warehousing

Stages of revolution
Lower Level Function

Stage -1
Integrative Approach

Stage -2
Quick response – Customer
focused warehousing
Stage -3
 warehousing

Strategic Warehousing
 A. Push vs. Pull system
 B. Location
 C. Layout
 D. Customer service / Flexibility
 E. Computerization & Automation
 warehousing

 Roles of Professional Warehousing

• A. Economic Benefit
• 1. Consolidation and Break Bulk
• 2. Sorting
• 3. Seasonal Storage
• 4. Reverse Logistics Processing
•
 The role of consolidation in
contemporary distribution networks
Manufacturers Retailers

Manufacturers Retailer
Manufacturers Consolidator Retailerss
Consolidator
The role of cross docking in
contemporary distribution networks
Manufacturers Retailers

Company A Customer X
A .B ,C
YCustomer Y
B ,C
Manufacturers
Company B Transit Mix
Consolidator Retailers
Product D
Customer Z
A . C ,D
Company C
Break bulk warehouses
 Break bulk warehouse operations are similar to
consolidation except that no storage is performed.
 A break bulk operation receives combined customer
orders from manufacturers and ships them to
individual customers.
 The break bulk warehouse sorts or splits individual
orders and arranges for local delivery.
 Because the long-distance transportation movement
is a large shipment, transport costs are lower and
there is less difficulty in tracking.

6
Break bulk warehouses…

7
 warehousing

 Roles of Professional Warehousing

• 4. Reverse Logistics Processing
• Return management
• Remanufacturing
• Remarketing
• Recycling
• Disposal
warehousing
Processing/Postponement
 Warehouses can also be used to postpone, or delay,
production by performing processing and light
manufacturing activities.

 A warehouse with packaging or labeling capability allows

postponement of final production until actual demand is
known.

 For example, vegetables can be processed and canned in

"brights" at the manufacturer.

 Brights are cans with no pre-attached labels.

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Processing/Postponement…
 The use of brights for a private label product
means that the item does not have to be
committed to a specific customer or package
configuration at the manufacturer's plant.
 Once a specific customer order is received,
the warehouse can complete final processing
by adding the label and finalizing the
packaging.

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Processing/Postponement…
 Processing and postponement provide two economic
benefits:

 First, risk is minimized because final packaging is not

completed until an order for a specific label and
package has been received.

 Second, the required level of total inventory can be

reduced by using the basic product (brights) for a
variety of labeling and packaging configurations.

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The major warehouse operations
 Inbound processes

 Receiving (~10% of warehouse operating costs): the

collection of activities involved in
 the orderly receipt of all materials coming into the warehouse;
 providing the assurance that the quantity and quality of such
materials are as ordered;
 disbursing materials to storage or to other organizational
functions requiring them.

 Put-away (~15% of warehouse operating costs): the act of

placing merchandise to storage; it includes
 determining and registering the actual storage location(s)
 transportation
 placement
The major warehouse operations
(cont.)
 Outbound processes
 Processing customer orders (typically done by the computerized
warehouse management system of the facility): This set of activities
includes
 checking that the requested material is available to ship;
 if necessary, coordinating order fulfillment with other facilities of the
distribution network;
 producing the “pick” lists to guide the order picking and the necessary
shipping documentation;
 scheduling the order picking and the shipping activity.
 Order-picking (~55% of warehouse operating costs): the set of physical
activities involved in collecting from the storage area the materials
necessary for the fulfillment of the various customer orders, typically
identified as:
 traveling (~55% of the order picking time)
 searching (~15% of the order picking time)
 extracting (~10% of the order picking time)
 documentation and other activities (~20 % of the order picking time)
 The major warehouse operations
(cont.)
 Outbound processes (cont.)
 Checking: Checking orders for completeness (and quality of product)

 Packing: Packaging the merchandise in appropriate shipping

containers, and attaching the necessary documentation / labels.

 Shipping: The activities of

 preparing the shipping documents (packing list, address label, bill of
lading);
 accumulating orders to outbound carrier;
 loading trucks (although, in many instances, this may be the carrier’s
responsibility).

 Others: Handling returns, and performing the additional value-

added-processing supported by contemporary warehouses, as
discussed in a previous slide.
 warehousing

 Summary Warehouse Operations

• 1. Loading -Unloading
• 2. Goods Receiving
• 3. Storage
• 4. Materials Handling
• 5. Goods Issue
• 6. Order Processing
• 7. Active Storage
• 8. Extended Storage
•
Operational Cost Breakdown

10%
20%
15%
Receiving
Putaway
Order Picking
Others
55%
Alternative Warehouse
Strategies
 Warehouse alternatives include:
 (1) Private warehouses,
 (2) Public warehouses, and
 (3) Contract warehouses.
 A private warehouse facility is owned and managed
by the same enterprise that owns the merchandise
handled and stored at the facility.
 A public warehouse, in contrast, is operated as an
independent business offering a range of services
-such as storage, handling, and transportation- on the
basis of a fixed or variable fee.
 Public warehouse operators generally offer relatively
standardized services to all clients.

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Public Warehouses
 On the basis of the range of specialized operations
performed, public warehouses are classified as

 (1) general merchandise,

 (2) refrigerated,
 (3) special commodity,
 (4) bonded, and
 (5) household goods and furniture.

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 Warehouse classification by
“customer type”

 Factory warehouse: Interfaces production with

wholesalers
 small number of large orders daily

 advance info about order composition

 Retail Distribution warehouse: Serves a

number of captive retail units
 advance info about order composition

 carton and item picking from a forward area

 more orders per shift than

consolidation/shipping lanes
Warehouse classification by
“customer type”

 Catalog Retailer: A warehouse filling orders from catalog

sales
 a large number of small (frequently single-line) orders

 item and, sometimes, carton picking

 daily composition of orders usually unknown

 only statistical information available

 Support of Manufacturing operations: A stock room

providing raw material and/or work-in-process to
manufacturing operations
 many small orders

 only statistical information available about order

composition
 stringent time requirements (e.g., response in 30 min)
 warehousing

 Warehouse Ownership Arrangements

1. Private :- Company's private WH cost
efficient / flexible
2. Public :- Refrigerated / Bonded / Special
Commodity / Agricultural good
3. Contract :- Combination of private and Public
4. Network Deployment
• ;- Service capacity utilization
 warehousing

 Warehouse Decisions

• 1. Site Selection
• 2. Layout design
• 3. Materials Handling
• 4. Product Mix analysis (FSN /
• Space productivity )
• 5. Expansion
•
•
Warehouse Layout and Design

Types of warehouse issues:

Running out of space?
Costs too high?
Poor productivity?
Poor layout?
Processes not working?
Thinking of moving?
Thinking of outsourcing?
Warehouse Layout and Design

Types of warehouse issues:

Storage capacity ?
Picking frequency
Selection of materials handling system
Product Mix
Order cycle process
Warehouse layout
Warehouse Layout and Design
Warehouse Layout and Design
High Pick & High Storage
This indicates a large and
active warehouse such as a
Distribution Center (DC). In
these situations, high
technology automated picking
combined with mechanized
handling and high density
storage justifies itself.
Low Pick & High Storage
Here the requirement is for
high density storage with high
bays, multi-levels and dense
packing. Low turnover means
that picking can be manual or
High Pick & Low Storage
With high picking activity but
low storage, the picking area
should be compact and dense
and  storage is simple. Some
automation of picking may be
justified.
Low Pick & Low Storage
A simple, small warehouse
requires neither automation or
sophisticated storage devices.
Stacked pallets, floor storage
or simple racks and shelves
Pilferage Protection…
 Computerized inventory control and order processing
systems help protect merchandise from being carried out of
the warehouse doors.
 No items should be released from the warehouse unless
accompanied by a computer release document.
 If samples are authorized for use by salespersons, the
merchandise should be separate from other inventory.
 Employees / Customer access
 Security cameras
 Visual checks
 High value items in lock

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 Product Deterioration…

 Damage products
 Unidentified products
 Wrongly binned products
 Excessive ordered products
 Products returned by Customers
 Lack of SOPs FIFO….( Identification of
Shelf life items)
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 Warehouse Management System

•
Core Functionality Advanced
1.Receiving 1. yard Management
2. Put Away 2. Labor management
3. Picking 3. Cross dock
4. Binning 4. Returns management
5. Inventory 5. Warehouse optimization
Control
6. Shipping
7. Packing

Interface Systems

ERP –Supply Chain Planning System