Page 250 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Unit 12: Warehouse Management

and the number of Stock Keeping Units (SKUs) in the DC are important considerations in Notes
determining layout, equipment selection, and business process requirements. Storage equipment
selection should be matched to product characteristics, volume, and any additional unique
requirements (e.g. security, temperature control,).

Information and Technology Requirements

Information is the critical driver for successful DC operations. Short term forecasts provide
information to determine labor and space requirements over a short term planning horizon.
Longer term forecasts are used for capacity planning (e.g. DC size, workforce and equipment
requirements.). Information technology is critical in achieving DC performance. Warehouse
Management Systems (WMS) direct where products should be stored and provide the necessary
functionality for the completion and optimization of receiving, storing, and shipping operations.
Additional functionality may permit the use of hand held devices and bar coding to optimize
efficiency and reduce errors. Most WMS systems also include inventory management
functionality that permits the DC to have real time information on the inventory status of all
items in the DC.
Measuring Performance

The primary objectives of DC’s include providing the right product, at the right place, right
time, and damage free – at a competitive cost. Fundamental to achieving and sustaining these
objectives is measuring performance. The most common DC performance measures include
handling productivity, space utilization, accuracy, damage, service, cost, and inventory. Handling
productivity is often measured in “units or lines” picked per hour or total handling cost per
“unit”. Space utilization is evaluated based on the percentage of total space available for storage,
percentage of useable storage space actually used for storage, and storage cost per unit of
product.
Accuracy includes measures of location and record accuracy, the percentage of items picked
correctly, and the percentage of orders picked correctly. Damage measurements include the
percentage of items picked that are undamaged when received by the customer and the percentage
of orders picked without damaged merchandise. Service measures include fill rate which is
based on the number of orders that were filled completely.

Cycle time is also a critical measure to determine service and efficiency. Dock to stock cycle time
is a critical measure of how long it takes to make material available following receipt. Order
cycle time measures the elapsed time from order receipt until order shipment. Order cycle time
may also include transportation to measure the total elapsed time until the customer receives
the product. Cost and inventory performance measurements include total distribution center
cost per unit handled, distribution center cost as a percentage of sales, and inventory turnover.

Self Assessment

Fill in the blanks:
1. A ………………………… is a static unit in the material and product pipeline, necessary to
match products in a timing sense with consumers, for storage of products
2. ……………………… planning in warehousing helps to ensure a high level of growth in
the revenue for all the companies involved in the chain.
3. In ………………………………. concept, manufacturers move away from multiple
warehouses for downstream storage and combine their inventories with that of other

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