Sample Logistics Essay Paper on International Journal of Physical Distribution & Logistics Management

Logistics

Designing a Logistics Network

As a result of the increasing competition in the world of trade, organizations need to advance in their logistics system. As a way of meeting the ever-increasing demands of the customers, organizations have to come up with plans to design logistics network comprising of warehouses and networks that will be effective in handling customer orders. Generally, logistics entails the movement of people and materials in an organization supply chain (Tseng et al, 2005). The logistical department of an organization makes the decision as to how and when, the raw materials or finished goods or semi-finished products needs to be moved and stored. In most cases, most organizations are opting for a single warehouse system thereby basically focusing on the integrated warehousing that is aimed providing services for the entire market. In this case, the network needs to be designed with regards to the complete analysis of the organizations operations. This will be effective in designing a well-organized strategy for the organization. Additionally, the network will involve several other facilities, for instance, manufacturing focus, vendor, distribution center and customers among others. This papers provides a description that will entail designing a logistics network for a single warehouse in designing an optimal network and the strategy that will incorporated in the network.

The process of designing a logistics network of a single warehouse begins with the selection process through the determination that the facility’s location achieves one of the greatest function of ensuring that an organization is close to its customers (Harrington, 2007). Secondly, organizations need to make decision as whether they need to have a stand-alone warehouse in serving the nationwide demand or if the need to pair other prevailing network with a new warehouse facility or replace an existing facility. Therefore, organizations need to base the location of their warehouse decisions on the proportions of their customer service and the cost implication. Other significant elements include offering high-service network, operating a low-cost network and designing a network that is greater that the competitors. In most cases, the logistics networks should be designed to curtail costs in the service objective (Gunasekaran & Ngai, 2003). This implies that the designed network should have the lowest-possible total distribution cost at the same time distributing to the maximum number of customer orders within a short time. In designing an optimal network strategy and configuration, an organization needs to assess effective trade-offs present between all appropriate cost and service variables. For instance, this involves the number and location of warehouses in that given network, which will have an impact on the cost of inbound freight versus outbound freight. Naturally, a network with several warehouses will have a decreased outbound customer delivery freight costs as compared to a network with one or minimal warehouses.

Predetermined Approach

Generally, the size of the prevailing distribution midpoints and the technologies incorporated in these centers time and again profile the predetermined outlook of a single warehouse design (Huifeng & Aigong, 2008). In designing the warehouse, logistics planners first decide the elementary facility layout, dimensions and technology. Logically, there are some disparities in facility size and other variables, which will be permitted. Nonetheless, an organization will create a basic design and technology configuration in the organization network. The next significant phase in designing a logistics system with a single warehouse is understanding customer service and costs. In designing a warehouse network in logistics, it is significant for organizations to recognize the services they need to provide to the customers. For instance, do they need to have a high availability levels or short lead times among other questions. They also need to know if they run the risk of losing customers if the competitors offer enhanced services. Warehouse networks are significant in controlling and influencing in the four main budget areas of designing a single warehouse. These include inbound and outbound carriage, inventory, facility expenses and labor.

Network Analysis

After designing a warehouse through conducting a logistics network study, the contradictory series ensues. In this case an organization needs to execute freight evaluation, warehouse location as well as logistics costs (Daskin, Snyder, & Berger, 2005). Thereafter, the warehouse layout, technology and automation planning is implemented. In this stage, the non-integrated network design slant can result in a sub-optimal total network strategy. This occurs since the cost, productivity and capacity effects that substitute warehouse skills may provide are not incorporated into the logistics network analysis.

The most significant component in this stage in designing a logistics network with a single warehouse is database development that is crucial in warehouse design. From the data, organizations designers can come up with actual facility model that is based on regular shipments, production and receiving cycles. The information data that is required in coming up with this determination include:

  • The total list of the products of the organizations.
  • The locality of the customers and clients.
  • The total costs of warehousing and transporting.
  • The demands nature of the customer for all the products.
  • Size of consignment by product.
  • The total costs to be incurred in order processing.
  • The arrays of the orders determined by the size, content and regularity.

Afterwards, the organizations single warehouse designers in logistics system can then include a security stock to all the warehouse information aimed at accommodating inconsistent inventory levels. The data growth determination begins with recognizing precisely what wants and necessities that the warehouse must satisfy. Additionally, there should be an examination of the volume of receipts and shipments that will be significant in ascertaining the quantity of inbound and outbound as well as the features of those shipments. Furthermore, designing a single warehouse in logistics networks also encompasses organizations assessing the percentage of shipments that dock either through water, road container, full trucks load among other forms. This also should involve the quantity of air cargo that they pick at the terminal. Organizations also need to determine how regularly they get orders, which are in pallets and prepared for put away as compared to the shipments that require to be first organized and re-arranged. This determination also should not only reflect the present but also the future at least five to seven years.

Generally, in sizing and designing a single warehouse in logistics systems, the most difficult task is the projection of the inventory levels particularly in meeting the future functioning requirements needs. This is because the inventory is the major space driver for organizations and designers need to consider in determining the quantity of inventory they need to have as well as the related preference finishes that is required to handle inventory.

In a copiously incorporated logistical warehouse design analysis, the prospect is aimed at creating a strategic advantage that is attained through enhanced service and decreased cost with other exogenous variables, for instance, labor amounts, utility rates, taxes and freight expenses that are well-adjusted with the utilization of technology. Technology is significant in controlling variable amounts, for instance, the amount of labor and benefits needed in the warehouse. Eventually, most organizations establish new distribution center for three main reasons, enhancing productivity, to lessen operating costs and improving customer service levels. Also, the technical and physical phases of warehouse design could be different. Nonetheless, one of the fundamental aspect about logistical network consisting of a single warehouse design is constant, a well-designed as well as a well-operated warehouse need to be a competitive strength providing services not only at current times but also in the future distribution of needs.

References

Daskin, M.S., L. V., & Berger, R.T. (2005). Facility location in supply chain design. In Logistics systems: Design and optimization (pp.39-65). Springer US.

Gunasekaran, A., & Ngai, E. W. T. (2003). The successful management of a small logistics company. International Journal of Physical Distribution & Logistics Management33(9), 825-842.

Harrington, L. (2007). Designing the Perfect Warehouse. Inbound Logistics, 27(5).

Huifeng, J., & Aigong, X. (2008). The method of warehouse location selection based on GIS and remote sensing images. Proceedings of The International Archives of the Photogrammetry, Remote Sensing and Spatial Information Sciences, Beijing, 545-548.

Tseng, Y. Y., Yue, W. L., & Taylor, M.A. (2005). The role of transportation in logistics chain. Eastern Asia Society for Transportation Studies.