5. Warehousing Management

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WarehouseA warehouse is a commercial building for storage of goods.

Warehouses are used by manufacturers,Wholesalers, retailers, importers,exporters, customs etc.

They are usually large plain buildingsin industrial areas of cities and towns.

Today warehouses are not used to store things but rather toreceive, breakdown, repackage and distribute components toa manufacturing location or finished products to customers
http://en.wikipedia.org/wiki/Image:Automatisches_Kleinteilelager.jpghttp://en.wikipedia.org/wiki/Image:Automatisches_Kleinteilelager.jpg


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The warehouse is where the supply chain holds

or stores goods.

Functions of warehousing include Receiving, Storing

Buffer stock for customers retail or commercial

Stockpiling (Seasonal, Bulk-Buy)

Postponement ( Parts and components are stocked atstrategic locations and final assembly is kept on hold till

the customer places or modifies the order)

Packing (Labelling & Packaging)


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Supplier A

Supplier D

Supplier B

Supplier C

Warehouse Plant

Manufactur ing Suppor t


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Mixing Warehouse:A warehouse is used as a product mixing point, no. of plants

manufacturing different components, are combined at aconvenient place to make the final product.

Each plant manufactures only portion of the total product

offering of the firm. Products are assembled at commonmixing point and dispatched to the customer.

It involves multiple plant locations (e.g., plant A, plant B andplant C) that ship products (e.g., products A, B and C) to a

central warehouse.


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Mixing Warehouse

Plant A

Plant B

Plant C

Customer 1

A B C

Customer 2

A B C

Customer 3

A C

Customer 4

B C


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Break-Bulk:It is directly opposed to that of the consolidation warehouse.

Material that has arrived in bulk is divided into small shipments to

deliver to the end customer.

Bulk cargo of fertilizers, oil and chemicals coming frommanufacturers is broken into smaller consignments.

As the shipment is received at warehouse, it is broken down intosmaller shipments and orders are sortedwhich are sent tocustomers in different geographical area.


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Break-Bulk

Warehouse

Break-Bulk Warehouse:


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Inbound materials are Directed to outbound doors and are directlyloaded into outbound trucks...or... Staged for a very brief time period beforeloading Can accomplish significant reductions in total costs

and in lead times in a supply chain

Cross dock facilities (CF) act as transfer points


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CROSS-DOCK=No storage(?)Cross-dock (from multiple suppliers):

goods sorted as they arrive,

goods moved across dock and loaded onto trailers,

benefits - optimal vehicle use and low handling

costs.

Avoids placing goods into storage


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Cross Docking


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Private Warehouses: Private warehouses are company owned and

operated.

Publ ic Warehouse:Public warehouses are owned and operated by

a third party. They allow companies to store goods under one roof. It is

given on rent or lease.

Contract Warehouses:Contract warehouses are also owned by a

third party. It offers unique and specially tailored warehousing and

logistics services exclusively to one client. Based on mutual benefits,

long term commitment and good relationships.


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Provide timely customer service. Keep track of items so they can be found readily &

correctly.

Minimize the total physical effort & thus the cost of

moving goods into & out of storage.

Provide communication links with customers


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Receive goods

Identify the goods

Dispatch goods to

storage

Hold goods

Pick goods

assemble shipment

Dispatch shipment


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Accepts goods from Outside transportation or attached factory &

accepts responsibility

Check the goods against an order & the bill of

lading

Check the quantities Check for damage & fill out damage reports if

necessary

Inspect goods if required

Receive goods


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items are identified with the appropriate stock-

keeping unit (SKU) number (part number) &

the quantity received recorded

Identify the goods

Dispatch goods to storage goods are sorted & put away

Hold goods

goods are kept in storage & under proper

protection until needed


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Pick goods items required from stock must be selected

from storage & brought to a marshalling area

assemble the shipment goods making up a single order are brought

together & checked for omissions or errors; order

records are updated


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Dispatch the shipment orders are packaged, shipping documents are

prepared, & goods loaded on the vehicle

Operate an information system a record must be maintained for each item in

stock showing the quantity on hand, quantity

received, quantity issued, & location in the

warehouse


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WAREHOUSE PROCESSPut-away

Identify Product

Identify Product Location

Move Products

Update Records

StorageEquipment

Stock Location

Popularity / Significance

Unit Size

Shipping PreparationPacking

Labeling

Stacking

Order PickingInformation

Walk & Pick

Batch Picking

Shipping

Schedule Carrier

Load Vehicle

Bill of LadingRecord Update

RECEIVINGSchedule Carrier

Unload Vehicle

Inspect for damage

INP

UT

OUT

PUT


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Before selecting site, there is some locationanalysis techniques that could assistcompany in selecting a general area forwarehouse location.


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Location Factor RatingThe location factor rating technique may beused when many sites are available, and eachsite has some appealing characteristics. Thepurpose of the technique is to "score" eachsite to be somewhat objective about thelocation decision. The steps in using the

technique are:


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FACTORS

Weight (Relative

importance to Org.) Scores out of 100

India - Pak

Labor Availability 0.2 65 - 55

Proximity to market 0.1 30 - 65

Tax Structure 0.4 50 - 50

Education & Health 0.08 65 - 67

Proximity to Suppliers 0.22 70 - 65


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LOCATION STRATEGY

(FACTOR RATING METHOD)

FACTORS INDIA PAKISTAN

Labor Availability (.20)(65)=13 (.20)(55)=11Proximity to market (.10)(30)=3 (.10)(65)=6.5

Tax Structure (.40)(50)=20 (.40)(50)=20

Education & Health (.08)(65)=5.2 (.08)(67)=5.36

Proximity to Suppliers (.22)(70)=15.4 (.22)(65)=14.3

56.6 57.16


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Center-of-Gravity Technique The center-of-gravity technique can be used when

multiple suppliers or customer bases exist atdifferent geographic locations, and it is

economically sensible to locate centrally to serviceall of them. In general, transportation costs are afunction of distance, weight, and time.


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Site SelectionOnce location analysis is completed, a specific

building site must be selected.

The primary factors in site selection are theavailability of services and cost.

The cost of procurement is the most importantfactor governing site selection.

Beyond procurement cost, setup and operatingexpenses such as utility expenses, taxes, insurancerates, and highway access require evaluation.

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Site SelectionSeveral other requirements must be satisfied before

a site is purchased

Necessary utilities must be available.

The soil must be capable of supporting thestructure, and the site must be sufficiently high toafford proper drainage

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Use one-story

facilities

Move goods in astraight line

Use efficient

materials-

handling

equipment

Use an effective

storage plan

Minimize aisle

space


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Number of stories in the facility The ideal warehouse design is limited to a single

story so that product does not have to be movedup and down.

The use of elevators to move product from onefloor to the next requires time and energy.

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Height Utilization: Regardless of facility size, the design should maximize the

usage of the available cubic space by allowing for the greatestuse of height on each floor.

Most warehouses have 20- to 30-foot ceiling, although modernautomated facilities can effectively use ceiling heights up to100 feet.

Maximum effective warehouse height is limited by the safelifting capabilities of material-handling equipment, such as

forklifts.

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Product-Mix Considerations The design and operation of a warehouse are

related directly to the character of the product mix.

Each product should be analyzed in terms of

annual sales, stability of demand, weight, andpackaging.

It is also desirable to determine the total size andweight of the average order processed through the

warehouse.


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Benefits of Warehouse Management Provide a place to store & protect inventory

Reduce transportation costs

Improve customer service levels

Complexity of warehouse operation depends on the

number of SKUs handled & the number of orders

received & filled.

Most activity in a warehouse is material handling.


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Capital costs

Costs of space & materials handling

equipment

Operating costs

Cost of labor

Measure of labor productivity is the number of

units that an operator can move in a day

COSTS OF OPERATING A WAREHOUSE


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Maximize use of space

space is the largest capital cost

Effective use of labor & equipment labor is the largest operating cost

material handling equipment is the second

largest capital cost


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THANK YOU

5. Warehousing Management

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