Chapter I3 Warehousing

FIGURE
13-1 Consolidation
Consolidation
and break-bulk Plant A
arrangements Customer
Consolidation --
Plant B A B C
warehouses

n Plant C

Break-Bulk

Customer A

Break-bulk
Plant A Customer B
warehouse

Consolidation and Break-Bulk. The economic benefits of consolidation and

n Customer C

break-bulk are to reduce transportation cost by using warehouse capability to increase

shipment economies of scale.
In consolidation, the warehouse receives materials from a number of sources,
which are combined into a large single shipment to a specific destination, such as a
customer. The benefits are the realization of the lowest possible freight rate, timely
and controlled delivery, and reduced congestion at a customer's receiving dock. The
warehouse enables both the inbound movement from origin and the outbound move-
ment to destination to be consolidated into a larger shipment, which generally incurs
lower transportation charges and often quicker delivery.
A break-bulk operator receives a single large shipment and arranges for delivery
to multiple destinations. Economy of scale is achieved by transporting the larger con-
solidated shipment. The break-bulk warehouse or terminal sorts or splits out individual
orders and arranges local delivery.
Both consolidation and break-bulk arrangements use warehouse capacity to im-
prove transportation efficiency. Many logistical arrangements involve both consolida-
tion and break-bulk. Figure 13-1 illustrates each activity.

Assortment. The basic benefit of assortment is to reconfigure freight as it flows

from origin to destination. Three types of assortments-cross-docking, mixing, and
assembly-are widely used in logistical systems.
The objective of cross-docking is to combine inventory from multiple origins into
an assortment for a specific customer. Retailers make extensive use of cross-dock op-
erations to replenish fast-moving store inventorie~.~

'For an expanded discussion, see 'The Nuts and Bolts of Cross-Docking," Grocery Distribution, April
1997, pp. 18-20; and Arnold Maltz, The Changing Role of Warehousing (Oak Brook, IL: Warehousing
Education and Research Council, 1998) or "Warehousing After 2000," Warehousing Forum, February 1998,
pp. 1-2.