Examination of logistic hub facilities available to CWT Limited Essay

Warehouse has been perceived as merely a topographic point for storage of goods. Today, the function of warehouse has evolved into a strategic distribution point providing value added services to semi-finished goods or finished goods on behalf of the fabrication works before distribution. The evolvement of function was due to the increasing tendency in companies using the construct of delay to their supply concatenation to prolong their competitory advantage. This assignment aims to explicate how a warehouse may play a function in assorted delay schemes. The intent of this assignment is to analyze critically on the function of warehouse in delay scheme through literature research. The first subdivision shall turn to the quandary faced by companies in pull offing their supply concatenation, which could be resolved by implementing delay scheme in their distribution activity. The 2nd subdivision shall touch on the importance of logistic direction and concentrate on its distribution activity. The 3rd subdivision shall briefly address the background of delay and its definition. Case surveies of companies will be usage to exemplify the function of warehousing in different delaies. The assignment shall reason with a consolidation of the important functions played by a warehouse in each of the schemes and reenforcing on the features of delay.

In today? context, consumers have defined their demands and beliefs otherwise. They become more value witting ( Christopher 2007 ) and expect instant merchandise handiness and in good status when acquiring their merchandises ( Fernie & A ; Sparks 2004 ) . Personal computer ressures from client? demand creates the demand for companies to diversify their merchandise scope by thousand fabricating many specialized versions of a merchandise to run into the demand and satisfaction of different group of consumers, in order to increase their market portion ( Dornier, Ernst, Fender & A ; Kouvelis 1998 ) . This means shorter merchandise lifecycles of the bing merchandises and the demand for each of the specialized merchandises is really volatile as each one is selling at a comparative little measure ( Dornier et al. 1998 ) . Furthermore, intense planetary competition has besides pushed companies to globalise their operations by fabricating their merchandises in low labor cost states to cut down their cost, taking to long prognosis skylines and complexness in supply concatenation direction ( Sheffi 2005 ) . Companies frequently find prediction of the measure to fabricate hard as demand for each trade name and scope is unknown. Due to the uncertainnesss, companies tend to maintain big safety stocks to avoid lost gross revenues ( Sheffi 2005 ) . Having to keep stock or stock list in the warehouses is a extremely dearly-won activity ( Fernie & A ; Sparks 2004 ) . Hence, there is a demand for companies to construct in flexibleness into their supply concatenation construction through frequent reappraisal and redesigning, in order to make systems which are capable of more rapid response to the market demand alternatively of trusting on forecasted figures ( Sheffi 2005 ) .A

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Logisticss direction is seen as company? nucleus capableness to derive competitory advantage, which aims to accomplish client? satisfaction by guaranting stock list handiness, timely bringing and less merchandise failure to avoid ailments and cut down lost gross revenues ( toBowersox, Mentzer & A ; Speh 2008 ) . In some cases, through proviso of good distribution service, the demand for monetary value, merchandise, and promotional distinction can be reduced ( Daugherty, Stank & A ; Ellinger 1998 ) . Logistics direction plays an of import function in the full supply concatenation as it is a consolidation of both material direction and physical distribution direction undertakings harmonizing to Fernie and Sparks ( 2004 ) extracted illustration shown in Fig 1. It starts managing from agreement for natural stuffs to be delivered to the mill for production and present finished merchandises to the storage installations or to the consumers. Five undertakings has been identified under physical distribution direction viz. , storage installations, stock list, transit, unitisation and packaging and communications as shown in Fig 1.A

Fig. 1 Logistic Management extracted from Fernie & A ; Sparks ( 2004, p.2 ) A

Storage installations refers to warehouse, distribution Centre or stock room of retail shops, in which retail merchants manage the warehouse to let them to maintain stock in expectancy of or to respond to consumer? demand for merchandise ( Fernie & A ; Sparks 2004 ) . s Christopher ( 2007 ) mentioned that the function of distribution is no longer seen every bit merely an activity covering with transit and repositing, but takes on a wider function as the supplier of the concluding value added merchandise in a delay scheme. Having addressed the challenges faced by companies in today? competitory consumer market, the of import function played by logistic direction in the supply concatenation and the altering function of the repositing in distribution activity, the following subdivision of the assigtnment shall touch on delay. It shall get down with an debut of delay? background, followed by its definition, placing the type of delaies used and exemplifying how warehouse play a function in each type of delay assisting companies to accomplish competitory advantage.A


The construct of delay was originated from Wroe Alderson ‘s selling literature in the 1950 ‘s as a scheme to cut down on selling hazards and costs through proroguing alterations in stock list location, signifier and individuality of merchandise till the latest possible clip ( Wong, Wikner and Naim 2009 ) . It is a scheme that? llows concerns to take advantage of the offshore capacity and labor for fabrication in add-on to local coating Centres for concluding assembly, packaging, and distribution, widely used in the automotive, dress, and consumer vitamin E lectronics industries? ( Rietze 2006, p.3 ) . Delay aims to cut down hazards associated with merchandise assortment by working commonalty between points and by planing flexibleness into the production and distribution procedures so as to detain the points of distinction to minimized stock list ( Christopher 2007 ) . He illustrated the critical linkages which connects the market place to the supply concatenation and identifies postponement as one of the critical elements under the distribution activity as shown in Fig 2.

Fig 2. Critical linkages in the supply concatenation, abstracted from Christopher ( 2007, p.24 )

Delay can be used as a scheme by the companies to prolong its fight by bettering on its legerity capableness to response to any unanticipated fortunes and better efficiency on the full supply concatenation procedure ( Sheffi 2005 ) . Tangible benefits like lower stock list costs, quicker response clip, better prognosiss, and addition of merchandise assortment every bit good as the intangible benefits of better client service and coordination and integrating of fabrication, gross revenues and selling maps has been observed from the consequence of delay ( Rietze 2006 ) .A

The construct was subsequently expanded by Bucklin in 1965 by presenting `postponement-speculation ‘ which integrates logistics and fabricating map together with guess. However, Bucklin ‘s principal of postponement-speculation was commented by Zinn and Bowersox ( 1988 ) that the theoretical construction of the principal does non aid in managerial determination doing on when and how the principal can be applied. In 1988, Zinn and Bowersox came up with a determination model on delay which allows directors to make up one’s mind when delay is applicable. Through analysis of different distribution costs which considers classs like client service degree, processing, stock list carrying costs, warehousing and transit, they have developed five types of delay with clear processs to steer directors in acquiring and consolidating cost informations to back up their delay determination. Four different types of delay falls under signifier delay: labeling, packaging, assembly and fabrication, together with clip delay, constitute the five types. As logistic elements are cost intensive activities which concerns the full supply concatenation, this assignment shall utilize the principal of delay by Zinn and Bowersox ( 1988 ) to exemplify the function of the warehouse in delay and the cost effectivity in implementing delay. The undermentioned subdivision will be divided harmonizing to the five delaies, each depicting the features of the delay, and cost effectivity of the execution. Case survey of companies will be cited for labeling, packaging and assembly delay to exemplify the function played by the warehouse.A

Labeling postponementA

Labeling delay plants for a company on an premise that a common generic merchandise is being marketed under several trade name names. In the traditional distribution attack, companies anticipate on the market demand to find the batch size of each production and affixed the labels at the fabrication works. Under this delay, labeling is being postponed by transporting generic unlabeled merchandises to the warehouse. Upon reception of client ‘s orders, the warehouse will take on the undertaking of labeling and label the merchandises harmonizing to the needed measure ordered. This postponement hence reduces duplicate of safety stock and stock list retention costs due to consolidation of unlabeled common merchandise. The chance cost would be the addition in labeling cost due to little economic systems of graduated table at warehouse degree ( Zinn and Bowersox 1988 ) . Mentioning an illustration from Ballou ( 2004 ) on StarKist Foods, a canner of tuna merchandises, forwarded their labeling operation to their East Coast warehouse to function the eastern markets. The generic merchandise for StarKist Foods is canned tuna fish. As the company does cannery for both company-label and private-label markets, they face uncertainness in apportioning the proportion of the gimmick for each label at the point of canning. Since there was no difference in the quality of the merchandise under the two labels, StarKist decided to alter its distribution scheme by proroguing their labeling operation. They canned the fish in unlabeled tins which they called “ brights ” and shipped straight to their East Coast warehouse. Upon reception of client ‘s orders for each of the labels, the warehouse does the labeling consequently before transporting out to the client. The consequence of delay was a cut down in stock lists and cost relating to cost of lost gross revenues or keeping cost for each of the labels.

Boxing delay

Boxing delay can be applied to a specific merchandise which needs to be marketed in assorted bundle sizes. In expectancy of sale, merchandises are being packed harmonizing to forecasted measure at the fabrication works and shipped to the warehouse for distribution. With the execution of delay, merchandises are being shipped in majority to the warehouse. Warehouse will so box the merchandise harmonizing to client ‘s order. Similar to labeling, per unit packing cost will increase due to loss of economic systems of graduated table at the warehouse degree. However, it can be offset against nest eggs from reduced stock list transporting cost due to fewer stock maintain units and lower transit costs as merchandises are being shipped in majority from the fabrication works to the warehouse.A

A good illustration to mention is the concern partnership between Borouge Corporation and Singapore ‘s listed logistic company, CWT Limited, in constructing a logistic hub in Singapore for its South East Asia distribution ( Borouge 2010 ) . Borouge, a polyolefin manufacturer based in Abu Dhabi, had signed a 10 twelvemonth contract with CWT limited to plan and construct their Southeast Asia distribution hub with packaging capableness to manage up to 330,000 metric tons of value-added polyolefins per twelvemonth to function their South East Asia clients ( CWT 2009 ) . Borouge ships the polyolefin in sea majority containers from their works in Abu Dhabi straight to CWT warehouse in Singapore for packing, hive awaying and distribution. By outsourcing the packaging undertaking to CWT is a signifier of delay. Polyolefins can be packed either in 25kg bags or in 900kg jumbo bags depending on client ‘s demand. Having the loose polyolefins shipped in sea majority, cut down the transit cost for each metric metric tons as more measure can be loaded into the container as compared to transporting in bags and palettes. While the merchandises are sailing to Singapore, Borouge ‘s gross revenues squad can hold more clip to consolidate their clients order and inform CWT to pack the polyolefins harmonizing to the orders. With confirmed order and exact item of packaging, Borouge is able to cut down their stock list keeping cost. In this illustration, CWT warehouse works like a little `plant ‘ covering packaging to custom-make Borouge products.A

Assembly delay

Assembly delay plants for merchandises which has several selling versions. For this delay to work, it is assumed that `a base merchandise with a figure of common parts is sold in a figure of constellations that are client unique ‘ ( Zinn & A ; Bowersox 1988, p.124 ) . Under this delay, warehouse plays a function of an assembly line by piecing the parts to the base merchandise harmonizing to the client ‘s order. Due to the customization, clients will hold to anticipate longer bringing clip which may take to an addition in the cost of lost gross revenues. Inventories transporting and transit costs will be reduced as unassembled parts takes up lesser infinite than to the full assembled merchandises. Harmonizing to Rietze ( 2006 ) delay was used by Hewlett Packard ( HP ) , maker of Desktop pressmans. With the construct of “ localisation ” , they designed two types of pressmans in Vancouver, a US version and a generic version. The generic version exclude constituents like power supply faculties, power cord stopper, and direction manuals due to different planetary market demands. These constituents are so locally assembled in Europe, Asia, or Pacific distribution centres harmonizing to each state ‘s specific order. Through bring forthing generic merchandises for planetary markets, HP is able to custom-make their merchandise to run into local demands through delay. Economicss of graduated table in fabricating generic theoretical accounts reduced the fabrication cost of the merchandise as compared to customization at the point of fabrication. Transportation system cost is reduced as more generic pressmans are being shipped in one majority without the concluding packaging which is handled by the designated distribution centres.

Manufacturing delay

The premise used in fabricating delay is similar to assembly postponement. Zinn & A ; Bowersox ( 1988 ) explained that the difference between assembly and fabrication delay is the grade of warehouse assembly. In this delay, parts are delivered to the warehouse from a few locations while assembly delay has the parts delivered to the warehouse merely from a individual location. In add-on to the trade off mentioned in assembly delay, fabricating delay enjoys transit and stock list costs decrease from multi location supply of the components.A

Time delay

Time delay takes topographic point when finished merchandises are shipped to centralise

warehouses closer to the client than the fabrication location ( Rietze 2006 ) . This delay aims to response rapidly to client ‘s order to increase client service degree through decrease of client lead clip and by puting stock lists closer to the client prior client ‘s house order ( Rietze 2006 ) . Its feature is the engagement of big figure of distribution warehouses. Apparel industries like Benetton, Zara and Gap uses this delay to vie in manner market.A


Warehouse is no longer merely a topographic point for storage of goods to guarantee merchandise handiness in the market. It plays a strategic function in company ‘s distribution activity and this can be observed from instance surveies of different companies mentioned in the old subdivision, in which delay has been implemented into their supply concatenation. The warehouse play the function of labeling and boxing the concluding merchandises before distribution upon reception of client ‘s house order in the instance of StarKist and Borouge in labeling and boxing delay severally. In the instance of HP, warehouse takes up the function of piecing the customized constituents to the merchandise to run into client ‘s demand in different geographic locations. In all three instance surveies, delay has helped companies in cut downing their hazards exposure associating to unknown consumer demands. The consequence of execution allow companies to hold a flexible supply concatenation that is capable of reacting rapidly to market demand, betterment on their client service degree, cost nest eggs from the decrease of stock list keeping costs and transit costs.

Used Mentions

Ballou 2004, Business logistics/ supply concatenation direction: planning, forming and commanding the supply concatenation, 5th edn, Pearson Prentice Hall, New Jersey.

Bowersox, DJ, Mentzer, JT & A ; Speh, TW 2008, Logistics Leverage, Journal of Business Strategies, vol.25, no.2, pp.85-99, viewed 20 July 2010, Proquest 5000.

Borouge 2010, Borouge opens its logistics hub in Singapore, dated 16 May 2010, accessed 16 July 2010, hypertext transfer protocol: //www.borouge.com/MediaCentre/Lists/News/DispformCustom.aspx? id=142

Bucklin, LP 1965, Postponement, guess and the construction of distribution channels, Journal of Marketing Research, vol.2, pp. 26-31, viewed 17 July 2010, EBSCOHost.A

Christopher, M 2007, `New waies in logistics ‘ in D Waters ( explosive detection systems ) , Global logistics- new waies in supply concatenation direction, 5th edn, Kogan Page Ltd, Great Britain.

Hundredweight 2009, Annual Report 2009, CWT Limited.

Daugherty, PJ, Stank, TP & A ; Ellinger, AE 1998, Leveraging logistics / distribution capablenesss: the consequence of logistics service on market portion, Journal of Business Logistics, vol.19, no.2, pp.35-52, viewed, 17 July 2010, Proquest 5000.

Dornier, PP, Ernest, R, Fender, M & A ; Kouvelis, P 1998, Global operations and logistics: text and instances, John Wiley and Sons Inc, USA.

Fernie, J & A ; Sparks, L 2004, `Retail logistics: alterations and challenges ‘ , in J Fernie & A ; L Sparks ( explosive detection systems ) , Logistics and retail direction: penetrations into current pattern and tendencies from taking experts, 2nd edn, Clays Ltd, Great Britain.A

Rietze, SM 2006, Case surveies of delay in supply concatenation, Massachusetts Institute of Technology.

Sheffi, Y 2005, The resilient endeavor: overcoming exposure for competitory advantage, The Massachusetts Institute of Technology Press, USA.

Sheffi, Y 2005, The resilient endeavor: overcoming exposure for competitory advantage, picture recording, MIT, Nov 2005 hypertext transfer protocol: //mitworld.mit.edu/video/322, viewed 17 July 2010.

Wong, H, Wikner, J, Naim, M 2009, Analysis of signifier delay based on optimum placement of distinction point and stocking determinations, International Journal of Production Research, vol.47, no.5, pp.1201-1224, viewed 18 July 2010, EBSCOHost.

Zinn, W & A ; Bowersox, DJ 1988, `Planning physical distribution with the rule of delay ‘ , Journal of Business Logistics, vol.9, no.2, pp.117-136, viewed 19 July 2010, EBSCOHost.


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