CERT MBA IN PROCUREMENT,

LOGISTICS AND SUPPLY CHAIN

MANAGEMENT

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 by

PHIDELIS EBLEDZI -
(MBA Logistics Management, HND P/S, MILT, MISM)

Managing Partner
Integrity Logistics and Educational Consult

0240999639/0267300177
lifeide76@gmail.com

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 LEARNING OUTCOMES
By the end of this session is to provide participants with an in-depth
knowledge of logistics and supply chain management. Specifically,
participants will be able to:
appreciate the importance of coordinated flows of inventory through
supply chains;
identify and discuss the main types of inventory and the reasons for
carrying them;
evaluate the critical role warehousing plays in the logistics supply
chains; and
examine the crucial role of transportation in the logistics pipeline.

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 Outline of Presentation
This presentation covers:

Warehousing and materials handling

Managing inventory flow in the supply chain

Transportation and shipping

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 Methods of
Presentation
This is a 3 hour presentation.

Participatory and interactive approaches will be used to

enable participants to share their experiences. Also, adult

learning approach will be adopted.

Small groups may be employed for group exercises.

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 RULES

You are expected to behave in a professional

manner.
All mobile phones should be off/silent.
Lectures start promptly.

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 Warehousing and Material Handling
Warehousing is regarded as one of the vital components of logistics and
operations management.
Basically, warehousing is the process of storing raw materials, goods-
in-progress (WIP) and finished goods within a storage facility.
A warehouse is the location in the supply-chain where products are
sorted and dispatched. It is not for storage purposes only.
It is an integral part of every logistics system providing a desired level of
customer service at the lowest possible total cost.
It is a primary link between producers and consumers.

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 Distinction Between Stores and
Warehouse
Stores and warehouse is often used interchangeably.

A warehouse is often viewed as part of the finished goods

distribution network, and therefore viewed from the perspective of
transit storage.
A store on the other hand, is considered as a temporary location for
holding materials (input raw materials, spare parts, supplies, WIP
and other production inputs) needed for operational purposes.

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Purpose of Efficient Warehousing
Professional attitude;
Customer awareness
Establishing standard procedures;
Proactive operations;
Real-time, paperless control systems;
Flexible operations;
Automation;
Accurate inventory;
Priority to quality housekeeping; and
Motivated workforce.
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 Warehouse Analysis
The standard of warehousing and distribution management in todays global
business environment can have a significant impact on corporate performance
and profitability.
Therefore, warehousing decisions are of much significance to a firm.
The following questions should be considered by management when making
warehouse management decisions:
Should we use a warehouse?
What type(s) of warehousing should we use (private or public)?
What should be the size of the warehouse?
How many warehouses should be used?
Where should the warehouses be located?
Which warehouse layout approach and design should be adopted?
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 Basic Warehouse Operations
Generally, the objectives and priorities of a warehouse and the role it
plays in the supply chain outlines to a large extent the nature of activities
and resources that are required.
Warehouses store all products in four cycles - receive, store, pick and
ship.
Nevertheless, these operations (receiving, put-away, storage, order
picking, shipping preparation and shipping) are common to most
warehouses regardless of their level of sophistication, thus in terms of
storage and material handling

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Basic Warehouse Operations Contd

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 Organizing Warehouse Flows
The main warehouse activities (receive, store, pick and ship) represent
material flow inside a warehouse and this is closely influenced by the
chosen layout.
It is important to ensure that the whole operation takes place in an efficient
and effective way to enable all the activities flow in an orderly manner so
as to maximize productivity.

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 Warehouse Flow Diagram
Warehouse flow indicates the daily flows passing through the various
zones of a warehouse.

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 Principles for Flow
The following are important principles for flow:
Check product identification and velocity throughput principles;
Check stock holding levels;
Minimize travel distances to save time and resources;
Consider manual vs. automated operations;
Assess the impact of operational requirements and real-time
information gathering; and
Allow for legal and security requirements.

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 Warehouse Design and Layout
The common objective of a warehouse layout is to minimize
handling cost resulting from the travel distance which a waste and
does not add any value.
Therefore the flow of goods, vehicles and people within the
warehouse needs to be as smooth as possible (to ensure optimum
productivity), and attempts must be made to minimize the number of
cross-over points and areas of high density traffic flows.

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 Warehouse Design and Layout Contd
There are several methods of material flow
planning but the two main methods are:
U-shape flow layout, where both
movements into and out of the
warehouse take place on a single face
of the building, although separated.

Straight-thru, where the input and

output are at opposite ends of the
building.

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 Warehouse Security and Prevention of
Security in a warehouse includes Loss
protection against merchandise pilferage
and deterioration.
The focus on security and prevention of loss should not only be on preventing
break-in-ins from outside (external theft) but much attention should also be
directed at internal theft.
Some of the ways of ensuring security and preventing loss include:
Install security systems and internal control for all people entering
and leaving the premises;
Install good lighting and eliminate blind spots;
Avoid congested work flows and carry out spot checks;
Use valid integrity tests for recruitment and selection;
Conduct background checks as thoroughly allowed by legal
requirements; and
Model honesty in the company.
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 Materials Handling
Materials handling involves the techniques to move, transport, store or
distribute materials whether liquid, solid or gaseous with or without the
aid of mechanical appliances.
Materials handling aims at:
reducing the total storage and distribution costs;
achieving optimum space requirements and utilization;
minimizing damage and waste;
improving efficiency;
improving the distribution pipeline; and
improving working conditions within the stores or warehouse
environment .

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Types of Materials Handling Systems
Materials handling systems include the following:
Manual systems items are stored, picked and issued by stores staff
using powered equipment for heavier for heavier items.
Semi-automated systems (SAS) combination of labour and
computer-controlled machines.
Automated systems all the physical movement is done by
computer controlled machinery.

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Inventory Management throughout Supply
Chainmanagement is the coordination of
A major issue in supply chain inventory

inventory policies adopted by different supply chain actors, for example,

suppliers, manufacturers, distributors, so as to smooth material flow and
minimize costs whilst responsively meeting customer demand.
Supply Chain as an integrated function within the corporate management
has a role in managing inventory of the organization to support production.
Inventory in supply chain is regarded as the life blood of the organization.
Lack of stocks in the warehouse could mean production stoppages.
Therefore, effective management of the flow of inventory in supply chains
is one of the key factors for success.

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 Inventory Management throughout Supply
Chain
Inventory entails stocks or Contd
items that are deployed to support production,
and this includes; raw materials, work- in- progress (WIP), maintenance,
repairs, operating stock (MROs), and finished goods within the
organization.
The most critical aspect of warehouse management is inventory control.
Basically, inventory control is being able to locate and track a given item
within the warehouse in order to enable quick selection and loading for
order fulfilment.
It is the process of keeping enough amounts of product to meet customer
demands, whilst balancing the expense of keeping the product in storage at
the same time.
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 Types of Inventory
There are various types of inventory that are associated with different
organizations depending on their material requirements in production.
The primary categories of inventory include:
Raw material and semi-finished inventory: This includes items purchased from
suppliers or produced internally to directly support production requirements. items
purchased in a bulk or unfinished condition and semi-finished inventory (items
and components used as inputs during the final production process).
Work-in-process inventory: WIP relates to incomplete inventory that is not yet
been transformed to a saleable finished good. It includes materials: waiting to be
moved to another process, currently being worked on at a work center, queuing up
at a processing center due to a capacity bottleneck or machine break-down.

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 Types of Inventory Contd
Finished goods inventory: It comprises completed items or
products that are available for shipment or future customer orders.
Maintenance, repair, and operating (MRO) supplies inventory:
MRO inventory includes the items used to support production and
operations.
In-transit/pipeline inventory: This inventory is in transit to a
customer or is located throughout distribution channels.

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 Inventory Costs
One of the drawbacks of holding excessive inventory is its effect on a firms
working capital.
Holding excessive inventory ties up funds unnecessarily as it could likely
have been used more productively elsewhere.
Changes in inventory levels have an impact on return on assets (ROA).
The following are costs associated with holding inventories:
Unit cost;
Acquisition or ordering costs;
Carrying costs;
Quality Cost; and
Other Costs.

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 Inventory Costs Contd
It is often difficult to quantify the total costs associated with ordering and
carrying physical inventory.
Historically, industry has neglected calculating total inventory costs.
There is also the lack of systems capable of identifying inventory-related costs as
most cost accounting systems are not yet capable of identifying and assigning the
true costs related to maintaining physical inventory.
However, accounting systems based on activity-based costing (ABC) principles
are increasingly able to quantify the distinct costs associated with holding
inventory.
Also, the new types of enterprise resource planning (ERP) systems also aid
managers to more accurately measure the actual level of inventory on hand, as
opposed to guesstimating the inventory cost.
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 Reasons for Holding Inventory
To cater for both demand and supply;
As safety/protection (physical protection, against supplier
uncertainty and non-forecasted demand);
In anticipation of demand - hedge against marketplace
uncertainty; and
To provide service to customers.

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 Reasons for Stock Control
To verify the value tied up;
To identify the costs of holding stocks;
To respond to non-conformance;
To check for loss or fraud of stock;
To identify mistakes and how to rectify them; and
As part of the management control system

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 Transportation and Shipping
The final step of warehousing is the transportation aspect of delivering the goods
to the ultimate user (customer).
Selecting the right transportation and logistics provider is as critical for the
success of any supply chain.
Transportation relates to an operational area of logistics that geographically
moves and position of inventory.
It also covers movement within a facility, overseeing incoming and outgoing
shipments.
The final movement process occurs at the shipping operations stage.
The shipping process usually involves inspecting, packing, palletizing and
loading items into a carrier for onward delivery to the customer or to the
production line.
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 The Transport Chain
STORAGE LAND
PRODUCER
(Node) TRANSPORT

TERMINAL STORAGE
(Node) (Node)

Sea Transport

TERMINAL LAND STORAGE

CONSIGNEE
(Node) TRANSPORT (Node)

STORAGE
(Node)
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 Transportation and Shipping Contd
Transportation represents the major cost component of the logistics chain.
Transportation provides the bridge between the producer and the consumer,
and the quality of the transportation service enables a firm to differentiate its
product in the marketplace.
Practically, the ownership of a warehouse plays a key role in determining its
transportation arrangements.
Transportation arrangements are accountable for scheduling of order
picking in the warehouse.

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 Transportation and Shipping Contd
Due to its basic role and visible cost, transportation usually receives much
managerial attention.
Transportation requirements can be fulfilled in three main ways:
a private fleet of equipment may be operated;
contracts can be arranged with dedicated transport specialists (outsourcing
transportation function); and
an enterprise can employ the services of several carriers that provide
different transport services required on a per shipment basis.
Transportation cost is drastically reduced when goods are moved in
economically large quantities or in bulk.
The per unit load cost is reduced significantly when goods are consolidated and
moved in truckload or volume shipment.
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 END OF LECTURE
NICE TO BE WITH YOU

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