Similarly to production systems, logistic systems need to be properly configured and managed. Actually a number of methodologies have been directly borrowed from operations management such as using Economic Order Quantity models for managing inventory in the nodes of the network.[21] Distribution resource planning (DRP) is similar to MRP, except that it doesn't concern activities inside the nodes of the network but planning distribution when moving goods through the links of the network.
Traditionally in logistics configuration may be at the level of the warehouse (node) or at level of the distribution system (network).
Regarding a single warehouse, besides the issue of designing and building the warehouse, configuration means solving a number of interrelated technical-economic problems: dimensioning rack cells, choosing a palletizing method (manual or through robots), rack dimensioning and design, number of racks, number and typology of retrieval systems (e.g. stacker cranes). Some important constraints have to be satisfied: fork and load beams resistance to bending and proper placement of sprinklers. Although picking is more of a tactical planning decision than a configuration problem, it is important to take it into account when deciding the racks layout inside the warehouse and buying tools such as handlers and motorized carts since once those decisions are taken they will work as constraints when managing the warehouse, same reasoning for sorting when designing the conveyor system or installing automatic dispensers.
Configuration at the level of the distribution system concerns primarily the problem of location of the nodes in a geographic space and distribution of capacity among the nodes. The first may be referred to as facility location (with the special case of site selection) while the latter to as capacity allocation. The problem of outsourcing typically arises at this level: the nodes of a supply chain are very rarely owned by a single enterprise. Distribution networks can be characterized by numbers of levels, namely the number of intermediary nodes between supplier and consumer:
Direct store delivery, i.e. zero levels
One level network: central warehouse
Two level network: central and peripheral warehouses
This distinction is more useful for modeling purposes, but it relates also to a tactical decision regarding safety stocks: considering a two level network, if safety inventory is kept only in peripheral warehouses then it is called a dependent system (from suppliers), if safety inventory is distributed among central and peripheral warehouses it is called an independent system (from suppliers).[17] Transportation from producer to the second level is called primary transportation, from the second level to consumer is called secondary transportation.
Although configuring a distribution network from zero is possible, logisticians usually have to deal with restructuring existing networks due to presence of an array of factors: changing demand, product or process innovation, opportunities for outsourcing, change of government policy toward trade barriers, innovation in transportation means (both vehicles or thoroughfares), introduction of regulations (notably those regarding pollution) and availability of ICT supporting systems (e.g. ERP or e-commerce).
Once a logistic system is configured, management, meaning tactical decisions, takes place, once again, at the level of the warehouse and of the distribution network. Decisions have to be made under a set of constraints: internal, such as using the available infrastructure, or external, such as complying with given product shelf lifes and expiration dates.
At the warehouse level, the logistician must decide how to distribute merchandise over the racks. Three basic situations are traditionally considered: shared storage, dedicated storage (rack space reserved for specific merchandise) and class based storage (class meaning merchandise organized in different areas according to their access index).
Picking efficiency varies greatly depending on the situation.[20] For man to goods situation, a distinction is carried out between high level picking (vertical component significant) and low level picking (vertical component insignificant). A number of tactical decisions regarding picking must be made:
Routing path: standard alternatives include transversal routing, return routing, midpoint routing and largest gap return routing
Replenishment method: standard alternatives include equal space supply for each product class and equal time supply for each product class.
Picking logic: order picking vs batch picking
At the level of the distribution network, tactical decisions involve mainly inventory control and delivery path optimization. Note that the logistician may be required to manage the reverse flow along with the forward flow.
Traditionally in logistics configuration may be at the level of the warehouse (node) or at level of the distribution system (network).
Regarding a single warehouse, besides the issue of designing and building the warehouse, configuration means solving a number of interrelated technical-economic problems: dimensioning rack cells, choosing a palletizing method (manual or through robots), rack dimensioning and design, number of racks, number and typology of retrieval systems (e.g. stacker cranes). Some important constraints have to be satisfied: fork and load beams resistance to bending and proper placement of sprinklers. Although picking is more of a tactical planning decision than a configuration problem, it is important to take it into account when deciding the racks layout inside the warehouse and buying tools such as handlers and motorized carts since once those decisions are taken they will work as constraints when managing the warehouse, same reasoning for sorting when designing the conveyor system or installing automatic dispensers.
Configuration at the level of the distribution system concerns primarily the problem of location of the nodes in a geographic space and distribution of capacity among the nodes. The first may be referred to as facility location (with the special case of site selection) while the latter to as capacity allocation. The problem of outsourcing typically arises at this level: the nodes of a supply chain are very rarely owned by a single enterprise. Distribution networks can be characterized by numbers of levels, namely the number of intermediary nodes between supplier and consumer:
Direct store delivery, i.e. zero levels
One level network: central warehouse
Two level network: central and peripheral warehouses
This distinction is more useful for modeling purposes, but it relates also to a tactical decision regarding safety stocks: considering a two level network, if safety inventory is kept only in peripheral warehouses then it is called a dependent system (from suppliers), if safety inventory is distributed among central and peripheral warehouses it is called an independent system (from suppliers).[17] Transportation from producer to the second level is called primary transportation, from the second level to consumer is called secondary transportation.
Although configuring a distribution network from zero is possible, logisticians usually have to deal with restructuring existing networks due to presence of an array of factors: changing demand, product or process innovation, opportunities for outsourcing, change of government policy toward trade barriers, innovation in transportation means (both vehicles or thoroughfares), introduction of regulations (notably those regarding pollution) and availability of ICT supporting systems (e.g. ERP or e-commerce).
Once a logistic system is configured, management, meaning tactical decisions, takes place, once again, at the level of the warehouse and of the distribution network. Decisions have to be made under a set of constraints: internal, such as using the available infrastructure, or external, such as complying with given product shelf lifes and expiration dates.
At the warehouse level, the logistician must decide how to distribute merchandise over the racks. Three basic situations are traditionally considered: shared storage, dedicated storage (rack space reserved for specific merchandise) and class based storage (class meaning merchandise organized in different areas according to their access index).
Picking efficiency varies greatly depending on the situation.[20] For man to goods situation, a distinction is carried out between high level picking (vertical component significant) and low level picking (vertical component insignificant). A number of tactical decisions regarding picking must be made:
Routing path: standard alternatives include transversal routing, return routing, midpoint routing and largest gap return routing
Replenishment method: standard alternatives include equal space supply for each product class and equal time supply for each product class.
Picking logic: order picking vs batch picking
At the level of the distribution network, tactical decisions involve mainly inventory control and delivery path optimization. Note that the logistician may be required to manage the reverse flow along with the forward flow.
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