Warehouse location selection: labor, transportation, and site factors

¶ … satisfactory site?

Modern warehouses, similar to manufacturing plants, are often located in suburban or rural areas where the cost of land is significantly less and there is access to main highways. Usually the warehouse is a long, flat, and often one story building, instead of older multi-story buildings that are regularly seen in downtown areas of numerous cities. With this type of building, there is no need to build and maintain passenger and freight elevators, nor to build stairwells and staircases. This type of construction also means there is no added costs to reinforce/fortify floors to increase their load handling capacity. Excellent floor layouts also mean that within these single level buildings - plus the wide aisles - forklifts and other tools and equipments can move about skids and pallets of merchandise rather easily. Moreover, because the internal movement of stock can flow in a straight course without the need to move up and down different floor levels, the goods can come in through one end of the single floor layout, become stored in the centre of the structure, and leave the building through the other end. Thus, operations tend to become more efficient (Bizmove, n.d.; Shanks & Simmons, n.d). The factors that one needs to consider to assess whether a warehouse site is satisfactory or not include the following (each discussed separately): The Labor Force; Transportation; and Other Factors.

The Labor Force -- the available labor force is a crucial factor in the analysis of the site. Lately, many individuals are willing to commute great distances to work. Many firms usually operate by the notion that if the site's location is good, then at least ten people will present themselves for consideration for every one that will eventually be employed. One of the other important factors to consider is the average wage for the location. This particular wage rate should also be compared to that which competitors pay their workers. Small towns often have lower wages and individuals with better work ethic. A further consideration with respect to hiring concerns whether a firm will require unskilled or skilled employees. If the local residents are not suitable, then the conduciveness of the location to attract the qualified employees should be considered. Often, unskilled workers will be more likely to move to new areas for work (Shanks & Simmons, n.d).

Transportation -- the available transport to the warehouse site is one of the other factors that should be considered when choosing a business location. The transportation means that will be needed for the firm, or by its clients, in accessing the business include close proximity to major roads, railway lines, or airports. The cost of delivery to clients should also be determined (Shanks & Simmons, n.d).

Other factors -- some of the other factors that should be considered when choosing a business site should be regional costs. These entail the costs of electrical power, water, waste disposal, taxes, land, and construction. The location plays an important role in the image that the business portrays. The initial costs of land should not be given too much consideration. The difference in costs between different sites is not large after it is spread throughout the life of the business. The case is the similar for other one time fixed costs. It is crucial not to allow personal preferences, which are often emotional rather than logical or rational, to interfere with our decision making processes (Shanks & Simmons, n.d).

After analyzing the aforementioned factors, it is critical to utilize a score sheet to evaluate the comparative values between different sites. The score sheet enables one to assign ratings to singular factors enabling one to determine the strengths and weaknesses of the site. A weight should also be assigned to each of these factors, with consideration of the fact that some factors will be more important or significant than others (Shanks & Simmons, n.d).

2. What items would need to be kept in stock, and the optimum stocking level of each?

The Stocking Plan

After determining the general categories of merchandise the warehouse is to store, the retailer then splits the general categories into smaller categories referred to as classifications. The classifications are then in turn divided into sub-classifications. A unit stock strategy of the number of goods to be stocked in each is then prepared. The purpose of this move is to make sure that the stock will represent a collection of goods that will meet the wants and needs of a broad section of the targeted end consumers. One component of a stock plan approach is the basic stock list, also known as a model stock. These are the never-out items or 'musts' that may also be referred to as 'bread-and-butter' stock items (Bizmove, n.d.).

The number of goods in all stock plans ought to be multiplied by the price line to get the total dollar value of the planned inventory. Adjustments need to be made to the stocking plan if insufficient financing precludes ambitious stock assortment plans (Bizmove, n.d.).

The Buying Plan

One of the most crucial aspects of market penetration is to possess items in stock at the times when customers want to purchase them. This means going to the market to buy goods early enough to make sure that delivery to the store is done at the right time. Purchasing goods for a retail store requires prior planning to determine the stock needs for each month and then making commitments without any procrastination. Because retailers provide new merchandise for sales months before the actual calendar date for the start of a given new season, it is important that purchasing plans be made early enough to allow for intelligent purchasing without any last minute panic buying. The main function for this early offering for sale of new merchandise is that the retailer perceives the calendar date for the start of the new season as the merchandise date for the completion of the old season (Bizmove, n.d.).

The duration following the calendar date for the start of the new season is utilized by the retailer to sell job lots, closeouts, irregulars, imperfects, seconds, off-price purchases, markdowns from regular stocks, and distressed merchandise (Bizmove, n.d.).

In summary the Buying Plan should show:

When one should visit the market to see, assess, and analyse new offerings for the upcoming season.

The timings of the commitments

When the first delivery should be made to the store (Bizmove, n.d.).

The Selling Plan

The selling plan is closely linked to the buying plan. Once goods have been purchased, plans must be made to make sure that the greatest numbers of units are sold during the duration of customer interest and acceptance. The selling plan should include:

a) When merchandise should be marketed through advertising, or displays, etc.;

b) When the inventory should be taken to the maximum;

c) When no more reorders should be placed;

d) When markdowns should be made for regular stock;

e) When the merchandise should no longer be stocked (Bizmove, n.d.).

The individuals who purchases merchandise for a retail store should evaluate the time when merchandise should be purchased, when the merchandize should be introduced, the time it should be reordered, the time it should be marked down, and when it should be taken out of stock. This process can be compared to tidal waves-which go up and down. In terms of merchandising it is known as the ebb and flow of merchandise. The old must be sold or it must go and be replaced with the new (Bizmove, n.d.).

The Unit Control Plan

To dispose of unwanted items and maintain in-stock position of wanted items, it is important to create a sufficient form of control over the merchandise that has been ordered and that which is already in stock. For small retail traders there are quite a number of simple, inexpensive forms of unit control including;

Eyeball or visual control-allowing the retailer to examine the inventory visually to assess if there need for additional inventory;

Tickler control-that allows the retailer to physically count and add up together a small fraction of the inventory each day, such that each segment of the inventory is counted after a certain number of days making it regular.

Stub control-which enables the retailer to retain a fraction of the price receipt when an item is purchased by a customer. The retailer can then utilize this ticket to note down the sold items; and lastly;

Click sheet controls-that enable the retailer to record each item sold on a sheet of paper. All these type of unit controls are utilized by retailers to reorder purposes (Bizmove, n.d.)

For a large retailer more sophisticated and technical forms of unit control are required. These include:

Point of sale terminals which send data to the computer of the items sold. The buyer receives data printouts at determined regular intervals for review and action if need be.

Off-line point-of-sale terminals which send the data directly to the suppliers computer, which in turn uses this information to automatically transport additional merchandise to the retailer; and A manufacturer's representative pays a visit to the large retailer at regular intervals to take stock count and to write the reorder. Unwanted merchandise is taken out of stock and returned back to the original manufacturer through the process of an authorized level (Bizmove, n.d.).

A proper unit control must entail maintenance of control over pending orders so that delivery dates are met or adhered to ensure that retailers do not receive merchandise that they did not order.

3. What size facility is needed -- both floor space (sq ft) and volume (cubic ft)?

The size of warehouse that is needed for an operation is determined based on the maximum quantity, in terms of volume and tonnage, of supplies to be purchased and stores at any given time. This quantity is often based on the number of beneficiaries, the type of distribution system, the lead-time needed to replenish the warehouse, and the frequency of distribution (e.g. weekly or monthly). When determining the storage requirements, only 70% of the entire warehouse surface capacity should be regarded as actual available storage space. The remaining 30% is utilized to provide passageways, proper ventilation, repackaging areas, and handling space. Furthermore, it should be noted that it is often either impractical or downright impossible to fill a warehouse to the roof, and it is not recommended. Thus, the storage capacity of a warehouse should be determined at a level at least a metre below the height of the warehouse ceiling. Moreover, to avoid damage to the merchandise, or the risk of goods toppling over, only a few items can and should be stacked at a height of over 2.5 metres. When calculating the warehouse capacity it should be understood that no added weight than what has been mentioned within the contract can be loaded in warehouse floor space (WFP, 2013).

Theoretical capacity is the real physical capacity of the space that has been reserved for storage. So for a non-complicated warehouse with a layout of a thousand pallets in various locations, all of the following proportions 40" x 48" x 72," its theoretical capacity would be one thousand full pallets or 80,000 cubic feet (since each pallet is 80 cubic feet). This is referred to as storage capacity, for the reason that it is linked to the storage characteristics and specific inventory and not all of this capacity is utilized. If there is a cube information setup or a Warehouse Management System (WMS), space utilization reports can be run to determine the theoretical capacity being utilized. If this is a case-pick system, when making a utilization report to prove to the company's executive how "full" the warehouse is, it maybe calculated that the warehouse is under 70% utilization. This leads us to the working capacity (Piasecki, 2012).

Based on the characteristics of storage and inventory configurations, 70% utilization may in fact be "full" (the 70% being discussed is just an example and not an industry standard). One warehouse may run up to 90% while another may be just at 60% based on the storage and inventory configurations. Inventory characteristics include things such as the physical size of items, the number of items, the amount it can carry, and the characteristics of outbound and inbound orders. All of these work within the confines of the storage configurations or settings. For instance, consider the one thousand pallet example, and assume this is a full-pallet-in/full-pallet-out system. If the warehouse is made up fully out of selective pallet racks, and has a steady stream of outbound and inbound volume, there should be not issues with running at 90% or more utilization (Piasecki, 2012).

However in case the same inventory had been stored in the form of floor loaded bulk storage with pallets stacked 3 high in lanes that range from four to eight deep, there may be a struggle to reach and maintain even a 60% utilization. That is because in the selective-rack case, whenever a pallet is removed from a certain space within the warehouse, that particular pallet location then becomes available for another item. However, in the floor-stacked example-assuming lots or items cannot be mixed in storage lanes- there will be a need to wait until the entire lane is completely emptied out before storing something else in it. Going back to the selective rack example and changing the system from pallet pick to case pick, our cube working capacity would be cut since we would then have so many spaces occupied by partial pallets (Piasecki, 2012).

4. An optimum system for locating items, so your employees will know where to put them when they arrive, and find them when they're needed?

"Universal Product Codes" or UPCs became very popular immediately when they were released into the market. Nowadays they are found almost on each and every product on supermarket shelves. In the same fashion as barcodes, UPC codes formed a link between the digital and physical worlds, providing any person with a barcode scanner the ability to access instantaneously the data that is contained in that barcode. Similar to all initial barcode formats, UPC codes were in one dimension (1-D)-meaning the information carried was also in one direction. 1-D codes may be enough for carrying small amounts of data such as numeric codes, however as the digital world became more complex, it was realised that there was need for bar codes capable of carrying even more data. One solution that was designed and implemented was the stacked barcode, which as the name implies contains stacks of 1-D codes piled on top of each other. These stacked barcode scans store a lot of information, however they were found to be difficult to read at time since they could grow very large. So as to have a barcode that was easier to read but still capable of holding a large variety of character types and a huge amount of data, the 2-D barcodes were innovated (Atteberry, 2015).

"Universal Product Code" or "UPC" bar codes have slowly been replaced by "Smart Labels," which are also known as "Radio Frequency Identification" or RFID tags. RFID tags are smart codes since they can relay information to a networked system, thus tracking all products that are placed on a shopping cart. These tags connect to electronic scanner located in the shopping carts and thus the scanners detect every item in the cart and ring up in real-time. The electronic scanner or reader is connected to a large computer network that will send the information of the goods in the cart to the retailer and the product manufacturers. The bank will then be notified and the due amount be deducted from one's account. No lines, no waiting. RFID tags are helping track goods globally. Numerous manufacturers utilize the tags to track the location of all products from initial preparation to the time the product is put on a shopping cart (Bonson & Fenlon, 2015).

UPC's are generated by a firm known as the Uniform Code Council (UCC). A manufacturer applies to the firm for permission to enter the system. The manufacturer then pays an annual charge for that particular privilege. In return, the UCC gives that manufactures a six-digit manufacturer identification number (manufacturer ID) and provides guidelines on how to utilize them. One can see this number in any standard twelve-digit UPC code. The UPC code is in two parts: the human readable twelve-digit UPC number and the machine readable barcode (Brain, 2015).

A person employed by the manufacturer, known as the UPC coordinator, is responsible for assigning item numbers to products, ensuring that the same code is not utilized for more than one product. This also ensures that the codes of products that are no longer being produced are retired. In general, every item sold, including different size packages, requires a different code. The last digit of the UPC code is the check digit. This digit acts as a control for the scanner to check if it is functioning properly (Brain, 2015).

5. Which of the three options would be best? Why? Explain.

Of the three systems discussed above, the barcodes are the best. Barcodes can not only be scanned by electronic scanners but also by Smartphones. Common models such as Android, Blackberry and iPhone Smartphones all have the capacity to read even the common 2-D bar code formats, helping clear perhaps the biggest obstacle to the widespread adoption of 2-D bar codes. Smartphones make sense of this seemingly unintelligible pattern of squares and lines on the grounds that the bar code itself was created from scratch using a scanning process as rapid and as accurate as possible (Brain, 2015).

Bar codes are the best because:

Low error rates - recognition and transcription errors are banished. Manual entry through the keyboard, for instance generate about 10 errors for every 1000 keystrokes. The optical barcode, on the other hand, suffers only a mere one error for every 10,000 scans.

Improvement of productivity-Bar code systems cut personnel overhead and significantly reduce training time. Barcode systems also allow real-time implementation of any adjustments to pricing made in the firm's database.

Asset management-Bar codes are the key to proper asset management and act as a strong theft deterrence system. They also allows asset tracking.

Business intelligence-Bar code data provides increased awareness of product availability and the flow of stocks -- the kind of information needed for strategic planning and decision making (Brain, 2015; Atteberry, 2015).

6. What are the minimum procedures you should put into place, to ensure that your warehouse workers (probably no more than one or two people) aren't exposed to unnecessary risks?

Safety of warehouses in the United States is regulated by the Occupational Safety and Health Administration (OSHA). The United States Congress created OSHA in the passing of the Occupational Safety and Health Act of 1970. The act mainly deals with preventing work related illnesses, injuries, and deaths. Since it was operationalized, occupational injuries have decreased by 42 per cent, and occupational deaths by 62 per cent (Murray, 2015a)

OHSA regulations on forklift operations include:

To train, assess, and certify all operators to make sure that they have the ability to operate forklifts safely, and can follow the safe and recommended procedures in picking up, putting down, and staking loads.

To train operators to drive safely; to never exceed 5 mph; and to ensure that they slow down in congested areas.

To maintain adequately safe clearances areas for aisles and at loading passages and docks where forklifts are utilized.

To educate employees on the hazards linked to combustion of Carbon Monoxide, a by- product of forklift operations

OSHA recommended measures with regard to communication of hazards.

Workers must be trained on the risks of all the chemicals they handle.

There must be provision of spill cleanup kits in the locations where these chemicals are stored.

There should be a written spill control plan.

Employees should be trained on how to cleanup spills, how to protect themselves, and to effectively dispose of remnant materials.

Proper personal protective equipments must be provided and their use enforced.

All chemicals should be securely and safely stored (Murray, 2015a).

The first step one should take regarding electrical safety is eliminating or controlling factors in the warehouse that pose significant electrical hazards or risks. Ground fault is a common electrical hazard that results in shock. OSHA requires that all workplaces be fitted with ground fault circuit interrupters (GFCIs) for replaceable power outlets even in warehouses (Murray, 2015a).

One type of fall protection when operating equipment or handling merchandise from high positions is the fall restraint, e.g. standard railings/guardrails, complete body harnesses, and warning lines. Another type of fall protection is the fall arrest that stops a fall in progress, e.g. safety nets (Murray, 2015a).

OSHA also requires that all employers provide their employees with the proper personal protective equipment (PPE). Many preventable accidents occur in the workplace because of lack of protective equipment; this may occur because employees refuse to wear the PPE; this is especially true in the warehouse scenario. One such PPE is for respiratory protection: respirators are designed to protect the wearer from paint, dust fumes, pesticides, and other airborne substances (Murray, 2015a).

Trident Session Long Project (SLP)

1. The name of the organization

Constant growth has been noted for Macy's Inc. e-Commerce business via our Omni-channel approach, providing the clients with the opportunity to shop wherever, however, and whenever they please: online, through mobile phones, and even in store outlets. The store's Direct to Consumer (D2C) fulfilment centres are actually a segment of Macy's Logistics and Operations business unit, which is accountable for the transfer of products from the sellers through supply centres and eventually to the consumers or stores (Macy's Inc. Home page, 2015).

2. Its primary business or mission

Macy's Inc. is a primary national omni-channel seller having iconic products that serve consumers via the extraordinary outlets and active online sites. When it comes down to recognition, both Bloomingdale's and Macy's are globally recognized. Each of them possesses its own special identity and target clients. Bluemercury is a beauty company that predominantly concentrates on specialty stores (Macy's Inc. Home page, 2015).

3. Why you chose this business

Macy's Inc. is among the most recognized and well developed retailers in America. The chain stores of the department, providing middle-scale all the way to upscale products, together with home decor and appliances, clothing, cosmetic products, and many others, has been satisfying the needs and wishes of the clients from the time when the first flagship store was opened in New York in 1858. Currently, Macy's manages about 800 stores in the U.S., Columbia District, Puerto Rico, and Guam and has around 175,700 workers (Macy's, Inc. Annual Report 2012.). In addition, Macy's has also been developing its omni-channel existence through its website, which is macys.com. In accordance with the website, Macy's Inc. attained 27.7 billion dollars in sales as of economic year 2012 (Macy's, Inc. Annual Report 2012.). The continued success of the retailer can be attributed to its broad variety of quality products at reasonable prices. This particular case study aims to evaluate the aspects that contribute to Macy's achievement and the factors that the retailer could develop on so as to increase both its revenue and attention from the millennial customer (Tenser, 2013).

Macy's, Inc., having commercial offices both in New York and in Cincinnati, is among the primary retailers in the United States, with sales of 28 billion dollars in fiscal 2014. The corporation manages around 885 stores in 45 different states, the Columbia District, Puerto Rico, and Guam with the names of Bloomingdale's Outlet, Bloomingdale's, Macy's and Bluemercury, in addition to bloomingdales.com, macys.com and bluemercury.com sites. The Ai Tayer Group LLC manages Bloomingdale's in Dubai, under a license agreement (Macy's Home page, 2015).

4. How it handles its warehousing functions

The omni-channel approach entails incorporating Macy's stores, the Internet, as well as mobile devices, so as to enable the store to surround its customers at each and every turn, and position the entire company's inventory to satisfy their needs and wishes. An essential portion of the omni-channel approach is the ability to permit the members in every store to sell a product which might be out of stock regionally. This happens by choosing the desired products from other different stores, or its online fulfilment centres, for delivery to the consumer's doorstep. Similarly, the online fulfilment centres of the store can make use of the store records countrywide to fill orders that stem from the internet or through mobile devices (Macy's, Inc. Annual Report 2012).

Facilities layout and warehousing

Macy's brick-and-mortar sites are progressively turning into a mixture of digital and physical. Pictures from Macy's handbag department show real purses and their digital displays side by side, providing the customers with an opportunity to feel and also hold the actual thing in addition to seeing a continuous aisle of other handbags, spinning them and viewing inside, all onscreen. This particular arrangement permits Macy's to exhibit products which it may not be able to otherwise due to the inadequate floor space or inventory. Macy's is also conducting further research on digital dummies which could be rapidly and easily be re-outfitted all through the day, varying apparel to please the different kinds of customers who do their shopping at different times of day. Point-of-product information and kiosks shall be a continuing segment of the in-store encounter, similar to a new visual broadcasting system. Whereas Macy's has long been featuring video loops in its stores, the new visual broadcasting system shall elevate it to the next level. It shall permit the retailer to alter its videos depending on the department, time of the day, or to highlight door-busters or any other products that are on promotion (Macy's, Inc. Annual Report 2012; Macy's Home page, 2015).

In the cosmetic division, there is also the existence of other new customer-facing technology, where a "beauty spot" touch-screen gives a combination of physical inventory along with a virtual engaging display giving extra information on the product. At the Clinique counters, clients can search for assistance through an iPad application or via the more conventional approach of on-site experts. The main intention is offer the customers various options, and allow them to acquire the necessary information at their own pace, or to seek assistance. Consumers are presented with more opportunities to participate on their own terms. There is Wi-Fi in all the 840 store sites. In addition, Macy's has also united with Google to offer in-store maps which clients can download and utilize to find their way in the stores. Moreover, it is also uniting with Google for tap-and-go mobile payments through Google Wallet (Tenser, 2013).