The development of distribution systems for trading and manufacturing companies covering vast Russian territories is a major challenge involving a whole range of tasks aimed at improving the logistics of goods distribution. One of these is maintaining a consistently high degree of alignment between supply chain capacity and business goals and objectives. Assessing supply chain capacity allows one to define whether it is capable of delivering the required quantity of goods to the user within a specified time, provided that established standards and technological processes are followed.
This is important when an enterprise, especially a distribution network dealing in consumer goods, enters new markets. Such an analysis must take into account both the current “throughput capacity” and the volume of flows of goods and related information expected in a precisely defined future. The analysis and “capacity adjustment” of the chain are carried out, among other things, based on existing infrastructure: warehouses, transport, and information systems. For the analysis to play its role, it is necessary to apply: an assessment of the current volume of cargo flow and its projected volume in the short and long term (commensurate with anticipated needs), as well as an assessment of the “throughput capacities” of the available infrastructure. At this stage, it is necessary to calculate the target volume of cargo flow, corresponding to the current throughput of each warehouse facility and existing reserves in this area, as well as deficits in “throughput capacities” in individual facilities – according to time ranges in the forecasting process. The transport efficiency of one’s own distribution system can be increased with the help of external transport and forwarding companies. On the other hand, existing information systems that unite supply chain participants generally have great potential, allowing for an increase in the amount of information transmitted.
Resource limitation
The most significant “bottleneck” in the distribution process is warehouses, which limit the flow of cargo. Warehouse efficiency reflects the extent to which it is able to secure maximum cargo turnover within a specified time, under the required standards and technological processes established during design or adopted during the operation period. Warehouse efficiency analysis is evaluated based on its usable area, available equipment, employed staff, and gate throughput. Of course, the target warehouse efficiency should be calculated based on the minimum resource. Some resources can be supplemented quite easily and quickly, while others require separate calculations and market research to increase. For example, necessary mechanical equipment can be purchased or leased. A lack of staff can be addressed by hiring additional employees. However, the most “complicated” element in this regard is warehouse space, as it has high inertia. Therefore, when planning a supply chain, it is first necessary to assess the upper limit of cargo flow in relation to warehouse space resources. However, it must be remembered that the limit throughput capacity has nothing to do with an emergency situation, when we are talking about the possibility of its maximum utilization within the limits of the usage standards of specified resources. Monitoring warehouse efficiency in a distribution system is carried out based on the following data:
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information identifying the warehouse in the system
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area of a specific warehouse
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height of warehouse facilities
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volume of inventory turnover
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average mass of 1 m3 of goods stored in the warehouse in transport packaging
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volume of incoming cargo flow to the warehouse at the beginning of the analysis period
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forecast of cargo flow growth for each warehouse in the distribution system over the next few years (usually the next 3 years).
Example of warehouse efficiency assessment
We will consider the assessment of warehouse efficiency in distribution systems using the example of a trading company in the consumer goods industry, operating in Moscow and managing a network of its branches in other regions of Russia. The company’s central warehouse is located in Moscow itself, and regional distribution centers are in Yekaterinburg and Chelyabinsk. We assume that all facilities are rented. The management of each warehouse belonging to the company’s distribution system must know what “throughput capacity” resource its unit possesses at any given moment. It is therefore necessary to calculate the time limit (deadline), based on the planned growth of cargo flows, in order to adapt in advance to development within its part of the supply chain. At the same time, control must be exercised by the company’s central logistics department. While an excess of “throughput capacity” in a warehouse does not pose a threat to the stability of the logistics chain, it is not beneficial from an economic perspective. Let us assume that the company’s warehouses have the parameters as shown in Table 1.
The article comes from the magazine “Logistyka” 4/2008.