Friday, January 11, 2008

Facilitator's Question

What are the reasons leading to upgrading from bar-code scanning to radio-frequency identification (RFID) for effective warehousing operations? Explain.

There are many reasons to why bar-code scanning should be upgraded to radio frequency identification(RFID) for effective warehousing operations. For effective warehousing operations to occur, a warehouse must be up-to-date with the current technology, efficient, fast and accurate. Even though bar-code scanning would be able to improve accuracy it is unable to improve the speed and efficient of various warehousing operations.

For example: Bar code Scanning would require close range line of sight scanning and is only able to scan one item at a time. Where else RFID would enable warehouse to detect items at a further range and able to scan many items at ago. We have an example of how RFID would help improve the receiving dock and shipping process in one of the post at the bottom titled RFID- Receiving dock and Shipping. Through RFID, it would also ensure a 100% order shipment accuracy.

The second factor would be to increase competitiveness level. By upgrading to RFID which assures consumers 100% accuracy, efficiency and prompt service. Consumers would definitely be more willing to store their products due to the extra service which RFID would help to achieve. Therefore RFID would definitely be able to boost the company reputation in comparison to Bar code Scanning which in comparison to RFID is more back dated.

Thirdly, RFID technology is beginning to cost cheaper and cheaper. There is a article which I found on the internet which indicates RFID tags getting cheaper in price which i posted titled Tag Cost and ROI. The article basically is about RFID tags getting more affordable and cheaper due to technological advances and etc. Therefore, if RFID is becoming more affordable why not pay a little extra more to gurantee even more customer's satisfaction. Customers would definitely be more satisfied knowing their goods are being stored in a warehouse with the lastest technology and equipments.

Tag Cost and ROI

Tag Cost and ROI.

RFID Journal's analysis indicates that the price of simple license-plate tags will fall to 5 cents in 2007. But companies that wait until then to deploy RFID technology are making a mistake.
By Bob Violino



By Mark Roberti Feb. 16, 2004—Nothing in the RFID industry has been more controversial than the Auto-ID Center's claim that it could produce a prototype for an RFID tag that would sell for 5 cents in high volumes. With the intense focus on the investment suppliers will have to make to comply with RFID tagging requirements issued by Wal-Mart and the U.S. Department of Defense, RFID Journal did a detailed analysis
of when end users might be able to buy a simple, read-only license plate tag for 5 cents, to help suppliers plan staged rollouts (see The 5-Cent RFID Tag). Our report concluded that the market would reach the volume needed to drive the price down to 5 cents in 2007. The analysis was based on the cost of producing a microchip, attaching the antenna and creating an inlay (the tag and antenna mounted on a plastic or paper base). The economics of the semiconductor industry are well documented. Sanjay Sarma, the former head of research at the Auto-ID Center, used an understanding of the silicon industry to conclude that, using conventional technologies, it would require an annual volume of 30 billion tags to drive down the price of the chip to a little more than a penny; attaching the antenna and creating the inlay account for the rest of the cost. Our analysis looked at when the market might consume 30 billion tags annually and factors in unconventional assembly technologies, which could lower costs more quickly. Some, no doubt, will say our forecast is wildly optimistic. Others might say we weren't bullish enough. I'm confident that we balanced the forces at work in the market and came up with a solid forecast. We spelled out how we came to our conclusion in painstaking detail. Our goal was not to encourage companies to wait until the tag price falls to a nickel to deploy RFID, but to give them a benchmark to use today to plan phased deployments. It's long been my view that the tag cost issue is something of a red herring. I've heard executives say that they can't get a return on investment with a tag price of $1 or more. I would ask them at what price they could get an ROI. Invariably, they would say they don't really know. If you don't know what the tag price has to be to get an ROI, then how do you know you can't get it at $1 per tag? The fact is a company could spend $50 per tag and $40,000 to install each reader and still make a return on investment for certain applications. Don’t believe it? That's exactly what the railroad industry did in North America. By automating the tracking of rail cars, it cut the number of people needed to walk up and down tracks reading numbers painted on the sides of cars. It also reduced delays and improved customer service. That may be an unusual example, but the point is the railroad industry wouldn't be reaping huge benefits from RFID today if it had waited for the price of tags to fall to a nickel. Moreover, if companies are looking at RFID only to track cases of product, they are looking at it too narrowly. Virtually all companies have reusable assets they could track with tags that cost more than 5 cents each and still get an ROI. Even when the price of a simple RFID tag falls to a nickel, many companies will be using more expensive active (battery-powered) tags to track everything from heart defibrillators to pallet jacks. And I expect to see widespread use of RFID sensors to monitor the status and condition of shipments. Sensors will likely cost more than a nickel for a long time to come. Of course, if a company needs to tag cases of paper towels or cereal for a large retail customer, they are going to want the cheapest tag that meets the requirements. Our reason for determining when the price of a simple license-plate tag would fall to 5 cents was to give companies guideposts. RFID technology needs to be deployed in stages. High-value products that are often stolen or out of stock can be tagged profitably today with a 30-cent tag. As prices fall, the types of products and applications suitable for RFID will expand dramatically. Companies should do their analysis and plot an adoption path. And if every company moves quickly to deploy RFID where it makes sense today, our prediction will be off because tag prices will fall much more quickly. That’s OK—we'd rather see your deployments succeed.

Reference
http://www.rfidjournal.com/article/view/796/1/2

Thursday, January 10, 2008

Brief Introduction - Shipping and Docking

The Shipping and Docking/Receiving processes are the most important and crucial function of a warehouse. Without this two functions, no warehouse will be able to reap any profits as Shipping and Receiving are the two activities that connect the warehouse to the customers.

The Shipping function is basically cargoes stored in the warehouse being shipped/moved out of the warehouse to consumers. The video below will help further emphasize the importance of shipping.

Based on 'Business dictionary' definition, receiving refers to a function that involves checking of the quality, quantity, and condition of the incoming goods followed by their proper storage. And, the point of receipt refers to the point where the carrier hands the shipment over to the warehouse operators after ensuring that the proper documentations are in place, and from there, the shipment could be repackaged (if required) and shipped out to it's designated location.

The process of receiving and shipping requires different equipments and transports to perform these functions. Furthermore, a smoother process flow could be achieved with a successul implementaion of Information Technology (IT)computer systems that includes Radio Frequency Identification (RFID) technology.



The video above show the importance of shipping as without shipping, non of the customers in the video would be able to receive their Christmas gifts .

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More On Dock Operations

"Dock Operations

The dock area may well be the most neglected part of the warehouse plan. All too often we are expected to make do with what exists, even if no dock is connected to the warehouse. Except in very small operations, at least one dock door is needed. The number of doors needed will increase is in direct relation to how long it takes to unload or load a shipment and how many deliveries and pick-ups you average each day. You should not have more than one carrier waiting for a door at any given time, and the wait should not exceed thirty minutes.

The basic dock functions are unloading and loading carrier shipments, checking the shipments for damage, and verifying the counts stated on the delivery receipt. The driver should note all damage and shortages on the delivery receipt before the receipt is signed. All delivery and/or shipment paperwork should be routed to the proper department within the organization.

Basic dock equipment usually includes a hand truck and a pallet jack. If there is a high volume of shipments, the pallet jack may need to be electric or there may need to be a powered lift truck. In the end, the characteristics of the shipments usually determine the equipment needed.

Space directly adjacent to the dock doors should be sufficient to accommodate the average daily volume of receipts and outbound shipments. Just how much space depends on the time it takes receiving to check shipments and move them into the storage systems, your ability to control when carriers deliver and/or pick up shipments, and how soon outbound shipments start being staged each day. There should also be space for empty pallets, containers, carts, and the like used to hold inbound goods. You might save floor space by storing these above and/or between the dock doors.

Unless you expect to receive inbound shipments continuously throughout the day, it usually makes sense to handle inbound and outbound shipments in the same area of the warehouse. Doing so usually requires less space, less equipment, and fewer personnel.

Comments: This article gives a clearer picture of dock operations. It explains what the basic dock functions are, what equipment are used to handle the shipments and special equipments that are used for larger volume of shipment and the planning space of a dock.


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More On Receiving Operations

Receiving Operations

Receiving duties often include the dock functions. The receiving function is the starting point for inventory control in the warehouse. It is also the function best suited for gathering information needed for keeping product details accurate and current. And if copies of the product are to be routed or stored, receiving should handle their delivery and storage. Any and all essential data should be gathered at this stage, and it should be documented on the receiving reports.

The basic functions of receiving include verifying product quantity, preparing receiving reports, and routing those reports to designated departments. Receiving also should prepare received products for movement into the storage and picking systems.Receiving also should pull the stock needed to process backorders.

Receiving usually needs a desk, a computer, a filing cabinet, and other furniture or equipment associated with the duties to be handled. A small office or a designated space near or in the dock area is all the space normally required. "

comments: Receiving functions includes the verification of shipment documents, quantity and quality. It is important to note that the shipment data could be collected at this point. It is the starting point for documentations and inventory database collection.

reference: (http://aaupwiki.princeton.edu/index.php/Warehouse_Operations)

Receiving Procedures



RECEIVING PROCEDURES

AUTHORIZED RECEIVING POINTS

Each department is responsible for receiving goods. To be effective, each department must:

1.Limit the points to which goods may be delivered to avoid misdelivery of goods, lost or stolen goods and lost or misplaced documentation.

2.Limit the number of people authorized to sign for deliveries and ensure that they are aware of the correct receiving procedures, as described in this section.

3.Whenever possible, ensure that three different individuals are involved in the receipt/payment process. However, a minimum of two different individuals is required.

One to sign/authorize the requisition.
One to physically inspect and sign for the goods received
One to authorize payment (may be the same person as "a" above).

The ordering department is obligated to accept delivery of any merchandise which has been ordered in accordance with purchasing procedures. If there is a change regarding the need for the items, the department should immediately contact Purchasing to make other arrangements. ONLY PURCHASING HAS THE AUTHORITY TO MODIFY OR CANCEL PURCHASE ORDERS. It should be realized that there may be a restocking charge if the items must be returned through no fault of the supplying vendor. The City’s failure to accept and pay for ordered goods is a breach of contract.


RECEIVING GOODS FROM THE CARRIER

1.Avoid accepting delivery of any merchandise until adequate identification from the packaging or delivery tags is obtained. A purchase order number or other suitable identification indicating that the merchandise should be delivered to the department, must be in evidence before the shipment is accepted.

2.Sign only for the number of boxes or parcels which are received from that carrier and which are listed on the delivery tag (carrier’s receipt) which accompanies the delivery. NOTE: The receiver is not signing as to the condition of the merchandise inside the box or parcel, but should note any exterior damage, including unsealed packaging, on the delivery tag before signing. The receiver should not refuse a shipment because of apparent damage. This may result in storage fees to the City.

3.In cases of known damage (apparent at the time of delivery):

4.Note on both copies of the delivery tag (carrier’s receipt) "case damaged in shipment" and , if the item is visible and the damage is visible, also include "item visibly damaged".

5.Obtain signature from carrier on both copies of the delivery tag before signing for receipt.

6.Return one copy of the receipt to the carrier.

7.Retain a copy of the receipt for Purchasing Division files.


INSPECTING GOODS AFTER DELIVERY

1.Inspect the merchandise promptly after receipt. Inspections of items received and determination of compliance with the ordering description or specifications are the responsibilities of the ordering department.

2.Check merchandise received against the packing slip and the purchase order.NOTE: If copies of invoices are received, they should be immediately forwarded to the person in the department who is authorized to make payments.

3.Post any partial deliveries received on a copy of the purchase order.
The receiver should keep all packing materials and merchandise and report the damage to the vendor immediately. If the problem is not resolved, contact Purchasing.

WARNING: Do not destroy damaged item(s) or any packaging materials.

4.Notify the vendor and the Purchasing Division if the quantity received is different from the quantity stated on the purchase order and no back order quantity is shown on the packing slip.

5.Purchasing need not be notified when the purchase order quantity states that the quantity is approximate or states that an over-shipment of a certain amount is acceptable and the quantity received falls within that range. In this event, the quantity on the receiving copy of the purchase order should be changed by the receiving department to agree with the quantity actually received.

6.If unable to resolve discrepancies with the vendor, notify Purchasing immediately.


LOST/DAMAGED GOODS

1.Usually, terms are FOB Destination and the seller holds title during transit. In this case, the receiving department shall notify the vendor of the loss, ask for replacement goods and give the vendor information to aid in filing a claim with the carrier. There will be no additional cost to the City. FOB Destination is the City’s preferred method of shipment because the City’s liability for lost or damaged goods is limited.

2.If shipping terms are FOB Shipping Point, the City owns the goods in transit. Therefore, the receiving department will file a claim with the carrier. If the goods must be replaced or repaired in the meantime, the City will have to pay the additional cost pending reimbursement by the carrier for the loss or damage.

INCORRECT GOODS

1.If the goods shipped do not comply with the purchase order, the receiving department will as the vendor to bring them into compliance.

2.If the vendor fails to do so within a reasonable time, the receiving department will notify Purchasing. Purchasing will notify the vendor of the breach of contract.

3.It is the receiving department’s responsibility, to notify Purchasing of the need to charge the defaulting vendor with any additional cost experienced by the City due to the breach of contract.

Reference: http://www.visaliapurchasing.org/pol_div_chapters/chap_12.html



Sharing Time: During my attachemnt period, I have been touched on receving procedures, my company always receives the containers 1-2 times per month. The most important and complex task is to check the items quantity and qulity, to see whether it is correct or not. But since my company is a small company, all the jobs are done by manual. So the accuracy of the receiving job may not be 100% and they take a long time to do it, so it's quite a waste of time. But the procedures they are following is just like what the above article mentioned, so I think the procedures are quite correct.

Wednesday, January 9, 2008

Shipping Documentation

Numerous documents are required for shipping. The primary documents are listed below with links to samples. Exporters should seriously consider having a freight forwarder handle the formidable amount of documentation that exporting requires, as forwarders are specialists in this process.

Documentation must be precise because slight discrepancies or omissions may prevent merchandise from being exported, result in nonpayment, or even result in the seizure of the shipment by customs. Collection documents are subject to precise time limits and may not be honored by a bank if time has expired.

Most documentation is routine for freight forwarders and customs brokers, but the exporter is ultimately responsible for the accuracy of its contents.

The following documents are commonly used in the shipping process:

  • Airway Bill
  • Bill of lading (B/L)
  • Commercial Invoice
  • Inspection Certificate
  • Insurance Certificate
  • Packing List

Airway Bill

An air waybill is used for air transport and is documentary evidence of the conclusion of a contract for carriage. It serves as:

• Proof of receipt of the goods for shipment
• An invoice for the freight
• A certificate of insurance
• A guide to airline staff for the handling, dispatch and delivery of the consignment.

Usually, the document consists of three originals. The first original is intended for the carrier and is signed by an export agent; the second original, the consignee's copy, is signed by an export agent and accompanies the goods; the third original is signed by the carrier and is handed to the export agent as a receipt for the goods after they have been accepted for carriage.


Bill of lading (B/L)

A bill of lading (B/L) is used for sea shipment and is a certificate of ownership of goods. It must be produced at the port of final destination by the importer in order to claim goods.

As a document of title, the bill of lading is also a negotiable document and you may sell the goods by endorsing or handing it over to another authorized party, even while the goods are still at sea.

The B/L is a formal, signed receipt for a specified number of packs, which is given to the export agent by the shipping line when the shipping line receives the consignment. If the cargo is apparently in good order and properly packed when received by the shipping line, the bill of lading, is deemed as "clean". The ship owner as a result accepts full liability for the cargo described in the bill.

See a sample of a B/L below:


Commercial Invoices

A commercial invoice is a bill for the goods from the seller to the buyer. These invoices are often used by governments to determine the true value of goods when assessing customs duties. Governments that use the commercial invoices to control imports will often specify its form, content, number of copies, and language to be used, as well as other important details.


See a sample of a commercial invoice below:


Insurance Certificates

An insurance certificate is a representation of the insurance policy taken out by the buyer or the seller (depending on the Inco-terms) for a shipment.

• Blank insurance certificates are supplied by the insurer pre-signed and bearing the open policy number of the exporter. For an air shipment, an air waybill serves as an insurance certificate.

• For a sea shipment, an insurance certificate is issued as evidence of the existence of the marine insurance policy.

• The marine insurance policy is a contract between the insured and the insurer which defines the terms of the agreement between the insured and the insurer.


The Packing List

The packing list indicates the number of items in the contents of each pack, along with individual weights and dimensions. This list enables you to check that the correct number of units has been received. Customs authorities can also easily identify a specific pack if they wish to inspect.

See a sample of a packing list below:

Types of Warehouses

A warehouse is a commercial building for storing goods. Normally used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial areas of cities and towns. Usually equipped with loading docks to load and unload trucks; or sometimes loaded directly from railways, airports, or seaports. Cranes and forklifts are usually used for moving of goods.

Some warehouses are entirely automated, with no workers inside. Pallets and product are moved with systems of automated conveyors, storage and retrieval machines synchronized by programmable controllers and computers software. These systems are frequently installed in refrigerated warehouses where temperatures are kept very cold to keep the product from spoiling, and also where land is expensive, as automated storage systems can use vertical space efficiently. These high-bay storage areas are often more than 10 meters high, with some over 20 meters high.

Whether a company really need warehouse space depends on the orders received, product demand as well as the amount of storage that is required. When deciding if a warehouse is needed, the following are some basic factors to be considered:


  • ability to help the company reduces its transportation costs
  • ability to coordinate supply and demand
  • ability to cater to production needs
  • ability to assist in marketing process
  • ability to obtain quantity purchase discounts
  • ability to support JIT programs and preventing stock out

Companies have several warehousing options. Some companies market their own products directly to the customers, thus there is no need for warehousing. However, for companies that stores their products in the field or logistical supply chain will have the following options:

  • owning (private)
  • renting (public)
  • leasing (contract)
  • storing in transit

Receiving Personnel

The Picker



The picture above is a picture of a warehouse picker. His job is to simply pick products from the various racks in the warehouse according to the pick slip given to him and pack it up to be ready for shipment. His job despite it sounding so easy is actually a very crucial role which leads up to the entire Receiving procedure. Without a Picker, non of the goods in the warehouse would be ready for shipment thus a Picker's Job is a very simple but important one.

The ForkLift Driver


The picture above is a picture of a ForkLift Driver. The ForkLift Driver's Job is basically moving pallets of goods into Containers, Trucks and etc for shipment. The ForkLift Driver aids in removing the need of having workers to manually move pallets with a Pallet Jack into and out of the trucks. A ForkLift Driver's Job may seem simple as well but they play a just as important role as any other jobs in the Shipping procedure.


The Truck Driver

Finally the Truck Driver. The picture above is a picture of a Truck Driver and his Truck. In the entire chain of the Shipping Process the Truck Driver has the most important task as his job is to deliver the goods ontime and without any damages. The Truck Driver is the only person that has direct contact with the customers. In the Shipping process he is the most important person as he would be the one bringing goods in and out of the warehouse. Without the Truck Driver non of goods would go anywhere therefore the Truck Driver bears a heavy responsibility.