WAREHOUSE MANAGEMENT

PREVIEW
INTRODUCTION NEED FOR WAREHOUSING UTILITIES OF A WAREHOUSE FUNCTIONS IN WAREHOUSING MATERIAL HANDLING TYPES OF WAREHOUSES ADVANTAGES OF WAREHOUSING WAREHOUSING STRATEGIES FUTURE TRENDS

INTRODUCTION

INTRODUCTION
A warehouse is a commercial building for storage of goods.

Used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc.

They are usually large plain buildings in industrial areas of cities and towns. They come equipped with loading docks to load and unload trucks; or sometimes are loaded directly from railways, airports, or seaports. They also often have cranes and forklifts for moving goods, which are usually placed on ISO standard pallets loaded into pallet racks.

NEED FOR WAREHOUSING

NEED FOR WAREHOUSING

Warehousing is necessary due the following reasons:

Seasonal Production: You know that agricultural commodities are harvested during certain seasons their consumption or use takes place throughout the year. Therefore, there is a need for proper storage or warehousing for these commodities, from where they can be supplied as and when required.
Seasonal Demand: There are certain goods, which are demanded seasonally, like woollen garments in winters or umbrellas in the rainy season. The production of these goods takes place throughout the year to meet the seasonal demand. So there is a need to store these goods in a warehouse to make them available at the time of need

NEED FOR WAREHOUSING

Large-scale Production: In case of manufactured goods, now-a-days production takes place to meet the existing as well as future demand of the products. Manufacturers also produce goods in huge quantity to enjoy the benefits of large-scale production, which is more economical. So the finished products, which are produced on a large scale, need to be stored properly till they are cleared by sales.
Quick Supply: Both industrial as well as agricultural goods are produced at some specific places but consumed throughout the country. Therefore, it is essential to stock these goods near the place of consumption, so that without making any delay these goods are made available to the consumers at the time of their need.

NEED FOR WAREHOUSING

Continuous Production: Continuous production of goods in factories requires adequate supply of raw materials. So there is a need to keep sufficient quantity of stock of raw material in the warehouse to ensure continuous production. Price Stabilization: To maintain a reasonable level of the price of the goods in the market there is a need to keep sufficient stock in the warehouses. Scarcity in supply of goods may increase their price in the market. Again, excess production and supply may also lead to fall in prices of the product. By maintaining a balance of supply of goods, warehousing leads to price stabilizations.

NEED FOR WAREHOUSING

To support the companys customer policy. To maintain a source of supply without interruptions. To achieve transportation economies. To support changing market conditions and sudden changes in demand. To support any JIT programs. To provide customers with the right mix of products at all times and all locations. To ensure least logistics cost for a desired level of customer service.

UTILITIES OF A WAREHOUSE

UTILITIES OF A WAREHOUSE
ECONOMIC BENEFITS
CONSOLIDATION BREAK BULK ASSORTMENT CROSS DOCK POSTPONEMENT STOCK PILING

SERVICE BENEFITS
SPOT CARGO SAFETY STOCKING

ECONOMIC BENEFITS
Consolidation Warehousing is a form of warehousing that pulls together small shipments from a number of suppliers in the same geographical area and combines them into larger, more economical, shipping loads intended for the same area. Small, flexible shipments in Large, economical shipments out! Benefits of Consolidation Warehousing
Lower shipping costs for participants No capital investment required (reduces risk) Lower inventory levels required Plant A Consolidation Warehouses

Plant B

Plant C

ECONOMIC BENEFITS
Break-bulk occurs when a warehouse receives a single large shipment and arranges for delivery to multiple destinations Warehouses that receive product in bulk, often by railcar, and then repackage the product based on customer requirements. In the case of containers with imported products, this generally requires the inspection and relabeling of product.

Plant A

Break bulk Warehouses

ECONOMIC BENEFITS
Assortment Warehouse stocks product combinations in anticipation of customer orders. The assortments may represent multiple products from different manufacturers or special assortments as specified by customers. In the first case, for example, an athletic wholesaler would stock products from a number of clothing suppliers so that customers can be offered assortments. In the second case, the wholesaler would create a specific team uniform including shirt, pants, and shoes. Cross-docking is a practice in logistics of unloading materials from an incoming semi-trailer truck or railroad car and loading these materials directly into outbound trucks, trailers, or rail cars, with little or no storage in between. This may be done to change type of conveyance, to sort material intended for different destinations, or to combine material from different origins into transport vehicles (or containers) with the same, or similar destination.

ECONOMIC BENEFITS
Processing/Postponement is the functionality of warehousing that enables postponement of commitment of products to customer until orders are received from them. Utilized by manufacturers or distributors for storing products ready up to packaging stage. These products are packaged and labeled for the particular only on receipt of the order. For e.g. Asian Paints has 1000s of SKUs and its literally impossible to store all the SKUs in all of their retail stores. Basically, Asian Paints postpones the coloring part to last stage and hence any dealer/retailer when they order a color, can receive the paint within a days time Stock piling is the function of warehousing that is related to seasonal manufacturing or demand. In the case of seasonal manufacturing, certain raw materials, like mango pulp are available during short periods of the year. Hence, manufacturing is possible only during these periods of availability, while the demand is full year around. This requires stockpiling of the products manufactured from these raw materials. An example is mango pulp processing. On the other hand, certain products like woolens are required seasonally, but are produced throughout the year, and thus need to be stockpiled as such.

SERVICE BENEFITS
Spot stocking: Stocking of products in strategically located warehouses during demand sensitive period is called spot stocking. Agricultural implements are spot stocked during the growing season.

Safety Stocking : In order to meet contingencies like stock outs, transportation delays, receipt of defective or damaged goods, and strikes, safety stocks have to be maintained. This ensures that, on the inbound site production stoppages do not occur, and, on the outbound side customers are fulfilled on time.

FUCNTIONS OF WAREHOUSING

FUCNTIONS OF WAREHOUSING
Receiving Activity concerned with the orderly receipt of all materials coming into the warehouse. Activities to assure that the quantity and quality of such materials are as ordered Pre-packaging (optional) Pre-packaging is performed in a warehouse when products are received in bulk from a supplier and subsequently packaged singly, in merchandisable quantities or in combinations with other parts to form kits or assortments. Put-away Put-away is the act of placing merchandise in storage. It includes both a transportation and a placement component. Storage Physical containment of merchandise while it is awaiting a demand. Form of storage will depend on the size and quantity of the items in inventory and the handling characteristics of the product or its container.

FUCNTIONS OF WAREHOUSING
Order picking Order picking is the process of removing items from storage to meet a specific demand. Its represents the basic service that the warehouse provides for the customer and is the function around which most warehouse designs are based. Packaging and/or Pricing (optional) As an optional step after the picking process. As in the pre-packaging function, individual items or assortments are boxed for more convenient use. Waiting until after picking to perform these functions has the advantage of providing more flexibility in the use of on-hand inventory Individual items are available for use in any of the packaging configurations right up to the time of need Pricing is current at the time of sale Pre-pricing at manufacture or receipt into the warehouse inevitably leads to some re-pricing activity as price lists are changed while merchandise sits in inventory

FUCNTIONS OF WAREHOUSING
Sortation and/or Accumulation Sortation of batch picks into individual orders and accumulation of distributed picks into orders must be done when an order has more than one item and the accumulation is not done as the picks are made. Packing and Shipping Checking orders for completeness Packaging of merchandise in an appropriate shipping container Preparation of shipping documents, including packing list, address label and bill of lading Weighing of order to determine shipping charges Accumulation of orders by outbound carrier Loading trucks ( in many instances, this is a carriers responsibility Transportation Provide transport arrangement to the bulk depositors. It collects goods from the place of production and also sends goods to the place of delivery on request of the depositors

MATERIAL HANDLING

MATERIAL HANDLING
Material handling equipment is equipment that relates to the movement, storage, control and protection of materials, goods and products throughout the process of manufacturing, distribution, consumption and disposal. Material handling equipment is the mechanical equipment involved in the complete system. Generally separated into four main categories:
Storage and Handling equipment Engineered Systems Industrial Trucks Bulk Material Handling.

MATERIAL HANDLING
Material handling and efficiency Material handling equipment is used to increase output, control costs, and maximize productivity. There are several ways to determine if the material handling equipment is achieving peak efficiency. These include capturing all relevant data related to the warehouses operation, measuring how many times an item is touched from the time it is ordered until it leaves the building Making sure you are using the proper picking technology Keeping system downtime to a minimum.

MATERIAL HANDLING
Storage and handling equipment Storage and handling equipment is a category within the material handling industry. The equipment that falls under this description is usually non-automated storage equipment. Products such as pallet racking, shelving and carts, among others, belong to storage and handling. Engineered systems Engineered systems are typically custom engineered material handling systems. Conveyors, Handling Robots and most other automated material handling systems fall into this category. Engineered systems are often a combination of products integrated to one system. Many distribution centers will optimize storage and picking by utilizing engineered systems such as pick modules and sortation systems. Equipment and utensils used for processing or otherwise handling edible product or ingredients must be of such material and construction to facilitate thorough cleaning and to ensure that their use will not cause the adulteration of product during processing, handling, or storage. Equipment and utensils must be maintained in sanitary condition so as not to adulterate or contaminate product.

MATERIAL HANDLING
Industrial trucks Industrial trucks usually refer to operator driven motorized warehouse vehicles, powered
manually, by gasoline, propane or electrically. Industrial trucks assist the material handling system with versatility; they can go where engineered systems cannot. Forklift trucks are the most common example of industrial trucks Their greatest advantage lies in the wide range of attachments available; these increase the truck ability to handle various types and shapes of material.

Bulk material handling

Bulk material handling equipment is used to move and store bulk materials such as ore, liquids, and cereals. This equipment is often seen on farms, mines, shipyards and refineries. On-rails transfer cart
It moves on the rails and can transfer heavy cargoes or equipment with the weight 1-300t between the workshops or warehouses in the factory. It is widely used in the line of metallurgy, coal, heavy manufacturing, automotive assembly, etc.

Conveyors Cantilevered Crane Loading Platform

TYPES OF WAREHOUSES

TYPES OF WAREHOUSES
Warehouses have been classified as under: Private Warehouses Public Warehouses Government Warehouses

Bonded Warehouses
Co-operative Warehouses

PRIVATE WAREHOUSE
The warehouses which are owned and managed by the manufacturers or traders to store, exclusively, their own stock of goods are known as private warehouses.

Generally these warehouses are constructed by the farmers near their fields, by wholesalers and retailers near their business centres and by manufacturers near their factories.
The design and the facilities provided therein are according to the nature of products to be stored.

PUBLIC WAREHOUSE
The warehouses which are run to store goods of the general public are known as public warehouses. Any one can store his goods in these warehouses on payment of rent. An individual, a partnership firm or a company may own these warehouses. To start such warehouses a license from the government is required. The government also regulates the functions and operations of these warehouses. Mostly these warehouses are used by manufacturers, wholesalers, exporters, importers, government agencies, etc

GOVERNMENT WAREHOUSE
These warehouses are owned, managed and controlled by central or state governments or public corporations or local authorities. Both government and private enterprises may use these warehouses to store their goods. Central Warehousing Corporation of India, State Warehousing Corporation and Food Corporation of India are examples of agencies maintaining government warehouses.

BONDED WAREHOUSE
These warehouses are owned, managed and controlled by government as well as private agencies. Private bonded warehouses have to obtain license from the government.

Bonded warehouses are used to store imported goods for which import duty is yet to be paid.
Incase of imported goods the importers are not allowed to take away the goods from the ports till such duty is paid. These warehouses are generally owned by dock authorities and found near the ports

CO-OPERATIVE WAREHOUSE
These warehouses are owned, managed and controlled by co-operative societies. They provide warehousing facilities at the most economical rates to the members of their society.

IDEAL WAREHOUSE
Any warehouse is said be an ideal warehouse if it possesses the below mentioned characteristics: Warehouse should be located at a convenient place near highways, railway stations, airports and seaports where goods can be loaded and unloaded easily. Mechanical appliances should be there to loading and unloading the goods. This reduces the wastages in handling and also minimises handling costs. Adequate space should be available inside the building to keep the goods in proper order. Ware houses meant for preservation of perishable items like fruits, vegetables, eggs and butter etc. should have cold storage facilities. Proper arrangement should be there to protect the goods from sunlight, rain, wind, dust, moisture and pests. Sufficient parking space should be there inside the premises to facilitate easy and quick loading and unloading of goods. Round the clock security arrangement should be there to avoid theft of goods. The building should be fitted with latest fire-fighting equipments to avoid loss of goods due to fire.

ADVANTAGES OF WAREHOUSING

ADVANTAGES OF WAREHOUSING
PROTECTION AND PRESERVATION OF GOODS Warehouse provides necessary facilities to the businessmen for storing their goods when they are not required for sale. It provides protection to the stocks, ensures their safety and prevents wastage. It minimises losses from breakage, deterioration in quality, spoilage etc. Warehouses usually adopt latest technologies to avoid losses, as far as possible REGULAR FLOW OF GOODS Many commodities like rice, wheat etc. are produced during a particular season but are consumed throughout the year. Warehousing ensures regular supply of such seasonal commodities throughout the year. CONTINUITY IN PRODUCTION Warehouse enables the manufacturers to carry on production continuously without bothering about the storage of raw materials. It helps to provide seasonal raw material without any break, for production of finished goods CONVENIENT LOCATION Warehouses are generally located at convenient places near road, rail or waterways to facilitate movement of goods. Convenient location reduces the cost of transportation

ADVANTAGES OF WAREHOUSING
EASY HANDLING Modern warehouses are generally fitted with mechanical appliances to handle the goods. Heavy and bulky goods can be loaded and unloaded by using modern machines, which reduces cost of handling such goods. Mechanical handling also minimizes wastage during loading and unloading USEFUL FOR SMALL BUSINESSMEN Construction of own warehouse requires heavy capital investment, which small businessmen cannot afford. In this situation, by paying a nominal amount as rent, they can preserve their raw materials as well as finished products in public warehouses. CREATION OF EMPLOYMENT Warehouses create employment opportunities both for skilled and unskilled workers in every part of the country. It is a source of income for the people, to improve their standards of living FACILITATES SALE OF GOODS Various steps necessary for sale of goods such as inspection of goods by the prospective buyers, grading, branding, packaging and labelling can be carried on by the warehouses. Ownership of goods can be easily transferred to the buyer by transferring the warehouse keepers warrant.

ADVANTAGES OF WAREHOUSING
AVAILABILITY OF FINANCE Loans can be easily raised from banks and other financial institutions against the security of the warehouse-keepers warrant. In some cases warehouses also provide advance to the depositors of goods on keeping the goods as security. REDUCES RISK OF LOSS Goods in warehouses are well guarded and preserved. The warehouses can economically employ security staff to avoid theft, use insecticides for preservation and provide cold storage facility for perishable items. They can install fire-fighting equipment to avoid fire. The goods stored can also be insured for compensation in case of loss

WAREHOUSING STRATEGIES

WAREHOUSE DECISION MAKING

Success of a business depends on logical warehouse plans because this allows you to make the best use of available space. Facilitate better inventory control and efficiently coordinate the movement of products in and out of storage. Decisions related to warehouse are involved at Strategic Level, Tactical Level and Operational Level. Strategic Level Decisions : These decisions are taken by the company top management, have the long lasting impact on the operation of the warehouse and involve major investment. For example decisions like Warehouse Ownership Decision (Role of Private, Public or Contract operations) How many warehouses and where to be located ? Material Handling Equipment selection Tactical Level Decisions : Tactical Planning is the process of taking the strategic plan and breaking it down into specific, medium term actions and plans which involves significant investment. Facility Layout (Sizing of the warehouse areas and storage Layout) and its equipment Stacking Norms, Replenishment schemes and batch sizing Operational Level Decisions : Decision and policies related to the real-time operation of the warehouse.

WAREHOUSE SITE SELECTION

Revolves around two major factors: Service Cost The other factors are: Infrastructure Market Availability Product Access Regulations Primary transportation cost Local levies

WAREHOUSE LAYOUT DESIGN

GUIDELINES FOR DESIGNING LAYOUT
Item Turnover
Space Utilization

Product Configuration
Product Characteristics

Good Housekeeping
Safety and Security

WAREHOUSE DECISION MAKING MODEL

HOW SHOULD WE THINK?

STORAGE TO FLOW INVENTORIES AT REST TO INVENTORIES AT MOTION SWITCHING FACILITY RATHER THAN STORAGE FACILITY Because the value of strategic storage was not well understood , warehouses were often considered necessary evils that added cost to the distribution process Donald J Bowersox

WHAT SHOULD BE THE OBJECTIVES? Maximum utilization of storage space Higher labour productivity Maximum asset utilization Reduce material handling Reduce operating cost Increased inventory turnover

FUTURE TRENDS
OVERALL INVENTORY REDUCTION FOCUSING ON THE CUSTOMER CUSTOMIZED WAREHOUSING COMPRESSION OF OPERATIONS AND TIME CONTINOUS FLOW THIRD PARTY WAREHOUSING MORE CROSS DOCKING AUTOMATION ELECTRONIC TRANSATIONS THE HUMAN FACTOR VALUE ADDED SERVICES GREEN WAREHOUSES DEVELOPMENT OF WAREHOUSE-STYLE RETAIL STORES VENDOR MANAGED INVENTORY (VMI). REVERSE LOGISTICS

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