In relation to economies of scale is economies of agglomeration. How does a manager decide where to build or open a warehouse? There are many factors to take into consideration: economies of agglomeration, which is the analysis of urban spatial structures and location of households. Location of warehouses affects the bottom line of your balance sheet. Poor placement could mean added labor expenses, increased transport cost, and even increased assembly costs. Placement of warehouses in the right market is important to ensure a successful company.
Part of this theory relates to functional linkage, which is the link between industries that manufacture related products. This includes information, raw materials, finished goods, and transport links. By placing your warehouse in a market conducive to your industry, you can take advantage of external economies like labor and training. For example, industrial links and support can include exchange knowledge between firms, product exchange, or delivery through proximity.
Another factor to consider is the current economy and unemployment rates as well as labor search. A warehouse located in a city that has labor resources, but is located beyond reasonable travel proximity can adversely affect payroll expenses along with transport costs. A thorough analysis of the warehouse requirements along with the urban economics is important when considering a warehouse location. Make sure you know the advantages of that come with warehousing.
Sources:
answers.com
huduser.org
Journal of Urban Economics
Saturday, January 3, 2009
Economy of Scale
Smaller companies are at a bit at a disadvantage when it comes to economies of scale. In a very basic nutshell, economies of scale is based on the assumption that the cost per unit remains the same regardless of output. The advantage comes when marginal costs are spread over a higher number of units produced. For example, marginal costs encompass fixed and veritable costs and problems may occur when the marginal costs increases because of price changes in those fixed or veritable costs. Smaller companies may not have the negations power because of lower volumes of productions, so when per unit costs increase, profits decrease.
Larger companies may be able to keep per unit costs lower because they may be able to organize production more effectively. In addition, output necessary to afford greater purchasing in volume, allows negotiation for decreased unit cost relating to raw goods, labor, and parts. This theory applies to transportation and fright costs because rates usually decrease as volume increases.
Established warehouses have the advantage of monopsony, which affects all areas of productivity and giving them the advantage of bargaining power due to volume of production such as purchasing in bulk, long-term contract, labor, lower interest rates, and specialization of managers. Ultimately, warehouses offer the ability to negotiate certain costs that smaller firms could not. If you're looking to open a warehouse or find a fulfillment service, consider these factors first.
Sources:
linfo.org
Larger companies may be able to keep per unit costs lower because they may be able to organize production more effectively. In addition, output necessary to afford greater purchasing in volume, allows negotiation for decreased unit cost relating to raw goods, labor, and parts. This theory applies to transportation and fright costs because rates usually decrease as volume increases.
Established warehouses have the advantage of monopsony, which affects all areas of productivity and giving them the advantage of bargaining power due to volume of production such as purchasing in bulk, long-term contract, labor, lower interest rates, and specialization of managers. Ultimately, warehouses offer the ability to negotiate certain costs that smaller firms could not. If you're looking to open a warehouse or find a fulfillment service, consider these factors first.
Sources:
linfo.org
Saturday, December 27, 2008
Warehouse Transport
When it comes to transporting goods, the quicker the better, right? Well, not always. All products need to be handled with care, whether you're transporting washing machines, toilet paper, or fine china. But what if your cargo is dangerous? I bet you didn't know that there are certain routes that hazardous waste and non-hazardous waste can be transported. Transportation companies are required to follow federal and state regulations that trucks containing radioactive and non-radioactive hazardous materials that specific routs are designated for transport. These routes are collected for each state and stored in a national database. A routing agency is designated by the governor and various Indian tribes responsible to coordinate and review the designated transport routes. The database includes addresses, highways, tunnels, and many landmarks that trucks are allowed to transport hazardous materials.
The other area of concern is border compliance. Hazardous materials must be properly boxed and labeled. Areas of concern are biological safety as well as chemical. Bio safety laws are vast and concern everything from potential environmental leaks to blood borne pathogens. It is vital to have policies and procedures in place to properly handle and transport these materials throughout the US.
Violation of federal and state regulations could mean fines and imprisonment for repeat offenders. There are consultants that can work with companies to maintain proper safety measures and stay within compliance.
A good way to make certain that federal and local are met is to designate a specific manager to over-see that your company follows them. It is important that adequate training is provided to everyone involved in the process and measures are in place to ensure proper protocol.
Source:
AIHA - Home
The other area of concern is border compliance. Hazardous materials must be properly boxed and labeled. Areas of concern are biological safety as well as chemical. Bio safety laws are vast and concern everything from potential environmental leaks to blood borne pathogens. It is vital to have policies and procedures in place to properly handle and transport these materials throughout the US.
Violation of federal and state regulations could mean fines and imprisonment for repeat offenders. There are consultants that can work with companies to maintain proper safety measures and stay within compliance.
A good way to make certain that federal and local are met is to designate a specific manager to over-see that your company follows them. It is important that adequate training is provided to everyone involved in the process and measures are in place to ensure proper protocol.
Source:
AIHA - Home
Industrial Hygiene
I was fortunate enough to read an article by John V. Currie about industrial hygiene. He works on the basic premise that there are six steps to successfully managing hazmat safety on a work site. It is not just a matter of responding to an industrial accident but making a concerted effort to prevent illness and injury in the work place.
Currie’s six steps:
1) Develop a written policy manual, which is endorsed by management, included specific goals to achieve, and the resources to maintain the plan.
2) Establish accountability on all levels of management. He states that it is important not to overburden with so much work that he or she is not able to maintain the high standards required to maintain a healthy and safe work environment.
3) Train employees continually and consistently. Curries states that regulatory compliance should be taught consistently and suggests that several employees be trained which then become in-house trainers.
4) Allocate sufficient resources to safety compliance. Some companies do not have adequate staff so depend on outside consultants to assist them in staying within compliance. Other companies use a comprehensive computer database system, which tracks everything from inventory, transportation, to proper labeling.
5) Never become complacent about maintaining the highest standards of safety. All employees should be held accountable for their actions: even if that means reflecting poor performance standards for allowing hazardous materials to be transported without the appropriate precautions.
6) Document consistently as if you were to be audited at any time.
Currie makes many valid and important points that can be of utmost importance to maintaining a safe work environment, which ultimately could save lives and money because of workers’ compensation claims or penalties for non-compliance.
Source:
http://www.nsc.org
Currie’s six steps:
1) Develop a written policy manual, which is endorsed by management, included specific goals to achieve, and the resources to maintain the plan.
2) Establish accountability on all levels of management. He states that it is important not to overburden with so much work that he or she is not able to maintain the high standards required to maintain a healthy and safe work environment.
3) Train employees continually and consistently. Curries states that regulatory compliance should be taught consistently and suggests that several employees be trained which then become in-house trainers.
4) Allocate sufficient resources to safety compliance. Some companies do not have adequate staff so depend on outside consultants to assist them in staying within compliance. Other companies use a comprehensive computer database system, which tracks everything from inventory, transportation, to proper labeling.
5) Never become complacent about maintaining the highest standards of safety. All employees should be held accountable for their actions: even if that means reflecting poor performance standards for allowing hazardous materials to be transported without the appropriate precautions.
6) Document consistently as if you were to be audited at any time.
Currie makes many valid and important points that can be of utmost importance to maintaining a safe work environment, which ultimately could save lives and money because of workers’ compensation claims or penalties for non-compliance.
Source:
http://www.nsc.org
Chemical Warehousing
Do not make the mistake in thinking that just because you may deal in hazardous waste once in a while that you will not be responsible for everything that is involved in storing, transporting, or eliminated the hazardous waste in the proper manner. Hazmat warehousing could include the materials that are flammable or deadly gasses. It would be wise to prepare properly for the maintenance of hazardous materials or allow warehousing facilities that are properly equipped to manage the material.
Hazmat compliance requires adherence to the proper OSHA requirements, training, department of transportation DOT shipping regulations, compliance, and material safety data sheets (MSDS) displayed in proper locations, training, and reporting. The MSDS alone is an enormous data sheet that includes all the chemicals that could be located in a warehouse. Each chemical is broken down into its basic elements, the effects on the human body and environment, and the proper method of treatment in case of exposure and injury.
Warehouses that specifically deal with chemicals are required to have specific fire resistant walls, explosion proof appliances, special industrial chillers, flame and heat detectors, chemical resistant coated surfaces, special mixing rooms, and fire rated cold rooms. This is just to name a few requirements.
Non-compliance to federal and state regulations could mean heavy fines, potential injury, and illness to workers, and potential imprisonment of executive management for repeat offenses.
Sources:
hazmat safety
businessweek.com
Hazmat compliance requires adherence to the proper OSHA requirements, training, department of transportation DOT shipping regulations, compliance, and material safety data sheets (MSDS) displayed in proper locations, training, and reporting. The MSDS alone is an enormous data sheet that includes all the chemicals that could be located in a warehouse. Each chemical is broken down into its basic elements, the effects on the human body and environment, and the proper method of treatment in case of exposure and injury.
Warehouses that specifically deal with chemicals are required to have specific fire resistant walls, explosion proof appliances, special industrial chillers, flame and heat detectors, chemical resistant coated surfaces, special mixing rooms, and fire rated cold rooms. This is just to name a few requirements.
Non-compliance to federal and state regulations could mean heavy fines, potential injury, and illness to workers, and potential imprisonment of executive management for repeat offenses.
Sources:
hazmat safety
businessweek.com
Saturday, December 20, 2008
Emergency Action Plan
Per the Occupational Safety and Health Standards (OSHA), upon hire employers should provide employees with a fire prevention and safety response plan in case of an emergency. Employees must be informed of any fire hazards, and an employee emergency plan must be created and practiced to handle any reasonably expected situation.
An emergency evacuation plan should include a written evacuation plan and practice. The plan should include floor wardens that head the evacuation in case of an emergency. There should be one warden for every twenty employees. The wardens plan and practice the evacuation in case of an emergency. Each warden has a designated location to scan for employees that have not departed from the location. It is mandatory to have maps of the building and evacuation route highlighted for easy reorganization posted in highly visible locations. Have a designated location for employees to meet at a location away from the fire such as a parking lot or park near by the work site.
Emergency evacuation training should include actual emergency evacuation drills. Make sure to contact the local authorities, so that they are aware and have the option to be involved with the evacuation practice. The fire department will also work with you to evaluate the effectiveness of the current plan and give suggestions on how to improve the speed at which employees evacuate the building.
It is helpful for each floor warden to have an emergency pack and orange vests to identify him or her, so that employees recognize who to ask for instructions and assistance.
Sources:
http://www.osha.gov
An emergency evacuation plan should include a written evacuation plan and practice. The plan should include floor wardens that head the evacuation in case of an emergency. There should be one warden for every twenty employees. The wardens plan and practice the evacuation in case of an emergency. Each warden has a designated location to scan for employees that have not departed from the location. It is mandatory to have maps of the building and evacuation route highlighted for easy reorganization posted in highly visible locations. Have a designated location for employees to meet at a location away from the fire such as a parking lot or park near by the work site.
Emergency evacuation training should include actual emergency evacuation drills. Make sure to contact the local authorities, so that they are aware and have the option to be involved with the evacuation practice. The fire department will also work with you to evaluate the effectiveness of the current plan and give suggestions on how to improve the speed at which employees evacuate the building.
It is helpful for each floor warden to have an emergency pack and orange vests to identify him or her, so that employees recognize who to ask for instructions and assistance.
Sources:
http://www.osha.gov
Warehouse OSHA Compliance
Federal regulations require companies in the U.S. to meet Occupational Safety and Health Standards (OSHA) in an effort to reduce or eradicate work related injuries or illness. Organizations are required to provide a formal written safety plan if they have ten employees or more. An oral safety plan is acceptable for companies that have fewer than ten employees. The written plan must cover preventative measures and disaster recovery steps, which list the actions that are required in case of an emergency.
Safety training must be provided for each potential hazard that may occur in your warehouse.
For example:
The training for a forklift / pallet jack operators must address safety areas such as avoidance of collisions by the use of signs, horns, and proper lighting and driving. Operators should be trained on how to conduct a proper inspection and hazard recovery.
A janitorial service should cover topics such as chemicals used and repercussions and first aid in case of chemical exposure.
Another area of importance is instruction on what to do in case of exposure to a chemical hazard and where the first aid equipment is kept.
Safety training should include a combination of classroom and hands-on demonstration. Employee training should be ongoing and revised to keep up with changing industry and OSHA standards. Non-compliance could mean hefty fines that could ranges from $7,000 per incident to $70,000 for willful repeat violations.
Sources:
OSHA Compliant Safety Programs & Training
http://www.osha.gov
Safety training must be provided for each potential hazard that may occur in your warehouse.
For example:
The training for a forklift / pallet jack operators must address safety areas such as avoidance of collisions by the use of signs, horns, and proper lighting and driving. Operators should be trained on how to conduct a proper inspection and hazard recovery.
A janitorial service should cover topics such as chemicals used and repercussions and first aid in case of chemical exposure.
Another area of importance is instruction on what to do in case of exposure to a chemical hazard and where the first aid equipment is kept.
Safety training should include a combination of classroom and hands-on demonstration. Employee training should be ongoing and revised to keep up with changing industry and OSHA standards. Non-compliance could mean hefty fines that could ranges from $7,000 per incident to $70,000 for willful repeat violations.
Sources:
OSHA Compliant Safety Programs & Training
http://www.osha.gov
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