A virtual warehouse system for production logistics

Abstract

Rapid change of product demand impacts the master production schedule and affects the stability of production. Traditional inventory planning generated by advanced planning and schedule system is inadequate to handle the effect of variability, non-linear relations, and other abrupt factors on product demand. This paper presents a virtual warehouse system (VWS) which is capable of refining inventory planning so as to streamline product planning and control if there is an abrupt change in the product demand. It can also serve as an advisory tool for supporting decision making and monitoring the inventory allocation of WIP when supply shortage occurs. The VWS is based on the concept of the postponement of product differentiation, a simulation model and knowledge-based system. The inventory, which was originally planned for current and future demands, will act as a buffer to be reallocated and to fulfil a sudden demand. The flexibility of inventory stirring is of key significance in this study. A prototype VWS was built and a successful trial implemented in a prestigious manufacturing enterprise. The results show that the inventory level across the supply chain among different parties can be minimized and the manufacture enterprise more predictable and adaptable to an abrupt change in product demand.

Keywords:

• Virtual warehouse
• Production logistics
• Supply chain management
• Production planning and control
• Inventory visibility

Acknowledgements

The authors would like to express their sincere thanks to the Research Committee of the Hong Kong Polytechnic University, the Innovation and Technology Commission of the Hong Kong Special Administrative Region of the People's Republic of China, and Schick Asia Ltd for the financial support of the research work (Project code: UIT/046). Many thanks are also due to Catherine Wong and Chi-kin Leung for their helpful advice and technical support of the research project.

Sui Hei Fung is a research student of the Department of Industrial and Systems Engineering of The Hong Kong Polytechnic University. He is currently working in a teaching company scheme coorganised by Schick Asia Limited, The Hong Kong Polytechnic University and The Innovation and Technology Commission of the Government of the HKSAR. He received his bachelor degree in manufacturing engineering at the same University. His research interests include logistics systems, supply chain management, product and knowledge engineering.

Chi Fai Cheung is an associate professor in the Department of Industrial and Systems Engineering of The Hong Kong Polytechnic University and an adjunct professor of the Harbin Institute of Technology Shenzhen Graduate School. He is an active researcher with an emphasis on industry related and applied research. His research interests include logistics systems, e-business, knowledge management, artificial intelligence and precision engineering. His research results have been published in various international journals and conferences.

Wing Bun Lee is the Chair Professor and Head of the Department of Industrial and Systems Engineering of The Hong Kong Polytechnic University. He is also Director of the Microsoft Enterprise Systems Centre and the Advanced Manufacturing Technology Research Centre of The Hong Kong Polytechnic University. His research interests include manufacturing technology, ultra-precision machining, dispersed production systems and logistics engineering. Professor Lee has published two research books, co-edited two books, and contributed to more than 200 technical papers published in various fields of manufacturing engineering. He also acts as an editorial board member in a number of international journals.

S. K. Kwok is a project fellow of Department of Industrial and Systems Engineering. He is also in charge of the Mobile Commerce Demonstration Unit of the Microsoft Enterprise Systems Centre (MESC). His research areas are in artificial intelligence, industrial and systems engineering, information and communication technologies (ICT) and mobile commerce. The research outcomes are presented in several international conferences and published in various international journals.