Topic 6:

Warehousing
Management
Lecturer Duy Tran
 Agenda

To discuss the role of warehousing in a

logistics system

To learn about public, private, contract

and multi-client warehousing
To analyze select considerations when designing
warehousing facilities

To examine some prominent operational

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issues in warehousing
Inventory vs Warehousing

Warehousing: Control the movement Inventory: show the availability and

and storage of the product quantity of stock on your hand

The management of the inventory within the warehouse depends upon the use of
warehouse management, which allows you to find specific locations to place the
inventory or even to retrieve it later. In short, warehouse management gives you
the specifics of inventory control, whereas inventory management simply gives
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you the quantity.
The Role of Warehousing in a Logistics
System

 Warehousing
 refers to “that part of the firm’s logistics
system that stores products (raw materials,
part, good-in-process, finished goods) at an
between points of origin and point of
consumption.”

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 The Role of Warehousing in a Logistics
System

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The Role of Warehousing in a Logistics
System

Storage Packing

Warehousing

Price
Financing
Stabilization

Risk Bearing
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The Role of Warehousing in a Logistics
System
1. Storage:
 This is the basic function of warehousing. Surplus commodities which
are not needed immediately can be stored in warehouses. They can be
supplied as and when needed by the customers.
2. Price Stabilization:
 Warehouses play an important role in the process of price stabilization.
It is achieved by the creation of time utility by warehousing. Fall in the
prices of goods when their supply is in abundance and rise in their
prices during the slack season are avoided.
3. Risk bearing:
 When the goods are stored in warehouses they are exposed to many
risks in the form of theft, deterioration, exploration, fire etc.
Warehouses are constructed in such a way as to minimise these risks.
Contract of bailment operates when the goods are stored in wave-
houses.
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The Role of Warehousing in a Logistics
System
4. Financing:
 Loans can be raised from the warehouse keeper against the goods
stored by the owner. Goods act as security for the warehouse
keeper.
5. Grading and Packing:
 Warehouses nowadays provide the facilities of packing, processing
and grading of goods. Goods can be packed in convenient sizes as
per the instructions of the owner.

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 The Role of Warehousing in a Logistics
System

 Warehousing facilitates the regrouping function

in a supply chain – can take place in four forms
1. Accumulating (bulk making)
 involves bringing together similar stocks from different sources
2. Allocating (bulk breaking)
 involves breaking larger quantities into smaller quantities
3. Assorting
 refers to building up a variety of different products for resale to
particular customers
4. Sorting out
 “separating products into grades and qualities desired by
Lecturer Duy Trandifferent target markets”
Cross-docking: receiving
and shipping it out in the
same day to reduce
inventory carrying costs
and faster delivery

LECTURER DUY TRAN

 The Role of Warehousing in a Logistics
System
1. Centralized management with high level of accuracy
2. Large capital resource and the ability to raise capital
regularly
3. A sufficient number of carriers can continuously
operate in the area
4. Always have volume of products and orders
received
5. Goods must be packed by partners with the standard
of handling

Faster delivery  Lesser

safety stock

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Type of Warehouse

 Public

 Private

 Contract

 Multi-client

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Public, Private, Contract, and Multiclient
Warehousing

 Organizations must also decide

the proper mix in terms of
warehouse ownership
 Owning
 Private warehousing

 Renting
 Public warehousing
 Contract warehousing
 Multiclient warehousing

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 Public, Private, Contract, and Multiclient
Warehousing
 Private Warehousing: owned by the firm storing
goods in the facility; generates high fixed costs and
should only be considered by companies dealing with
large volumes of inventory; feasible when demand
patterns are relatively stable.

• Advantages: offers control over storage needs and

product placement, increased flexibility

• Disadvantages: high fixed cost of private storage

and the necessity of having high and steady demand
volumes; may reduce an organization’s flexibility in
responding to changes in the external environment
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 Public, Private, Contract, and Multi-client
Warehousing
 Public warehouses: Facility operated by a third party that
typically involves shorter contracts, less customization and
the facility simultaneously serves multiple customers

• Advantages: Other parties have responsibilities for personal

decision and regulatory issues, may provide specialized
services that aren’t available from other sources

• Disadvantages: potential lack of control by the user, lack of

specialization in terms of services available.

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 Public, Private, Contract, and Multiclient
Warehousing
 Contract Warehousing: a long term, mutually beneficial agreement
which provides unique and specially tailored warehousing and
logistics services exclusively to one client, where the vender and
client share the risks associated with the operation

• Advantages: simultaneously mitigates the negative aspects and

accentuates the positive aspects of public and private warehousing;
allows a company to focus on its core competencies, viewed as more
flexible than private warehousing but less so than public
warehousing, both vendor and client share the risks associated with
the warehousing, less costly than private warehousing and more
costly than public warehousing

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Public, Private, Contract, and Multi-client
Warehousing
 Multi-client Warehousing: mixes attributes of
contract and public warehousing; utilized by a
limited number of customers (at least two, but
generally no more than a dozen)
 Attractive to smaller organizations that don’t have
sufficient volumes to build their own storage
facilities or use traditional one client contract
warehousing services

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Design Considerations in Warehousing

General Consideration Trade-offs

Order-picking
Fixed vs variable Build out vs
versus stock-
slot location replenishing Build up

Two-dock Conventional,
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versus single- narrow, or very
dock layout narrow aisles
Design Considerations in Warehousing

1) Locations 4) Equipment and Serviced

2) Type of warehouse offered
3) Size 5) Regulations
6) Proper inventory
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management system
 Design Considerations in Warehousing

 General considerations
 Quantity and character of goods to be handled
must be known—product profiling
 Know the purpose to be served
 Maximizes utilization of the cubic capacity of
the storage facility
 Rapid product movement with limited time in
storage should be configured to facilitate the
flow of product into and out of it

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 Design Considerations in Warehousing
Trade-offs: Must be made among space, labor,
and mechanization with respect to warehouse
design.
Fixed versus variable slot locations for merchandise
 In fixed slot locations each SKU has one or more
permanent slots assigned to it
 Variable slot location involves empty storage slots
being assigned to incoming products based on space
availability

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Design Considerations in Warehousing
Build out (horizontal) versus build up
(vertical)
 General rule of thumb is that it is cheaper to build
up than build out
 Illustrates the importance of understanding inter-
functional trade-offs when thinking about
warehousing design

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 Design Considerations in Warehousing

Trade-offs
 Order-picking versus stock-replenishing
functions
 Organizations must decide whether workers who
pick outgoing orders and those who are
restocking storage facilities should work at the
same time or in the same area.

 Two-dock versus single-dock layout

 generally has receiving docks on one side of a
facility and shipping docks on the other side, with
goods moving between them
Duy
Lecturer InTransingle-dock system, each and every dock can
be used for both shipping and receiving
Design Considerations in Warehousing
 Trade-offs
 Conventional, narrow, or very narrow
aisles
 As aisle space increases, storage space
decreases
 Easier to operate mechanical equipment in
wider aisles
 Reduce the chances of accidents and
product damage with wider aisles
 Narrower aisles require specialized storage
and handling equipment (more expensive)
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 Design Considerations in Warehousing
 Trade-offs
 Degree of warehouse automation
Refers to utilizing mechanical or
electronic devices to substitute for human
labor
Examples include narrow aisle forklifts,
automated guided vehicles, automated
storage and retrieval systems, and radio
frequency identification, and others

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 Example
 https://www.youtube.com/watch?v=_AthU0fgtCQ
 https://www.youtube.com/watch?v=dLJ6gM4AQI4

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What are the advantages and disadvantages
of using robot in warehousing ?
What did Amazon do to improve their w
arehousing management?
-

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Warehousing Operations

Warehousing
Safety
productivity
consideration
analysis

Warehousing Cleanliness and

security Sanitation Issues

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 Warehousing Operations
 Safety considerations
 Warehouses, distribution centers, and cross-
docking facilities can be dangerous
workplaces
 Fatality rate in warehousing is higher than the
average rate for all industries1
 Warehouse safety can by influenced by
governmental regulations
 Hazardous materials “hazmat”
 Examples include:
 Explosives
 Flammable liquids
 Flammable solids
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 Warehousing Operations
 Warehousing security
 Example potential threats include:
 Theft
 Pilferage
 Heat and humidity
 Vandalism
 Fire
 Loss of electricity
 Focuses on protecting products and
preventing their theft

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 Warehousing Operations
 Cleanliness and sanitation
issues
 Particularly important in many
industries, such the foodservice
industry
 Can have a positive impact on
employee safety, morale, and
productivity while also reducing
employee turnover1
 Requires common sense and due
diligence
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Objective of Warehousing Operations

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

Minimize the
total physical
effort & thus the Provide
communication links
cost of moving with customers
goods into &
out of storage.

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 Exercise
 Introduce 1 business you want to talk about
 Designing a warehouse layout for your business.
 Research about OHS and apply into this case

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Lecturer Duy Tran
The Role of Warehousing in a Logistics
System

Distribution centers: Rapid movement of Warehouses: storage of products and maximize

products and focus on throughput (product storing spaces
entering and leaving quantity)

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