air transport a more cost effective option, particularly for international movement.

Back to the above case, first thing to do is we need to get quotations/offers from service providers such as DHL, UPS, TNT or others. Better to get at least three quotations/offers for comparison and transparency of the decision making process. If we will continue to send more items/goods by air transport, would be better if we issue a tender and enter into contract for a specified period of time with one of service provider.

Things to be arranged after a service provider has been selected:

  • Packaging and labeling. Transport by air (aircraft) will usually take place using some form of unit load device so it will reduce the need of packaging. The nature of goods will determine the precise nature of packaging. Labeling should include details of the sender and consignee, other relevant information and the package number.
  • Proof of delivery of goods, i.e. Air Waybill (AWB). Normally AWB and other regulations for air shipments should be in-line with IATA (International Air Transport Association) regulations. The AWB is the carrier’s receipt by air, evidence of the contract of carriage and is usually non-negotiable. Correct name and address of sender and consignee are very important for AWB.
  • Handling. It is important to note whether the goods must be handled with special care or not, for example for this case the goods categorized as fragile so it should not be slammed and so on.

 2. “Abadi” office will move from current location in city A to the new location in city B. Total distance from city A to city B approximately 700km. A number of office equipment such as desks, chairs and cabinets should be moved to city B. City A and city B both have the airport facilities, railway lines and roads across the province are quite good, however the environmental conditions across the provinces are less safe. What mode of transport should be used?

For this case, we can use rail as an option of transport mode because road condition across the two provinces are less secure. Rail offers effective method for bulk haulage, it is therefore suitable for the movement of large load size over longer distances in affordable cost. This is the major benefit of rail. If total delivery distance is not high, for example less than 500km, rail often be found to be an uneconomic option. In some cases, the size of the consignment will mean that the entire train movement. Significant quantities can be moved in one trainload. In certain circumstances, wagons can be built based on customer specifications but normally available on hire basis. Wagons come in all shapes and sizes, for example hoppers for transporting coal. However, the availability of locomotives to haul the train and the wagons will impact on the speed and reliability of this mode.

Back to the above case, first thing to do is to get three quotations/offers from transport companies. Then we should determine whether the goods need to be packaged or can be sent directly. Proof of delivery of goods, rail waybill can be also considered as a contract and usually non-negotiable. Correct name and address of sender and consignee are very important for rail waybill.

3. Supermarket “Jaya” in Jakarta, Indonesia wants to import 50 tons of instant noodles from factory in Singapore. Packaging of instant noodles is in carton box with weight per box is 5kg. So in total there will be 10,000 boxes to be imported. What mode of transport will be used?

For this case, the mode of transport is containerized by sea because goods to be imported is food and the packaging is in carton box and unavailability of transport by road.  Normally, selection of transport company for import of goods or materials will be done through tender process.

Analysis for all offers received should consider:

a. Transport rate from Singapore to Indonesia. Normally offers will be made in the basis of:

  • Door to door
  • Door to port
  • Port to port
  • Port to door

b. Rate of Customs clearance at port of origin and at port of destination.

c. Rate of Local Shipping Charges, e.g. Terminal Handling Cost, Delivery Order fee, Lift-on, lift-off, cleaning and other costs.

d. Other costs if any such as demurrage, detention etc.

After awarded the agent (transporter), we need to closely follow up the movement of the goods, from the origin factory/warehouse, loaded into containers until the vessel is sailed. As soon as possible after the vessel is sailed, proof of delivery of goods, i.e. Bill of Lading (B/L) to be issued. B/L is the main shipping document and has three roles:

  1. It is the carrier’s receipt for the carriage of goods by sea.
  2. It is evidence of the contract between the sender/consignor and the shipping line and details about the conditions of carriage.
  3.  As evidence for payment of goods transported.

The B/L usually issued in a set of three originals, signed on behalf of the ship owners by the captain or the person in command of a ship or the shipping agent acknowledging the receipt on board of specified goods. It stipulates the payment terms and details of consignor and consignee. Without an original B/L, the goods will not be released.

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