ABSTRACT

We propose a case study where the inventory storage area has been reduced through a reengineered inbound and outbound process and operating costs have been effectively reduced despite the increase in distribution volume at the logistics site. A case company is a paper manufacturer that mainly produces and sells printing paper and thermal paper. As the production volume of a case company increased, their own storage area was converted into production facilities so that the inventory storage area continuously decreased in size. In addition, the product assortment changed as the export volume increased, which increased the volume compared to the previous product assortment. As a result, the shortage problem of storage space was aggravated. In order to solve this problem, this study investigated the inbound and outbound logistics process, forwarded the exported products to a CFS (Container Freight Station), and changed the process to solve the shortage of storage space in order to reduce its related costs. Accordingly, the inventory storage area was expected to be 40% lower than that of the previous year and the reduction in the related costs was expected to be more than 2.7 billion won each year; the actual results were found to indicate that costs improved by 3.4 billion won per year after implementing the proposed solution. This study shows a case of the reduction of warehouse space and its related cost. And it will be helpful for many companies in similar circumstances.

KEYWORD

Inbound/Outbound Reengineering, Inventory Space, Stock Location, CFS, Logistics Cost Reduction

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