Warehousing And Material Handling For Substantially Growth Post-Essay.

Examples of Practice

Describe about the Warehousing and Material Handling for Substantially Growth Post.

Supply chain management in the global scenario has seen a substantially growth post industrial revolution (Christopher, 2016). The need to trade overseas for exposure and revenue made supply chain an effective tool for most companies. The below report shows successful implementation of supply chain around the world especially in regard to warehousing. With examples of Walmart, 7-Eleven and AER the report demonstrates how concepts of warehousing, bullwhip effect and warehouse automation have been efficiently implemented.

There are several companies all around the world that implement the global supply chain theory for the purpose of international trade (Stadtler, 2015). Warehousing and material management are key elements of any company and need special attention based on the type of industry and material in question. Below are examples of a few companies that have implemented warehousing and material handling successfully

Walmart is an American multinational retail corporation that operates supermarkets and discount stores all over the world. The company had its major operation in the US and later spread across several countries Canada, UK and other Asian countries. The company is known for is unique warehousing techniques used, given that the company has huge procurement orders and have more than 11,000 stores around the world. The company uses a centralized warehouse that caters to stores around. This warehouse called the distribution centre is the point of procurement acting as the hub and supplying the same to the individual stores. This enabled huge procurement to be done at minimum prices (Monczka, 2015). Each centre has several trucks that operate to the store once a week. The company also uses the concept of cross docking where the finished goods are directly picked from vendors and supplied to stores without visiting the DC (Van, 2012). However, the same is done by their efficient warehouse management system.

The company initially installed a voice based system where each employee in the distribution centre is provided with a headset that would guide them to the location of the goods for order picking (Van, 2013). For the purpose of capacity management, a retail link system was enabled where the retail suppliers could monitor the distribution centres to analyse the current goods and they would replenish the goods themselves (Herwig, 2013). This later evolved into the CPFR collaborative planning, forecasting and replenishment system (Yao, 2013). The company makes use of a Massive Parallel Processor system to keep a track of where and when the goods are being moved in the warehouse. The warehouse is managed using a grid system where the computer stores the coordinates of the goods, since the warehouses are huge and have several kind of goods stocked in. When the Id of a particular good is fed to the system, the system displays the coordinates of the goods location and hence order picking has been made relatively easy.

Walmart

Bullwhip effect is one of the key concepts of warehousing as it influences the forecasting method of demand of goods. Though supply chain may actually sound pretty simple, if the demand is forecasted incorrectly, inventory management, capacity management and the techniques of warehousing all take a hit. Also known as the Forrester Effect, the concept was implemented by Hau Lee, to help Volvo overcome its material management issues (Lee, 2015).

Supply chain is a complex group of functions involves the movement of raw materials from suppliers to the retailers who finally sell them (Bozarth, 2016). These function need to work together to meet customers demand. Supply chains help organization to focus on specific processes that ensure maximum probability through low cost solutions and effective systems. Unfortunately, supply chains many times comes across issues when there is a change in market conditions and the consumer demand shifts.

The bullwhip effect in supply chain happens when there is a significant change in consumer demand which makes the companies order more goods and raw materials to meet the new demand (Udenio, 2013). The bullwhip effect usually effects the supply chain in an upward motions. It generally starts with the retailer, wholesaler, distributor, manufacturer and then the raw materials supplier. This effect is witnessed in several companies.  The reason is that the companies make demand forecast based on previous purchases, sales, current market conditions and competitors, but not through the customers.

The reasons for bullwhip effect are plenty. The first is that the managers each level in the supply chain have their own perceptions of the demand and they forecast in accordance to these perceptions. When organizations come up with a product in the current market, they estimate the demand based on the present market conditions (Chen, 2012). Several companies in the supply chain order more than they usually sell to make sure that shortages are prevented. This inventory varies depending on the usually estimated market fluctuations. When demand increases, the companies that are usually preferred by the consumer will increase their inventory to meet the demand (Akkermans, 2013). When the demand decreases, the point closest to the customer consumption of the supply chain will decrease the inventory which will affect the later stages.

The major reason for the bullwhip effect is due to the individual demand forecasts of each of the company in the supply chain. Lack of communication during operations also because situations where companies may not provide information up the supply chain about the present market conditions, causes an in appropriate inventory to be stocked (Jaipuria, 2013). These fluctuation is the customer demands are usually managed by implementing a point-of sale (POS) system that is integrated with a just-in-time (JIT) inventory system. This allows each function in the supply chain to gain knowledge on the demand of the individual goods (Duan, 2015).

Bullwhip effect

Assembling work of Toyota is done by only 20% of its total employees and in case of Boeing it is only 35%. The remaining work involves the creation required subsystem, subassemblies and component assembly which is usually done by sub-contractors. Toyota uses a just in time system and encourages all its vendors to meet demand from consumers which has resulted increased and stable sales of the company. They also use the just in-time delivery system for the same.

To eradicate Bullwhip effect inter-company coordination especially between the various parties involved in necessary. Coordination needs to be present in determining the timings of arrival, planning decisions, delivery schedules, and reduces issues of out of stock. This is also termed using CPFR which is collaborative planning, forecasting and replenishment

7-Eleven, Inc. is an international chain of convenience stores that operates franchises and licenses thousands of stores around the world. Founded in 1927 in Dallas, Texas, 7-Eleven brought forward the concept of convenience store. During its first years of operation it was known as an ice company. The company focuses on meeting the needs of a consumer by providing products that are high in quality, with a wide range of choices and a friendly store environment. Each store's has about 2,500 different products and the services are tailored according to the preference of the local customers. Each store’s size id from 2,400 to 3,000 square feet. In most of the locations they are present in the corners for easy access and better visibility. Apart from US the company operates in countries including Japan, Australia, China, Hong Kong, Indonesia, Malaysia, Mexico, Norway, Philippines, Singapore, South Korea, Sweden and Denmark.

7-Eleven in Japan has collaboration with bread suppliers for 10 000 existing stores. This connect is made through the server computer to connect with PPIC (Production, Planning and Inventory Control) suppliers. Through this system the suppliers have the facility to monitor their sales and understand the actual customer demand before going ahead with the production. This helps the various suppliers understand the actual sales and instead of forecasting the demand they go ahead and manufacture based on how much is sold and how much is required to fulfil this capacity.

The bullwhip effect theory has occurred in several other companies and job designs are done in accordance to the chances of this theory effecting their business. However, bull whip effect cannot be measured easily and analysing the same can be extremely challenging. The theory deals with a very volatile concept of customer demand and hence establishing concrete basics for all industries is difficult. The bull whip effect on each industry is different and there is very little understanding on when this effect may strike.

7-Eleven

Advanced Engine Research also known as AER is an auto racing engine manufacturer based out of England. The company produces high profile engines for international races which usually have turbochargers and other electronic components installed. The company is a prime supplier for other automotive companies such as Nissan, Toyota, Ford and Hyundai. The engine parts are assemble under controlled conditions and are stored in warehouses that are fully automated. The company is home for expensive engines that are a result of high end technology and great precision is its various electronic components. The assembled parts are hence dealt with extreme care and most of the assembly is done by computer aided systems to ensure minimum human error. The sub-assemblies are stored in the warehouse using automated guided vehicles. These machines are programmed with an intelligent scheduling algorithm and are each responsible for one segment in the warehouse. The vehicles vary depending on the segment they are in charge of as they need to be able to carry the sub-assemblies to the transport dock to move on to the main assembly line. The vehicles are all interconnected through a network and have sensors fitted to them. The warehousing coordinates are fed to the system and each vehicle has routes determine to travel to the main assembly line. When a sub-assembly is required the computer triggers a request to the concerned vehicle. The vehicle picks the subassembly and scans the barcode of the same informing the main network of the product in use (Guney, 2015). This is then delivered to the designated area by accessing the scheduled route plans. The mechanism is fully automated by appropriate scheduling for each vehicle (Hamberg, 2012). The company also uses an efficient warehouse management system that stores all the data in regard to the location of each sub-assemblies, BOM, vehicles responsible, routes, and schedules and hence is highly productive.

Conclusion

The concept of supply chain has seen tremendous growth post the industrial revolution. Almost all the companies around the world today employ the same at one level or another. The area of warehousing and material handling had gained significance due to the increasing globalization of the companies thereby increasing the requirement of storing and moving goods both inland and globally. Warehousing has been successfully implemented in several companies especially in the retail chain of Walmart. The bullwhip effect that in a common issue in inventory management has been handled significantly by companies such as Volvo, Toyota, Boeing and 7-Eleven. AER has automated their warehouse management systems to ensure reduced human errors. All these techniques are methods implemented for the effective application supply chain globally.

References

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Bozarth, C.B. and Handfield, R.B., 2016. Introduction to operations and supply chain management. Pearson Higher Ed.

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Christopher, M., 2016. Logistics & supply chain management. Pearson Higher Ed.

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Guney, M.A. and Raptis, I., 2015, October. Task-Allocation and Control of a Ground Robots Collective for Warehouse Automation. In ASME 2015 Dynamic Systems and Control Conference (pp. V002T30A006-V002T30A006). American Society of Mechanical Engineers.

Hamberg, R. and Verriet, J., 2012. Automation in warehouse development. Springer.

Herwig, N.C. and White, D.F., Ncr Corporation, 2013. Retail checkout system and method. U.S. Patent 8,494,908.

Jaipuria, S. and Mahapatra, S.S., 2014. An improved demand forecasting method to reduce bullwhip effect in supply chains. Expert Systems with Applications, 41(5), pp.2395-2408.

Lee, H.L., Padmanabhan, V. and Whang, S., 2015. The bullwhip effect in supply chains. IEEE Engineering Management Review, 43(2), pp.108-117.

Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L., 2015. Purchasing and supply chain management. Cengage Learning.

Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.

Udenio, M., Fransoo, J., Vatamidou, E. and Dellaert, N., 2013. An analysis of the effect of response speed on the bullwhip effect using control theory. Beta working paper 420.

Van Belle, J., Valckenaers, P. and Cattrysse, D., 2012. Cross-docking: State of the art. Omega, 40(6), pp.827-846.

Van Kommer, R., Swisscom Ag, 2013. Voice portal hosting system and method. U.S. Patent 8,457,970.

Yao, Y., Kohli, R., Sherer, S.A. and Cederlund, J., 2013. Learning curves in collaborative planning, forecasting, and replenishment (CPFR) information systems: An empirical analysis from a mobile phone manufacturer. Journal of Operations Management, 31(6), pp.285-297.