Free Essay

Logistics

In: Other Topics

Submitted By furkandelice
Words 2113
Pages 9
Warehouse Capacity Explained
By Dave Piasecki
© Copyright. Content on InventoryOps.com is copyright-protected and is not available for republication.
Just about anyone who has responsible for the daily operations of a warehouse has either already experienced this situation (probably many times over) or likely will at some time in the future. You're struggling with a lack of warehouse space and your cries for help are pretty much ignored by those with the power to do something about it.
And here's why. They (upper management, the owner(s), alien life forms, the usual "they" suspects) simply don't believe you. They've heard these complaints before and yet somehow you (or someone else in your shoes) managed to still get the job done. In addition, they may have occasionally walked down into the warehouse and observed empty space, maybe some partially empty shelves or completely empty pallet locations. "Plenty of space here, I don't know what the hell [INSERT YOUR NAME] is whining about".
So either you are way too needy, or they don't understand warehouse capacity. While I won't completely dismiss the former, I think the latter is the more likely problem here. The problem is they are looking at "theoretical capacity" and you are dealing with "working capacity" (also called "effective capacity", "practical capacity", "rated capacity").
Theoretical Storage Capacity, Utilization, and Working Capacity.
Theoretical capacity is easy to explain. It's the actual physical capacity of the space dedicated for storage. So if you have a simple warehouse setup with 1,000 pallet locations all designed for 40" x 48" x 72" pallets, your theoretical capacity would be 1,000 full pallets or 80,000 cubic feet (80 cubic Ft. per pallet times 1,000 pallets).
I call this theoretical capacity because, for a variety of reasons related to your specific inventory and storage characteristics, you cannot actually use all of this capacity. If you have a WMS and have all location cube and item cube information set up, you could run utilization reports that shows you how much of your theoretical capacity you are using. Assuming this is a case-pick operation, you may find that when you run a utilization report to prove to upper management how "full" you are, you find you are only at 70% utilization. And that's what brings us to working capacity. Depending on the characteristics of your inventory and storage configurations, 70% utilization may indeed be "Full" for you. Now before any of you rule-of-thumb fanatics start thinking 70% is some industry standard, it's not, it's just an example. One warehouse may be able to run at 90% or more while another starts struggling at 60%. Yeah, that's right, 60% utilization could be full for some operations.
As I mentioned before it has to do with inventory characteristics and storage configurations. Inventory characteristics include the number of items, the physical size of the items, how much you carry, and the characteristics of inbound and outbound orders. And all of this works within the characteristics of your storage configurations. For example, let's go back to the 1,000-pallet scenario, and say this is a full-pallet-in/full-pallet-out operation. If your warehouse was made up entirely of selective (single-deep) pallet rack and you had steady inbound and outbound volume, you should have no problem running at 90% or better utilization. However, if this same inventory was stored in floor-stacked bulk storage with pallets stacked 3 high in lanes ranging from 4 deep to 8 deep, you may struggle to maintain 60% utilization. That's because in the selective-rack scenario, whenever you remove a pallet from a location, that pallet location is available for another item. However, in the floor-stacked scenario—assuming you can't mix items or lots in storage lanes—you need to wait until that lane is completely emptied out before stocking something else in it. Now before you start thinking you should be converting your bulk floor stock to selective racked storage to get better space utilization, you need to realize that even at 60% utilization, the floor-stacked scenario may be able to store 1,000 pallets in less space (depending on other variables).
And if we went back to the selective-rack scenario and changed the operation from pallet-pick to case-pick, our cube working capacity would be reduced because we would have many locations with partial pallets in them. How much would it be reduced? Again, that depends on the characteristics of the operation. If you only had one item in that warehouse (unlikely, but this is just an example), the utilization reduction would be negligible, but if you had 1,000 items the utilization could bring you down back near that 60% level or even lower.
So now let's get back to explaining to management how even though the warehouse guys are whining about a lack of space, they still manage to get the job done. This is where "working capacity" gets a little fuzzy. When we go back to the previous scenarios that showed lower working capacities, there is a point at which you will not be able to put away inbound receipts without doing some level of consolidation or relocation of existing inventory. For example, in the floor-stocked pallet scenario you may have initially put a receipt in an 8-deep 3-high floor stocked pallet lane. As you use up that inventory, you could move the remaining inventory into smaller locations. The more you are willing to do this, the higher your utilization will be. If you're one of those folks that are fanatical about not doing any "non-value-added" activities, you probably don't want to do this at all, so you will need to accept that low utilization. Then again if your space costs are very high and your labor costs are very low, you may find that it makes sense to move that inventory from an 8-pallet deep lane to a 5-pallet deep lane, then to a 2-pallet deep lane, then maybe even eventually to selective pallet rack as the inventory depletes. That's a lot of work, but it will get you higher utilization. In selective racked storage, consolidation would include moving palletized product into smaller locations as inventory is depleted, and/or mixing multiple items or lots in the same location. And, of course, there is plenty of middle ground here where you do some level of consolidation, but don't go nuts with it.
It all comes down to getting the right balance of space utilization and productivity for your operation. The problem often encountered here lies with managers that have expectations of high space utilization but don't accept that it takes more labor and/or investment in equipment to achieve that. And that there is a very real point at which even with a lot of consolidation and relocation of product, the warehouse is full. And that point is still below the theoretical capacity.
Calculating working capacity?
So the big question here is can you calculate a "working capacity"? Well . . . yes . . . sort of . . . maybe. If you have the data (would need detailed cube data by item and location) and are willing to do the analysis you may be able to calculate things like the point at which you will need to start doing some level of consolidation, or to take it a step further try to calculate the amount of consolidation to get to higher levels of utilization. Depending on the complexity of your operation, this could range from not-too-bad to near impossible. Pallet-pick or case-pick operations have a better shot at this than piece-pick (especially small parts piece-pick), but you really don't know until you try.
Another way to try to calculate a "working capacity" is to just track inventory levels (in cubic ft.) over time and also track labor associated with consolidation activities. Under this scenario you would need to hold off on consolidation activities until it is absolutely necessary, then have the labor available to complete the consolidation activities before the lack of space starts to impact other processes. This can be a bit tricky and may not be practical for your operation (it's usually better to do plan consolidation during slow times). You will still need to figure out what level of consolidation makes sense for your operation, but this should get you going in the right direction.
Speaking of impacting other processes, it's important to realize what happens when you exceed your working capacity. When you get to the point where you end up with staged inventory blocking aisles, docks, staging areas, and production areas, you will find you start having all kinds of issues. When workers have to work around stuff, or move stuff to get at other stuff, or have to search through vast areas of staged inventory looking for product, you end up with lower productivity, increased risk of errors, increased risk of product and equipment damage, and safety issues. There are very real costs associated with running a warehouse beyond its capacity.
Calculating a working capacity and understanding the relationship between working capacity and theoretical capacity can prove very useful in planning staffing, storage contingencies, and new warehouses. As someone that prefers to be prepared, I would much rather know in advance that I'm going to be "Full" than just wait until it happens. Quantifying "full" is the first step in that process. Once that is done, you can use projected inbound and outbound volumes to identify problems.
So just to sum things up, theoretical capacity is the actual physical capacity of all storage locations in your facility. Working capacity is the point at which you decide your warehouse can still run effectively, but to go beyond this level you will start to have serious problems. This doesn’t mean everything is fine as long as you are below working capacity. Depending on where you set your working capacity, you may have to do some consolidation and relocation of inventory as you approach your capacity. But that’s a tradeoff you analyzed and determined was appropriate for your operation, and therefore staffed accordingly. Right?
Warehouse space utilization versus storage utilization.
I just want to add that in the article I focused on utilization of dedicated storage space. This would be the capacity of the actual storage slots. So for a pallet slot in selective pallet rack it would the the capacity of the space where I could actually put product. It would not include the clear space to the sides of the pallet, the flue space behind the pallet, or the empty space above the pallet or the space occupied by the rack structure itself.
There are other ways people calculate utilization. For example, you may want to determine the actual cube of your entire warehouse and compare your dedicated storage cube to that to see how you are utilizing your warehouse. For example, you may find you have 2,000,000 cubic feet of warehouse space, within that you have 500,000 cubic feet of space that is can fit product in it, and of that you have 375,000 cubic feet of product stored. So under this scenario your dedicated storage slots take up 25% of your overall warehouse cube, and your inventory takes up 75% of your dedicated storage slots, or about 19% of your overall warehouse cube. This may sound like an empty warehouse, but it could easily be full with these numbers. People like to use these types of numbers to benchmark warehouses, but there are so many variations on how you measure this that it can get very confusing. For example, I used the cubic feet of the dedicated storage slots themselves (excluding space between pallets, above pallets, rack, aisles, etc. Some may include the cube of the storage spaces including racking and space between and above pallets, but not the aisles, Others may also include the aisles in the storage areas, but not the main traffic aisles. Others may compare the cube of the actual storage slots to the cube of the warehouse space dedicated to storage only (this would the cube of the areas of the warehouse that have storage, but not the production/shipping/receiving areas).
So where our previous utilization calculation told us how much of our dedicated storage slots are being used, these calculations could tell you things like how much of your warehouse is actually dedicated to storage. Any of these numbers can be useful for a very specific purpose, you just need to make sure you are using the correct measurement for your purposes.…...

Similar Documents

Premium Essay

Logistics

...LOGISTICS For the manufacture and sale of commercial and industrial pumps, there is no export controls placed on the selling of the company’s product to the target primary market. There is no validated export license required to export the product to the primary target market. Product can be exported under the NLR (no license required) provision. Licensing requirements were determined from the Department of Commerce’s Bureau of Export Administration. Government regulations and standards do exist in the primary market of Kazakhstan. These requirements govern material contents, labeling requirements, electric current cycles and voltage, environment standards, CE marking requirements, and ISO compliance. With the use of an outside partner agency, the company can easily fulfill these standards and regulations. There are no geographic or climate differences that will affect product functions. The product is impervious to humidity, heat and/or cold conditions. With the product being sold to industrialized and commercial operations, there are no buyer preferences that must be acknowledged in this new buyer group. There are no product size, packaging or color preferences that need to be addressed. There are no outside preferences that will influence buying decisions. Cultural aspects might influence acceptance of the product. Religious beliefs, taste preferences, habits and lifestyles will need to be discovered and addressed prior to the implementation of the plan......

Words: 1118 - Pages: 5

Premium Essay

Logistics

...Furthermore, once the size, number, and the location are determined, the production flows through its customers will be available. Ruthwik (2008) states these decisions will have a great significant to the firm since they have access to customer markets and will be having considerable impact on the revenue, cost and level of service. These decisions should consider a lot of things such as production cost, limitation, traffic, distribution cost and so forth. It can be said, even though the location decisions are mainly strategic, it has the impact on the operational level. Another critical issue is the capacity of manufacturing facilities, this depends on the extent of the vertical integration with in the firm. In other words, the location of the logistics is important in order to locate the manufacturing firms. On the other hand, determining the location of manufacturing includes the distribution centers or warehouse. It is important to determine the location of distribution center or warehouses because it holds inventory. In determining the location of distribution center or warehouses, it should be located near the company because it can reduce the cost of transportation. In other words, distribution centers or warehouses should be located around major transportation hubs. This can make the transportation easier and more efficient. Example, a company from UK is a distributor and always delivers products to ASIA. It can be said, the transportation cost is expensive. It is......

Words: 295 - Pages: 2

Premium Essay

Logistics

...APACHE ENGINE LOGISTICS PROCESS STANDARDIZATION IMPROVEMENTS FOR CORPUS CHRISTI ARMY DEPOTS by Renee Alicia Patterson A Graduate Capstone Project Submitted to the Extended Campus in Partial Fulfillment of the Requirements for the Degree Master of Science in Management Embry-Riddle Aeronautical University EXTENDED CAMPUS HUNTSVILLE RESIDENT CENTER FEBRUARY 2008 APACHE ENGINE LOGISTICS PROCESS STANDARDIZATION IMPROVEMENTS FOR CORPUS CHRISTI ARMY DEPOT by Renee Alicia Patterson This Graduate Capstone Project was prepared under the direction of the candidate's Project Review Committee Member, Mr. James Dunaway, Adjunct Associate Professor, Extended Campus, and the candidate's Project Review Committee Chair, Dr. Jonathan W. Campbell, Adjunct Associate Professor, Extended Campus, and has been approved by the Project Review Committee. It was submitted to the Extended Campus in partial fulfillment of the requirements for the degree of Master of Science in Management PROJECT REVIEW COMMITTEE _____________________________ James Dunaway, M.A.S Committee Member ______________________________ Jonathan W. Campbell Ph.D. Committee Chair ACKNOWLEDGEMENTS SPECIAL THANKS TO CHRISTY FORDHAM, PATRICIA WEITZEL AND DR. WALT WHITACRE AT THE HUNTSVILLE CENTER OF EMBRY-RIDDLE AERONAUTICAL UNIVERSITY, MY COMMITTEE CHAIR DR. JONATHAN CAMPBELL MY COMMITTEE......

Words: 6237 - Pages: 25

Premium Essay

Logistic

...manufacturing, logistics and finance departments? Explain the logistics department’s role in the introduction of the new products. Logistics professionals and other knowledge managers realize, however that in spite of all the hype about the Internet, successful organizations must manage order fulfillment to their customers effectively and efficiently to build and sustain competitive advantage and profitability. At the same time, the competitive marketplace demands efficiency are controlling transportation, inventory, and other logistics related costs. A different perspective on supply chain managements views it as a complex of the logistics systems and related activities of all the individual organizations that are a part of particular supply chain. In addition, there are three principle ways in which logistics adds value such as place, time and quantity utilities. The interactions needed to take place among the marketing, manufacturing, logistics and finance departments are very important. Logistics obviously are focuses on process that cut across traditional functional boundaries, particularly in today environment with its emphasis on the supply chain. Logistics interfaces between manufacturing and logistics are related with length of the production run. Advantages and disadvantages are gives impact on inventories. The logistics managers are responsible for the inbound movement and storage of raw materials and components that will support production, logistics and......

Words: 1398 - Pages: 6

Premium Essay

Logistics

...Logistical systems are capable of capable of delivering products at exact times. So customer orders can be fulfilled faster. With massive development in information technology, the need to maintain inventory has reduced dramatically. The occurrence of failures, characteristic of traditional supply chain, has been replaced by a commitment towards zero-defect of six sigma performance. In essence a high level of performance is achieved at a lower total cost with commitment of fewer financial resources than that in the past. 3. What specific role does logistics play in supply chain operations? Logistics is the primary conduit of product and service flow within a supply chain arrangement. It is the work required to move and to position inventory throughout a supply chain. It is a combination of order management, inventory, transportation, warehousing, material handling and packaging as integrated throughout a facility network. Logistics is essential for effective supply chain connectivity. 4. Describe "integrative management." Be specific concerning the relationship between functionality and process. Describe integrative management. In terms of enterprise extension. lowest cost can be achieved by capturing the trade-offs that exist between the functions. Instead. do not necessarily combine to achieve the total lowest cost. supply chain partners should be willing to share operating information and jointly plan their strategies. leadership and conflict resolution. How does the......

Words: 1968 - Pages: 8

Premium Essay

Logistics

...(International) Department Of Marine and Logistics management in Maritime and Logistics Management Logistics Management JNB 225 20 August 2014 Assignment 1 ------------------------------------------------------------------------------------------- Student: Ajanthan Jeyadevan Student ID: 176069 Unit Coordinator: Ms. Hilary Pateman Lecturer: Mr. Geoff Dickinson Unit: JNB 225 Course: Logistics Management ------------------------------------------------- Due Date : 18 August 2014 Content Page Introduction | 1 | Logistics and Economy | 1 | Logistics and Organisation | 2 | Logistics Management Practices | 2 | Conclusion | 2 | Reference | 3 | Appendix ( Presentation ) | 4 | Introduction The world is currently at a peak of industrialization. There are many types of goods movement in valve chain processes. But since the current system of economy growth is measured in GDP, this paper will discuss the significance of logistics in terms of......

Words: 1959 - Pages: 8

Premium Essay

Logistics

...The Logistics System: A Key Element of Contraceptive Security Planning A logistics system provides excellent customer service by fulfilling the six “rights”: ensuring that the right goods, in the right quantities, in the right condition, are delivered to the right place, at the right time, for the right cost. Logistics Cycle Over the years, experts have developed a logistics cycle that describes the activities of a logistics system. The logistics cycle comprises the following: • The logistics management information system (LMIS), which is at the heart of the cycle; • Quality monitoring, which is a continuing activity throughout the cycle; and • Policies and adaptability, which constitute the logistics environment. Each activity in the logistics cycle must contribute to excellence in customer service. Logistics management includes several activities that support the six rights. The logistics cycle (JSI/DEVILVER Web site, 2005) emphasizes the interdependence of the various activities (see Figure 1). For example, product selection is based on serving customers. What would happen if, for medical reasons, customers refused to use a particular product? Logistics managers would need to reconsider their earlier decision and order products more acceptable to the customer. The decision would, in turn, affect procurement and storage, which are two other activities in the logistics cycle. Figure 1. The Main Activities in the Logistics......

Words: 1522 - Pages: 7

Premium Essay

Logistics

...TSHWANE UNIVERSITY OF TECHNOLOGY FACULTY OF MANAGEMENT DEPARTMENT OF MARKETING LOGISTICS AND SPORT MANAGEMENT CLASS TEST 1 (LGS300T) DATE: WEEK OF 25 FEB 2014 TIME: 20 MIN TOTAL MARKS: 10 INSTRUCTIONS: 1 ANSWER ALL THE QUESTIONS 2 THIS TEST IS AN OPEN BOOK TEST QUESTIONS (MULTIPLE CHOICE): 1. Which of the below is not one of the external forces driving the rate of change and shaping our economic and political landscape? a. Government policy b. Technology c. Environmental concerns d. Globalization Outsourcing involves a. moving company facilities away from the home office. b. hiring foreign nationals to manage parts of the business. c. obtaining materials, parts, and products from other companies. d. building a factory in another country. The Supply Chain Concept a. is very new and considered cutting edge technology. b. is highly dependent of computerization. c. not always well understood by senior managers. d. developed from the previous Physical Distribution concept. Logistics, in its simplest form, a. is a military term, as it was developed originally to supply the battlefield. b. combines inbound logistics with the outbound logistics of physical distribution. c. is another term for transportation management. d. does not involve customer service or other related functions. Which of the following is not part of the Supply Chain network? a. Plants b. stores c. terminals d. distribution centers Complexity in the supply chain is caused by a. the number of SKUs. c.......

Words: 406 - Pages: 2

Premium Essay

Logistics

...LOGISTICS is the function responsible for the flow of materials from suppliers into an organisation, through operations within the organisation, and then out to customers. Supply chain management, however, is about managing the flow of materials, components and information throughout the total pipeline from raw materials to end user, and is based on effective customer/supplier relationships to ensure quality, delivery, cost and flexibility can be improved throughout the supply chain. This integration will result in a reduction in the total cost of logistics rather than the cost of each activity. This is due to the improved flow of material and information, improved transport and warehouse asset utilisation and elimination of duplicated department efforts. Consequently this results in an improved capability to respond to customers ―Quick Response‖ needs. The goal is to improve customer service, save cost and increase revenues. to satisfy the end customer whilst achieving competitive advantage over any competitors through ensuring maximum efficiency and return. To respond more accurately to actual customer demand and keep inventory to a minimum (Pull System), leading companies have adopted a number of speed-to-market management techniques that help them to build a comprehensive supply chain structure, such as just in time (JIT), quick response (QR), efficient consumer response (ECR) and vendor managed inventory (VMI). There is a need to develop collaborative......

Words: 4484 - Pages: 18

Premium Essay

Logistics

...Logistics has an important relationship to manufacturing, marketing, finance, and other areas of the organization * Logistics Interfaces with Operations/Manufacturing * Logistics Interfaces with Marketing * Logistics Interfaces with Other Areas Interfaces w/operations/manufacturing -Length of production runs Balance economies of long production runs against increased costs of high inventories. -Seasonal demand Acceptance of seasonal inventory to balance lead production times. -Supply-side interfaces Stocking adequate supplies to ensure uninterrupted production now a logistics function. -Protective packaging Principal purpose is to protect the product from damage. -Foreign & third party alternatives Some logistics functions are being outsourced. Logistics Interfaces with Marketing: The Marketing Mix – Four Ps * Price * Product * Promotion * Place -Manufacturing and marketing are probably the two most important internal, functional interfaces with logistics. -Other important interfaces now include finance and accounting. Logistics can have a major impact on return on assets and return on investment. Logistics costs reported by cost systems measure supply chain trade-offs and performance. Economic utilities and means that add value to a product or service in the SCM * Production * Form Utility (by assembling parts into finished...

Words: 1640 - Pages: 7

Premium Essay

Logistics

...components of a balance sheet? A: assets, liabilities and owner’s equity 3.6) Q: Discuss how logistics decisions affect net profit margin in an organization. A: They are affected by sales, costs of goods sold, and total expenses. 3.8) Q: Discuss some of the ways that inventory costs can be reduced in order to affect an organization’s financial performance. A: Reduce inventory, inventory carry cost, inventory turnover, and information availability. 3.10) Q: How does logistics strategy connect to overall corporate strategy? Is it a one-way or two-way connections? A: Saves money, customer satisfaction, turnover, and inventory. It is a two-way connection. 3.12) Q: Most managers believe that while it is possible to connect logistics decisions to costs, the connection to revenue enhancement is difficult to impossible. Do you agree or disagree? Why? A: I agree. There are always unknown factors such as availability of product, logistics in general, customer satisfaction as well revenue streams. High risk, high reward. 3.14) Q: Do you think corporate cultures are relevant for designing a logistics measurement system? Why or why not? A: Yes. The more culture you have the more diversity you have. The more diverse a company is the more they can expand in the business world as well as inside their own company as a whole. 3.16) Q: Describe how logistics decisions might affect an organization’s cost of goods sold. A: There are many things......

Words: 496 - Pages: 2

Premium Essay

Logistics

...1- IMPERIAL Logistics, one of three divisions within the diversified, international industrial services Group, is a global logistics and supply chain leader that moves business and industry through innovation, inspiration and foresight. They deliver excellence in end-to-end logistics and supply chain management, daily – enabling customers to grow in an efficient, proactive and cost effective manner. a. Location: Established in 1975, today Imperial are at the forefront of the logistics industry with extensive operations in Europe and Africa, including countries such as Botswana, the Democratic Republic of the Congo, Namibia, Mozambique, Tanzania, Zimbabwe and Zambia. The Southern Africa division currently houses more than 70 operating companies. b. Volume: Employer of 17,000+ in southern Africa and largest employer of industrial engineers and professional logisticians in South Africa. Total storage capacity > 2,240,000 m² and under cover warehouse capacity 1,500,000 m². c. Competitors: 1. Unitrans 2. Barloworld Logistics d. Competitive Advantage: 1. Exposed to diverse industries, markets, countries and clients 2. Expansion in inland waterway shipping due to Lehnkering acquisition 3. Extensive, established operations in 14 African countries 4. Leader in private sector transport and warehousing operation in Africa 5. Financially strong company and good market position e. Inventory Management: Transportation solutions: IMPERIAL Logistics is a global leader in...

Words: 832 - Pages: 4

Premium Essay

Logistic

...Logistics Planning and Management Lecture 1 Prof. Ying-Ju Chen Agenda Course Information Objectives and Learning Outcomes Structure and Grading Class Participation Topics Agenda Course Information Objectives and Learning Outcomes Structure and Grading Class Participation Topics Course Information Course Title • IELM 3450: Logistics Planning and Service Management • ISOM 3760: Logistics Management Instructor • Prof. Ying-Ju Chen • Office: LSK 4035 (Business building) • Email: imchen@ust.hk • Ph: 2358-7758 Instructor Qualification • BS &MS, Dept. of Electrical Engineering, National Taiwan University • M Phil &PhD, IOMS-Operations Management Group, Stern School of Business, New York University Instructor Past Experience • Faculty, IEOR Department, University of California at Berkeley, 2007-2014 Taught Courses • Dynamic programming • Service operations management • Production system analysis •… Instructor Current Appointment • Department of ISOM, School of Business and Management • Department of IELM, School of Engineering • Joint (50 & 50) appointment • Home dept & office: SBM • Teaching: 50 & 50 • Service: 100 & 100 … Agenda Course Information Objectives and Learning Outcomes Structure and Grading Class Participation Topics Course Objectives Understand role of strategic logistics management in global firms Analyze logistics problems on a functional, business and......

Words: 736 - Pages: 3

Premium Essay

Logistics

...even when the majority of sales occur during a relatively small part of the year. Finally we come to the point of how to improve inventory management. According to Gourdin(2001) the following aspects need to be paid attention to: Top management commitment Key management support is essential if inventory is to be managed effectively. Because lower inventories have an impact on many different parts of the logistics system, senior leadership must ensure that all of the ativities are working together to meet customer needs without the luxury of excess stock. ABC analysis of all inventory items Management must first understand which goods in inventory are the most important in terms of their contribution to the objectives of the organization. Those few items that generate the most profits , for example , or are deemed mission-essential by the firm’s most important customers would be designated “A” items and perhaps maintained at virtually 100 percent availability. Improved performance of other logistics activities Managers should ensure that the rest of the logistics system is functioning effectively Improved demand forecasting Demand forecasting is also a way of reducing variability , this time in terms of expected versus actual sales. Better forecasting techniques can be utilized to more accurately predict actual sales. Inventory management software Software is currently available for virtually any type of inventory management situation and allows managers......

Words: 1002 - Pages: 5

Premium Essay

Logistics

...Logistics is the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers (frequently, and originally, military organizations). Logistics involve the integration of information, transportation, inventory, warehousing, material-handling, and packaging. Logistics is a channel of the supply chain which adds the value of time and place utility. Origins and definition The term "logistics" originates from the ancient Greek " " ("logos"—"ratio, λόγος word, calculation, reason, speech, oration"). Logistics is considered to have originated in the military's need to supply themselves with arms, ammunition and rations as they moved from their base to a forward position. In ancient Greek, Roman and Byzantine empires, there were military officers with the title ‘Logistikas’ who were responsible for financial and supply distribution matters. The Oxford English dictionary defines logistics as: “The branch of military science having to do with procuring, maintaining and transporting material, personnel and facilities.”Another dictionary definition is: "The time related positioning of resources." As such, logistics is commonly seen as a branch of engineering which creates "people systems" rather than "machine systems".... Military logistics In military logistics, logistics officers manage how and when to move resources to the places they are......

Words: 3529 - Pages: 15