Value Adding Roles - Product and Supply Mixing

What is product mixing?




Product mixing for customer order means mixing products from multiple supplier/production facilities to shipment to a single customer. Example: meeting customer's order.

Supply mixing for manufacturing activities means mixing required materials or sub assemblies from multiple suppliers to shipment to a plant. Example: meeting production order

Crossdocking has the same effect as mixing and typically serves as "distribution mixing centre" . Example: no storage involve, receive-sort-ship action

The basic benefit of mixing is to reconfigure transportation as it flows rom origin to destination. This usually results in significant transportation costs.

Mixing activities are carried out at distribution level (Distribution Centre).


Elaborated explaination:



Product mixing

In a typical mixing operation, truck loads of products are shipped from origin to the mixing warehouse. These inbound transportations are planned to minimise transportation cost. Example: Transportation Consolidation

Upon arrival at mixing warehouse, inbound shipments are breakbulk and sorted into the combination desired by each customer. During the mixing process, inbound goods can be combined with others regularly stocked at a warehouse.

Warehouse that perform mixing operations often result in reducing overall product storage in a logistical system while achieving customer required assortments and optimizing transportation costs.

A mixing warehouse for multiple product line can lead to more efficient order fulfillment. (From Tan-Oh-Wee DCM textbook)


Example:

A product line usually turns out into thousands of "different" products, if color, size, design and other factors are included. A shoes manufacturer produce shoes of different colors, sizes and designs. A retailer(customer) often want a product line mixture. Example: 200 pairs of red color track shoes for each size and 100 pairs of blue color sprinting shoes for each size. The shoes manufacturer may have production plant in several locations with each specializing in producing a specific product. By having a mixing warehouse, these plants supply the products to the warehouse and the warehouse will perform the necessary order fulfillment.

Supply mixing

The objective of supply mixing is to support manufacturing operations. Products and components are supplied to a mixing warehouse located in close proximity to the manufacturing plant, when requested by the plant, necessary sortation will be carried out and ship to the plant directly. It is a popular strategy to support manufacturing firms with JIT(Just-In-Time) and MRP( Materials Requirement Planning) system.

Toyota Motors example:

Toyota Motors uses JIT and lean approaches for its production system. Components and sub assemblies required to make a car will be stored in suppliers premises and delivered to a mixing warehouse near toyota's plant when requested. Kanban also means demand scheduling will trigger a request to suppliers to bring in the necessary materials required to build a car. The materials arrived at the mixing warehouse which will be sorted and ship to the plant in a JIT manner.

The following example illustrate how warehouse can support JIT operations. In addition, it has the ability to keep goods at the point of origin as long as possible until when requested. This means that Toyota can have a low investment in inventory until when needed.


2-3 usefulness of this topic to the Distribution Centre

• Multiple product line usually lead to efficient order fulfillment.
• It is able to fulfill customer's specific assortment at the lowest possible cost through transportation consolidation.
• The DC can support JIT/MRP system of a firm

2-3 Constraints of this topic to the Distribution Centre

• High precision required for successful mixing is highly dependent on information technology.
• Cross docking can be very fast paced and requires good management within the DC and external parties (3PL, Vendors or Plant). The status of shipment should be trackable to enable the DC manager to plan the resources required for cross docking before the shipment arrives.