Warehouse Assignment

WAREHOUSE MANAGEMENT


By: Cosmas Teo

Warehouse Management


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Table of Contents

Assignment Questions 4

Introduction 5

1. Functions of Warehouse 5

1.1. Receiving 5

1.2. Storages 51.2.1. Pallet rack 61.2.2. Mezzanine 61.2.3. Cantilever rack 61.2.4. Shelving 61.2.5. Automated Storages & Retrieval System 6

1.3. Distribution 61.4. Other – Packing & Repacking 6

2. Planning & SWOT Analysis to Set-up Warehouse 73. Warehouse Facilities Development 83.1. Size and Number 83.2. Location 103.3. Design & Layout 103.4. Transportation 13

4. Conclusions 13



Assignment Questions

The answers to the above two questions should be written in one assignment.

1. Describe briefly the main three functions of warehousing.

2. Discuss, with suitable illustrations, the factors that warehouse management should take

into consideration in warehouse facility development. Your answer should include,

among others, the following main elements in warehouse facility development:

a. Size and number of warehouses,

b. Location of warehouses and

c. Design and layout of warehouses.



1. Introduction - In every industry neither in manufacturing, importer, exporter, wholesaler,

transport business, or even customs, a warehouse is consider a ‘must’. Warehouse can be

generally a large plain building located in industrial area, town, city, port, airport, etc,

where good are temporally store before going for delivery or distribution. Warehouse

usually has a loading and unloading bay to receiving and distribution of goods directly

from seaports, airports or railways. In the warehouse normally equipped with forklift or

crane for moving goods from one place to another. Goods usually placed on ISO standard

pallet. Good stored in warehouse can be raw materials, components or finished goods for

agriculture, manufacturing, or commerce. Function of warehouse can be neither internal

nor external. It also serves as purpose or specialization for customer focus.

2. Among the functions of warehouse include; Receiving, Storage, Distribution, and other

functions can be included packing & repacking, order accumulation and record keeping.

2.1. Receiving – When goods arrive either at seaport, airport, train stations, goods

will normally store temporally at warehouse before distribution to next locations. Or

even in the factory or manufacturing goods, raw material where receive from outsider

will store at warehouse before being used in producing final goods or product. Same

for finish products/goods, it will also store at warehouse before being distribute to

other locations.

2.2. Storage – Warehouse can be also function as storage. Raw materials,

components or finished goods / products can be store at warehouse before

distribution. There are different storage systems for different type of goods /

materials/ products being used for storage. The common storage systems can be

either;



2.2.1. Pallet rack, - the goods or material are place on pallets or skid. Each pallet or

skid is place on rack neither in horizontal row with multiple levels.

2.2.2. Mezzanine, - is an intermediate floor between main floors of a building, and

therefore is not counted the overall floors of a building1. Normally mezzanine

type is common if the warehouse buildings is tall, and have an extra space to

build a certain level for storage.

2.2.3. Cantilever Rack, - is warehouse storage system consisting of the vertical

column, the base, the arms, and the horizontal and/or cross bracing. These

components are fabricated from both roll formed and structural steel. The

horizontal and/or cross bracing are used to connect two or more columns

together. They are commonly found in lumber yards, woodworking shops, and

plumbing supply warehouses2.

2.2.4. Shelving, - a type of storage metal, steel, nor catwalk type.

2.2.5. Automated Storage and Retrieval System (ASRS) –Most modern type of

storage system in warehouse. It consist variety of computer system or latest

technologies method of placing and retrieving loads from specific location in

the warehouse.

2.3. Distribution – All goods either raw materials or finish goods will surely not

going to keep forever in the warehouse. Once the goods are ready, it will distribute

out from the warehouse to destination where it will be utilized or use. The goods will

distribute out will either use the method of FIFO (First in First out) or FILO (First in

Last Out).

2.4. Other - Packing and Repacking – Warehouse can also be a place for packing

and repacking. Sometime goods are delivery to warehouse in big quantity and need to

1 http://en.wikipedia.org/wiki/Mezzanine_(architecture)2 http://en.wikipedia.org/wiki/Cantilever


http://en.wikipedia.org/wiki/Cantilever

http://en.wikipedia.org/wiki/Mezzanine_(architecture)


repacking into small or packages before delivery from warehouse. Finish goods

sometime deliver in big amount or volume in order to save shipping cost, and it will

delivery to warehouse first before distribute to final destination. And in the

warehouse, it wills either packing or repacking accordingly. Order accumulation –

Warehouse also can function as temporally storage order accumulation before

distribute out. Sometime, goods coming in will not meet up to the customer demand

in quantity. So the goods will temporally store at the warehouse while waiting for the

balance of the goods to arrive and meet the final demand before distribute out.

Warehouse also can be function as record keeping like stock counting.

3. Any warehouse before set-up, it need a planning and SWOT Analysis to be study up.

SWOT analysis is a strategic planning method used to evaluate the Strengths, Weakness,

Opportunities and Threat involve before a warehouse being set-up. What is the purpose

and objective of warehouse facilities being set up? Any natural of business neither in

manufacturing, automobile, factories, or import & export, it required a warehouse. Before

a warehouse needs to set up, management usually need a proper planning like where the

warehouse will be built. Neither near the seaport if the goods are coming in thru seaport?

Or near the factory, if the goods if direct coming thru the factory. It also needs to gather

all relevant data such like shipment data or arrangement with end user or manufacturer.

Such data can be crucial information. With the data gather, it can be use for analysis in

setting up warehouse. That is why the SWOT Analysis is used for planning a warehouse

in either internal or external factor, which is also will look into the warehouse facility

development. What is the strength of the warehouse being set-up? Either in location, size,

nor design etc. it must able to give advantages in internal or external. Such as if a

warehouse being set-up near the seaport, will it able to give advantages. Then if the

warehouse is set-up far away, will it give any weakness to the supplier or customers?



Weakness is a characteristic that will bring disadvantages if the warehouse being set-up

either in term of size, location, or design. Opportunities can be external changes to make

in accommodate more than what a current warehouse is. It can be an opportunities for

other purpose of the current warehouse. Like to diversify to others functions of

warehousing. There is a threat that can cause a problem or trouble when the warehouse is

built. It can be either a threat in size, location, design or layout, transportation or software

& IT. After the analysis is complete, it needs to put in paper or blue print. Whatever been

planning, it needs to be put into model to see the effect of it and can be functioning

according to what it been planning. And from there, it needs to be implemented. How to

implement the plan is also important. It needs to set a target when to start the

implementation of the plan. Only after the implementation, it needs to analysis it. It called

the Post Implementation. By analysis it, we can know what when wrong or not according

to what been plan early. By this way, we can try to minimize the mistake or to add the

strength and opportunities.

4. Facilities development needs to include Internal and External factor. Internal factor is

within the facilities its self. While the external factor, we look as overall of the whole

facilities. Taken for example, in Oil and Gas industry, a management will not only

consider just 1 warehouse to store all the cargoes or items, but will consider different

sections of warehouse like Open storage Warehouse, Close storage warehouse, air-

condition type warehouse or even chemical warehouse according to its needs and

facilities.

4.1. Size and Number of warehouses is according to business or operation needs.

Some type of business or operation may need just one warehouse, while other may

need more than one warehouse to cater all the needs. Some business may need a small

size warehouse while other may need larger size warehouse. Take for example in



Labuan. Labuan is duty free island and main industry in oil and gas sector. In oil and

gas industry most of the oil and gas companies required different sizes of warehouse

for storages. Some need to be in open yard warehouse, some need to be in air-

conditional warehouse type, and close warehouse. Like all major oil & gas

companies, Murphy Oil Corporation is also required warehouse for storage the items

or cargo before ship out to offshore, or return from offshore, and coming in and out

Labuan. Refer to the map 1 below.

Map 1

Murphy Oil Corporation operates within the area of Asian Supply Base (ASB)

Labuan. ASB is a one-stop logistic support centre for oil and gas industry. ASB is

also a port where general cargoes can be imported, exported and/or transhipped

through and/or from its warehouse and open vast yards. Because of the nature of

operation, it required different size and number of warehouses for its operation. In

map 1 we can see inside the ASB, there are 4 warehouses with different sizes.

Warehouse 1(Red colour outer line) is a closed warehouse type. It normally for

storages of small items needs special or delicate care like drill bit, bolt and nut,

electrical equipments, etc. Warehouse 2 & 3 (blue & yellow) is open yard storage.

Open yard storage normally for putting a large or big size items or equipments, or



something is not practically put inside the closed warehouse, example like casing

pipe, riser, shipping container, etc. Warehouse 4 (Pink) is a chemical warehouse.

Chemical warehouse is for chemical products and it related product because it need

special care and attention. This is also because of safety & health issue that chemical

cannot store in normal warehouse or open yard warehouse. For the map, we can see

the sizes of each warehouse according to its needs and number of warehouses

required in this type of operations.

4.2. Location is also important for establishing warehouse. Warehouse management will

look into the consideration to set up warehouse neither to focus on clients or supply.

Warehouse must be located in the correct location to efficiently meet clients and

customers delivery requirements. In focus of clients or supply requirements,

warehouse maybe built near the client business premise or easy for access to supply to

other locations. Location is important because 1) save cost, 2) transportation, 3) raw

material, 4) import & export facilities example seaport or airport, 5) Labour

catchment. One of the reason Murphy Oil set up warehouse within the ASB is because

the location. It near to the jetty or port for vessel or supply boat to berth. Labuan is

hub for oil and gas to offshore. At offshore, there are very limited storage for

equipment and cargo. And the flow of the equipments and items is fast. And it need to

constantly supply from the base where more items or cargo is being keep at the

warehouse. In order to save time, transportation and easy access to jetty, it best way to

have warehouse near the location. When the cargo being ship back to base, it will also

easy to delivery to warehouse, especially big size or odd size cargo.

4.3. Design & layout of warehouse. An effective warehouse design must take into

account a wide range of factors from all areas of the operation. The design of a

warehouse can have an impact on your overall operations. In turn, this will affect



inventory control, process flows and space utilisation. The scope of a warehouse

design plan should encompass inventory levels, cycle and variance in inventory

throughout the business year, cost of space, warehouse operational management, cost

of inventory transport and flexibility for future change adjustments in product or

demand3. In Murphy Oil warehouse is consider an important to it operations in oil &

gas sector. It functions as 1) Product storage, 2) Inbound operation, 3) Outbound

Operation and 4) value-added processes. Most of the part, equipments are very

crucial and important especially when need for replacement or changes in fast. If

equipment or tool need urgency replacement, it cannot effort to wait for spare part to

arrive in 1 or 2 weeks time especially order from overseas. Because any shut down, it

will cost a million or thousand losses in operation. Because of this, warehouse is a

place for product storage and advance order or replacement stored at warehouse, so

that it can fast delivery to offshore. For some products, like chemical it will stored at

Chemical warehouse, where specific handling for chemical and must follow the

Safety and Health policy. In open yard warehouse, because of large hectares/yard

normally it will required a special material handling equipment such like heavy lift

crane, or 10 tons forklift or trailer to move any big or odd size items. In everyday,

there will be an inward and outward of cargo to offshore and back from offshore. For

example in warehouse 1 (Closed warehouse) the

design of the warehouse is almost similar to the left

photo. It is equipped with aisle on pallet on storage

rack. One reason why it on pallet is because for easy

movement and pick-up by 3 ton forklift, and stored

on storage rack is to save on space and in order

according to stock / items. The loading bay for loading and offloading is all at one

3 http://www.supplychainlogistics-consulting.co.uk/warehouse.html


http://www.supplychainlogistics-consulting.co.uk/warehouse.html


place at the end of the warehouse. Refer to illustration 1. It because, all items coming

in and out need to check and receiving by warehouse personnel for checking like need

to be key in to inventory system, comply with company Health, Safety &

Environment policy. All the cargo going for outbound will also be labelling and re-

labelling last destination of each cargo, and also MSDS for chemical. This value-

added process is done in warehouse 1 to ensure all cargo is correctly label and

accordingly. The layouts for warehouse is look simple and organize according to its

sector. Each sector like Production, Drilling – Sabah Water & Drilling – Sarawak

Water if place accordingly and not mix up. By doing it simple and more flexible, it

can create a cost efficiency, flexibility, easy handling and more specific. The

warehouse is also meet the specifications that can affect the storage and material

handling like type of racks used, height of racks, lighting, equipment movement like

forklift, loading and unloading bay etc..


RACK (Production)

RACK (Drilling - Sabah Water)

RACK (Drilling – Sarawak Water)

RACK (Drilling – Sarawak Water) OFFICE

RACK (Drilling - Sabah Water)

LOADING / UNLOADING

Illustration 1


4.4 Transportation also plays an important role in goods movement. As the operation

is mostly to offshore and require supply vessel for transportation, surely the

warehouse needs to be set-up near the seaport. By setting up warehouse inside the

ASB and near the ASB port / jetty it will provide easy 24 hours operation. ASB is

operating 24 hours operation with its own facilities and infrastructure such like fuel

& water bunker for vessel, security, material equipment handling, Temporary

storage for discharging cargo, etc.

5. Conclusion – Warehouse is important to its business needs either for clients or supply.

Function of warehouse can be either for receiving, storages, distribution, or packing and

repacking, and others that can contribute to its warehouse functions base on what the

warehouse management need and want. Before to set-up a warehouse, it need proper

planning and SWOT analysis to ensure it according to what the warehouse objective to be

neither in business or operation. Among its planning, we need to look into warehouse

facilities development like size and number of warehouses to be, location to set up,

design & layout of warehouse based on its operation or business, and other like

transportation facilities, that can contribute to proper warehouse planning and

management.



BIBLIOGRAPHY

1. http://en.wikipedia.org/wiki/Mezzanine_(architecture)

2. http://en.wikipedia.org/wiki/Cantilever

3. http://www.supplychainlogistics-consulting.co.uk/warehouse.html

4. http://en.wikipedia.org/wiki/Warehouse


http://en.wikipedia.org/wiki/Warehouse

http://www.supplychainlogistics-consulting.co.uk/warehouse.html

http://en.wikipedia.org/wiki/Cantilever

http://en.wikipedia.org/wiki/Mezzanine_(architecture)

Warehouse Assignment

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