Q3. Illustrate the need of modeling a warehouse facility and the inherent costs of empty runs.

The warehouse forms a key part of the supply chain system, performing functions such as storage,
control, pick up, tracking etc. of materials and products. As such to maintain minimum costs, optimal
levels of inventory, correct pick up period, correct orders, employee efficiency, as well as to increase
traceability and accuracy etc. the modeling of a warehouse facility assumes a very important role. This is
even more important in the case of Hassia Waters, which produces and manages large volumes of
products and inventory. The customization of orders, like mixed pallets of juices and various grades of
water adds to its importance.
A properly modeled warehouse facility can benefit in the following ways:
Traceability
Minimized inventory costs
Flexible supply chains
Accuracy and Visibility
Increased Throughput With Integration
Improved Labor Productivity
Reduced Paperwork
Better Space Utilization
Less opportunity for errors

A few factors to be kept in mind while modeling the warehouse are
Location To minimize costs with given service objectives. Transportation and inventory
costs should be kept in mind. Various techniques such as load distance, center of gravity etc.
can be used.
Design Costs, flows, functions, ease of maintenance, equipment placing etc. are to be kept
in mind. Techniques such as block diagramming, load factoring can be used.
In order to handle the new trends and demands of distribution management companies are employing
sophisticated, highly automated warehouse management systems (WMS) to run day to day
operations of distribution center and to keep track of inventories. More precisely, warehouse
management involves the receipt, storage and movement of goods, (normally finished goods), to
intermediate storage locations or to a final customer. In the multi-echelon model for distribution, there
may be multiple levels of warehouses. This includes a central warehouse, a regional warehouses
(serviced by the central warehouse) and potentially retail warehouses (serviced by the regional
warehouses). Such a system is used effectively in Hassia Waters. The warehouse is automatically
managed by a WMS which is linked to an enterprise resource planning (ERP) system. The ERP systems in
this case integrate all the organizations decision elements inventory levels, demands, lead times etc. All
the variables are monitored by the system, which increases the productivity. This system also schedules
the loading and pick up of the product from the warehouse efficiently.
A good model of a warehouse facility can hence help minimize costs and increase productivity.
Another aspect which a good design can reduce is the number of empty runs, thereby reducing the
inherent costs of an empty run. Empty runs constitute a major portion of cost incurred in warehousing,
both in terms of tangible measures such as fuel, money etc. and intangible output such as man hours,
pollution etc. The WMS and ERP utilized by Hassia Waters minimized the empty runs by using an
effective model. When an employee has just completed a storage order, they can receive a pallet to
supply a consignment. Effective route management can also be used for this purpose .Matching routes
and destinations creates more efficient, streamlined route loops minimizing empty runs.