Logistics managers should be in a position to respond to redesigning distribution networks in such a way that they frequently operate at the lowest cost possible while providing the best service to the customers (Smith, 2011). However, there is a specific procedure that managers should follow when designing a logistics network consisting of only one warehouse. For instance, top management should be included in the decision-making process to ensure that people develop in ensuring that logistics network is efficient. When designing a logistics system consisting of one warehouse, I would minimize the many costs involving buying, production, inventory holding, facility and transportation costs.
A well-designed logistics network consisting of only one warehouse should cater to the present and future functioning of the organization. As a result, the designing process will consider the impacts of the warehouse in the next four to five years to avoid the occurrence of uncertainty. As a result, I would involve sales, marketing, manufacturing in an open planning process. These categories of people play an essential role in giving views and ideas that could be applied in reconfiguring the logistic system (Golinska, 2014). Involving different stakeholders will ensure that all the processes involved in the logistics system are designed efficiently to reduce the costs of operation.
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The centralized warehouse is beneficial because it can help in attaining the goals and objectives for minimizing operational costs. Therefore, there should be consideration of the different types of expenses that are likely to affect the operation of the system (Park, Lee, & Sung, 2010). For instance, handling costs include the costs associated with the services that goods require to be stored or transported to a different place. These costs vary depending on the type of products that saved in the warehouse. Additionally, fixed costs also affect the operational cost of a single warehouse in a logistic warehouse. These costs depend on the volume of materials that flow into the warehouse. As a result, the size and space should be designed in such a way that products handled in the warehouse serve the interests of customers. The inventory holding costs should also be involved in storage costs.
Steps To Follow To Design Optimal Logistic Network for One Warehouse
Designing a warehouse configuration depends on the infrastructure and the supply chain that affects the functioning of an organization (Park, Lee, & Sung, 2010). Such decisions have to depend on the location of a firm and the distribution system used by the organization. However, the following vital steps should be considered when deciding a warehouse. For instance, the first step should involve a process of data collection applicable in the decision-making process. The information included in this stage consists of the location of consumers, retailers, and the distribution centres to be involved in the logistic network. The rate of transportation within the mode also needs to be considered when deciding the logistic system that can provide an insight regarding the mechanism to be applied in the order (Li et al., 2016). Annual demand and warehousing costs, such as demand for labor, also need to be considered to determine operational costs.
The second step involves data aggregation to analyze the information collected before implementing the operational costs. Therefore, the information will be aggregated through the application of the grid network. This process involves the collection of information, thus clustering consumers in need of similar services in one grid (Guerrero Campanur et al., 20156). Therefore classification becomes an essential tool for ensuring that products are classified depending on the services that they need in the system.
The third step includes the building of the mathematical model to ensure that there is an optimization of the model before implementing its functionality. Optimization tools ensure that the system designing meets the needs of critical stakeholders.
The final step should involve the reconstruction of the existing model to meet the needs of the collected information from the previous actions. This step considers the particular regulations and environmental factors to the location and functionality of the system.
Data Needed To Make a Decision
In an attempt of making this decision, there is a need for collecting data regarding the geographical location of retail stores, warehouses, and the manufacturing facilities in that place (Shu et al., 2012). There should also be consideration of the current possible locations where the new warehouse can be located, thus considering various factors to make a decision. For instance, information regarding the shapes and volumes of the product are essential aspects that can be utilized to create a viable choice about the product. Demand for a specified period also determines the size and amount of space would be required to construct a warehouse. Handling and fixed costs to be involved in the process also assess the profitability of building a warehouse in a particular region.
Strategy to be applied in this Logistic Network
The approach to be involved in the construction of one logistic warehouse requires the application of centralized policy because it has various advantages associated with its functioning. Using a single warehouse in a logistic network has multiple benefits in the market. For instance, service will be improved because there will less inventory levels and the fixed costs. The transportation cost would also be enhanced because transportation would be designed towards the retailer supporting all areas (Oeser, 2012). These benefits accrue because the decision making considers various aspects such as location, infrastructural facilities and decision that should be applied to meet the needs of the logistic system with one warehouse.
In conclusion, designing a logistics network consisting of one warehouse should involve key stakeholders to operate at an optimal level. For example, sales, marketing, and manufacturing aspects have to be considered as viable sources of information for making an optimal decision. Successful warehousing designing process should consider issues such as the information consumer, retail, and infrastructural facilities in the industry. The centralized decision-making process should also be put in place for the method to be effective.
References
Golinska, P. (2014). Logistics operations, supply chain management and sustainability. Springer International Publishing.
Guerrero Campanur, A., Olivares-Benitez, E., Miranda, P. A., Perez-Loaiza, R. E., & Ablanedo-Rosas, J. H. (2018). Design of a Logistics Nonlinear System for a Complex, Multiechelon, Supply Chain Network with Uncertain Demands. Complexity, 2018.
Li, S., Chen, J., Liao, Y., & Shi, Y. (2016). The impact of information sharing and risk pooling on bullwhip effect avoiding in container shipping markets. International Journal of Shipping and Transport Logistics, 8(4), 406-424.
Oeser, G. (2012). A framework for risk pooling in business logistics. In Supply Management Research (pp. 153-193). Gabler Verlag.
Park, S., Lee, T. E., & Sung, C. S. (2010). A three-level supply chain network design model with risk-pooling and lead times. Transportation Research Part E: Logistics and Transportation Review, 46(5), 563-581.
Shu, J., Li, Z., Shen, H., Wu, T., & Zhong, W. (2012). A logistics network design model with vendor managed inventory. International Journal of Production Economics, 135(2), 754-761.
Smith, T. M. (2011). Integrate Network Design with Warehouse Design. Retrieved from: http://mhlnews.com/archive/integrate-network-design-warehouse-design
