Professional Documents
Culture Documents
Stores & Warehouse Operations and MGMT
Stores & Warehouse Operations and MGMT
Doors
Lighting
Picking Areas
Pallet space
Pick popularity
Volume movement
Pick density
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1.5 Allocating Stock to Storage (Pick Density and 'The Golden Zone')
Batch
On-Line
Weigh counting
Bar Coding
RFID Tags
1.10.1 Stockyards
Construction
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2.3 Packaging
WEEE regulations
2.4.1 Introduction
2.4.5 Cranes
2.4.8 AGVs
2.5.2 Road
2.5.3 Rail
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2.5.4 Ship
2.5.5 Air
3.3 The Principal Steps and Official Notes in Ordering and Receipt
3.4.1 Introduction
Single Sampling
Double Sampling
4. Special Topics
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Dynamic Zoning
5. Human Resources
5.2.1 Grievances
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5.2.3 Discipline
5.4 Security
Internal Theft
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The stores is self-evidently a major company service department. Service is provided on behalf of the
following functions:
The stores receives raw materials and bought-out parts on behalf of Purchasing. The receipts
must therefore be counted accurately and the material checked or sampled as to quality.
Information about receipts must be promptly notified to the central database.
Service to Production:
The stores must marshal and issue all works orders on behalf of production, and perhaps any
tools and fittings needed. The stores also accepts material from production, whether completed
work or scrap. The nature of production is such that emergency issues of material are always
likely to be required. It would follow from this for a factory stores that the facility should provide
a service during all times that production takes place ... including second and third shifts.
The planning of production and the correct maintenance of stocks are essential services as the
company progresses manufacture, but these tasks simply cannot sensibly proceed unless the
stores/warehouse correctly maintain stock records at a very high level of accuracy.
The stores or warehouse must prepare goods for despatch to external customers within a
turnaround time that has been agreed between its manager, the distribution manager and
transport supervision. The function of despatch includes packaging and, perhaps, making ready
all documentation.
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There may be a requirement to hold and dispense spares for machines both within the factory or
installed at customers' premises on a 24-hour basis. The stores' role in providing this service
entails call-outs ... not merely leaving a key with security.
Stock is regarded for financial purposes as a current asset of the company - ie an asset of the same
nature as cash and debtors - so that consequently Stores' maintenance of accurate records is a
vital contribution to company management. The accuracy of the records is not merely an issue at
year end when the balance sheet is being struck. On going accuracy is needed continually for
integrated financial accounting purposes.
Other important functions of the stores relate simply to the internal good management of the facility. Obvious
examples are the safe and economical handling of material; and security from fire and theft. As well, there is
a requirement to maintain stock in good condition. (It is rarely accepted, however, that the stores or
warehouse is responsible for the ordering, forecasting or replenishment of stock itself, except perhaps
inexpensive consumable items or fuel in the course of operating a simple "2-bin replenishment" system . We
must return to the question of purpose and function in the final Section of this on-line course, when the
matter is discussed as to how well the stores has performed and the need for its continuous improvement.
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Multi-storey warehouses can be successful if care is taken to 'zone' the stored material
carefully. Typical zoning schemes are: (i) high and low pick densities (see later); and
(ii) bulk stock / back-up stock / picking stock. A financial reason for single-storey is
given in the relationship between the cost of the construction, worked out in £ per
cubic metre of space obtained, and the (single storey) height to the eaves. This can be
illustrated by a graph showing how the relative cost per cubic metre of space created
falls exponentially as the overall height of a building rises. As a rough estimate, a 12
metre high building would cost only 15% more than a 6 metre building. However, a 12
metre (tall) warehouse would show major cost savings over a 6 metre (more extensive)
warehouse of the same racking capacity, with savings in land costs, rates, heating etc..
Perhaps as important as this is the resale value of the warehouse, as more and more
companies are looking for new premises and focus on buildings well over 6 m high.
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A two-stage approach can be used to work out the best system of materials handling.
First, the best or most likely range of units loads of incoming materials is determined:
size, weight, frequency etc.. This will enable the equipment to be decided that is
necessary to handle them, and the design of the receiving docks. Secondly, the unit
loads required by the company's own customers are considered, so that the equipment
needed at this end of the materials handling system can be determined. (For example,
consider the requirements to fit out a supermarket ... receiving docks and fork lift
trucks are necessary to deal with incoming cartons brought in from the retailer's
depot, and wire trolleys and trolley parks are needed to deal with the carrying away of
customers' weekly groceries to their cars.)
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Floors are always of concrete, sometimes treated with compounds to reduce slippage
and to minimise dust and grit. Specialist contractors must be employed to lay them,
capable of constructing them to the required high standards of flatness and delivering
the required degree of durability.
Flatness is especially important: if a floor is not flat, fork lift trucks will slow down
and may collide with racking. But what is flat? To answer, consider an elevation
difference of 10mm across a 1500mm aisle. Put a narrow aisle truck on the floor at
this level and raise its cab 15m. Now the 10mm difference has become a 100mm static
lean. At speed, that 100mm lean becomes a lean of 300mm. Floor flatness is specified
by BS8204 (Part 2). Floors should have an elevation difference of less than 3mm.
Flatness is measured by a prophilograph machine, which traces the floor contours
electronically. An uneven floor can be flattened by a laser-guided grinding machine,
or, alternatively, a new floor can be laid as an apron on the old one.
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Loading bays are positioned so that vehicles can have direct, unhindered access to
them without the need for complicated manoeuvring. Among other things, easy access
will speed the loading and unloading processes and may even reduce the need for
extra bays. A key decision is whether to allow for side loading or end loading of
vehicles. End loading offers many advantages. Although it restricts access to only one
part of the load, the narrower width is such that than one can get two bays in a space,
compared to one with side loading. End loading also provides better temperature
control and greater safety. (Loading bays are a particularly critical area for safety ...
25% of all industrial accidents occur in this area). Note incidentally, that clockwise
circulation of traffic up to the loading bays is required to provide better driver control
of the reversing turn into the bay. The construction of the loading bay must clearly
allow for modern materials handling equipment and practices. Doors should be 9 ft,
or a little more for higher trailers. The height of the loading bay platform must
accommodate any number of vehicle types and make allowance for the fact that
vehicle heights rise and fall during the loading and unloading processes. The usual
(very cost effective) solution nowadays is to build permanent docks levellers. As for
location, two common practices are diametrically opposed to each other. One is to
locate both the receiving and despatch bays next to each other. The other is to put
them as far apart as possible! However, with modern communications and materials
handling, it may be more effective to place bays at several points around the building
to allow direct pick-up and easy despatch by factory departments. If this is done, of
course, all such bays must be centrally controlled and berth activity supervised. The
question of how many loading/unloading bays should be provided in the construction
of the stores or warehouse can be decided best through the use of a simulation model
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as described below.
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Further vital topics which must be dealt with include those in the list below. Perhaps
the most important point, however, is that the stores should be designed, at least in
rough, by stores staff themselves - it will be realised that an inadequately planned
facility can have massive, permanent on-going effects on operational costs. For
example, failure to obtain the know-how and inside knowledge of staff may result
later in queues; excessive waiting times for drivers or shop floor operators; double
handling; and delays in clearing materials for use.
(a) Doors
For the sakes of security and to minimise heating costs, instal only those doors which
are essential. Aspects of doors to consider are from (1) to (5) as follows - or perhaps a
combinations of them is required ... (1) their speed (speed is clearly important for
doors to cold areas); (2) whether automatic control is desirable; (3) security; (4)
thermal efficiency: (5) whether specialist factors apply, such as use as fire shutters,
extra high security or heavy duty. How much traffic will use the door and what types
of traffic will it be? Alternative door types are (i) sectional insulated overhead doors
('up and over' doors, or Thermadoors), which may be standard, or normal, lift, high
lift or low lift, (ii) Rapid Roll doors. An essential accompaniment to internal doors is
either a traffic light or one-way system. (Warning klaxons are an additional
safeguard.) Door control activators should also be given attention - it is grossly
inefficient if drivers of FLTs need to dismount to open/close the door. The necessity
for high speed, insulated doors is dealt with under Cold Stores.
(b) Lighting
Ensure that the fullest possible advantage is taken of natural light, especially in
gangways and passages, so make sure shelves and racks when they are installed will
not obscure windows. (Windows of continuous glazing with wired glass.) Inadequate
lighting can make it difficult to read documents, labels and screens. Anto-glare filters
should also be considered. (On the matter of clarity of documents, ensure that bold,
clear fonts are used and that the pitch of letters and numbers is sufficiently large.)
Heavy goods, bins, safes and others may be zoned into special stores areas to be laid
out in conjunction with the main pallet racking.
These are: the boiler house; electricity sub-station; garage; fuel pumps; canteens;
toilets; car parks; first aid stations, etc..
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The following simple six step procedure can be used to find the average palletised area
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iii. Each stack occupies the area of one pallet, plus, say, 1.5 cms
overhang on each side. The area is thus 1030 mm × 1230 mm,
= 103 cm × 123 cm = 12,670 sq cm, or 1.267 sq metres per
stack.
iv. The gross area in iii. is reduced to 60% net after allowing
for aisles, staging areas and offices. Thus net area is 1.267 / .6
= 2.11 sq metres per stack.
vi. The area per case for planning purposes is therefore 2.64 /
60 square metres per case, = 0.044 square metres per case.
(For example, if stacking 2,000 cases, allow 2000 × 0.044
square metres = 88 square metres.)
Analyse existing data such as the stock records transaction trail and record the total
number of picks plus putaways per item per month. If the file holding this data is
sorted into descending order of the number of picks + putaways, it will be found that
the top 20% of the items account for 80% of the total number of picks + putaways ...
the familiar ABC effect.
From the data in (B), apply the volume of each item V. This is defined as V = T × C,
where T = the average total number of units of the item put away and withdrawn per
month and C = physical volume of each unit - ie the space occupied by one item,
measured in cubic centimetres (or cubic feet). That is, volume movement is the volume
of each item stored and picked per month. Analysis of items in descending order of
volume movement will show typically that 15% of items account for some 80% of the
total volume movement. Of equal interest to the stores planner is the fact that 50% of
the items account for less than 0.5% of the total volume movement.
If P = the average number of putaways and withdrawals per month for an item, and V
is its volume movement, then each item's pick density D = P / V. Pick density is needed
in determining storage location, as explained further below. Hint: In order to find the
volume of a small item, institute a "measuring cup" of fixed volume ( say 100 cc) and
determine how many units will fit in a cup. For large items, imagine them being in a
box, and apply a tape measure to the imaginary box.
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The stores designer today must be very conscious of the rapidity of change taking
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Storage options here means the stores or warehouse 'furniture' - the physical containers, shelving and the rest
used to contain the items being stored. Note that the term stores furniture seems to imply that the fixtures and
fittings are static and the goods within them are at rest. It is possible, however to install what is termed 'live'
storage facilities. With live storage, either the goods themselves move, or the equipment moves, or both. An
example of live storage where the goods alone move is a chute.
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Open shelving is suitable for items within strong packages, such as small boxes of
components. A working ledge at the front is typically provided for counting out items
being picked. Closed shelving usually means closed at the back and is more common.
It is suitable for non-packaged goods and can be fitted with shelf trays. Lockable
fronts may be provided. A shelving bay means a single multi-shelf construction ... ie
one unit of shelving from the equipment supplier. By bolting several bays together
side-by-side, we form a 'run'. A very strong, stable structure is formed when two runs
are bolted together back to back, and, as indicated above, runs can also be stacked in
tiers. Guidelines on shelving are contained in BS826, specifying preferred dimensions.
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The term "racking" is applied to any storage fixture that is not shelving or binning.
Racking is used for the storage of an enormous variety of goods - pallets themselves,
tyres, cables, bars, tubes, drums ... The layout of racking must be given the greatest
attention at the design stage, since the decisions made will have a considerable effect
on the utilisation of floor space (and volume) and on the speed and efficiency of
storing and picking.
A common requirement in industrial stores is for racking for bars and tubes. The
basic options are to hold the stock either horizontally or vertically. The preference is
usually for horizontal racking. This may be either pigeon hole or antler ('horn').
Pigeon hole racking consists of angle irons in which the bars are stored together. A
disadvantage of it is that mechanical handling is difficult. With the antler method, the
racking consists of a framework of angle irons, so that each bar is stored in an
individual slot like bottles in a wine rack, making mechanical handling easy.
Horizontal racking clearly demands corresponding horizontal working space, and if
this is limited compared to height, vertical racking may be preferred. Two problems
with this are (1) that the bar or tubing may become distorted due to the pressure of its
own weight; and (2) the greater safety hazard it presents.
Note that warehouse racking is regulated under the Construction (Design and
Management) Regulations ('CDM'), part of the Health & Safety at Work Act. The
CDM regulations were amended and re-issued in April 2007. Although racking in a
warehouse may seem a long way from a building site, the Health & Safety Executive
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There are a great many standard storage arrangements for pallet racking. The Stores
planner can decide on the configuration suitable for a specific need simply by
contemplating a standard layout, the type of material to be stored and the
picking/putting away rates to be achieved. Seven standard arrangements are given
below, with very brief comments on each. Their pro's and con's are summarised
below.
Unit loads are stacked on top of each other, and stored on the floor in storage lanes
("blocks"), two to ten deep. Block stacking is suitable only for a very limited number
of different items, where product quantities are large and/or where products
themselves are bulky and turnover is high. Very high storage density is achieved
though ease of access is not good. Also note that block stacking is strictly LIFO (see
below), so that if FIFO is necessary, block stacking is not a feasible option.
Single deep racking is a simple system that is associated with pallet racking for
picking faces (see Two-Step Picking later). It allows immediate access to every load
stored. A major disadvantage, however, is the loss of some 60% of floor space to aisles.
Double deep pallet racking is merely an extension of single with less loss of space to
aisles (but with more honeycombing).
The racking consists of upright columns with horizontal rails to support pallets.
Storage lanes of the chosen depth reduce space lost to aisles even more. High density,
but suitable only for low/ medium thruput items. LIFO only. Drive thru merely means
access from two sides.
This superior though expensive system is similar to Drive In Racking, except that
loads are moved on skate wheel conveyors. As a load is removed from the front of the
storage lane, the next lane advances to the picking face. Pallet flow racking gives high
throughput and good space utilisation, and permits FIFO. It is used for high density,
high thruput storage, but costs some £200 per storage position.
As a load is placed in storage, its weight and the force of the FLT (fork lift truck)
pushes back the other loads in the lane. As a load is removed, the rear loads push
forward. Expensive and LIFO.
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Safety is a most important concern with all racking. Training must be given by the
equipment manufacturer and the greatest care exercised to ensure loads are evenly
distributed and that they never exceed the manufacturer's limits. Operating conditions
must also be satisfactory, such as lighting and working space, and the racking
installation must be rigorously inspected on a regular basis, not simply when someone
'notices something is wrong'... For Racking Safety Trainining, visit SESS.
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The first task is to obtain and analyse the volume movement of all items so that the correct storage capacity
can duly be assigned to the items to be stored. The four principles which the planner will typically follow are:
These items should be assigned to very productive, low volume storage media - for
example, carousels (see below).
Expensive storage media cannot be justified for these items. The media selected for
them will be storage drawers and bin shelving.
These items must be stored in pallet racking systems that lend themselves to frequent
picking and restocking, such as flow racks and single deep racking.
Consideration should be given to the relative merits of the seven types of pallet racking described in the
previous sub-session. The characteristics and appropriateness of the seven systems are summarised in the
following table.
....................................Cost .Storage Density .Load Access .Thruput Capacity .FIFO? Variabl Load Sizes?
Stacking Frames....................low..............good...............................poor.................................poor.....................n.............................poor
Flow Racks..............................high..............good............................good.................................v.good..................yes............................poor
Push Bk...................................high...............good.............................v.good...........................average..............difficult...................average
Mobile.......................................high..............v.good............................poor................................v.poor...................no.........................average
As we see from the table, both relative volume movement and relative picking popularity are taken into
account in working out required storage volume and determining the specific storage media to be installed.
Relative volume movement and relative popularity are consequently taken into account in determining where
"regions" of stock and storage media are to be located. In short, where both volume movement and
popularity are high, flow racking might be best. Where volume movement is low, then we might turn to (1)
storage draws (low popularity); (2) bins and shelves (medium popularity); and (3) carousels (high popularity).
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For a very small number of special items, the decision as to which locations they are to be assigned for storage
will be made on an individual basis. For example, precious metals will be located in safes and material likely
to give off fumes will be located in well ventilated areas. The decisions for the great majority of items within a
general storage region, however, will be made after first considering how easy (quick) it is to put away into, or
pick from, those locations. In stores jargon, the locations where these activities may most easily be
accomplished are referred to as "the golden zone" - locations which are between waist and shoulder high, and
are close to a central point in the stores. Next come locations in the "the silver zone". Finally, the slowest and
most distant locations make up "the bronze zone". Nominating locations and zones is the first task in deciding
what to put where.
At first thought, it seems intuitive that the criterion for deciding which items are to be assigned to the golden
zone should be on the basis of their popularity. However, popularity alone ignores the fact that the stores
planner is trying to optimise the use of the golden zone, and that consequently he should also take into
account how much space is taken up by items. What he wishes to do is to maximise the degree of picking that
takes place there. Consequently, the notion of pick density, previously defined, must be examined further.
As previously stated, if P = the average number of putaways and withdrawals per month for an item (ie
popularity) , and V is its volume movement, then each item's pick density D = P / V.
The planner must calculate the pick density of each item within a stores region and allocate the group of items
with the highest pick densities to the golden zone, the group with next highest pick densities to the silver zone
and those with the lowest densities to the bronze zone.
To illustrate the optimisation of golden zone space, consider a simple example of a golden zone of just 10
cubic meters of space. Now consider three items A, B and C, with the attributes shown in the table below.
Suppose now that we decide to store one months supply of material in the golden zone. If we were to allocate
Item A to the zone on the basis of highest popularity, this will exhaust the capacity of the zone and the
number of visits we will get to it will be 200. If , however, we use the basis of pick density, the items assigned
to the golden zone will be C and then B. Together, these will exhaust the zone's capacity of 10 m3 (ie 6 + 4 =
10) and the number of visits we will get will be 270 (150 + 120). The use of pick density instead of popularity
in allocating items will make a significant difference to the stores' utilisation of prime space.
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The dominant scheme for the layout of the facility is as a U-shaped flow. The advantages of a U-flow are as
follows:
* There is very good utilisation of dock resources (doors, dock levellers, space, goods
in/out staff), since receiving and despatch operations can share docks;
* U-flow makes cross docking easier, and also facilitates the immediate onward
movement of incoming Just-in-Time supplies to the factory floor;
* U-flow gives excellent FLT utilisation, since putaway and picking trips can be
combined;
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* U-flow design is inherently more flexible - it is easier to expand the various facility
areas as operations change.
Other layout schemes are "Straight Through" (for distribution depots) and "Modular Spine".
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Simulation is an immensely powerful tool in warehouse design and warehouse development for providing
answers to such questions as "how many FLTs should be deployed?", "How many cranes?", "What would be
the effect of a conveyor system covering these locations?" Simulation is particularly useful in warehousing
since it incorporates the mathematics of queuing theory in order to test the effect of likely activity. For
example, "How long will vehicles wait to unload by mid-morning, and how many extra docks should be
provided to reduce these queuing times by 75% ?" Virtually every company planning and building a new
warehouse will have used simulation in order to do so. Recent past users of simulation have included Boots, in
building a complete distribution/logistics system, and Littlewoods Home Shopping, for a £40m distribution
centre eventually incorporating 18 cranes and 350, 000 locations. The main benefits reported were:
The ability to test and compare the performance of alternative scenarios put forward
at the 'ideas stage' of the projects;
The use of simulation requires the building of a computer model of the proposed facility or proposed change -
vehicles, traffic, routes, times, loads etc.. Nowadays, easy-to-use systems which incorporate interactive
animation can easily to built by anyone. The completed models incorporate animation and realism, with the
advantages that people at all levels are quickly able to grasp what is being proposed, and (through
interaction) are able to input their own ideas or get detailed information about what is being shown on the
VDU. For example, by clicking on a fork lift truck in the picture, statistics can be obtained about its
percentage use, distance travelled etc, in operating the warehouse over, say, a specified hour. The training
needed to use an animated simulation package sufficiently well to obtain good results is just a few days. In
reality, users must spend most of the time fact finding, discussing alternatives with colleagues and deciding
objectives. (As a hint, if the student of this course engages the service of a simulation consultancy, perhaps
paying fees in accordance with the time spent, it is essential to find out beforehand precisely what data needs
to be provided, and to have such data readily to hand.) The foremost interactive animated simulation package
in the UK principally aimed at warehousing is Automod, and its sister module Autostat, from Brooks
Software, Reading. Visit http://www.automod.com or phone 0118-921-5600.
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Automation is costly and the more flexible and extensive in design it needs to be, the more costly it gets.
Consequently, there are four important requirements to consider before embarking on it, as follows. There
must be .....
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A. Technical Overambition.
It was not unknown for the design of early systems to take two or three years to
complete. The designers of the automated system moreover then required that every
movement should be as perfectly meshed in the real world as on paper. Mechanical
devices, however, break down. The scale of early warehouse projects was greater than
experience showed to be practical.
B. Logical Overambition.
In order to automate the warehouse fully, it is necessary for software designers and
programmers to understand and describe its operations fully. Computer programs
must be written and database data properly set up. But many of the activities in the
manual warehouse are simply too involved to describe, and must of necessity rely on
human knowhow and intuition, which cannot be programmed.
To achieve success and avoid the mistakes of the past, five guidelines are put forward.
1. Islands of Automation.
The obligations of the automated equipment supplier are not confined merely to the
customer's experience with the technology. He must liaise closely with the customer
as part of a team in setting up training schemes and seeing to other matters (eg in
developing manuals). By the same token, the customer must realise that he also has an
obligation to cooperate fully with the supplier.
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and hard work. (These lessons have long been known in the field of big project
development).
5. Partial Automation.
The stores or warehouse supervisor should contemplate partial automation only ... the
installation, say, of AGVs, carousels, automatic weighing machines, labelling etc, each
installed only as and when its use seems to be individually justified on a strictly local
basis.
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For identification, classification and computer purposes, each unique item in the stores must be assigned a
unique code. Together, the codes and each code's associated information, such as the item's name and other
major features, are known as the stores' vocabulary. One obvious property of a coding system is that the codes
generated through it should be consistent. In fact, codes are often made up using a "hierarchical approach",
based on the particular types of goods in store. An example is the assignment of a 6 figure numeric code (ie
NNNNNN), where the 1st digit is the type of material (ie raw material, component, piece part ...), the 2nd is
'metal' or 'non-metal', the 3rd is type of metal, the 4th the form ('rod', 'tube', 'ingot' ...), the 5th the shape and
the 6th the size. (A well-established methodology is the Brisch system, which is a means by which a company
can put together a coding set itself, geared to its own use.)
For the stores, there are two vital coding issues: memorability and meaning.
Memorability means that the code can be copied down or transcribed onto transactions easily and with
consistent correctness. (Incorrect recording is a major cause of error in stock records.) It has been shown that
to achieve memorability the maximum length of a code should be 7 digits (and 6 would be better - but very
definitely not 8 or longer, unless a barcode or RFID reading system is in place).
The question of incorporating meaning into the code is more difficult. First, it should be said that there is very
obvious merit in keeping to the same coding as used by production and purchasing. However, the general
company scheme may not be best for the stores since it is desirable in this environment for the storeman to be
able to tell from the code that the material he is about to pick or place has certain properties. For example,
suppose that a material which was subject to special quality procedures (QP) had to be handled within the
stores in a certain way. The fact that the material is a "QP" can be stored on the database so that special
instructions are displayed as necessary by the computer system. But to be safe, it may be desirable to include
this on the code itself, so that storemen can recognise it on occasions not involving the computer. A second
example relates to packaging. It may be logically correct to designate the 50kg Box Packet as 01, the 50kg Soft
Packet as 02, the 100kg Box Packet as 03 and 100kg Soft as 04. But it may be safer to code them B50, S50,
B100 and S100 to prevent errors during the physical act of picking. All the attributes of a material qualified
by its package can be maintained on the database internally, available to the storesmen through computer
programs. But it may be necessary to incorporate a number of these classifications in the visible code itself to
help staff in the operational side of their jobs. If so, the risk then arises, of course, of making the code more
unwieldy from the viewpoint of memorability!
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Batch.
'Batch' processing means that data events are progressively recorded through some
medium (whether paper forms or an electronic recording collector) and the records
then input to the computer all together. That is, the original data are deliberately held
back from being input to the computer until a reasonable quantity of information has
been collected, so that input, although efficient, is made usually several hours after the
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On-line.
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Data recorders:
These are hand-held devices which incorporate a small VDU screen, plus a
tiny keyboard (say, 3"). More importantly, they are able to communicate
directly, on-line, with the computer via a radio signal - ie a cable is not
required. Data recorders and RDTs can optionally have bar code scanners
attached and some models are suitable for rugged or hostile environments.
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Voice directed picking is a highly effective and increasingly popular technology that
has many advantages in both stores and warehouse operations. With 'voice', workers
wear a headset, earphones and a belt-attached portable computer which enable them
to hear instructions from the computer and to speak words of confirmation as to
action taken - below under Order Picking.
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1.9.4 Communications
Electronic Data Interchange (EDI): This medium is perhaps being eclipsed by the
Internet. The term EDI refers simply to the creation of data by one computer, in
computer readable form, and its acceptance directly by a second computer. Usually,
the transfer of data is through a data network known as a Value Added Network
(VAN). The sending company transmits the data with the code of the intended
recipient company. The data is stored on the VAN operator's computer at the nearest
position to the receiver. The receiving company scans the VAN computer at times
convenient to itself for any messages addressed to it. Local networks mean in-house
networks communicating via coaxial cable laid in the premises. Wideband networks
are inter-site, and are capable of carrying vastly greater volumes of data traffic. They
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are typically provided by BT between specified major towns and cities. The Internet is
a communication medium based simply on ordinary, existing telephone cabling, and
has the consequent virtue of being cheap. Direct access between a distribution depot
and a central warehouse is via a local telephone call using simple software. Both text
and graphics can transmitted and received.
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Computerised weighing machines. A sample scale can be used to find the 'mean', or
average, unit weight of a product, and the average then stored on a computer. Large
electronic scales are subsequently employed to weigh the main stock entering the
stores or warehouse, with direct links to the computer database holding the unit
weight. Care must be taken to account correctly for the container weight, referred to
as the "tare", and to ensure the items' weight is not distorted by oil, wetness etc. Other
devices of value are simple weighbridges, non-computer weighing scales, calipers and
micrometers. In the process industries, bulk liquids are measured by flowmeters or
even simple dip tapes and dip sticks. Many methods used for measuring liquids are
acknowledged as being problematical, with comparatively wide tolerances arising
inherent in the techniques themselves. Problems may be compounded by the need to
take the temperature of the liquid, and the further need to assume the temperature is
uniform throughout the material's bulk.
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Bar Codes
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Bar coding in the stores or warehouse is not always successful even when those
attempting its implementation have carefully assessed that it will be. There are three
issues.
If bar coding works well and easily, without a continual struggle to keep it going, there
are two advantages to its use. First, self-evidently, material and location codes are
read correctly and more easily. Secondly, the reading process ensures that each
transaction relating to an activity is indeed raised, and is not forgotten, and that it is
then input to the computer system in a timely manner. (Missing transactions are a
major source of error in attempting to achieve high stock records accuracy.)
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By 'identification' is meant the attachment of a small "tag" bearing the code and
much other data of what is to be identified, and the subsequent reading of the tag code
and data at some later stage by a tag reader. The physical tag attached to the object
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may commonly be a label, in a flat, thin, flexible ticket or may take other forms
depending on the application to hand. Important attributes of tags are that they are
robust and capable of functioning in extremely harsh environments and that they are
reusable and can last for many years. The code and other data associated with the tag
is read by a special tag interrogator, a primary function of the interrogator, or reader,
being to excite a component within the tag termed its antenna. Although the
technology associated with RFID tags and interrogators is changing rapidly, as at the
date of this on-line course (2006), the microchip incorporated in the tag 'structure' is
likely to be a silicon microprocessor and the antenna formed from conductive carbon
ink. The silicon chip will be attached to carbon - ink electrodes at the back of the
paper label. (Labels are referred to as smart labels.) Note particularly in RFID tags
that a battery may be incorporated into the tag - that is, a tag may have a small
lithium battery to boost power. Tags with batteries are referred to as active tags and
without as passive tags. Power is transmitted to the tag in the first place from an electric
field created by the tag interrogator. Data is transferred from the tag to the
interrogator through the modulation by the tag of the interrogator signal. With their
extra power, active tags are able to communicate with an interrogator over
considerably greater distances than passive tags (many thousands of feet rather than
only tens of feet). Active tags are also capable of carrying and conveying greater
amounts of data (thousands of bits rather than tens). Not surprisingly, however, active
tags are more expensive. Cost is currently a major issue in RFID technology,
especially as it concerns its widespread adoption in retail.
A critical milestone in the practicality and acceptability of RFID technology has been
the adoption in late 2005 of the GEN2 data technology standard and the ALE standard.
GEN2 governs the basic tag reading technology essential to the production of tags
themselves and tag readers. ALE deals with the collection, management and routing
of data; it addresses the problem of huge amounts of raw data generated by RFID
readers - readers can make multiple readings of the same tag in a fraction of second,
so that this "dirty data" must be filtered. In summary the key benefits of GEN2 and
ALE are the ability to read RFID tags quickly and simultaneously.
Finally, and most importantly, we see from the technical nature of the interaction
between the RFID interrogator and the RFID tag, that two major advantages lie with the
technology and distinguish it from bar coding.
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In order to commence a move to RFID, the stores supervisor might first attend a one-
day course on the subject held at the DTI's RFID Research Centre in Bracknell,
Berks.. Further details are obtainable at the Research Centre's website at
http://www.rfidc.com. In addition, it is possible to see RFID in action at an RFID
demonstration site run by Unipart Logistics and others at Oxford. Two consultancies
expert in RFID are Manhattan Associates and Davies & Robson.
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1.10.1 Stockyards
Construction
The stockyard must be sited with immediate access to adequate roads capable of
taking heavy lorries. If it is to be accessed by rail, railway lines should be sunk to
ground level. And if so, if possible, a single line to a deadend in the yard should be
avoided because of subsequent queuing problems. Beyond this, stockyards are cheap
to construct, amounting merely to expenditure on barbed wire or other fencing, plus
the required surfacing. Surfacing will depend on the loads to be stored. In order of
rising cost, they are: Gravel or Ashes - this will not support heavy loads and heavy
traffic in bad weather; Tarmac - popular, though liable to damage and 3 times more
expensive than gravel; and Concrete - 5 times more expensive than gravel, but suitable
for all loads in all weathers. The most important additional feature is adequate
drainage to disperse rain water - even long life building materials are damaged by
constant contact with standing water.
The gatehouse is the nerve centre for all documentation including the overall company
stock records system. A very minimum requirement is connection to the central office
by phone and fax. Better, even for small stockyards, is a proper telecommunication
link, perhaps involving RDTs. Points to watch in respect of organisation are:
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(a) the establishment of a proper location system, with ground areas coded by alley
ways and local areas, perhaps being marked out by posts;
(c) measures to prevent trespassers, especially children, from entering the area - the
company is liable if children manage to gain access and subsequently come to harm;
(e) setting up an efficient one-way system for traffic, with good signposting;
(f) ensuring that there is supervision during all opening hours, including meal breaks;
(g) neatness and tidyness must prevail to minimise the risk of accidents;
(h) the stock must be cycle counted on a regular basis. Note that it is not unknown in
poorly managed stockyards for corners of stock to become isolated and forgotten.
(i) Remember the effect of weather on signs and, especially, labels. Even plastic labels
can become unreadable after a time, and routine label replacement may be necessary.
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The cost of building a cold stores is about 3 times that of an ambient store. A second
considerable cost is the cost of running the store (and the colder, the more costly): this
must be balanced by the cost that would otherwise be suffered from the deterioration
of the product. As well, temperature controlled vehicles are expensive. The
temperatures needed for the degree of cold clearly depends on what is to be stored.
Thus:
The critical factor in the operation of a cold store is the activity taking place at the
door. If warm air is allowed to enter the building, ice will form and will be costly to
remove. Solutions to the problem are the installation of a conveyor tunnels; air locks;
and fast acting insulated doors. (A well-known vendor of high speed, insulated doors
is Hormann, in Leicester; Hormann have developed the DOBO docking system,
whereby docking takes place before opening.) A related problem in cold stores is
condensation. Excessive condensation can form on the product and damage it. To
avoid this, loads are best removed in small quantities, with immediate protection using
moisture-proof covers. Note that it is common practice that storemen in cold stores
take a 15 minute break per hour. The most careful watch must be kept on racking,
fixtures and fork lift trucks continually exposed to the cold. Steel can become brittle
and dangerous. (FLTs bought new and destined to work in cold stores are in fact
modified by manufacturers). Repairs to racking are also a problem - oxyacetylene
welding is not undertaken, since welds become eutectic and break. Instead, bolted
racking is used. Repairs to a floor also present difficulties, since there is usually a need
to raise its temperature to effect them. Care must also be taken in product stacking - it
is essential that air should be allowed to circulate the product stored.
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Having a knowledge of the materials that are handled and stored are core requirements of the storeman or
warehouseman. "Knowledge" means knowledge of the materials' sources and suppliers; any special
circumstances in their manufacture; their technical characteristics; methods of measurement; how their
quality is assessed; and the uses to which the materials are put.
The simplest and most reliable scheme that the stores supervisor can adopt for protecting the material in the
store's care is surely adoption of a policy of FIFO (First in - First out). FIFO ensures that the oldest stock is
used first so that it has less chance of deterioration due to the passage of time. Identification of the oldest
material, however, may not always be easy when the storeman comes to make a withdrawal, especially in a
fixed location store. Three methods for doing so are:
(a) Since the stock recording system tracks the dates stock was put away, picking
instructions might be issued taking account of the age of stock to be removed;
(b) When stock is originally stored, its putaway date or batch sequence number should
be clearly marked;
(c) If material is particularly sensitive to deterioration due to time, the medium chosen
for its storage should be geared to enable FIFO to be accomplished readily. For
example, stored objects may be placed at one end of a long bin, and removed by access
to the far end of the bin, the material in the bin being pulled along on rollers (ie live
storage). For any storage medium, staff must be trained to put material away
supermarket style - ie the newest to the back.
For legal, traceability and safety reasons, some types of material must be separated by technical/production
batch. Familiar examples are foodstuffs, pharmaceuticals and parts used in aircraft manufacture. (There may
also be a requirement for traceability under ISO 9000.) Since the batch identification data includes the
storage date, FIFO picking instructions are generally straightforward in such instances.
The stores supervisor is not the only manager who can contribute to reducing the threat of time's passage to
the condition of stock. In todays manufacturing environment, "lean production" techniques which greatly
reduce stock holding can make an even greater contribution than FIFO. For example, purchasing department
must recognise that excessive purchasing lot sizes are expensive and that the cost of stock holding is over 25%
per annum of the value of material held. And the production manager can get smarter in the scheduling of
work, and can vastly reduce production lot sizes by the adoption of fast machine changeover techniques
(which make it more economic to manufacture small lots).
Time is not the only enemy of stock. Others are damp, dust, physical damage and sunlight, usually in that
order, and action to avoid these perils must be taken accordingly. For example, protective coatings of grease
or oil might be applied, or the items might be stored in damp-proof and rigid containers, perhaps in small
quantities for easier, damage-free issue. Potatoes and other items may be stored in humidified warehouses*.
Other examples of protection are the storing of electronic components to ensure that they are not harmed by
magnetic fields or X-rays, the protection of certain agricultural goods by dusting them with insecticide and
anti-fungus powder, and the stacking of timber in an interleaved fashion to permit the circulation of air.
Finally, the safe storage of some goods predominates the whole stores operation. Two examples are the
storage of explosives, requiring a police certificate, and the storage of petroleum, requiring a local authority
certificate. (* One result of storing potatoes in humidified warehouses is to increase their weight, and also
increase their value if eventual payment is calculated by weight.)
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There are some 50m pallets in use in the UK, the majority made of wood from the
Portugese Maritime Pine, a wood harvested nowadays literally as a crop. The pallet is
designed for use with the fork lift truck. The load carrying capacity of the pallet is
determined by its design, construction and weight. The more wood, the stronger the
pallet. When pallets are first bought, a maximum load bearing capacity and the
operating environment in which it is to be used are specified; it is dangerous and
illegal to exceed the specifications.
Plastic pallets are also used, as well as wooden pallets. An advantage of plastic pallets
is that they are capable of easy, thorough cleaning and disinfection. (For that reason,
their use may be insisted on by food manufacturers). Before choosing plastic pallets,
an assessment should be made of the damage likely to be incurred to them due to
stress in loading and unloading operations. For example, pallets made of hollow
plastic may rupture, leading to the ingress of water and dirt. Consideration should
also be given the effect on plastic of conditions of storage: temperatures below -20C
may lead to cracking and fractures, with the implications this has for safety.
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The most critical and distinctive feature of a pallet is its "footprint" - ie its width x
breadth. In UK industry, the standard pallet load platform is 1000mm × 1200mm. As
a consequence, what is created de facto is the standardisation of the loads carried.
Such standard loads are referred to as unit loads - ie individual loaded pallets, built
up, perhaps, from separate packages in the form of a rectangular block, handled as a
single lot and capable of being stacked onto other similarly palletised unit loads. A
major consequence is that the provision for their handling from one company to the
next by standard equipment is easily accommodated. Complete standardisation of unit
loads in terms of their dimensions and maximum weights is referred to as unitisation.
(Unitisation exists in the grocery supply chain all the way from grocery
manufacturers' factories to the retailers' local depots.) A further form of unit load and
unitisation is one based on a standard ISO container, this being 8' wide and 8' high,
and one of four standard lengths (10', 20', 30' and 40'). Container handling also
entails standard equipment - end loaders, side loaders, straddle carriers, gantry
cranes etc..
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By far the biggest issue relating to wooden pallets is that of their loss. Because they are
so widely used, many staff see them as common property. Indeed, certain
organisations operate pallet "pools" through which they are interchangeably swapped.
But common property has a knack of sticking to some firms and disappearing from
others. It is not uncommon for a very large company to appoint a full time "pallet
officer" - usually a young manager of the investigative type. Hints and tips to reduce
pallet loss are:
(1) to take the problem seriously - measure and report pallet expenditure
and loss, and keep up the pressure;
(2) to mark all pallets Property of the ABC Company if they are not to be
swapped via a pallet pool. This is the only sound identification legally;
(3) to make staff responsible for pallets that they remove from the
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premises - drivers carrying palletised loads, for example, must know they
are expected to account for their returns.
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While much attention in the past has been paid to individual package design, often
little has been spared for the way those packages are stacked on pallets or how they
can be packed better in standard outer cases. One software package that addresses the
problem is CAPE PACK. This consists of a number of modules for showing how
pallets are to be stacked (the 'Palletise' module), how boxes and containers are to be
filled (the Boxfill module), how boxes might be redefined for better stacking and
filling (the Packfill module) and how new packaging requirements should be designed
(the Cellsize module). There are other features as well, including 'Display Pallet',
giving a 3D ‘inside' view of the proposed stacking of boxes etc.. CAPE PACK is sold
by Cape Systems Ltd. (phone 020-8752-8610).
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2.3 Packaging
The principal functions of packaging are given below. In considering them, it should
be noted very obviously that storage facilities and methods of transport also help
determine packaging specifications, as well as the protection itself of the goods to be
carried. In considering the functions, the packaging technologist must assess the
trade-off between factors - for example, the best protection against damage may
involve too great a bulk and too high an increase in haulage weight. Thus: (1).
Protection of the Goods (Environment): this may be especially exacting when material
is being sent to "deep sea" markets - into cold Canadian winters or to Thailand in the
monsoon season. (2). Protection of the Goods (Transport): Fragile goods may require
specific purpose packages with internal package clamps, protective frames, cross
pieces and polyester foam cut-outs in the shape of the product. (3) Handling: this
includes palletisation so that packages can be stacked in a single (ie unit) load. (4).
Recognition: it should be possible for customers to recognise goods quickly and
without error, especially as companies move to more frequent deliveries of smaller
quantities. (So-called "shop ready" packaging is also becoming increasingly
demanded by retail customers.) Counting multiple items within a package is also
important from the viewpoint of stock records accuracy. Finally, there is the question
of advertising and appearance. Students of this on-line course with a special interest in
packaging may care to join The Institute of Packaging, phone 01476-514590. The IOP
have a diploma in packaging technology, and corresponding training schemes.
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The packaging waste regulations became law in 1997 and were forced on the UK by
the hated European Union. They were intended to reduce the effect of packaging
waste on the environment. The targets set are as follows: recovery (including energy
recovery and compost), 50% - 65%; and recycling: 25% - 45% (at least 15% by
weight of each individual package material to be recycled. Five terms should first be
defined, as follows.
Companies which are required to take action with regard to the regulations are
known by the Environment Protection Agency or Scottish Environment Protection
Agency (SEPA) as obligated producers. By "producer" is meant any organisation
which creates or supplies packaging somewhere along the supply chain to the final
consumer. Examples are the manufacturers of bubble wrapping, manufacturers of
plastic granules, a company filling bottles or cans with drinks or, say, a company
making and wrapping sandwiches. Different targets, termed activity obligations, have
been set for companies depending on their roles in the supply chain as follows:
converters 11%;
retailers 47%.
For example, suppose a company produces 400 tonnes of steel sheet per annum. Its
obligation under the Regulations would be to recover 400 tonnes × 6% (raw material
manufacturing) × 38% (recovery target) = 9.12 tonnes per annum.
Obligated companies are required: (1) to register direct with the Agency or join a
scheme (see below); (2) to provide it with data; (3) to recover or recycle their target of
packaging, or obligation, as above; and (4) to furnish proof of their compliance.
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by way of the aggregated totals for all their members. Two 'popular' national schemes
are VALPAK and Waste pak. There is also a dairy industry scheme called DIFPAK.
Note that obligations under the regulations are also incurred by importers ... that is, a
company must take on the responsibilities of others in the supply chain outside the
UK. Since their introduction, in true EU fashion, the regulations have actually
reduced the amount of recycling in the UK.
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2.4.1 Introduction
The scope and sophistication of equipment available for materials handling are now
very considerable, and devices are sold by a large, keen, specialised supplier market.
To assist him in keeping abreast of developments, it is suggested that the storesman or
warehouseman should very definitely take and read one monthly magazine in this
field. An example might be ShD (Storage, handling, Distribution). To obtain a free
copy of ShD, complete and submit the form at the magazine's website. For all this, the
natural way of handling materials that are not 'too heavy' is manually. Recognising
the efficiency and cheapness of manual handling, proof should be demanded why it
cannot be used, before turning to mechanical handling, and consideration should be
given to assisting the manual handling process. Examples of ways in which manual
handling might be made easier are (1) giving attention to the handleability of
packages, including those from suppliers; (2) provided waste is not thereby created,
ordering bar and tube in shorter lengths; (3) using box pallets or storing small
components in tote boxes.
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Devices include multiple tines with hydraulic pads for bricks and concrete blocks,
tipper forks and many others. Clamps constitute the largest family. Examples of such
equipment include: rotating paper reel clamps; mechanical clamps for drums;
hydraulic squeeze clamp; an hydraulic clamp for a drum; mechanically operated
overhead concrete block clamps; and hydraulic bale clamps to squeeze soft loads such
as wool.
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By far the most common device in this category is the electric fork lift truck. Because
of the absence of fumes and hydrocarbon fuel, it is particularly suitable for use in an
indoor, confined space. In fact, there are number of means for powering the FLT,
depending on the truck's desired nominal lift capacity .... for example, diesel and LPG
are typically used in stockyards and other outdoor areas. Ranges of power are: (1) up
to 1 tonne, electric FLT; (2) from 1 to 4 tonnes, electric, diesel or LPG; (3) from 4 to 6
tonnes, diesel or LPG; (4) over 6 tonnes, diesel. Note that for the electric FLT, with the
use of heavy-duty batteries, batteries must be recharged nightly. Otherwise, there is
little difficulty in starting them up, and drivers should be encouraged to switch them
off at the end of their shifts. The lifting principles of the fork lift truck are that the
weight of the truck is is at the rear, and counterbalances the load lifted through the
'forks' of the truck at the front. Visit The Fork Lift Truck Association website. As well
as the conventional FLT, we also find ... (1) reach trucks. Reach trucks operate by
having the forks within the wheelbase of the truck when moving. The forks move out
when material is to be stored or removed. Their advantage is in saving gangway space.
Variations to the reach truck are (2) the side-loading truck (the forks emerge from the
sides) and (3) the turret truck. With turret trucks, the forks rotate 90 degrees on a
masthead. Loads are carried along aisles and gangways as with conventional FLTs
and are then swung 90 degrees for putting away on the racking. FLT attachments
include clamp jaws, booms, hooks and other devices as discussed above.
Driver Regulations
Driving hours are subject both to British regulations and EU regulations. The EU
limits are: daily driving, max. 9 hours (but two shifts of 10 hours in a week are
permitted); per fortnight, max. 90 hours. There must be a weekly rest after 6 driving
periods, and a 45 minute break after 4.5 hours (this can be split into several periods).
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2.4.5 Cranes
Overhead electric cranes may typically have 5 or 10 tonnes capacity, and be either
controlled from the floor (the controller walking besides the crane) or controlled from
a cab slung on the crane bridge. 'Goliath' cranes travel along tracks laid along a (very
stout) structure on two opposite sides of a factory floor or a dock road. There are also
stacker cranes and mobile jib cranes, the latter mounted, perhaps, on a vehicle.
Usually, the driver/picker rises with the truck. They may comprise front or side-
loading forks and cage arrangements round the pallet on which the stock picker can
walk.
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Conveyors are widely used in stores. They are especially successful when large
numbers of small items have to be moved quickly and regularly to a certain point.
Clearly conveyor systems might have been more appropriately discussed in Section 1,
since they should be designed in conjunction with the racking or binning layout. An
example of a conveyor arrangement is a fishbone layout. That is, a main conveyor
travels down the middle of the facility and subsidiary conveyors at each side feed it.
The racking in this case is also a fish-bone, being laid out along the sides of the
subsidiary conveyors. The conveyors themselves may be powered rollers, powered
belts, overhead tow lines and sub-floor tow lines.
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4. Small stores should know their limits (ie they should not
undertake moves they have no experience of);
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Handling a load twice when it should be handled once only clearly increases the
operational load on the stores or warehouse unnecessarily. Typical causes are as
follows:
Equipment Maintenance
Finally, note that the subject of materials handling includes care and operator
maintenance of equipment. Full-scale equipment maintenance by the company's
engineering maintenance section is clearly also a most vital activity. Service and
inspection should be regular, and records must be kept of them and of any repairs and
replacements. Individual items of equipment should be marked with a unique
company id number. An unconnected point is the placing of identifying plates over the
controls of each item of equipment.
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Note that manufacturers and suppliers of 'hazardous goods' are required to classify,
package and provide information on substances listed in the Chemical (Hazard
Information and Packaging for Supply) Regulations 2002. As well, The Transport of
Dangerous Goods (Safety Advisers) Regulations 1999 stipulate the requirements for the
movement of dangerous goods by road, rail and inland waterways. The regulations
make employers responsible for loading, transport and unloading of dangerous goods
and requires them to have a sufficient number of qualified safety advisers to 'sign off'
and supervise the loading and unloading of the goods.
2.5.2 Road
By far the greatest advantage of this mode of transport is that it offers a door to door
service, with goods remaining on the vehicle. Road transport services are frequently
hired on an occasional basis, from a national pool of many thousands of common
carriers. The transport by road of goods into Europe is typically by trailer or in 12
metre containers Although part loads can be despatched, either a haulage contractor
or a freight forwarding agent (see below) may undertake to combine the company's
own consignment with those of other customers in an arrangement referred to as
groupage. Full loads may then proceed to a roll on - roll off ("ro-ro") ferry, to a
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2.5.3 Rail
The despatch of goods by this mode usually requires either that our own factory and
that of the customer are directly connected to the railway network or that rail links
which are not strictly part of the national rail network are specially built to connect
the supplier and/or buyer to the network (as with steel factories or national breweries,
for example), or that supplementary road operations provide the required network
links at extra cost. Rail truly comes into its own for the transport of heavy, cheap
goods: coal and coke; petroleum products; and chemicals and aggregates.
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2.5.4 Ship
The term for ocean going shipping to markets other than Europe or Ireland is deep
sea transport. The vast proportion of goods to be conveyed by deep sea, other than
bulk material, will be loaded in ISO (ie standard) containers on container vessels. The
operation begins when a gantry crane or straddle carrier loads an empty container
onto a vehicle at a container base. This is then moved to the company's premises,
where it is loaded, sealed and returned to the base. It is then transported by vehicle or
by container train to a container port, where a container crane lifts it into a specially
built slot within the vessel. At the destination port, the process is reversed.
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2.5.5 Air
The main air freighting services available are: (1) direct: goods, flown out on the next
flight; (2) consolidation, in which: airlines and agents build up an air pallet load from
various suppliers' goods, and despatch the pallet either when it is full or at a published
frequency; and (3) deferred: the airline undertakes to despatch goods when there is
surplus capacity. This service is cheaper, but there is no certainty when the despatch
is to be made. The two types of aircraft used for these air services are: (1) passenger
aircraft, which can carry limited cargo, and (2) cargo aircraft devoted to cargo. There
are few routes which justify the operation of cargo aircraft only. When airfreight
despatches are made, there are very precise regulations issued by IATA, the
international air transport authority. IATA classifies goods as: (1) not admissible; (2)
admissible on cargo aircraft only; (3) admissable on passenger aircraft, but only in
limited amounts; and (4) admissible on passenger aircraft without restriction. In
practice, a large proportion of goods are carried in passenger aircraft. But because
these give priority to passengers and their baggage, there are many occasions when
cargo is shut out at the last moment.
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forwarding agents will also advise on required documentation and can act as local
intermediaries with customs officials. The costs of a freight forwarder's services are
generally covered by commissions and margins obtained by him from the carrying
companies he engages on behalf of his clients.
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Computers hold maps and can be used to plan a single route to a specified destination
- there are several such 'sat nav' systems on the market, which are also used widely in
private cars. What is less well understood is that computer packages can also be used
to plan the shortest total distance for several vehicles distributing material on a single
day. The routes that the computer plans are not the same as would be planned
separately for each vehicle in isolation. In other words, suppose two routes were
planned separately for two vehicles to (say) 10 customer each, and each route so
planned was, say, 100 miles. If a route planning package now planned the two routes
together, it would come up with two different routes for each vehicle from before, and
the total distance would be about 180 miles (ie some 20% shorter than the previous
total of 200 miles). The principle by which the software works is referred to as the
Savings Criterion. Thus consider a Factory F and two customers C1 and C2, with
distances from F of 'a' miles and 'b' miles. With 2 trips, the distance travelled to C1
and C2 is clearly (2a + 2b). With 1 trip, the distance is (a + b + x), where x is the
distance between C1 and C2. Thus the savings by making only 1 trip = (a + b) - x. The
savings by combining the two trips will be greater the further away the customers are
from the factory and/or the closer the two customers are together - that is when (a + b)
is large and/or x is small, or both. Because of this, the transport routes worked out by
computer packages tend to assume a 'petal' shape, with elongated shapes. Packages
also allow the transport planner to incorporate special constraints which meet
requirements particular customers may have about delivery times, by incorporating
individual customer requirements such as early-closing days or the need to deliver,
say, between 11am and 12pm. Transport planners typically review the first-cut
computer routes and key in amendments to cater for special circumstances only they
can deal with. There are many software packages - for example Dayload, Optrak,
Paragon, Routemaster, Trandos, Visit, LogiX and the popular Truckstops (from
Kingswood, Brentford, London, phone 0208-568-7000).
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Although the company and the external supplier can make whatever joint arrangements they wish in
allocating responsibility for, and carrying out, the many tasks necessary to effect the transfer of goods
between their two factories, they will usually settle the matter by nominating that one or other of the thirteen
standard terms drawn up by the International Chamber of Commerce, used worldwide and referred to as the
Incoterms, should govern the transfer. (New sets of Incoterms are published from time to time. The most up
to date set at the moment is Incoterms 2000, published in December 1999.) To nominate a particular
Incoterm, a specific reference must be made in the contract between buyer and supplier stating which
Incoterm is to apply in the agreement, and also adding the Incoterm's year of publication. However, in
agreeing a particular term, there is no reason at all why the provisions set out in the standard term should not
be modified by the two parties if some special condition is to prevail. For example: "Delivery is to be made in
accordance with Incoterm 'EXW' published by the International Chamber of Commerce in 2000, modified as
followed .... ". Guidelines regarding modifications are included in the book 'Guide to the INCOTERMS',
published by Prof. Jan Ramberg (see below).
There are 13 Incoterms set out in four groups named for the initial letter of the standard abbreviations of
each term included, as given below.
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EXW (Ex-Works) ... (followed by a named place). The supplier fulfils his obligations
to the buyer when he has made the goods available at his own premises. Note that he is
not responsible for loading them onto the buyer's vehicle. The buyer bears all costs
and risks in taking the completed load from the supplier's premises. Problems for the
stores or warehouse with EXW are that the buyer may delay in making the collection,
so affecting the supplier's storage costs and disrupting his everyday work (for
example, the buyer's vehicle may arrive without prior warning, at a difficult time,
causing disruption and congestion).
FCA (Free Carrier) .... (followed by a named place) The supplier fulfils his obligations
when he has handed the goods over into the custody of a carrier named by the buyer.
The "place" may be a transport terminal or into a vehicle. FAS (Free Alongside
Ship) ... (followed by a named place) The supplier delivers the goods alongside a vessel
on the quay. The buyer bears all risks and cost from this point. FOB (Free on
Board) ... (followed by a named port of despatch) Delivery and transit risks pass from
the supplier to the buyer when the goods cross the ship's rail at the nominated port.
CFR (Cost & Freight) ... (followed by a named destination port) The supplier must
bear the cost of carriage, although other costs such as insurance remain the
responsibility of the buyer. CIF (Cost, Insurance and Freight) ... (followed by a named
destination port) This differs from CFR only in that the supplier is now responsible
for marine insurance as well. CPT (Carriage Paid To) ... (followed by a named
destination) The supplier clears the goods for export and bears all freight costs.
However, liability for loss or damage passes to the carrier (and hence indirectly to the
buyer) when the goods are delivered into the custody of the carrier at the port of
destination. CIP (Carriage and Insurance Paid To) ... (followed by a named
destination) As with CPT, except that the supplier must himself procure and pay for
insurance for the cargo on board ship.
DAF (Delivered At Frontier) ... (followed by a named place at the frontier, before the
customs barrier) Supplier clears for export, and fulfils his obligations when the goods
have been made available at the named point (ie before customs clearance). DES
(Delivered Ex Ship) ... (followed by a named port of destination) The supplier pays all
costs and bears all risks in bringing the goods to the port of destination, and fulfils his
obligations when the goods are made available to the buyer on board ship. DEQ
(Delivered Ex Quay, Duty Paid) ... (followed by a named port of destination) The
supplier makes the goods available on the quay at the destination port, cleared for
import, and must bear all risks, costs, duties and taxes in doing so. The term "Duty
Paid" is added, but commonly the term is modified by the two parties to read "Duty
Unpaid", the wording of the Term being correspondingly changed. DDU (Delivered,
Duty Unpaid) ... (followed by a named place within the country of destination * ) The
supplier makes the goods available at the named place in the country of importation,
and bears all risks and costs except duties and taxes. DDP (Delivered, Duty Paid) ...
(followed by a named place within the country of destination *) The maximum
obligation of the supplier, and the complete opposite of EXW. The supplier is fully
responsible for every cost and requirement in delivering the goods, including the
payment of taxes, the obtaining of an import licence and the payment of import duty.
On the other hand, the proficient supplier is able to affect service through the
judicious choice of carriers and the correctness of his documentation, to the
satisfaction of his customer.
A complete, legally accepted list of conditions, known as 'INCOTERMS 2000', is obtainable - 215pp, £26.75,
and may be ordered from Amazon. As stated above, a further book, providing commentary as well, is'Guide
to INCOTERMS 2000' by Prof. Jan Ramberg, £52.25. It is strongly advised that any stores/warehouse
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supervisor responsible for interpreting an Incoterm should obtain a copy of the ICC publication and
Ramberg's book.
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Much of the law involved in the transfer of goods relates to contract law. Contract law
is a division of the common law. Common law is not a specific law passed by
parliament - instead, it has developed in the UK over very many hundreds of years,
and is based on universal principles. One of these principles, the one behind contract
law, is that we should stick to bargains we have made with other people. The details of
contract law are based upon this principle and on the decisions made in the courts
relating to past cases. As well as common law, there is statute law - laws specifically
passed by parliament. Two statute laws in this area are the Sale of Goods Act, 1979,
and the Sale and Supply of Goods Act, 1994
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'Delivery' is simply the transfer of physical possession from one person to another.
Thus the signing of a delivery note presented by the supplier or haulier simply
acknowledges receipt of the goods. Section 34 of the 1979 Sale of Goods Act
specifically lays down that: Where goods are delivered to the buyer and he has not
previously examined them, he is not deemed to have accepted them until he has had a
reasonable opportunity of examining them to ensure their compliance with the
contract. (The Act also states that the supplier must, on request, give the buyer
reasonable time.)
The word 'acceptance' means a different thing in everyday English than in law. In
everyday English, acceptance simply means literal receipt. In law, in effect it means
the buyer's concurrence that the goods delivered comply with the contract's
provisions in a number of vital regards. For example, it means that the delivery date is
agreeable; that the general material state, especially as regards design and quality, is
agreeable; and that the quantity delivered is agreeable. (Agreeable here does not mean
perfect, it simply means the receiving company is content with the matter.) Now it is a
fact of contract law that if there is a breach of conditions of a contract, the contract
can be terminated. Consequently, from the legal viewpoint, since such agreeableness
means compliance with the central contract conditions, the most important effect of
legally accepting the goods is that the buyer can no longer terminate the contract
because of breach of conditions.
Section 35 of the Sale of Goods Act states: "The buyer is deemed to have accepted the
goods when he intimates to the seller that he has accepted them, or when the goods
have been delivered to him and he does any act in relation to them which is
inconsistent with the ownership of the seller, or when, after the lapse of a reasonable
time, he retains the goods without intimating to the seller that he has rejected them".
It is unlikely that the signature of a storeman would ever be accepted in court as
constituting legal "acceptance", regardless of what was said at the time. Note that
timeliness of delivery is regarded as a warranty - a secondary matter - not as a
contractual condition, unless the contract specifically states that on time delivery is a
condition. Only if it is so stated to be a condition can the company terminate the
contract.
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Just because the receiving stores is in possession of the goods, and even if it has
accepted them in the legal sense above, this does not mean it has legal ownership.
Legal ownership of, or legal title to, the goods, is transferred to the buying company
only when the terms of the contract specify that it is to be transferred. In almost all
cases, the contract will stipulate that title is transferred only when payment has been
received. One reason for this is that if the buyer were to become bankrupt before he
had paid for the goods, and the supplier still retained legal title in them, the supplier
could claim for their return by the receiver in bankruptcy. If it were the buyer who
had title to them in these circumstances, however, the receiver would sell the goods to
pay off his debts.
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Section 19 of the Sale of Goods Act specifically deals with retention of title by the
seller as discussed above. If, then, goods are held by the buyer in their unaltered and
original form, they may be reclaimed by the supplier in the event that the buyer
becomes insolvent or fails to make payment, as already mentioned. However, if the
goods have been processed, so that the original material has lost its identity, it is held
that the material sold has become the buyer's property regardless of the supplier's
retention clause to the contrary. However, even though the original goods are lost to
the supplier, if the buyer is in possession of other goods relating to a separate, second
contract with the same supplier, albeit these being already paid for, title in these other
goods can be claimed by the supplier against payment for the first contract. Among
other things, this obviates the need for the supplier continually to identify and mark
the materials sold to the buyer - for example, when materials are being supplied in a
succession of repeat orders.
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3.2.6 Bailments
There are many instances in manufacturing where the company receiving goods never
does become the owner of them. For example, it may be sent components so that it can
perform a specialised technical operation on them. When this has been done, the
components are to be returned or sent on to a third party. Again, the company may
receive free issue material from its customer for use in a job being undertaken on its
behalf. Transitory goods in these circumstances are referred to as bailments, the party
supplying them being the bailor and the party receiving them the bailee. A formal
definition of bailments is that they are "goods delivered in trust upon an expressed
contract that the trust be faithfully executed on the part of the bailee".
Finally note that any attempt by the supplier to impose some condition on the buyer when he makes the
delivery is invalid - it is not part of the original contract and should be ignored - examples are: (1) the supplier
must be notified in 3 days of ...; and (2) the supplier is not responsible for damage discovered after delivery.
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3.3 The Principal Steps and Official Notes in Ordering and Receipt
Purchasing department sends a copy of the supplier order to the stores with the
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The supplier sends the firm a note in the post or on fax saying the goods are being
despatched. Details are included of all items, codes, quantities, the company's order
number an the supplier's own reference number.
A single delivery can involve a great deal of work so that labour and equipment
planning are important. The busy stores will also wish to schedule suppliers' deliveries
where possible to obtain an even flow of arrivals throughout the day.
A note giving details of the delivery should accompany the physical goods. One of two
procedures only should then be followed: A delivery note will be accompanied by a
consignment note if the suppliers' goods (the delivery) are being delivered by a third
party haulier. Details must be transmitted to Purchasing and Production, and to Stock
Records.
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3.4.1 Introduction
Every stores supervisor is concerned about the quality status of incoming materials.
Occasionally, it is possible for the receiving company to be assured of 100% incoming
quality conformance. This occurs when the supplier undertakes to perform "statistical
process control", or SPC, at his place of manufacture. This usually also involves an
inspection of his procedures by the purchasing company's quality control manager,
and the issuing by him of a supplier accreditation certificate. If this has been done, the
incoming material can be received straight into stock or, if a Just-in-Time system is in
operation, straight to the production line.
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The level of quality that an external supplier agrees it can and will send to the
company should be agreed jointly by the supplier and the company's quality control
manager after due observation and discussion of his proven quality performance over
some time. For example, after discussion of his manufacturing process, it may be
decided that the supplier can, and will, meet a target commitment of 1.5% non-
conformancies. (A 'non-conforming' part is one not meeting specifications, also known
as a 'defective'.) The main decision at this point, for (1) a particular material, from (2)
a particular supplier, at (3) an agreed percentage non-conformancies, is based on two
factors as follows:
(b) the cost of a non-conforming part entering production, with the need then to scrap
it or rework it, k2.
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BEP = k1 / k2 x 100%
For example, if k1 is 15p and k2 is £10.00, the BEP is 15/1000 × 100% = 1.5%.
The decision that is made is as follows: (1) if the incoming percentage non-
conformancies that has been agreed, as discussed above, is greater than the BEP,
100% inspect the incoming parts; and (2) if the incoming percentage non-
conformancies is less than the BEP, allow all parts straight into production, with no
inspection or checking. For example, if the incoming parts are declared by the
supplier to be 2.9% non-conforming, and the BEP is calculated to be 1.5%, it is cost
effective to 100% inspect. If the incoming parts are declared to be 0.3% non-
conforming, it is not cost effective to inspect - the parts should be admitted straight
into production.
Note that as a matter of policy, some incoming parts are always 100% inspected,
regardless of the rules above - for example, safety critical devices, pharmaceuticals
and aircraft parts. Other parts are never 100% inspected - fuses, ammunition and
cylinders of gas.
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There are four circumstances in which the stores are required to sample incoming
parts:
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The first thing to say is that sampling is an exact science and a major part of the
subject of quality, involving the use of well-established, mathematically based
"Sampling Tables", each containing a large range of individual sampling plans (see
below). (Any quality control manager who believes that sampling means the selection,
say, of 5% of incoming parts, or some other percentage, as he sees fit, should read up
on the subject.)
A sampling plan specified in a Sampling Table first requires the user to determine (1)
what physical characteristic of the incoming units determines whether a unit is
'conforming' to quality requirements or not; (2) p, the percentage of non-conforming
parts expected to be in the batch, usually as agreed with the supplier; and (3) the
number of units in the incoming lot to be sampled (the number of units is traditionally
referred to as N.) The sample plan itself, set out in the Sampling Table for the
particular combined value of p and value of N specified, then states the size of the
sample to be taken from the incoming lot, referred to as n (and which is to be 100%
inspected), and the 'acceptance criterion' c. The acceptance criterion means that if
there are c non-conforming units in the sample, or fewer than c, the whole lot of N
units should be accepted. If there are more than c non-conformancies, the incoming
lot should be rejected in its entirety.
The two most popular Sampling Tables are known as MIL-STD-105E and Dodge-
Romig Set IV. However, the storeman or stores supervisor will not be responsible for
selecting a Table. This will be specified jointly by the supplier and the quality control
manager. Instead, what the stores need to understand are (1) the idea of a "sampling
plan", as explained above, (2) the difference between single sampling and double
sampling, explained below, and (3) the procedures involved in each. Thus:
Single Sampling
As stated above, in order to look up and read the appropriate sampling plan from
those included in the chosen Sampling Table, what must be specified are N, the size of
the incoming batch, and p, the percentage of non-conforming parts expected to be in
the batch (ie agreed with the supplier as a target). What the sampling plan will then
specify are n, the size of the sample to be taken from the incoming batch, and c, the
'acceptance criterion'. When the sample has been taken and 100% inspected, if the
number of non-conformances in it is less than or equal to c, the batch is accepted; if
the number of non-conformances is greater than c, the incoming batch is rejected.
Double Sampling
As before, in order to find the appropriate sampling plan from the chosen Sampling
Table, what must first be specified are N, the size of the incoming batch, and p, the
percentage of non-conforming parts expected to be in the batch (ie agreed with the
supplier as a target). What the sampling plan will specify are n1 and n2, the sizes of
the first and second samples, and c1 and c2, the two acceptance criteria. When the
first sample is taken, if the number of non-conformances is equal to or less than c1,
the incoming lot is accepted (ie a second sample is not taken). If the number of non-
conforming items in the first sample is greater than c2, the incoming lot is rejected
(again, a second sample is not taken). However, if the number of non-conforming
items in the first sample is greater than c1 and less than or equal to c2, the second
sample of size n2 is taken. If a second sample is taken, then the rule is that if the total
number of non-conforming items in the two samples combined is less than or equal to
c2, the incoming lot is accepted. If it is greater than c2, the incoming lot is rejected. It
should be noted that double sampling is far cheaper to conduct than single sampling,
since n1 is about half the size of n and taking the second sample is not usually
necessary.
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Finally, what does the stores - and company quality - gain from
sampling? Firstly, with sample plans from the MIL-STD-105E
tables, it receives an assurance that if a batch of parts is
accepted under a plan, there is a 95% chance that in reality the
parts in total will be at the value specified for p% or better.
Under the Dodge-Romig Set IV tables, the company is assured
that if the parts overall are worse than p%, there is a 90%
chance the incoming lot will be rejected. As far as the late Harold
Dodge was concerned, the justification for sampling was that if a
supplier's batch of parts failed the sampling test, the whole lot
would be returned to him, not just the failing components. The
pressure on the supplier at that point to sort out his own
problem is then very considerable.
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The speed and accuracy with which requests for stores or warehouse stock are handled are often pointed to as
primary indicators of the efficiency of the whole operation. There are two good reasons for this, relating to
the physical ability to handle stock and the accuracy of the stock records.
For a stores, the question of authorisation is a conflict between the exercise of control
and the pursuit of flexibility. Control can be by the maintenance of lists of authorised
people or job functions. (These are, however, often difficult to keep up-to-date, and
their use may break down when critical personnel are off site.) The overall procedures
are fairly standard throughout industry. The following steps are representative: (1)
compilation of an issue note; (2) authorisation; (3) requisition check; (4) scrutiny by
stores;(5) identification of goods; (6) selection (physical); (7) issue of stock; and (8)
update of records.
The terms met in issue documentation include stores requisition, requirement voucher,
stores indent, issue ticket, stores order, demand note, kit marshall list, stores schedule
and picking list ... nine terms all meaning the same thing and containing data
regarding the codes and/or descriptions of the goods, quantities, works order
numbers, cost centre codes, serial number and so forth. The types, methods and
circumstances of issuing stores material may typically be as below.
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Despatches to outside take on a different complexion when they are large loads sent on
a frequent and perhaps regular basis. Load assembly in these cases is an important
operational activity that demands skill, planning and investment. In its narrowest
sense, the term means the physical stowage of goods for immediate despatch, and is
related to route planning above. As stated there in different words, one of the
tradeoffs in logistics is between economy of cost, epitomised by certain types of routes
typically planned on a variable basis from day to day or week to week, and the desire
by customers for deliveries at specified times irrespective of whether their delivery is
light or heavy. That is, the tradeoff is cost v. customer acceptability. However,
whatever the time of day of delivery, customer acceptability is increased if the
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distributor has made a good job of physical loading - for example, by the avoidance of
damage to goods, by arranging the load in a way conducive to straightforward
unloading ("first on, last off") and by swift and efficient vehicle turnaround.
The actual planning of the vehicle load requires access to certain basic data, such as:
(a) vehicle capacities (cube and weight); (b) drivers' hours; (c) customer locations
(computer-based maps can find the standard driving time from the location
coordinates); and (d) the delivery (or collection) time associated with the volume of
goods per order. The loading of the vehicle is then a two-step procedure as follows:
Step 2: Take the next order and add the time to travel/deliver
from last customer to this customer. Check driver's time and
vehicle capacity. If the time or capacity is exceeded, the load is
already complete. Otherwise, repeat Step 2.
Software has been successfully used to manage load assembly in warehouses. It will
determine the original stock picking sequence by reference to the destinations and
routes to be travelled by the vehicle(s), and is closely linked to route planning software
above. The system may also be technically integrated with radio data terminals or
RFID tags (see above). There are many software package on the market, often
incorporated as modules within Warehouse Systems - See Dispatcher CS from LIS
Warehouse Systems Ltd, High Wycombe. Another package also well spoken of is
Paragon.
Vehicle loading and unloading can be assisted by a number of devices. For example,
especially with a large number of "drops" (ie individual deliveries) involving small
packages, doors can be provided in the side of the vehicle. Attention must be given to
platform heights so that mechanised equipment for loading/unloading can be
efficiently used. Loading/ unloading itself may utilise: pallet trucks; wheeled pallet
cages; rollers in the floor of the vehicle; overhead conveyor rails for hanging loads; the
`Jolada' system of pallets on floor channels moved by jacks; vehicle cranes (for building
material);and tail lifts. There may also be the use of securing devices to ensure to loads
do not fall in transit - shoring bars, tie rails, dunnage bags.... Note that when large,
single drop loads are involved, it may be sensible to consider the use of 'swap bodies ' -
that is, demountable trailers that can be left at the customer's premises for unloading
at his leisure and which are taken back empty the following week when the next load
is delivered.
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4. Special Topics
4.1 Variable versus Fixed Locations
The flexibility of a stores and its ability to adapt to changing circumstances is greatly helped by the adoption
of a variable (or 'random') location storage system. The traditional method of storage, the only one available
before the days of computers, is the fixed location system. In the fixed system, every item to be stored is
allotted a storage location. In the variable system by contrast, all of the stores locations are maintained as a
file by the computer system, and, for each one, the product and quantity currently stored there. When
incoming stock is to be put away, the software determines the most suitable empty location for its storage,
employing a computer algorithm as discussed below. When stock is to be retrieved, its location is found by the
system and picking information issued. The advantages of a variable system include the following:
1. Far less space is needed for stock than with a fixed location system. Space savings of
30% can be expected. The main reason for improved space utilisation is, of course,
that with a fixed location system, the (fixed) space made available must be sufficient
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for the maximum stock holding. The full space advantages of a variable locations,
however, implies smaller locations and will require the manager to consolidate stocks
of the same product on a continuous basis.
2. A changing mix of items over the years is catered for quite naturally;
3. The storage of seasonal goods and very fast moving goods is accommodated
automatically without recourse to overflow areas. In a variable system, sudden stock
surges are accommodated simply by the occupation of more locations;
As well, variable locations make for smoother day-to-day operations. Thus in putting away, the storeman
need not concern himself about finding space - the system will direct him immediately to a guaranteed,
suitable location. And in picking multiline orders, the system will work out his shortest travel route and
guarantee both the correctness of the locations and his adherence to FIFO principles (see below).
Before listing a number of software features required, two examples are given of data processing in (a)
putting stock away in a variable system, and (b) retrieving stock. The examples relate to a product P50 in a
storage facility in which locations are coded according to the following scheme: ARRSB, where A = aisle code,
RR = rack number, S = shelf code, and B = bin number. (Thus Location C10B4 is aisle C, rack 10, shelf B, bin
4.)
On date 12 November, it is required to store 200 units of P50. The current stock position of P50 before this is
done is as follows:
Location...............................................Quantity....................................................Date Stored
....A04F1...................................................450........................................................10th October
Total ........................................................1070.................................................................n/a
The computer scans the database for an empty location as near to existing stock of P50 as possible, and
directs the storeman to put the stock in Location A08G4. After he has done so, and the transaction has been
processed, the stock position of P50 is as shown in the next Figure.
Location...............................................Quantity....................................................Date Stored
....A04F1...................................................450........................................................10th October
(b) Retrieval
After the storage on 12 Nov, it is required to withdraw 150 units of stock of P50. Using the FIFO principle,
the computer determines that 120 units are to be retrieved from Location A07A2, and the balance of 30 from
Location A04F1. After the two withdrawals have been made and the data transactions processed, the stock
position of the product is as shown in the final Figure figure below.
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Location...............................................Quantity....................................................Date Stored
....A04F1...................................................420........................................................10th October
(* This empty location would not, of course, be displayed - it would simply "disappear" from any association
with P50.) A worry expressed by many stores managers considering the switch from a fixed location system to
a variable one is that stock may be placed but the location wrongly recorded, the stock thereby becoming
"lost" since its actual location is no longer capable of discovery through the system. A number of safeguards
are available here. First, if a storeman is directed by the system to place stock in a location supposedly empty,
and finds it occupied, he must abort the placement and report matters so that an audit of the location can be
carried out. Secondly, periodically, all locations recorded as being empty on the system can be printed out,
and a quick visual check made to verify that they are indeed empty. Finally, a powerful verification system
based on secondary location codes can be instituted, as given below.
A unique, randomly generated secondary code is assigned to every stores location, and tagged to the end of
the primary location code. For example, the secondary code 3729 may be generated and tagged to primary
location code A08G4 to give a new code as follows:
A08G4-3729
When the storeman puts stock away at a location or retrieves it, he must record on the transaction the full
code of the location, including the tag. The computer checks the validity of the full code and rejects the
transaction if the primary code and the tag do not match. For example, suppose the 200 units of P50 in the
figure immediately above had not been placed at Location A08G4, but had been wrongly placed in, say,
Location A08F4 instead, Location A08F4 having tag 6881. The storeman records on his transaction "A08G4-
6881" (he thinks he has placed it correctly!) The transaction is rejected because primary code A08G4
corresponds to tag 3729, not 6881.
There are numerous software packages on the market offering a variable location putaway and retrieval
system, and all proprietary warehouse management systems (WMS's) include this facility. There is great
scope in the design of any such system to contribute to stores flexibility and effectiveness. However, many
packages are, frankly, poor, and any student of this on-line course who is going down this road is urged to
take the greatest pains in evaluating alternative systems. Investigation must be thorough, and detailed
answers must be given by the various software vendors to questions. The following issues and package
capabilities should be closely gone into.
(1) As stated in Section 1, in stores jargon, the easiest stores locations for putting away
and picking are referred to as "the golden zone" - locations which are between waist
and shoulder high, and which are close to a central point in the stores. (Next come
locations in the "the silver zone". Finally, the slowest and most distant locations make
up "the bronze zone".) In the system, a fundamental requirement is to be able to
nominate locations and zones maintained by it in this manner, and as well to be able to
nominate certain locations within these three zones as suitable for special storage (eg
large, long or secure - categories peculiar to the company's types of stored items);
(2) What is next required of the system is that it should direct stock to be put away in
locations which make best use of storage. Again as explained in Section 1, the criterion
usually used is each item's pick density. Pick density recognises the fact that the
company wishes to optimise the use of the golden zone, and that consequently it should
take into account how much space is taken up by items to maximise the amount of
picking that takes place there. For each stocked item, the supervisor must determine
its volume-movement, V. This is defined as V = T × C, where T = the average total
number of units of the item put away and withdrawn per month and C = physical size
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of each unit - ie the space occupied by one item, measured in cubic inches. If P = the
average number of putaways and withdrawals per month, then each item's pick
density D = P / V. The company should determine the pick density of each item and
record this on the system. The system must allocate items with the highest pick
densities to the golden zone, items with the group with next highest pick densities to
the silver zone and those with the lowest densities to the bronze zone;
(3) In addition to pick density, the system must also take account of special storage
problems such as size, weight and length. These needs must be combined with pick
density for putting away;
(4) Where a choice of locations exists in storage, the system should select the location
nearest to existing stock of the product being stored. The natural affinity of stored
items should also be considered - for example, Products A & B are distinctly different
items, but 70% of all orders to pick A also include a need to pick B (eg cans of
adhesive and ceramic tiles).
(5) In stock retrieval, adherence to the FIFO principle (first-in, first-out). Besides
conforming to good storekeeping practice, this rule will also tend to lead to locations
being emptied at the fastest possible rate, thus freeing space for further storage. (In
the second figure above, the oldest stock is at A07A2, and withdrawal of 120 units
leaves the location empty and available for further use. In the last figure, the oldest
stock is at A04F1, and this location will be continually selected for picking until it too
is empty.) However, the principle of FIFO in the system cannot be divorced from the
good practice of picking stock so as to empty locations as soon as possible (thus freeing
them for further use). And on top of both of these matters is the question of stock
consolidation - for example, should the system direct consolidations, and if so, on what
basis? - partial pallets, partial shelves, partial bins ...?.
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Order picking is a principal activity of the establishment, and the efficiency with
which it is done is a prime measure of performance. The way that order picking is
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.............................................................................................Percent Labour
...............................................Storage ............................................10 %
...............................................Despatch/Consolidation ................20 %
Total Labour Warehouse Time (in minutes) / Number of Order Lines Picked
For example, suppose in one week the labour hours spent in picking came to 200.0 hrs,
and over this time 400 orders were picked, with an average of 6.0 lines per order (ie 6
different products ordered, each associated with the order quantity specified). The
picking rate is thus:
Although the breakdown of activities which make up a 'pick' will vary from
warehouse to warehouse, the following are typical, quoted in a Dexion study published
some years ago.
..........................................Travelling ...............................................................60%
..........................................Extracting ...............................................................20%
..........................................Searching ...............................................................10%
.........................................(Documenting +
.........................................(Sorting +
..........................................(Counting
---------------------------------------------------------------------------------------------- 100%
From the previous figures, if picking constitutes 33% of total warehouse labour costs,
and travelling to and from the picking face is 60% of that, then travelling to and from
the stock to pick orders constitutes about 20% of all warehouse labour costs. The
possibility of substantially reducing this time is clearly a serious matter. Ascertaining
the statistics above for a particular warehouse requires careful thought, then
measurement, and then calculation. The video-ing of operations is often an effective
way to obtain the raw data.
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Clearly from the figures above, a reduction in picking travelling time is the Number
One aim in improving picking efficiency. It is not the only means, however. Other
tasks that might come under scrutiny are: Documenting - use of the computer to
direct the picking operation and automate the flow of information; Reaching &
Sorting - consider Stock to Picker systems (see below), voice directed picking, pick-to-
light and the installation of automation; Counting - weighing on digital scales and
greater use of pre-packing. Nevertheless, the main cause of lost time remains
travelling, and here the most important issue is whether there should be one-step or
two-step picking!
One-step order picking is where the customer's order is satisfied by picking stock for
it direct from the main body of the stores. The stores employing one-step picking are
often low throughput with a small number of stores staff.
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All of the items on a multi-line order will be picked on a single picking trip. The
importance of locating the stock in the first place, perhaps by the picking density
method, has been dealt with earlier. Also mentioned was the matter of working out
superior picking routes, perhaps by complex mathematical means. It may also be
possible to combine several orders into a single multi line order by order bunching.
There are numerous ways orders might be bunched within the stores. For example, if
many of the orders received contain common items to be picked, they can be
temporarily amalgamated to eliminate multiple journeys to the same stock. The
amalgamation of Order 1 and Order 2 in the table below reduces the number of trips
to withdraw products A23 and B21 from two each to one each.
...................Order 1 .....................................................................Order 2
A23.......................4..............................................................A23......................4
.............................................Amalgamated Order
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.........................................A23.........................8....
.........................................B21 ........................9 ..
.........................................C56 ........................3 ..
In the example, the two original orders must now be separately built up from the
marshalled, amalgamated stock of the 'amalgamated' order. A problem above with
stores is that the customer himself may be physically present, and if so will not wish to
be kept waiting a longer time than necessary, quite regardless of the efficiency of the
bunched up picking. This consideration is likely to be absent when dealing with orders
in a warehouse from external customers, since customers will have sent their orders in
remotely via a Sales Order Processing (SOP) system. Since customers are remote, the
opportunity for bunching is far greater. The 2-order procedure illustrated above for a
stores can be amended as follows: (1) collect all SOP orders over one hour; (2) bunch
and sort the orders as in the illustration above; (3) pick the marshalled stock down to
nothing, and back into the originally received SOP orders.
Perhaps the most common improvement to basic one-step picking efficiency is zonal
picking (the arrangement of "stock" by a supermarket is an obvious example of
zoning, making the picking into his trolley by the customer fast and efficient.) In the
stores or warehouse, to start, stock is analysed into groups such that the number of
pick requests per group are approximately equal (also taking into account items with
high pick affinities - ie different items often picked together in the same order). The
space occupied by stock in each group is next calculated. The storage area within the
stores/warehouse is next sectioned into physical zones, the space within each physical
zone being appropriate for each zonal group. Finally, each item of stock is located
within its zone according to the pick density principle previously described. When an
order comes in, the lines on it are split up and the requirements from each zone are
given to the zone section leaders for picking. The picked items are placed by the
section leaders in the marshalling area designated for the order in question. A
variation on the method that requires considerably more organisation and
coordination than seems apparent at first glance, and which is used only in large
warehouses, is to send the original order note from section to section, each section
picker picking the stock which he sees on the order is in his particular zone.
Dynamic zoning:
It is necessary in zonal picking to keep the picking demands per zone and the picking
manpower allocated to it under constant review. Locations which are included in Zone
A should be reallocated to Zone B if the picking activity increases in Zone A and
decreases in Zone B. An incidental advantage of zonal picking is that it reduces
socialising by storemen.
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An obvious and critical question in two-step picking relates to the management of the
secondary store - how are replenishment quantities, retrieved from the main store to
'top up' the secondary stores, to be determined, and how and when are the 'top ups' to
be physically accomplished. The requirements of the secondary store can be
calculated, by a variety of means, so that the material is picked on a regular periodic
basis (perhaps once a day for convenience, being sure to replenish enough so as not to
run out during the day). Calculations can be made by keeping track of works order or
customer orders through the appropriate computer system. Alternatively, it might be
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Order picking must be seen in the total context of method, warehouse organisation,
supplies and customer activity - and the choices available of technology and materials
handling equipment. Picker to stock systems include simple equipment such as storage
drawers, gravity flow racks and bin shelving. It should be recognised, however, that
inexpensive equipment may be disproportionately expensive in terms of time and
manpower.
Boxes and pallets are trundled along a `picking tunnel'. Goods placed at one end are
trundled along until finally they are picked for despatch at the other. Two advantages
are (1) FIFO is maintained automatically, and (2) a single box or carton or pallet only
is presented to the picker at the other end. The pick module ... ie the picking area
reserved for the picker ... is thus separated from the storage replenishment activities.
The picker travels to the picking face on a specialised vehicle, which places him at the
correct height for picking.
Automatic cranes are directed by computer input instructions to pick stock (say, a
complete pallet) from one or more specified locations, bring it to the human picker in
charge of the order, and return the pallet to storage. Automatic cranes are often
necessary in very high racking. In other circumstances, it is vital in such a system that
effective use is made of warehousemen's time while the crane(s) are fetching stock,
otherwise all that will have been achieved is the substitution of a fork truck or reach
truck for very expensive automation.
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Because the amount of stock in the secondary store is small and resident there for very
short periods, the emphasis here will is on highly efficient picking per se, so that
machine-driven retrieval systems are likely to be preferred. It may even be economic
to have a very simple stock layout, such as an open U arrangement on benches. (If so,
attention must be paid to separating the human pickers in the U from the fork lift
trucks and empty boxes and pallets.) Higher up the technology ladder, the techniques
applied throughout industry for such equipment as bottling lines and similar high
speed synchronised operations have also been applied to picking. The result is the
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availability of fast, purpose built though expensive devices ideal for stock-to-picker
operations. Each system is designed and installed, tailored to a warehouse's individual
volumes, speeds and space. All utilise the computer to the maximum degree such as
by: (a) tracking replenishment needs by counting the stock picked; (b) printing
despatch labels and other documentation, including accounts, to accompany
despatches; and (c) making use of bar coding and radio frequency identification tags.
Many systems are capable of retrieving and delivering 3000 items per hour to the
picking face (ie to the manual pickers) from a stock of 3000 different lines. They are
major engineering undertakings fully comparable with their equipment counterparts
in manufacturing industry, and must be backed up by equivalent engineering and
maintenance support. Simpler, more easily installed equipment includes the following.
Horizontal: These can be heavy or light duty, and are often used for heavier or more
bulky objects than the traditional vertical carousel. For efficiency, one picking station
should be served by a number of the carousels ... perhaps 3 to 5 of them. These are
arranged in groups of so-called 'pods', butting on to the station. The orders are input
to the VDU console. Each carousel then rotates in turn, stopping at the trays/boxes of
each of the required objects stored on it.
Mini-Stacker Cranes
First marketed under the name `Supreme', the picking retrieval is made by a mini-
stacker crane under central computer control. The system is useful for more than
small objects and is popular because it creates a good working environment. Stock is
kept strictly separate from unauthorised personnel. The speed of picking is not
especially fast given the high capital cost of the equipment. Speed-up is obtained by
picking several orders together and by overlapping jobs - say, machine picking of
Orders 3 and 4 and manually load assembling of Orders 1 and 2.
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Voice directed picking is a highly effective and increasingly popular technology that
has many advantages in both stores and warehouse operations. With 'voice', workers
wear a headset, earphones and a belt-attached portable computer which enable them
to hear instructions from the computer and to speak words of confirmation as to
action taken. The computer communicates with the company's Warehouse
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Management System (WMS) to retrieve the locations to be picked, then the identities
and quantities of items to be picked, and transmits this information as speech to the
system. The worker proceeds to each designated location, reads out a check digit to
confirm its correctness and receives further instruction as to the identity and amount
of what is to be picked. He confirms the pick when he has actually physically picked
the material, and the system then proceeds to the next location/item. The advantages
of voice directed picking operations are that the storeman or warehouseman has his
hands and eyes free. Picking accuracy is far higher than with a paper based system,
productivity is substantially higher and accidents are reduced. For information on
voice picking, contact Vocollect or PsionTeklogix. An alternative to voice directed
picking is pick to light. With light directed picking, a small light is illuminated at each
place from which picking is to take place, speeding up the travelling process. The
system is however more expensive and less flexible than voice.
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Note that the free on-line course on Stock Records Accuracy is available at this site.
The stock recording system encompasses the maintenance of data records concerning
the receipt, movement, storage and withdrawal of physical stocks committed to the
stores' care. The main product and stock information is contained on a file of data, the
file usually consisting of one record for each separate product. The data record itself,
corresponding to the particular product under consideration, will consist of header
information giving, say, the product's description, unit cost, storage life etc.. It will
also consist of data of a highly dynamic nature showing the quantities of stock
currently on hand, perhaps split among such categories as free, allocated and
earmarked. The stock recording system is said to be transaction driven. That is, when
a physical event such as a receipt occurs, a corresponding data transaction is raised
with the relevant data relating to that receipt - product code, quantity, supplier code
and so on. The data transaction is processed by computer and the information on the
receipt used to update the main stock record. Besides the use of stock records in
inventory and operational systems, the records system becomes the eyes and ears of
the manager in physical stock management. Provided that sufficiently flexible means
are made available to interrogate the records, with easy-to-use on-line query facilities,
the stores or warehouse manager can 'scan his stock' each week to determine items
which are in danger of exceeding their shelf lives, spotlight slow-moving products,
report warehouse turnover and occupancy etc.. Many of the costs of stockholding such
as obsolescence can thus be largely eliminated.
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To estimate the accuracy of the store's records, it is necessary (1) to select randomly a
reasonable number of records (say, 50), then (2) to count the physical stock of the
actual products to which these records correspond, and then (3) to compare the
recorded quantity of each product with the quantity counted. If 100 products were to
be selected and counted, and in 81 cases the recorded quantity was the same as the
physical stock counted, the accuracy of the 100 records is 81 / 100, or 81%. That is, the
formula is:
There are a number of snags in carrying out the above, one of them related to the
complex matter of the reconciliation of the record and the actual count (see below).
However, for many stores, a further question is whether the record and the physical
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stock must match exactly for the record to be considered correct, or whether a degree
of "tolerance" is allowed between the two figures such that the record is still
considered to be correct despite the difference.
Although there are very many products which can and should be counted exactly -
large, expensive structures, for example - there are many others which simply cannot
be counted exactly. Bulk liquids are difficult to measure. Some items such as yarn,
counted by weight, have a weight heavily affected by humidity. And some items are
extremely cheap and numerous, and seem not to be worth the expense that would be
necessary to count them accurately - some small electronic components, for example.
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It can be seen from this that the top five causes out of 23 account for an incidence of
44 error occurrences out of 100. The causes of error to attack first are therefore these
five ... basically to do with (1) counting, (2) locating, and (3) the management of
transactions. After identifying the prevalent causes, the stores manager must set to
work to change the recording system, perhaps by providing new technology, by
providing more effective training or by whatever other means are necessary to
eliminate or alleviate the causes and put matters right. In other words, the problem
and the solution to it are not in the hands of staff; they are in the hands of
management.
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If the Stores Manager and his staff are to be accountable for the accuracy of the stock
records and the integrity of the material in their charge, it is essential that they
maintain full control at all times over stock issues and receipts. In short: the stores
must be physically secured and manned at all times, and must be strictly out-of-
bounds to non-stores staff. The closed store may present a problem in factories which
have multiple product locations (with materials placed near to their points of use).
Although the cost of re-laying out the factory can be high to achieve controlled access,
it is a prerequisite to the achievement of inventory records accuracy. One of these
costs clearly is the need to man the entry to the stores. Although the principle of a
fully-closed store must not be violated, there are a number of ways to mitigate the cost
and possible inconvenience, such as by introducing imprest and bulk issues previously
mentioned. In the last analysis, however, this is a matter where it may be necessary to
bite the bullet. A storeman must man the gate to the store.
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Note: this subject is covered at considerable length in the free on-line course on
Stock Records Accuracy at this site. Go to Cycle Counting Agenda or Cycle Counting
text.
Despite our best endeavours, it seems inevitable that the computer records for the stock of a few products will
deviate from the actual physical quantities of the material present. This is especially likely to occur if the
material is subject to a large number of transactions ... ie many receipts and many issues. And because of it, it
is periodically necessary to count the stock and correct the computer records where they differ.
In the past, this process has been combined with the financial and legal requirement to account for the value
of the stock at the company's year-end, stock being a major asset in the book of accounts as explained below.
When all the stock is counted at the year-end for this purpose, the activity is referred to as the annual
stockcheck or the annual audit. It is a disruptive and error-prone time, involving weekend working and
hapless helpers drafted in from other departments.
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A more natural, more efficient and far less disruptive way of checking physical stock against the record is by
way of a programme of cycle counting. Cycle counting means choosing and counting a number of products
day-after-day or week-after-week until eventually they have all been counted. When they have all been so
counted, the process starts all over again. The length of time to count the stock and start again is the 'cycle'. If
a company counted its stock three days a week such that it was all counted by the end of six months, and then
started again, this would be a six month cycle. Indeed, a company might well count certain of its products
(say, the 10% with the most transaction) over a one month cycle and others (say, the 30% with the fewest
transactions) over a much longer cycle (perhaps, six-monthly). Three issues which must be decided before
commencing a cycle counting programme are: (1) what the cycle length is to be (or what the different lengths
are to be, if the products are to be split into different counting groups); (2) what is to be the rota of counting
within a cycle; and (3) how records of actual counts are to be maintained and published. These questions are
lengthy ones answered in full in the Stock Records course referred to above.
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As previously stated, the role of the storeman is to provide a service to the production,
purchasing and distribution functions, and to receive, store and issue just that amount
of stock in a timely way that is determined by the planning and other systems which
they employ. The storeman or warehouseman therefore takes the accountant's view -
that stock is a valuable asset (under his direct control). The company has paid money
to suppliers or indirectly through the production process to acquire it, and expects in
time to put it to further use or to sell it. In short, it is what is known as a current asset.
A major company accounting document required by law and good practice, to be
prepared at the end of each financial year, is the balance sheet. This is a snapshot at
that moment in time of what the company owns (its assets) and what it owes (its
liabilities). The assets themselves are placed in one of two classifications, fixed assets
and current assets. Examples of fixed assets are land and buildings, machinery, and
fixtures and fittings. Current assets are those which either are cash, or are expected to
become cash in the near future. They include cash at the bank, stock and debtors (ie
companies that owe us money, usually being customers who have not yet settled their
bills).
The reason that stock in the stores is taken to be a current asset is that it is regarded
as an investment waiting to be sold. That is, when the company manufactures the
items on its sales range, in effect it is investing money in the production so that it will
have the stock available to sell. When the sale has been made, the company no longer
owns this investment - instead, it has revenue from the sale.
The stock in the stores is valued at its cost price. A cost price for every item is
calculated by the accountant based on the costs incurred in the production process -
raw materials purchased, electricity expenses and factory operators' wages, for
example. Note that work that is partially completed, basic components, sub-assemblies
and work in progress are also valued at their cost prices. In these cases, although the
material could not be sold to a customer, the items still represent investments, in these
cases, waiting to proceed to the next stages of the manufacturing process.
Return to Agenda Return to top of Agenda Go to Top of Course Go to end Next Section
There is a requirement to record carefully any discrepancy between the stock record
and a physical count. Discrepancies and the formal reporting of them in financial
terms are clearly important matters. A company which fails to keep close control over
stock jeopardises its own continued existence as a solvent, on-going concern. If the
stores or warehouse has a large range of different items, it is unlikely to be best to
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show a list of stock losses and gains individually. Instead, it will be more helpful to
summarise them in groups of similar items. In effect, each group is an account. (The
familiar term accountancy means the management of the company's books of
accounts.) Consider two groups, or accounts, (a) copper tubing, and (b) rubber
components, and the discrepancies that might be revealed one time from counting the
items of copper tubing items and the rubber component items:
Suppose now that prior to the production of these reports of the net (ie total) surpluses
and net deficiencies, the previous value of copper tubing we believed we held was
£1000 and the value of rubber components was £700. We can now post two financial
transactions to these accounts as shown in the final table below.
Return to Agenda Return to top of Agenda Go to Top of Course Go to end Next Section
When it comes to the re-evaluation of stock for various reasons such as its spoilage or
damage, the views as to cause and cure are required of many staff in the company
including the accountant, the production and purchasing managers, the marketing
manager and, of course, the stores manager himself. Categories of stock other than 'fit
for purpose' will be different for each company, depending on the nature of its
business, but might include: obsolescent (the material is going out of use but is not yet
unusable); obsolete (the material will never be needed again); deteriorated (the reason
for the deterioration should be recorded - storage conditions, damage, excess length of
stay etc..); and slow moving. In purely financial terms, stock gains and losses may be
reported to senior management in the above terms say, every 6 months. However, the
stores manager will wish to review stock in this way far more frequently than that -
say, every month. The review will take the form of a VDU query or printed report,
and enable him to identify material at risk ... for example, material moving into the
danger zones of excessive duration on the shelf. In other words, the idea is to look at
things and take action before they become problems.
Return to Agenda Return to top of Agenda Go to Top of Course Go to end Next Section
When the stores manager accesses the computer record for a given
product in his charge, the information he sees on the VDU is of a 'static'
nature. He sees a snapshot. In order for him to appreciate the succession
of events which have taken place ... the receipts into stock, the stock
movements, the picks, the despatches ... it is necessary for him to see a trail
of the data transactions. A transaction trail or audit trail is a display of the
transactions which have been raised and submitted to the stock recording
system and which have successively brought the record to its current state.
For example, suppose that at the beginning of the morning according to
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the record there were 500 heavy duty batteries in stock. Later, at 10.00am,
a system transaction is submitted and processed for a receipt of 150
batteries from the supplier. Shortly after this again, at 10.30am, a further
transaction is processed for 90 units issued to the shop floor. The record
now says that there are 560 heavy duty batteries (500 + 150 - 90). This
example is illustrated below. Note that the successive stock quantities on
the record show the 'before' and 'after' record amounts (ie before the
transaction was applied and after it). Note also that the order in which
transactions are displayed is from bottom to top. This is so that
increasingly old transactions can be seen by "scrolling" round the bottom
of the screen. In the example below, the times the data transactions were
input are given, as recorded by the computer clock.
The stock record system should provide the ability to display the audit
trail of any product on the VDU at any time. The maximum number of
(increasingly old) transactions capable of being retrieved will be clearly
governed by what is on the computer disk. It may be necessary to page
back through several VDU screens to see them all. Except in automated
warehouses, the times at which transactions are input to the system will
not correspond to the times at which the physical events they describe
actually occurred. The submission of the transactions will be later by
seconds, minutes or hours. In fact, in batch systems, it is possible for the
transactions to be input in a different order to the order of the real events.
In the example above, if the storesman had been unable to submit the
receipt transaction until 11.00am, even though the actual delivery was
made much earlier, the audit trail would read as below instead:
It can be seen that the the stock record at one point above was 410 units,
even though we know there never were that number of units present. The
investigation of out-of-order or missing transactions and known or
apparent discrepancies between the "real world" and the stock records to
establish the true position is referred to as "reconciliation".
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One reason that the storeman may wish to investigate a transaction trail is
the stores' concern with the reconciliation of a physical stock count and
the stock record held on the computer. Because the chronological order in
which the transactions are posted to the stock recording system is not
necessarily the order in which the physical events to which they relate take
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The next figure shows the stock record of Part P and the data transactions
raised and submitted in response to the events depicted in Figure 1 above.
It is assumed that the stock record is correct at 3.00pm. The cycle count
value is submitted as a transaction at 3.50pm.At the time the cycle count
transaction is received, however, the Issue to the Shop transaction of 300
units which occurred at 3.35pm has not yet been submitted to the system.
It is late. It can be seen in Figure 2 that it is not finally submitted until
4.00pm. Figure 2 : Data Transactions relating to Figure1 (previous page)
Because of the lateness of the submission and processing of the Issue to the
Shop transaction of 300 units at 4.00pm, if a comparison is made at
3.50pm between the cycle count value of 1200 units and the stock record of
1500 units at that time, it will appear that the record is in error by a 300
units excess. When the cycle count transaction then changes the stock
record to 1200 units at 3.50pm, the late transaction, when it arrives,
further changes the record to 900 units and makes it wrong.
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late transactions! For example, suppose above that the stock is closed off
at 3.30pm, and remains closed off for an hour, until 4.30pm, to give time
for all late transactions to get through the system. As before, the cycle
count takes place at 3.40pm, and the reconciliation takes place at 3.50pm.
The Issue to the Shop of 300 units physically occurs at 4.35pm, and the
transaction relating to it is submitted at 4.40pm. The physical situation is
illustrated in Figure 3 below, and the record is shown in Figure 4, also
below.
4.30pm.......................RELEASE STOCK...............................................................................................................................................................1500
4.30pm.......................RELEASE STOCK...........................................................................................................................................................................1500
Note that the subject of reconciliation and the role of software is dealt
with in greater depth in the Stock Records Course at this site. Visit
Section 4.4 of that course.
Return to Agenda Return to top of Agenda Go to Top of Course Go to end Next Section
5. Human Resources
5.1 Recruitment and Selection
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is known that a shop floor operator would know the company's ways of working and
so require little training. One must question, however, whether internal appointments
are as effective as those resulting from external advertising seeking recruits with deep
stores' knowledge and long stores experience. Secondly, in order to advertise the post,
it is necessary to define its duties and wage rate. It is common here for HR to grade a
stores job by a simple classification scheme. That is, the question is asked as to what
other jobs it seems to be like. Consequently, what is missed in doing this is that part of
the job related to record keeping, required meticulousness and other unique,
necessary qualities - not least, the need for willing assumption of responsibility for a
large financial investment in stock. It is highly desirable, therefore, that remuneration
and grading of the stores job should be achieved through application of a so-called
"point factor" system such as the Hay scheme.
Two aspects of staff selection are testing and interviewing. Dealing first with testing the
job applicant, two qualities needed of a recruit are a practical nature and
clerical/numeracy attributes (combined with good eyesight). Practicality is self-
evidently needed of the storesman or warehouseman in materials handling and
reacting to unexpected events (see Section 2). Numeracy is needed in the requirement
to support the computer input and output side of the job. These include completing
and submitting stock data transactions and the ability (say) to use computer put-away
software. So the first thing to test might be the job applicant's eyesight and colour
vision. After this, a simple numeric test might be given. [One test administered by a
company is to give each applicant a sheet of paper on which is printed a list of, say, 30
product codes. The candidate is required to copy the codes onto a second sheet of
paper! Not too many applicants can do so correctly.]
As for interviewing the candidates for the job, the first requirement is that the process
should be well organised purely from the viewpoint of personal arrangements. The
WASP procedure has been suggested, as follows: W: Welcome ... Putting the candidate
at ease and explaining the interview purpose; A: Acquiring .... Acquiring knowledge,
perhaps by going through the candidate's work experience in (reverse?) chronological
order; S: Supplying ..... Supplying information in answer to the candidate's questions;
P: Parting ..... Explaining what happens next, and in what timescale.
First, it should be noted that the contract of employment begins when the successful
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candidate accepts the company's offer, not when he starts actual work - a contract of
service is but an example of contracts in general, so that the general law of contract will
be applicable. Also note that the company may make the job offer subject to the
receipt of "satisfactory references". If so, the prospective employee should beware
that satisfactoriness is entirely a matter subjective to the prospective employer, and
also that a referee is under no obligation to provide a reference. If the job offer is
made orally, the employer has a statutory duty under the Employment Rights Act
1996 to send the new employee a "written statement" within two months setting out
such details of the employment as pay, hours of work, place of work, job title and so
forth. The company should take particular care in framing conditions relating to place
of work, hours and duties: these should be drawn up widely if it wishes to preserve
flexibility in its deployment of labour. Also a part of the contract are implied terms.
For the employer, they are the duty to act in good faith and others including those
relating to health and safety, and, for the employee, duties of fidelity, obedience and to
act with reasonable care and skill.
5.2.1 Grievances
The company is entitled to dismiss employees on strike without notice for breach of
contract. (There is no law which "permits" a person to break a contract of
employment.) If the strike is unofficial, the strikers are considered to be acting as
individuals. They have no right of appeal for unfair dismissal to an Employment
Appeal Tribunal, since a tribunal has no jurisdiction over matters of contract. If the
strike is official (ie if it is endorsed by a union or staff association), and all strikers are
dismissed en bloc, they also have no right of appeal for the same reason. However, an
appeal can be made if dismissals are selective. Since the dismissed employees have
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been treated differently from those not dismissed, the grounds of the appeal would be
that there has been unfairness - that is, that the employer must have had hidden
motives for his action that related to them but did not relate to others.
Statutory immunity from liability for certain torts, including those relating to contract
above, is given under the Trade Union and Labour Relations (Consolidation) Act,
1992. In order for the Act to apply, however, certain conditions must be met. First, the
dispute must indeed be in contemplation or furtherance of a trade dispute. Secondly,
there must be a yes/no ballot of union or staff association members for the action
proposed, with a simple majority in favour. Thirdly, the industrial action must be
confined to a dispute directly affecting the employees balloted, at their place of work.
That is, those involved in secondary action in support of other employees involved in a
dispute elsewhere are not immune from liability.
5.2.3 Discipline
Discipline by the employer may be reinforced by: a formal caution; a warning (or final
warning); demotion; or suspension for a period from the company (with pay).
However, the manager whose member of staff is the subject of the disciplinary
proceedings may believe it to be strongly in the interests of his store or warehouse,
and those of the company, that the employee be dismissed. If so, he must co-operate
closely with the HR manager. For one thing, dismissal other than for breach of
contract dealt with above, is hemmed about by legal obligations and restrictions. As
well as for reasons of ethics, there is a need for the company to avoid unfair dismissal
because of the Employment Protection (Consolidation) Act, 1978. Note that this Act
defines fairness, rather than unfairness, so that in any case before a tribunal, there is a
burden of proof on the employer to establish that there was a fair reason for the
dismissal, as defined under one or other of the six headings set out below. It is also
necessary at a tribunal to show that the dismissal was "reasonable". Facets of
reasonableness are that the severity of the action taken was matched by the
seriousness of the offence; that the action was consistent with action previously taken
against other employees in similar circumstances; and, most importantly, that fair
disciplinary procedures, such as the issuance of written warnings and the granting of
an opportunity for an employee to state his/her case, had been put in place and were
scrupulously followed.(Failure by the employer to follow procedure in every
particular is a major cause of tribunal findings of unfair dismissal.) The allowed
reasons for dismissal under the Act are:
2. Misconduct.
3. Redundancy.
4. Statutory disqualification.
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Fire is an ever present worry for the stores or warehouse supervisor. Fires are devastating to the operation of
the business: they often result in loss of market share; and the incurrence of huge expense in terms of loss of
stock and damage to the building itself. It is reported from insurance companies that warehouse stock losses
(including stock made unsaleable by fire) account for 20% of the financial value of all industrial claims. Loss
of warehouse buildings and property accounts for a further 10%.
The ferocity of fire in warehouses can be judged from reported statistics. Thus even fires involving non-
combustible materials such as metal parts can create air temperatures at ceiling height in excess of 650 C if
such materials are packed in cardboard or crates, or are surrounded by foam protection. Fires involving
combustible materials may produce ceiling air temperatures over 1100 C. At this heat, non-combustible
building materials will fail. Steel, for example, is structurally damaged by heat over 600 C and steel supports
exposed to the higher temperature for 10 or 20 minutes will collapse (no-one will forget the horror of the
collapse of the Twin Towers.) Even when steel reinforced concrete buildings survive, the cost of
reconstruction and renewal may exceed 50% of the original cost of the building.
Protection against fire must consequently be a high company commitment and well-known as an article of
company policy. Management must put in place fire protection and control systems, assign responsibility for
them and ensure those responsibilities are properly carried out. The means to avoid fire or mitigate its effect
through the use of non-combustible materials and the installation of effective alarms. Sprinkler systems must
be installed. The required action can be considered under five headings as follows.
The warehouse's basic precautions must be put in place and the work done to draw up
the initial fire regulations. The Warehouse will not receive a fire certificate from the
fire authorities until these activities have been performed. Advice may be obtained
from The Fire Protection Association.
The warehouse's fire regulations cover the precautions to be obeyed to avoid a fire
and the actions to be taken if a fire occurs. The regulations should be simple and to
the point, they must be published and they must be prominently displayed at a
number of sites. The principle regulations issued by government are The Fire
Precautions (Workplace) Regulations 1997 and The Fire Precautions (Workplace)
(Amendment) Regulations 1999. These are pblished at www.hse.gov.uk.
All staff must be regularly trained in fire drills, with (say) two drills per year. Drills
include correct assembly at the designated assembly points. Staff must understand the
purpose and procedure of the 'reporting hierarchy' whereby the senior person at the
assembly point accounts for all persons who were on site to ensure no-one is missing.
The speed and efficiency of fire evacuations must be recorded by the manager so that
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Fire walls and regulatory escape routes should also be provided, as should flame and
smoke detectors wired to an audio alarm system. It is essential that plentiful supplies
of water are available at all the required points for fire fighting by the fire brigade
and for the service of automatic fire sprinklers. It is stated by fire insurance experts
that the installation of effective automatic fire sprinklers will reduce loss eight fold. A
well-designed automatic sprinkler system can control or extinguish a fire, preventing
it from spreading by dousing adjacent areas and preventing it also from causing
structural damage by cooling steelwork. Sprinklers are permanently on guard and
will function, despite smoke and heat, under conditions which prevent effective fire
fighting by the brigade - in narrow aisles and at ceiling height, for example. Automatic
sprinklers operate from the moment a fire begins and water damage to stock is
confined to the area in which the fire breaks out.
The manager is responsible for ensuring that there is sufficient fire-fighting apparatus
at the designated fire points. (Fire points should be clearly sign-posted and mentioned
in the regulations.) The apparatus including the audible alarm system mentioned in
(iv) above must be regularly tested. Staff should receive training and annual update
training in the use of the apparatus.
5.4 Security
The stores/warehouse should be of substantial construction, with windows capable of being locked, so as to be
capable of resistance to forced entry. It should be laid out with a minimum number of access points to
buildings, perhaps by reducing the number of extra doors which have been provided as amenities simply to
cut staff walking time. Staff access should be arranged so that they are "covered" by formal reception areas.
Goods arrival and removal doors should similarly be covered if possible by supervision. Entry to the stores
must be restricted to those with the express permission of the stores supervisor. A good system should be in
place with regard to keys, with no duplicates allowed. (A system of computer controlled electronic keys can be
installed with separate security passes for personnel whose jobs require access.)
Theft in the UK each year from stores and warehouses and from vehicles in transit
occurs on a grand scale. It is a duty of the stores manager to take actions which
will reduce these losses and the costs associated with them. The organisation and
layout of the stores must take account of security from the beginning. The set- up
of routines is very much more difficult and less sure of success if the basic
requirements have not been built in.
Naturally, a major point in the provision of security is the installation of alarms. Often, however, the alarm
system is poorly matched to the premises and the environment in which it must operate. This can then be
compounded by inadequate training of guards and staff (the majority of false alarms occur at the start and
finish of shifts, when the system is being switched on/off). The police will downgrade their response to an
alarm if there are more than two false alarms in a year. Modern alarm equipment can now incorporate
verification analysis ... for example, is an external alarm signal then shortly followed by an internal alarm
signal...? Equipment can also be fitted with an analysis of the type of intruder (a cat or a man ..?) and the
precise location of the intrusion. Other security points include:
(iii) the installation of closed circuit TV to cover all entrances and walls.
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The profile of the internal thief employed in the stores varies from the employee who believes taking office
supplies and commonly available materials to be not really stealing and, anyway, a perk of the job, to the
professional thief who will potentially steal large amounts of inventory and who may be working with others
outside the stores or factory. Internal theft is effected by a variety of means - from putting goods in the pocket
or in a satchel or briefcase, putting goods outside a little used door for later collection, putting material in
recycling or refuse containers for later collection, all the way to making arrangements with drivers and
conspirators in customers' factories or using the stock system and deleting records of transactions. As well, IT
precautions should be taken to prevent entries in the stock records transaction file from being deleted.
(Individual transactions should never be permanently deleted from the transaction trail file. If, for any
reason, a transaction must be deleted for IT reasons, a copy of the deleted record should be retained as a
'dummy'. )
Perhaps the most important factor in the control of theft is the ethical stance adopted by the company and its
senior managers. If employees see evidence of dishonest practice at the highest level, they will not be held
back on moral grounds from dishonesty in their own jobs. Other than that most important point, theft can be
controlled by the following means.
1. as stated above, maintaining limited access to the stock. And if a storeman is not in
his own work area, should he really be there?
2. Institute high levels of stock records accuracy, and adopt the policy that material
"cannot be stored, moved, despatched, consumed or produced without supporting
documentation".
3. The supervisor must know what is going on in his own stores. He should walk about
and question people not doing what they are supposed to be doing or not in the place
expected of them. For example, he must query material staged without proper
documentation.
4. Managers should keep a watch for tell-tale signs that theft is taking place. These
include - figures changed on order documentation; missing documents; authorisation
stamps missing; stock records inaccuracy (*); unusual markings on packages; partly
opened packages; window guards with missing screws; products or picking slips
discovered in rubbish skips; employees making frequent trips to the car park during work
hours; drivers loading their own vehicles; little used or emergency doors have cardboard
wedged in their locks. (* It is not enough merely to check stock records for accuracy. A
record may be kept accurate through false transactions. Consequently, the audit trails
of certain records should be scutinised by auditors to ensure that recorded
transactions are genuine.)
Since March 2006 it has been illegal for any person to work as a 3rd party security guard without an SIA
licence (Security Industry Authority). There are two types of licence - Frontline (for guards) and Non-
Frontline (for managers). Nevertheless, the company engaging the services of a security provider should vet
the firm carefully and additionally vet each guard individually to ensure he has the necessary experience,
training and 'stability', notwithstanding his possession of a licence. Smart, polite guards or a licence do not
guarantee integrity. In some companies, there is a 300% staff turnover and management control (from an HQ
a hundred miles away) is poor. Finally, let it be said that the outsourcing of security or the employment of a
security company does not release company management from its liabilities and obligations under the law ...
the duty of care to provide security to both a company's employees and its property. For that reason, and to
assess effectiveness in this difficult field, it is recommended that the company arrange for an external audit of
its actual security - ie the services of a company that will physically test its procedures with a surprise visit by
personnel attempting to gain entrance. An organisation providing on-site audits is The Security Watchdog, of
Liphook, Hampshire.
Severe problems arise when material is committed to transit. In selecting third party hauliers, therefore,
considerable attention must be paid to the standards and procedures of the haulier in the matter of security.
The modes of transport suffering the fewest losses are aircraft and rail, the first because of excellent
procedures and safeguards followed by airlines and airports, the second because the nature of the loads make
them unattractive to thieves. Road is the problem. Driver training by a specialist company is essential. Stores
staff themselves should always be responsible for sealing and unsealing vehicles, not external drivers. Besides
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the use of seals, vehicles themselves are secured by slam locks, deadlocks, brace locks and immobilisers. In
addition, and more and more popular, is the deployment of a vehicle tracking system for vehicle recovery.
There are two types of system. The first operates by a GPS (ie global positioning satellite), capable of tracking
the vehicle to about 30 yards. GPS Systems have an advantage that unauthorised detours and stops by drivers
themselves can be detected. On the downside, the signal from these devices can be jammed. The second type is
based on a terrestrial signal, emitted from the device in the vehicle and which cannot be completely jammed.
The theft can be detected when it occurs, not simply when the driver reports it. Two systems in the UK are
TrakBak and Tracker.
In a warehouse, you are never more than five yards from a rat. The incidence of pests in the stores and
warehouse should be monitored by the maintenance of a Pest Book, with records kept of all so-called "visits"
by new pests or all discoveries of pest colonies. The information to be recorded should be date and time,
location and a sketch of the creatures. The book will be needed by the firm brought in to deal with them, and,
perhaps, by the Health and Safety Executive. Stores and warehouse pests include rats, silver fish, firebrats,
cockroaches, the warehouse moth, the Indian meal moth, tropical warehouse moth and house moth. Beetles
include the biscuit beetle and flour beetle. Also, there are the Australian spider, wasps and flies, mites, mice
and rats, feral pigeons and starlings.
While the need for uncompromising support for health and safety by the company can
hardly be overemphasised, responsibility at the practical level must clearly lie with the
storeman himself and with the stores supervisor. There is also a role for the human
resources manager, although it is likely to be administrative, especially regarding
formal compliance with regulations. For one thing, The Health & Safety at Work Act,
1974, described below, lays down in general terms the duties of the employer with
regard to the health, safety and welfare of his employees. In addition, one requirement
is that the company should issue a written statement of its policy, and also lay down
the duties of the employee regarding his own self-care and a requirement for his
cooperation with the company these matters.
Eight major statutes relating to health and safety in employment were enacted
between 1833 and 1963, the last four being The Mines and Quarries Act, 1954; The
Agriculture Safety Provisions Act, 1956; The Factories Act, 1961; and The Offices,
Shops, Railways and Railway Premises Act, 1963. In 1974, however, the government
implemented a new law termed The Health and Safety at Work Act (HSAWA). The Act
set up the Health and Safety Commission (HSC), a body corporate with a remit to
prepare regulations and issue codes of practice and guidance, and a Health and Safety
Executive (HSE). The HSAWA is referred to as an enabling act. That is, it provides
for a legislative mechanism whereby procedures specified in the offices of the Health
& Safety Commission can be translated into legally compelling regulations and the
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Obligations in the matter of health and safety under the common law centre round the
duty of care and statutory duty. The duty of care arises from the relationship between
the employer as manager and the employee as subordinate, rather than from the
contract of employment. Statutory duty in H&S relates to the requirement to conform
to laws and regulations such as those described above. If the company fails in either of
these duties, and an employee is thereby injured (ie some detriment thereby befalls
him), that employee may take action in the courts for damages, alleging either the tort
of negligence or the tort of breach of statutory duty. Assuming the action is between
the employee as plaintiff and the employer as defendant, the employee must show
three things to succeed in an action for negligence. Thus:
If causation is not present - ie if there is no link between (2) and (3), the action will fail.
The degree of care which must be exercised by the employer will depend on the
likelihood of an injury occurring and the likely severity of the injury if it does so
occur. In a judgment in 1949, Mr Justice Asquith expressed the principle thus: A
computation must be made in which the quantum of risk is placed on one scale, and the
sacrifice involved in the measures necessary for averting the risk is placed on the other.
Bearing in mind always the proportionality of risk and care required, the employer is
likely to have taken "sufficient measures" if:
(1) he has ensured that the employee is fully aware of the dangers of his work and
knows what precautions must be taken; and
(2) he has made precautions readily available, and ensured that the employer knows
of their existence.
That is, it is not the duty of an employer to eliminate every possible risk. There are
limits, namely the boundaries of reasonableness.
Note that if an accident occurs because of the malfunction of a machine or the sudden
failure of a supplier's component - for example, the splintering of a metal rod - statute
law in the form of The Employers' Liability (Defective Equipment) Act, 1969, applies
regarding anyone injured. Under the Act, the employer is deemed to be entirely liable
for an accident due to these reasons.
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would occur. Although Turner Manufacturing was directly responsible for the literal
occurrence of the accident, it was not liable in law for negligence, because it could not
be shown that it had lacked reasonable foresight. The case highlights the essential
need for the company, the company safety officer and the stores supervisor to keep
abreast of H&S knowledge from careful study of H&S magazines and HSC/HSE
publications. The defence offered by Turner Manufacturing of not knowing an
explosion would occur has not been available to any other company in the same
circumstances from the moment the facts were publicised in H&S literature.
There is a current vogue in the UK for setting targets for everything, whether they are NHS waiting lists or
traffic accidents on the M6. Three targets that could be devised for the stores might be "picking performance
better than 5.0 minutes per order line", "stock records accuracy of 97.0%" and "packages lost/damaged in
transit less than 0.1%". Setting targets and "measures of performance" however are fundamentally
misconceived for two reasons, as follows. (1) All human centred systems, such as the maintenance of stock
records, are liable to natural variation in output (due to what are called "common causes" of error),
invalidating the very idea of a fixed target. (2) When staff performance is measured by a target, hitting the
target becomes the sole focus of endeavour, rather than providing customer service. For example, hospitals
concentrate on performing a large number of fast, easy operations, regardless of the state of health of patients
waiting and medical emergency. Similarly, storemen measured on their picking rate may focus on speed at
the expense of accuracy.
There are two ways in which such an assessment might be made. The first is through the calculation of well-
known, standard financial parameters which reflect the general management of the facility rather than the
personal conduct of individuals. Three parameters are :
(i) Storage Costs (£ per pallet), including the ratio of (actual space occupied)/
(theoretical capacity) and the degree of honeycombing present;
(ii) Handling Costs :the cost of receiving, putting away, picking and despatching, per
unit handled
(iii) Stock Records Accuracy: the number of records correct/ the number of items
stored x 100%
The second assessment of performance is for the stores to present to each of its customers a statement of the
services it believes it offers and the principal areas where it is developing improvements. Then it must listen
very carefully to what its customers have to say and how its services might be changed or improved. Its
customers, we recall from the start of Section 1, are the shop floor, purchasing, distribution, quality, finance,
engineering and planning. In other words, forget targets, concentrate on customers.
Further Recommended Reading: ReInventing the Warehouse, by Roy L.Harmon, 1993 (The Free Press).
The End
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free course on stores and warehouse operations Page 69 of 69
http://www.gmcs.co.uk/stores.htm 08-Jul-2008