Warehouse Management

WAREHOUSE MANAGEMENT
(FOR PRIVATE CIRCULATION ONLY)

2019
PROGRAMME COORDINATOR
Dr. Narendra Parchure
COURSE DESIGN AND REVIEW COMMITTEE

Mr. Ashok Soman Mr. Ashok Joshi
Dr. Satish Chinchorkar Dr. Narendra Parchure
Dr. Sudeep limaye
COURSE WRITER
Prof. L C Jhamb Dr. Sudeep Limaye
Mr. Madhup Gandhi Mr. A.K. Sood
EDITOR
Ms. Neha Mule
Published by Symbiosis Centre for Distance Learning (SCDL), Pune

2019
Copyright © 2019 Symbiosis Open Education Society

All rights reserved. No part of this book may be reproduced, transmitted or utilised in any form or by any
means, electronic or mechanical, including photocopying, recording or by any information storage or retrieval
system without written permission from the publisher.
Acknowledgement
Every attempt has been made to trace the copyright holders of materials reproduced in this book. Should any
infringement have occurred, SCDL apologises for the same and will be pleased to make necessary corrections
in future editions of this book.
PREFACE
The Indian Logistics Market is mainly focused on providing warehousing and transport. With the
focus of government becoming sharper on overall supply chain and logistics, the warehousing is fast
emerging as a major independent industry from the shadows of logistics and transportation.
The SLM has nine units covering issues and topics from introduction to the concept of warehousing,
the functions performed by warehouse and different types of warehouses. The SLM covers the areas
of equipment being used in warehouse and also the role of technology in warehousing. This becomes
important since the modern warehouses have emerged as the places of value addition and high end
technology is adopted in its operations. The last two units of the SLM cover the areas of safety and
security in warehouses and the future trends in warehousing.
We express our gratitude to all those great institutions and great people whose research/writings/ideas
contributed to the growth and development of warehousing as an independent field of study. We are
also thankful to all my colleagues in the industrial as well as in the educational field whose help we
received in the execution of this project.
Attempts have been made to ensure correctness and consistency of the content. We sincerely request
the reader’s feedback on the content and also additional issues and areas that need to be treated.
We request all teachers and students who refer to this SLM to forward their comments and suggestions
in improving the SLM.
We are thankful to Symbiosis Centre for Distance Learning for providing us an opportunity to write
this SLM.
Prof. L C Jhamb
Dr. Sudeep Limaye
Mr. Madhup Gandhi
Mr. A.K. Sood
iii
ABOUT THE AUTHOR
Prof. L. C. Jhamb, B.Sc., Elect. Engg. Postgrad. in Industrial Engineering and Management, is
currently the Director (Operations) at El-o-matic India Pvt. Ltd., Pune and Director (Operations) at
Intervalve India Pvt. Ltd., Pune. He has over 25 years of industrial experience and has been associated
with companies like Sealol Hindustan Ltd., Pune (General Manager : Works), Thermax Limited,
Pune (Manufacturing Manager) and Divgi Metalwares Private Limited, Pune (Divisional Manager :
Manufacturing). Besides Industrial, Mr. Jhamb also has three years of experience as consultant with
Poona Divisional Productivity Council (Industrial Engineer). He is an author of repute and has written
so far twenty books on the subject of “Production and Materials Management.”
Mr. M. K. Gandhi, B.E. (Electronics and Telecommunication Engineering), MBA (Materials &
Logistics), is currently the Regional Director at Shree Shipping, Pune. He has over 16 years of industrial
experience and has been associated with companies like Mafatlal Industries (Materials Manager), P. T.
Kewalram Indonesia (Materials Manager), Conitex Sonoco India Pvt. Ltd. (CEO), Indorama Synthetics
Ltd. (AGM). Apart from this Mr. Gandhi is also working as a consultant in the field of supply chain
management and value appropriation.
Prof. A.K. Sood, a Management Consultant and a member of the Institute of Management Consultants
of India, provides training services to several organisations.
Mr. Sood has successfully combined a career in industry with teaching management courses in premier
Institutions of Management and Communications like Symbiosis Institute of Business Management,
Symbiosis Institute of Management Studies, Indsearch, I.M.E., Pune University, Vaikunth Mehta
National Institute of Cooperative Management and Sancheti Institute for Hospital Management
(Sancheti Institute for Orthopaedics & Rehabilitation) all of which he still retains associations with.
Prof. Sood is the Founder, Director of Institute for Sales Training, an organisation set up to provide
value to customers through education, job assistance, counselling and training programmes.
Dr. Sudeep Limaye has done B.Com. and M.Com. (Applied Economics) from Lucknow University
and PGDBM from Institute of Management Technology (IMT), Ghaziabad. He has also qualified the
UGC NET. He is PhD in Marketing Management. He has industry experience of about 18 years in
the domains of office automation, Sales management, Retail, Channel management, B2B marketing
and security. He has been a teaching faculty for more than 10 years with post graduate management
institutes.
Prof. Sudeep Limaye has authored 14 papers in research seminars and journals. Currently, he was
Assistant Professor for Marketing at the Symbiosis Centre for Distance Learning, Pune.
iv
CONTENTS
Unit Page
TITLE
No. No.
1. Introduction to Warehousing 1-20
1.1 Introduction
1.2 Warehousing a Global Perspective
1.3 Warehousing Growth Drivers in India
1.4 Opportunities for Warehousing in India
1.5 Key Challenges for Warehousing in India
1.6 Government Initiatives on Warehousing in India
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
2. Warehouse Functions 21-46
2.1 Introduction
2.2 Meaning of Warehousing
2.3 Importance
2.4 Functions of Warehouse
2.5 Functions: Receiving
2.5.1 Logistic Support for Inward Transports
2.5.2 Unloading, Inspection
2.5.3 Acceptance and Recording
2.6 Storing
2.6.1 Space Allocation
2.6.2 Facilitation to Stocking
2.6.3 Guarding & Recording
2.6.4 Risk Bearing- Processing- Grading and Branding
2.7 Issuing Services –
2.7.1 Issuing: Order Preparation
2.7.2 Picking
2.7.3 Dispatching/Delivery & Recording
2.7.4 Handling
2.7.5 Transportation & Storage of ISO Containers
2.8 Utility and Advantages of Warehouses
2.9 Problems and Issues in Receiving Processes
Summary
Keywords
Answers to Check Your Progress
Suggested Reading
v
Unit Page
TITLE
No. No.
3. Warehouse Types 47-66
3.1 Introduction
3.2 Warehouse
3.2.1 Own Warehouses
3.2.2 Hired Warehouses
3.3 Types of warehouses
3.4 Types Based on Ownership
3.5 Types Based on the Basis of Commodity Stored
3.6 Types Based on Functions
Summary
Keywords
Answers To Check Your Progress
Suggested Reading
Annexure
4. Warehousing and Value Added Services 67-82

4.1 Introduction
4.2 Characteristics of Ideal Warehouses
4.3 Warehouse Layout
4.4 Warehouse Designing and Configuration
4.5 Services Areas of Value Addition
4.6 Tips to Create Value Addition of Services
Summary
Keywords
Suggested Reading
vi
Unit Page
TITLE
No. No.
5. Warehouse Internal Operations 83-98
5.1 Introduction
5.2 Measures and Metrics of Warehouse Operations
5.3 Logistics in Warehouse
5.4 Locating Materials in a Warehouse
5.5 Identification and Classification of Materials and Products in
Warehouse
5.6 Managing the Material/Products Turns in Warehouse (FIFO/
LIFO)
5.7 Problems and Issues in Shipment Processes
Summary
Keywords
Suggested Reading
6. Warehousing Equipment 99-114
6.1 Introduction
6.2 Material Handling Equipment and Systems
6.3 Safety - Matting, Industrial Safety Equipment
6.4 Storage Types and Storage Unit Management
6.5 Material Storage Systems
6.5.1 Benefits
6.5.2 Methods
6.6 Industrial Shelving
6.7 Industrial Storage Bins
6.8 Spill Containment Systems
Summary
Keywords
Suggested Reading
vii
Unit Page
TITLE
No. No.
7. Inventory Management 115-130
7.1 Introduction
7.2 Need for Holding Inventory
7.3 Types of Inventories
7.4 Costs Associated with Inventories
7.5 Inventory Control Systems
7.6 Inventory Classification
7.7 Inventory Ledger
Summary
Keywords
Suggested Reading
8. Safety and Security in Warehouses 131-146
8.1 Introduction
8.2 Warehouse Productivity Analysis
8.3 Safety Considerations
8.4 Hazardous Material
8.5 Safety Equipment for Warehouses
8.6 Safety and Loss Prevention and Control
8.7 Cleanliness and Sanitation Issues
8.8 Warehousing Security
8.9 Security Equipment at Warehouses
8.10 Security Risk Prevention and Control
Summary
Keywords
Suggested Reading
Annexures
viii
Unit Page
TITLE
No. No.
9. Future Trends in Warehousing 147-158
9.1 Introduction
9.2 Role of Technology in Warehousing
9.3 Warehouse Management System
9.4 Global Warehousing Industry
Summary
Keywords
Suggested Reading
ix
x
Introduction to Warehousing
UNIT
Structure:
1
1.1 Introduction
1.2 Warehousing a Global Perspective
1.3 Warehousing Growth Drivers in India
1.4 Opportunities for Warehousing in India
1.5 Key Challenges for Warehousing in India
1.6 Government Initiatives on Warehousing in India
Summary
Keywords
Suggested Reading
Introduction to Warehousing 1
Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Understand the global warehousing industry
----------------------
• Analyse the growth drivers for warehousing in India
---------------------- • Evaluate the challenges faced by the warehousing industry in India
---------------------- • Evaluate the government initiatives on warehousing in India
----------------------
---------------------- 1.1 INTRODUCTION

---------------------- The Indian Logistics Market is mainly focused on providing warehousing
and transport. During the time they are increased, chain services like transport,
---------------------- warehousing, and other value added services have been provided.
---------------------- Basic logistics services which was focused on warehousing or pure
transport services which have changed in nature and structure and encouraged
---------------------- outsourcing to specialised players in the industry. Thus the concept of third-
party logistics (3PL) emerged, where companies have outsourced services to
----------------------
third-party logistics services for chain operations of some parts or occasionally.
---------------------- Third-party logistic providers are generally expert in integrated operation
---------------------- with warehousing and transport services, which can be customised based on
market conditions, demand, and delivery service requirements.
---------------------- The main driver for the growth of Indian economy are the country’s
---------------------- increasing FDI, growth in consumption level, and improvements and reforms
in the country’s market.
----------------------
Production outsourcing is increasing for industries like automotive and
---------------------- ancillary products, pharma and industrial equipment. Also the access to world
class organised players in the retail sector is another driver for the development
---------------------- of organised logistics players across the country. This has led to improved
international trade.
----------------------
Due to increasing market sophistication, changing customer preferences
---------------------- and global competition, manufacturers are pressurised to deliver quality goods
and services at a lower price. This has put pressure on the management of pricing.
----------------------
It has been found that the maximum cost savings can be done by managing the
---------------------- supply chain effectively.
In the past few years, the logistics have got high importance for providing
----------------------
a good product at low prices.
---------------------- The government is investing in infrastructure to make the logistics
---------------------- sector more competitive, efficient and cost effective. Attempts are being made
to encourage the participation of foreign and private players in this sector by
---------------------- changing government rules and taking up infrastructure development projects,
2 Warehouse Management
increasing transparency, creating flexible tax structure and establishing Notes
dedicated logistics park and Free Trade Warehousing Zone (FTWZ).
----------------------
The warehouse that contributes 20% of the total Logistics Market in the
entire logistics value chain, warehousing is a very important link. Warehousing ----------------------
was traditionally used as godowns to store goods from the time of production
till the time of consumption. ----------------------
In time, traditional warehouses have been converted into collection and ----------------------
storage points, where raw materials, intermediate and manufactured goods are
collected, stored and distributed. The warehouse market in India is expected to ----------------------
increase from 35 to 40% annually.
----------------------
Warehousing in India is very fragmented with small market for small
players spread across the country. ----------------------
Major challenges for this area: ----------------------
1. Lack of skilled labour ----------------------
2. Poor material handling and outdated equipment
----------------------
3. Weak technology adoption and innovation
----------------------
4. Absence of world-class standards and specifications
There is a dominance of unorganised players with a market share of 92%. ----------------------
Public sector companies such as Central Warehousing Corporation (CWC), ----------------------
Food Corporation of India (FCI) and State Warehousing Corporation (SWC)
have 70 to 75% market share of the organised market. ----------------------
The current capacity of the organised warehouse in the market is 106.95 ----------------------
million metric tonnes (MT), out of which only 18 million metric ton capacity is
in the private sector. ----------------------
In India, warehousing has been moved to the next maturity level with ----------------------
global 3PL players bringing in new technology, automatic material handling
devices and world-class standards for process and performance. ----------------------
As a result, warehouses have started focusing on value-added services like ----------------------
aggregation, labelling, packaging and re-packaging, bar coding, distribution
services, custom clearance services, customer service and reverse logistics. ----------------------
----------------------
1.2 WAREHOUSING A GLOBAL PERSPECTIVE
----------------------
In 2018, the world’s warehousing market was about $ 1.9 trillion. By the end of
2019, the industry is expected to grow by 6–8% CAGR. ----------------------
Global Warehousing Market ----------------------
High service provider maturity is seen in Europe and North America due to the
----------------------
wide range of offers, higher level of technology adoption compared to other
markets. ----------------------
----------------------
Notes Brazil, India, China, and Japan show low-to-middle level maturity due to
low penetration of 3PL and low warehouse technology.
----------------------
In the United States, general warehousing is approximately 55% of
---------------------- industry revenue and refrigerated warehousing is 15% of revenue. America’s
market trend is that usually companies having national warehousing requirement
---------------------- operate their own facilities.
---------------------- The norms for warehouse operators is to handle the needs of many
customers. Some market players also handle “contract” warehousing operations:
---------------------- running a full warehouse operation for a single large customer.
---------------------- Prices vary widely and are dependent on market location and services.
Typically, the annual lease rate for a large warehouse in the USA averages
---------------------- around $ 5 square foot.
---------------------- The self-storage segments of Warehousing in the US offer personal
storage space on lease to customers and small businesses on monthly basis.
----------------------
The average annual rent in the US market is around $10 per square foot,
---------------------- whereas the direct operating costs are $2 per square foot. The occupancy rates
for mature sites can be 80 to 90%.
----------------------
Trends in Global Warehousing Industry
----------------------
There is a trend towards adoption of high technology in the warehouse
---------------------- management operation. Technologies like automated guided vehicles, pick to
light, and voice-guided picking are emerging because most warehouses are
---------------------- adjusting their Delivery Centres (DC) for faster response times, space saving,
and efficient working systems with minimal human resource requirements.
----------------------
Now a days, warehouse service providers are offering value-added services
---------------------- like labelling, packaging and palletising to increase their service offerings.
---------------------- With the expected growth in the e-commerce sector, India and China are
likely to be the driving vehicles for future growth.
----------------------
Another trend in the market is to find drones used in the warehouse.
---------------------- Unmanned aircraft carriers (UAVs) are such aircrafts which do not require a
pilot on board. These UAVs are also commonly referred to as drones.
----------------------
To track an item properly, warehousing operators are evaluating the
---------------------- effectiveness of Radio Frequency Identification (RFID) tags that automatically
communicate with a local computer.
----------------------
Drivers to Global Warehousing
----------------------
1. Global manufacturing production is increasing and it is expected that the
---------------------- manufacturing will pick up and grow continuously. More manufacturing
demands more will be the need for warehousing facilities.
----------------------
2. Global GDP is also showing healthy growth, this has created a positive
---------------------- financial environment which increases the demand for warehouses.
----------------------
3. Demand for refrigerated warehousing is increasing because of the growth Notes
in the frozen food industry.
----------------------
4. The development of e-commerce is helping to increase the demand for
warehouse space by 3PL around the world and markets like India and ----------------------
China are expected to grow rapidly.
----------------------
5. Increasing service-level demand for customers of e-commerce and
retailing, such as one day delivery and e-commerce, also make marketers ----------------------
invest in warehousing.
----------------------
6. The market shift in Logistics to the centralized distribution model has
resulted in an increase in demand for modern class A type warehouses ----------------------
worldwide.
----------------------
7. A visible increase in the disposable income among the general public is
creating a demand for consumer goods especially FMCG products. This ----------------------
is the reason for the increase in production and warehouse industry.
----------------------
Issues faced by the global warehousing industry
1. In countries and regions, the availability of Class A warehouses is limited ----------------------
to only a few countries. Therefore, it hinders the adoption of high-level ----------------------
technology and the best-quality performance indicators fail.
----------------------
2. The lack of skilled labour and expertise in the warehousing sector resulted
in higher wages for skilled workers. It affects the entire operating expense. ----------------------
3. Another major challenge in the market is the real estate price which is
----------------------
increasing the cost of warehouse rent and industrial land. Constantly
increasing cost of land and rising rents of warehouses are becoming a ----------------------
challenge for operators of the market.
----------------------
Check your Progress 1 ----------------------
State True or False. ----------------------
1. In India traditionally, only pure transport or warehousing service ----------------------
providers of the in-house nature existed.
2. Warehousing sector in India is highly fragmented. ----------------------
3. Warehouse service providers are offering value-added services to ----------------------

enhance and compliment service offerings.
----------------------
4. Major growth driver for the global warehousing industry is refrigerated
warehousing. ----------------------
----------------------
Activity 1 ----------------------
Check the website of Ceva logistics and list down the major technological ----------------------
initiatives taken by the company in warehousing.
----------------------
Notes 1.3 WAREHOUSING GROWTH DRIVERS IN INDIA
---------------------- The increase in warehouses in India is mainly driven by the increase in
productivity, international trade growth and organised retail growth, private
---------------------- and foreign investments in basic infrastructure and easing of government
regulations. There are many other components that are encouraging the growth
----------------------
of warehouses in India.
---------------------- It is estimated that the logistics cost in India is 13 to 14% of its GDP.
---------------------- It should be seen that developed countries like the US, Japan, and European
countries spend 7 to 8% on logistics. This high cost percentage is primarily due
---------------------- to market constraints like highly fragmented structures, poor infrastructure, and
complex tax structure.
----------------------
The reason for the boost of the warehousing sector in India is the policy
---------------------- reforms initiatives by the Indian government. Some important initiatives of
policies are the establishment of Logistics Park in PPP model, Warehousing
---------------------- and Development Act 2007 and Goods and Services Tax (GST).
---------------------- Warehousing plays a major role in the farming sector as it provides the storage
space to the agricultural products until they are sold to the customers.
----------------------
Increasing outsourcing and ancillarisation of manufacturing industries like
---------------------- automobile, pharmaceuticals, electronics, and processed food are encouraging
for the growth of organized warehouses with appropriate value-added services
----------------------
and facilities. Growing general business trade is also a strong driver of CFS and
---------------------- ICD.
Insufficient and disorganised infrastructure is one of the major problems
----------------------
in the Indian warehousing sector and investment in infrastructure is an important
---------------------- element for the growth of warehousing.
---------------------- According to a survey conducted by PWC with 1200 chief executives

from 69 countries, government initiatives to build infrastructure are important
---------------------- for determining the competitiveness of countries. As major policy initiatives,
the government of India has eased FDI rules and encouraged PPPs to bring
---------------------- more investment into warehousing.
----------------------
1.4 OPPORTUNITIES FOR WAREHOUSING IN INDIA
----------------------
India is becoming the leading manufacturing hub for most of the industries
---------------------- and the main reasons behind it are increasing domestic consumption and the
cost-effectiveness of outsourcing of manufacturing activities.
----------------------
Some industries have developed growth because of the tightening of the
---------------------- economy’s growth.
---------------------- These include:
---------------------- 1. Automotive
2. Retail
----------------------
3. Pharmaceuticals Notes
4. Agriculture
----------------------
Automotive
----------------------
The Indian automobile industry is growing at 30% rate and is one of
the fastest growing industries in India. With the foreign large automobile ----------------------
manufacturers becoming important, the focus on efficiency and importance of
JIT and product performance are increasing. This is also leading to growth and ----------------------
development of warehousing as an organized industry.
----------------------
Due to the decrease in inventories and the importance of lead time
of inventory the warehousing is gaining higher importance. In addition, ----------------------
concentration of auto industry in some cities or in the geographical location, ----------------------
has made the marketers to build warehouses in strategic locations so that they
can work as central point for final and intermediate products for the distribution ----------------------
and collection.
----------------------
All players in the automotive industry use 2PL or 3PL for the part of
their logistic operations. There is now a trend to create a mix of in-house and ----------------------
outsourced services to manage the supply chain. This is the rise of 4PL services
in India. ----------------------
Special Economic Zones (SEZs) have been set up by the government ----------------------
for auto makers for the convenience of the automobile manufacturing industry.
SEZ has been set up in Haryana, Jharkhand, Karnataka, Maharashtra, Tamil ----------------------
Nadu, and West Bengal. ----------------------
The SEZs provide manufacturers with dedicated and shared-user facilities
----------------------
where two or more manufacturers share the warehousing services to save the
supply chain costs. To focus on the price reduction, the use of modern technology ----------------------
such as RFID and WMS are used to track the goods in the warehouses.
----------------------
3PL provides value-added services such as assembling, Pre-Delivery
Check, Cross-Dock Facility, aggregation and Deconsolidation Centres, ----------------------
automation and sorting to meet the needs of automakers.
----------------------
Retail
According to the US Consulting Group AT Kearney report, published in ----------------------
June 2010, India is the third most attractive retail market for global retailers. ----------------------
Major drivers of organised retail development in India are favourable
demographics, increasing disposable income, increasing urbanisation, large ----------------------
expanses of existing players and lesser access to new players. ----------------------
The success of retailers depends on ensuring consistent availability of a
----------------------
wide range of products in a wider network. It requires high level of control over
logistics. ----------------------
In addition to the food retailers, changing spending patterns in rural is
----------------------
making retailers setup bases in or for rural areas. Rural markets in India do
not have the good developed infrastructure. Retailers are now investing in ----------------------
Notes cold storage and special warehouses in the agriculture producing fields and
manufacturing places to avoid losses and reduce costs during continuous
---------------------- sourcing and transportation.
---------------------- With the increasing demand for modern warehouses, global players have
started entering the Indian market. Typically, these players make partnerships
---------------------- with the domestic real-estate companies or the country or establish their own
subsidiaries.
----------------------
Pharmaceuticals
----------------------
The pharmaceutical market is one of the few sectors, which is generally
---------------------- resilient even in the economic downturn. A highly efficient logistic operation and
integrated supply chain are required to support the growth of the pharmaceutical
---------------------- industry. Many pharmaceutical companies have increased outsourcing of their
logistics functions to 3PL due to the reduction of operation costs and increased
----------------------
supply chain performance.
---------------------- The cost of logistics in the Pharmaceutical Value chain is typically
---------------------- around 45 to 55%. Which includes packaging, distribution and other value
added services. The medicines requires a very reliable and secure storage space
---------------------- because it is temperature-sensitive and requires an environment where the
temperature range can be pre-defined to adjust to the specific requirements.
----------------------
Since Indian pharmaceutical companies are looking for opportunities in
---------------------- the international market, these companies have to adopt more advanced cold
chain management practices. Similarly, some companies have either set their
---------------------- own cool storage or outsourced it to a special 3PL.
---------------------- Agriculture
---------------------- Agriculture is India’s largest occupation and the largest employer in India,
it accounts for about 14-16% of GDP.
----------------------
India’s agricultural supply chain suffers from serious inefficiencies, which
---------------------- have caused huge loss of goods across the country due to lack of storage and
transportation facilities. It is estimated that India loses about 20% of its food
---------------------- grains due to poor storage facilities.
---------------------- Due to the unorganised nature of the market, there is a major lack of
storage and transportation facilities. Also, farm equipment has to be purchased
---------------------- from the government-designated centres, which are run by middlemen who
---------------------- operate in cartels. These gaps in supply chain efficiency have opened up many
opportunities.
---------------------- Most of the supply chain activities for agriculture are regulated and
---------------------- controlled by either by CWC and FCI or the unorganised sector. However, the
market is changing with the entry of many private and multinational retailers.
---------------------- Cleaning, sorting, grading, packaging, and financing are easily accessible.
These facilities are not only beneficial for the farmer but also for the business
---------------------- communities and corporates.
---------------------- Due to the increasing involvement of private players in the market, the
agricultural-logistics markets is expected to consolidated and evolve. This Notes
integration will require a large warehousing capability to manage the supply
chain, with the basic infrastructure and seamless backward and forward ----------------------
integration.
----------------------
1.5 KEY CHALLENGES FOR WAREHOUSING IN INDIA ----------------------
Although the strategic importance of the Indian economy and the ----------------------
opportunities for Indian markets are presented, there are many challenges in the
Indian repository. ----------------------
Major challenges for warehousing sector in India can be broadly ----------------------

categorized as,
----------------------
A. Strategic Challenges
----------------------
B. Operational Challenges
Let’s discuss these briefly. ----------------------
A. Strategic Challenges ----------------------
1. Infrastructure ----------------------
The infrastructure is the most important component in the warehousing
sector. An efficient warehousing operation depends on high quality ----------------------
infrastructure that includes a good national highway network, intermediate ----------------------
roads, and narrow city roads.
----------------------
As discussed earlier, the total share of the organised warehousing space
in India is less than 8% of the total warehouse space. The industry is ----------------------
fragmented and is largely unorganised and has small players’ dominance
with small capacity. Also, it does not have good connections with the ----------------------
national highway network and interstate roads.
----------------------
2. Land Availability
----------------------
There are major challenges to build a new warehouse, purchase of land
with a clear title and proper sanction are key challenges. Also, the lack of ----------------------
clear land classification and land redistribution in the Indian urban areas
are the main issues for the development of the warehouse in any area are ----------------------
still major concerned. ----------------------
Due to rising prices in large warehouses in India, it is becoming difficult
to buy land at cheap prices for the construction. Apart from this, there are ----------------------
various rules related to land acquisition in different states, which make ----------------------
entry barriers and affect the cost of serious expenditure and time. The
government is trying to facilitate this process and making policies to for ----------------------
ease of the process and to overcome the challenges.
----------------------
3. Lack of Certification
----------------------
Warehousing is available from many sources of special needs. Lack of
the certification and standards of warehousing are important challenges ----------------------
Notes in this industry, where the quality and flexibility of available warehousing
is a big concern.
----------------------
In the case of ready-to-be-used warehouses, companies need to invest
---------------------- more to improve the space and to improve its performance on standards
that support their operations. Many basic warehouses that are not designed
---------------------- to suit the implementation of technology and technical compliance or to
adjust to the need of adoption of automated equipment. Going forward,
----------------------
the demand from the warehouse users will put pressure on the developers
---------------------- and the owners to adopt the standards set by the policymakers.
4. High Cost of Credit
----------------------
Getting adequate and timely credit for a reasonable cost is the most serious
---------------------- problem facing the warehousing sector. The main reason for this is the
risks associated with high transaction costs for the unorganised nature of
----------------------
warehousing areas and credit rating of high risk by the banks. Also, most
---------------------- of the players in this area are small or medium entrepreneurs, so they are
unable to provide collateral to take advantage of the loan from banks and
---------------------- therefore they are denied credit.
---------------------- 5. Fragmented Markets with Unorganized Players
---------------------- Small and medium-sized players in the Indian repository are dominated
by small capacities. These players cannot achieve economies of scales of
---------------------- scale due to the small size and scale of operations. Cold-chain logistics
solutions are always run by the consolidation of different functions of
---------------------- logistics.
---------------------- Worldwide, cold-chain service providers include large fleet sizes, with
heavy traffic vehicle fleet size and sophisticated technology. Till now,
---------------------- market forces in India have not encouraged the large fleet ownership. In
---------------------- this way, the cost of cold chain supply in large quantities is prohibitive in
India.
----------------------
6. Power Outage
---------------------- The power supply in India is a challenge and power outage is still a regular
occurrence. Regular power outages affect the warehousing cold chain,
----------------------
and this causes significant side effects of agricultural products each year.
---------------------- Also, increased spending on continuous power increases the warehousing
costs for agricultural products.
----------------------
7. High cost due to long transit time
---------------------- Long-term transit time and incomplete infrastructure also increase
---------------------- transport costs. This leads to the collection of live content on the mini-
warehouse, which is distributed all over the place by losing the aim of
---------------------- growth and distribution.
---------------------- 8. Complicated Tax Regime

GST implementation issues and the complexity of income-tax, sales and
----------------------
transport tax systems is a challenge for the players in warehousing in Notes
India. Such complexity is prohibited from establishing a national level
central distribution center or centers in India. ----------------------
B. Operational Challenges ----------------------
1. The Possibility of Not Meeting the Entire Supply Chain
----------------------
Although warehousing is an integral component of the supply chain, at
present, India’s warehouses are structured on an independent basis. The ----------------------
warehousing service provider usually struggles to gather information and
----------------------
visibility with other supply chain holders.
Since there is no consolidation of warehousing with other players in the ----------------------
supply chain, there is uncertainty to use space and facilities. Expected ----------------------
value from these Warehousing service providers also impacted the
enhanced service performance level. ----------------------
2. Lack of Skilled Manpower ----------------------
There is a general shortage of skilled manpower structured courses in the
field of logistics and especially the warehouses. ----------------------
Some reasons that contribute to the shortage of skilled manpower are ----------------------
listed below,
----------------------
1. Develop warehouse management processes and operations
----------------------
2. More demanding customer
3. Lack of attraction for new recruits due to poor working conditions ----------------------
4. Relatively less attractive promotions and benefits ----------------------

5. Rise of attractive alternative career options ----------------------
3. Lack of IT Entrance
----------------------
The technology helps in the accuracy, speed of any operation. In India,
warehousing generally has a relatively less technical dependence. Low ----------------------
technology adoption and the related handicaps for sustainability are,
----------------------
1. Limited real-time visibility
----------------------
2. Manual Inventory Management
3. Manual Warehousing Operations ----------------------
4. Depending on the Paper Documentation, Billing and Reporting ----------------------

A majority of the Indian warehousing players today have inefficient ----------------------
methods of storing, handling and monitoring of goods. They also suffer
from stock visibility issues, stock traceability, higher pilferages and ----------------------
damages.
----------------------
5. Shortage of Warehousing Technology Experts
----------------------
Today, most warehousing companies in India have a poor mode of
storage, handling, and monitoring. They suffer from poor stock viability, ----------------------
Notes stock traceability, high theft, and loss related issues, warehousing is also
in India.
----------------------
6. In the Process of Inefficiency
---------------------- There is an absence of standardized operating systems and procedures in
warehouses in India. Unloading, handling, storing, and loading are often
----------------------
run improperly. It only creates inefficiency, but many inaccurate problems
---------------------- arise with the loss and subsequent growth.
---------------------- Check your Progress 2

----------------------
State True or False.
---------------------- 1. Logistics costs as a percentage of total cost in India are very high
---------------------- compared to developed countries.
2. Warehousing has been gaining tremendous importance due to the
---------------------- growing need to reduce storage and lead times for inventory.
---------------------- 3. In India, there are heavy losses of agricultural commodities throughout
the country due to lack of proper storage and transportation facilities.
----------------------
4. Typically, cold-chain service providers have large fleet sizes and big
---------------------- warehouses with state-of-the-art technology.
----------------------
---------------------- Activity 2
---------------------- Check the report on warehousing as prepared by NSDC. List down the
identified skills that are required for manager, supervisor, and operator in
----------------------
warehousing.
----------------------
---------------------- 1.6 GOVERNMENT INITIATIVES ON WAREHOUSING

IN INDIA
----------------------
1. Free Trade Warehousing Zone (FTZZ)
----------------------
The Free Trade Warehousing Zone (FTWZ) has been set up by the
---------------------- government to facilitate the import and export of goods and services that
are free to develop infrastructure and trade in open trade. These zones are
----------------------
established near coastal, airport or dry ports and connectivity is provided
---------------------- so that they can easily access through roads or trains or other means of
transportation.
----------------------
According to the Special Economic Zone Act 2005, there is a special
---------------------- category of FTWZ Special Economic Zone (SEZ) and the SEC is governed
by the laws and regulations. Generally, FTWZ is a foreign country for
---------------------- trading and is considered to be integrated areas for use as an international
business center.
----------------------
The growth rate under FTWZ is at least 0.1 million square meters, 100% Notes
FDI is approved. Some of the features of FTWZs are:
----------------------
• Customised warehouse for industries like Chemicals, food,
electronics, oil, etc. ----------------------
• Sophisticated freezer/thunder facility
----------------------
• Disburse large, containerised and dry cargo storage facilities
----------------------
• Controlled humidity warehouse
• Good transport facility ----------------------
• World-class information system for Cargo tracking etc. ----------------------

• Office space provisioning ----------------------
• Facilities like medical facilities, canteen services, business centres
----------------------
With the establishment of FTZ, the government expects to create
employment opportunities and boost the economy and the organised ----------------------
warehousing activities. ----------------------
2. Logistic Park
----------------------
Logistic Park is a designated area which provides facilities for the
domestic and foreign trade warehousing, cold storage, multi-modal ----------------------
transport facility, CFS, ICD, etc. Logistics Parks are similar to those of
FTWZ but are also available to local markets. ----------------------
Logistic Park makes cargo loads and unloading accessible for distribution, ----------------------
redistribution, and packaging and repackaging. They are being developed
----------------------
near industrial centres like Mumbai, Chennai, Hyderabad, Bangalore, and
NCR. ----------------------
Private Logistics Parks are being developed for industries like Automobile,
----------------------
Pharmaceuticals, Agriculture, Electronic Hardware, and Aero Industries.
The parks are connected by rail links and multi-modal transport facilities. ----------------------
3. Warehouse (Development and Regulation) Act, 2007
----------------------
Despite the importance of agriculture in the economy, historically
no concrete steps have been taken to protect agricultural products in ----------------------
the country. Government of India has established the Warehousing ----------------------
(Development and Regulation) Act 2007 to solve the problem of
agricultural product warehousing. ----------------------
The Warehousing Development and Regulatory Authority (WDRA) will ----------------------
make provisions for the development and regulation of warehouses.
The government launched negotiable warehouse receipt (NWR) system ----------------------
to allow farmers to transfer the goods from the warehouse without ----------------------
physically delivering it and also use them to get access to the loan. NWR
are expected to reduce the wasting/theft of goods during transit from ----------------------
production place to the possession of the banks/financial institutions.
----------------------
Notes Under the Warehouse (Development and Regulation) Act, 2007, the NWR
is controversial and regulated by the WDRA.
----------------------
These receipts are expected to improve farmer’s borrowing capabilities
---------------------- and quality of credit services in the agriculture sector, increase liquidity
in rural areas and encourage better price management of farm products.
----------------------
The WDRA provisions have increased the efficiency of banks’ loan
---------------------- portfolio and increased the interest of the credit institutions to ensure
credit in the context of the goods in the warehouse.
----------------------
4. New Tax Policies to Reduce Supply Chain Costs
---------------------- The government has introduced Goods and Service Tax (GST). This will
---------------------- reduce the cost of the supply chain and encourage the participation of
private players in the system.
---------------------- Octroi is one of the traditional taxes offered by the government. It has been
---------------------- recognized in view of the construction of godowns and trans-shipment
hubs outside the Octroi/State limits.
---------------------- However, the logistics organizations objected to it because a lot of time was
---------------------- wasted in the Octroi and state sales tax check posts. Also, administrative
complications and delays were made in pre-paid Octroi on other items
---------------------- and the getting refunds later. GST played an important role in reducing
time delays and cost of logistics.
----------------------
GST was introduced to prevent cascading effects of taxes being taxed at
---------------------- every level. However, a simplified tax system offers logistics players a
multi-market service and offers end-to-end solutions more efficiently and
----------------------
at a very low cost.
---------------------- Private sector participation plays an important role in developing the
warehousing sector rapidly. Illegal warehousing can be curbed by the
----------------------
government by setting up stricter and clearer rules. This will enable deeper
---------------------- penetration by international and domestic players into the warehousing
sector. Traditional tax strategies failed to encourage them because they
---------------------- brought down the impact on the downstream industry and this led to
higher costs for such industries.
----------------------
GST helps in the restoration of the industry and enables the goods storage
---------------------- and distribution across the country. Especially, because most manufacturers
---------------------- have built their own regional warehouses to avoid interstate taxes.
GST has encouraged companies to build centralised warehouses at key
---------------------- strategic locations that can work on the Hub-and-Speech model, which
---------------------- will result in the outsourcing of logistics activities in the organised sector.
GST will make the Indian manufacturing sector globally competitive and
---------------------- will promote entrepreneurial initiatives and financial activities solely. It
---------------------- is estimated that 3PL under GST will be encouraged and savings will go
up to 20%.
----------------------
5. Skill and Talent Development Notes
Most players in India’s warehousing sector are running warehouses for
----------------------
storage facilities for small or multiple companies in India.
It is a good opportunity for players to move away from traditional ----------------------
working practices. However, it is constrained by many obstacles, and
----------------------
most importantly, the lack of skill and talent.
There is a tremendous gap in the availability of knowledge and skilled ----------------------
manpower. There are very few professionals in the warehousing sector in
----------------------
India and most of the activities, strategies or operations are usually done
by generalist. ----------------------
The skills and talent issues in the warehousing sector exist in different ----------------------
ways. The main reasons for the existing skill barriers in this area are:
1. Rapidly developing warehouse management processes and ----------------------
operational skills requirements ----------------------
2. The absence of structured skill development initiatives
----------------------
3. Limited experienced professionals
----------------------
4. Poor facility for employment at the job
5. No new attraction due to insufficient working conditions ----------------------
6. Relatively less attractive promotions and benefits ----------------------
With the entry of international retailers and many global manufacturing ----------------------
players in India, there will be a combination of tax system changes and
warehousing area consolidation. This development will create the need ----------------------
for value-added services related to warehousing, in which picking and
packing, inventory management, stockpiling, shipment consolidation, ----------------------
brake bulk operations, processing/migration, assortment, proper handling ----------------------
systems, such as warehousing equipment like Stackers, flat trucks, etc.
And the ability to use and use information and communication technology. ----------------------
The growth of Private Container Train Operator (PCTO) in India has ----------------------
encouraged the development of CFS and ICD in which loading/unloading,
stuffing/d-stuffing, etc. functionality is required. ----------------------
Similarly, cold chain demands technically capable manpower, in which ----------------------
the capabilities of temperature and humidity control requirements and the
ability to run the equipment in a sophisticated controlled environment are ----------------------
available.
----------------------
Government has set up the Logistics Area Skills Council to create capacity
in areas of expertise required for the logistics sector. The National Skills ----------------------
Development Corporation has studied the skills required in the industry.
----------------------
Some findings in the NSDC report are given in the following table. Table
below provides snapshots of people working in the warehouse in India. ----------------------
----------------------
Notes Table 1 Profile of people presently employed in the warehouse sector in
India
----------------------
Qualification and number of years of experience Hierarchical levels
---------------------- 1 Graduates with 5-7 years of industry experience Managers
---------------------- 2 Diploma holders/graduates with 4-5 years of Supervisors
experience
---------------------- 3 10th/12th pass with/without experience Operators
---------------------- Source: www.nsdcindia.org
---------------------- It is estimated that India will need around 35,000 to 40,000 godown
managers over the next five years. At present, training and upskilling capabilities
---------------------- are low in order to meet the requirements of mid-level managers of the Indian
Warehouse Industry.
----------------------
---------------------- Summary
---------------------- ●● Traditionally in India, there existed only pure transport or warehousing
service providers of the in-house nature.
----------------------
●● The trend changed towards providing customised services and started
---------------------- being outsourced to specialised players in the industry.
---------------------- ●● The government is investing in infrastructure to make the sector more
competitive, efficient and cost-effective. Changing regulatory set-up,
---------------------- government incentives, and infrastructure development projects, increasing
transparency, relaxed tax structures to encourage the participation of
---------------------- foreign and private players in the sector and dedicated logistics parks and
---------------------- Free Trade Warehousing Zones (FTWZ) are fostering the growth of the
logistics market in India.
---------------------- ●● In global warehousing, Europe and North America markets show higher
---------------------- service provider maturity due to high technology adoption levels and a
wider range of services offered.
---------------------- ●● Emerging countries, such as Brazil, India, China, and Japan show low to
---------------------- medium maturity in warehousing due to lower 3PL penetration rates and
lower adoption of warehouse technology.
---------------------- ●● Currently, warehouse service providers are offering value-added services,
---------------------- such as labelling, packaging and palletizing, to enhance and compliment
service offerings.
---------------------- ●● India and China are expected to be the future growth driving markets
for the warehousing industry due to the expected robust growth in the
----------------------
e-commerce sector.
---------------------- ●● The key challenges for the warehousing sector in India can be broadly
classified into, strategic challenges and operational challenges.
----------------------
●● One trend in the market is the use of drones at warehouses to track inventory.
----------------------
●● Sectors with a high business opportunity in India are Automotive, Retail, Notes
Pharmaceutical, and Agriculture.
●● Free Trade Warehousing Zones (FTWZ) was established by the government ----------------------
to develop infrastructure to facilitate import and export of goods and ----------------------
services with the freedom to carry out trade transactions in the free currency.
●● FTWZ are established close to seaports, airports or dry ports, to be easily ----------------------
accessed by road or rail. ----------------------
●● Speciality logistics parks are being constructed for industries such as
automobile, pharmaceuticals, agriculture, electronic hardware, and aero ----------------------
industry. ----------------------
●● The government has introduced good and services tax structures to reduce
supply chain costs and also to encourage the participation of private players ----------------------
in the system.
----------------------
●● There is a huge gap in the knowledge and skill set requirement vis-a-vis
availability. There are in fact very few professionals in the warehousing ----------------------
field in India and most of the activities, strategic or operational, are done
----------------------
by generalists.
----------------------
Keywords
----------------------
●● Third-party logistics (3PL): Where companies provide outsourced or
----------------------
third-party logistics services to companies for part, or sometimes all of
their supply chain functions. ----------------------
●● Contract warehousing operations: Running an entire warehouse
----------------------
operation for a single large customer.
●● Free trade warehousing zone: A special category of Special Economic ----------------------
Zone (SEZ) that is governed by the provisions of the SEC Act and the
----------------------
Rules. FTWZ are foreign territories to carry on business and are envisaged
to be integrated zones to be used as international trading hubs. ----------------------
●● Logistics park: A stipulated area that facilitates domestic and foreign trade
----------------------
by providing services such as warehousing, cold storage, multi-modal
transport facility, CFS, ICDs, etc. ----------------------
----------------------
----------------------
1. Write a note on the trends in global warehousing.
2. List down the key drivers for warehousing in India. ----------------------
3. Warehousing is an emerging sector of India’s logistics domain Discuss. ----------------------

4. Explain the government’s initiatives for the growth of warehousing in ----------------------
India.
----------------------
----------------------
Notes 5. Write short notes on:
a. Strategic challenges for warehousing in India
----------------------
b. Operational challenges for warehousing in India
----------------------
---------------------- Answers to Check your Progress

----------------------
1. True
----------------------
2. True
---------------------- 3. True
---------------------- 4. True
----------------------
1. True
----------------------
2. True
---------------------- 3. True
---------------------- 4. True
----------------------
Suggested Reading
----------------------
1. Menon, K. S. Stores Management. New Delhi: Macmillan India Limited.
----------------------
2. Belapure, Ashutosh Madhukar, Export & import management, Horizon
---------------------- books, ISBN-978-93-84044-04-6.
---------------------- Bibliography
1. CRISIL Research.
----------------------
2. National Skill Development Corporation (www.nsdcindia.org).
----------------------
3. McKinsey Quarterly – “Transforming India’s Logistics infrastructure”.
---------------------- 4. Department of Commerce.
---------------------- 5. Warehousing Development Regulatory Authority (WDRA).
---------------------- 6. Jones Lang LaSalle Meghraj – “The Transforming Landscape of Indian
Warehousing”.
----------------------
7. Colliers – “Logic of Logistics, 2009”.
---------------------- 8. World Bank.
---------------------- 9. AT Kearney’s report on retailing.
---------------------- 10. BMI India Retail report.
11. Society of Indian Automobile Manufacturers (SIAM). Notes
12. Journal Of Computing, Volume 2, Issue 5, May 2010, ISSN 2151-9617.
----------------------
13. Financial Express (www.financialexpress.com/news/logistics-space-is-
hotting-up/613895/0). ----------------------
14. India Brand Equity Foundation (www.ibef.org/artdisplay.aspx?cat_ ----------------------
id=109&art_id=25460).
----------------------
15. Livemint (www.livemint.com).
16. India Private Equity (www.indiape.com). ----------------------
17. VCCircle (www.vccircle.com). ----------------------

18. Frost and Sullivan – “Strategic Analysis of Growth Opportunities in ----------------------
Indian Warehousing Market”.
----------------------
19. DealCurry (www.dealcurry.com).
20. http://www.hoovers.com/warehousing-and-storage--/--ID__152--/free- ----------------------
ind-fr-profilebasic.xhtml WAREHOU. ----------------------
21. https://www.beroeinc.com/category-intelligence/warehousing-market/.
----------------------
22. https://www.researchandmarkets.com/reports/4600502/global-
warehousing-and-storage-market-2018-2022. ----------------------
23. https://docplayer.net/4517442-Building-warehousing-competitiveness. ----------------------
html.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Warehouse Functions
UNIT
Structure:
2
2.1 Introduction
2.2 Meaning of Warehousing
2.3 Importance
2.4 Functions of Warehouse
2.5 Functions: Receiving
2.5.1 Logistic Support for Inward Transports
2.5.2 Unloading, Inspection
2.5.3 Acceptance and Recording
2.6 Storing
2.6.1 Space Allocation
2.6.3 Guarding & Recording
2.7 Issuing Services –
2.7.1 Issuing: Order Preparation
2.7.2 Picking
2.7.3 Dispatching/Delivery & Recording
2.7.4 Handling
2.7.5 Transportation & Storage of ISO Containers
2.8 Utility and Advantages of Warehouses
2.9 Problems and Issues in Receiving Processes
Summary
Keywords
Suggested Reading
Warehouse Functions 21
Notes
Objectives
----------------------
----------------------
• Explain the meaning of warehousing
----------------------
• Understand the need for warehousing
---------------------- • Identify the different types of warehouses
---------------------- • List down the characteristics of ideal warehouses
---------------------- • Discuss the functions of warehouses

• List down the advantages of warehouses
----------------------
----------------------
2.1. INTRODUCTION
----------------------
We eat different types of food in our daily lives. But have we ever
---------------------- considered the source of the food we eat? From where the rice or wheat comes?
Especially, we know that these cereals products are seasonal and are not
----------------------
available all year round.
---------------------- So how do we continuously supply this item?
---------------------- These foods are stored in some places in the right place, and they are
provided when we need them. The production of these products is essential
---------------------- when the collection is produced during a particular season and in specific areas
---------------------- throughout the country and throughout the year.
Generally, we store seasonal food in our house for our own use. But there
---------------------- are some places or stores, where these items are stored in a fairly accurate and
---------------------- neat way. In this unit, we will take a review of these activities of storage for
such a large amount in warehouses.
----------------------
----------------------
2.2 MEANING OF WAREHOUSING
---------------------- Every business requires a variety of items to produce or process the final
goods or services used for their sale. Some input items may not always be
---------------------- available. But for some production time and production of products are not
available, it cannot be seasonal to stop the production process or sales. There is
---------------------- a need for an entire year to meet the demand of the customers.
---------------------- It will have to be stored in the warehouse to require a continuous supply
of input materials. Similarly, after the production of the goods, there is a time
---------------------- period during production and final consumption or sale or distribution and
---------------------- during the interim period, it will be stored in the warehouse. Thus, the need for
storage for raw materials as well as prepared products is created.
----------------------
Storage includes the right mechanism to protect the goods during
---------------------- production or purchase until a real product.
When this storage is done on a large scale and in a specified way it is Notes
called warehousing.
----------------------
The place where the goods are stored is called a warehouse.
The person in charge of the warehouse is called ‘Warehouse-Cape’. ----------------------
So we can define warehousing as a means to make things available in the ----------------------
storage of a large number of goods in a convenient and systematic way, as per
the activities and requirements. ----------------------
In other words, Warehousing means holding or saving up to actual use or ----------------------
sale of large quantities of items from the time of their purchase or product.
----------------------
2.3 IMPORTANCE ----------------------
There are important reasons for the warehouses, ----------------------
(i) Seasonal production - In some special seasons the items of farming are ----------------------
deducted, but they are used throughout the year. This creates the need for
suitable storage and warehousing. ----------------------
(ii) Seasonal demand - There are some things, which are in demand according ----------------------
to the season, for example, wool or umbrella. These items are produced
throughout the year. Therefore, a warehouse is important for the storage ----------------------
of this material and making it available to the customers according to
their needs. ----------------------
(iii) Large scale production - Manufacturers make large quantities of goods ----------------------
to get the benefits of large-scale products and to get a larger economy.
It must be stored properly until the product of large-scale manufactured ----------------------
goods is properly stored. ----------------------
(iv) Immediate and prompt supply - In today’s market, the customer is
----------------------
expected to supply promptly. JIT has been implemented due to the
demand of companies for fast and small distribution cycles. For this, ----------------------
the owner’s storage space should be spread in one place, which is close
to consumption, so that anytime the series can be made available to the ----------------------
customers according to their needs.
----------------------
(v) Continuous production - Continuous production is necessary for exports.
Therefore, there is a need to keep sufficient raw material in the warehouse ----------------------
to ensure continuous production.
----------------------
(vi) Price stabilisation - Price is a function of demand and supply. Generally,
prices increase if demand increases and prices decrease if supply increases. ----------------------
There is a need to keep enough stocks in the warehouses to maintain ----------------------
steady levels of market items.
----------------------
----------------------
----------------------
Notes
Check your Progress 1
----------------------
----------------------
1. Warehousing removes the hindrance of time.
----------------------
2. Warehousing is not an important auxiliary to trade.
---------------------- 3. The objectives of warehousing may be to carry over the surplus
goods, for consumption in the future during the period of scarcity.
----------------------
4. Warehousing is not used to store the goods of seasonal nature.
----------------------
5. Warehousing is not useful for large scale trading.
---------------------- 6. Warehousing helps in continuous production of goods in the factories.
----------------------
---------------------- Activity 1
---------------------- Make a comparison statement of the functions of a store and a warehouse.

How does a Store differ from a warehouse?
----------------------
(Hints: Make a comparison on the basis of Storage capacity, Storage
---------------------- conditions, Ownership, Facilities available)
----------------------
---------------------- 2.4 FUNCTIONS OF WAREHOUSE

---------------------- Warehouses store large amounts of goods in a systematic manner. It
protects items in terms of heat, wind, storm, and humidity, etc. Goods are
---------------------- stored by the warehouse suppliers or other sources and supply gets done when
---------------------- it required by the customer or production plant. It may be said that the basic
functions of warehouses are receiving, storing and issuing the goods.
---------------------- In addition, warehouses also carry other activities for a few days other
---------------------- than other basic tasks.
Let’s look at the different activities that work in a typical warehouse.
----------------------
1. The Storage of Objects
----------------------
2. Conservation of Goods
---------------------- 3. Holding a Risk
---------------------- 4. Financing
---------------------- 5. Process
6. Grading and Branding
----------------------
7. Transport
----------------------
1. The Storage of Objects - The basic work of the warehouse is to store a
---------------------- large number of objects. The objects are stored until they are stored from
the time of their product or purchase. Notes
2. Conservation of Goods - Protects goods from losses or damages due to
----------------------
natural or man-made risks. The warehouse arranges the proper and secure
storage of products according to their nature. Due to proper maintenance ----------------------
and protection, losses will be reduced.
----------------------
3. Holding a Risk - Cargo goods take or risk the capital cost of goods. Once
the warehouse and cupboards are used for storage, the responsibility of ----------------------
safe storage of these items will be taken to the warehouse-keeper. In this
way, the risk of damage or loss of goods in storage is taken from the ----------------------
warehouse. Because the warehouse commits to return the goods in the
----------------------
good condition the way accepted it. The warehouse is responsible for
goods’ loss, theft or damages. ----------------------
4. Financing - When goods are deposited in any warehouse, the depositor
----------------------
gets the receipt from the warehouse, which acts as proof of the deposit
of the goods. The warehouse can also issue documents in favour of the ----------------------
goods’ owner, which is usually called as a warehouse-keeper warrant.
This warrant is a title document and can be passed by simple support ----------------------
and delivery. Therefore, the goods are kept in possession of warehouse-
----------------------
deduction, but traders who own the goods stored may get the loan from
the bank or other financial institutions by keeping this warrant as security. ----------------------
5. Process - Some objects are not used in the manufactured form. It needs ----------------------
to be processed to make them useful for use. For example, rice is cooked
to make rice. Even on behalf of the owners of goods, they also undertake ----------------------
value-added activities of processes.
----------------------
6. Grading and Branding - Warehouse manufacturers, wholesalers do
grading and branding of goods on behalf of importers. It also provides ----------------------
value added facilities for mixing and packaging for convenience of
handling and selling. ----------------------
7. Transport - In some cases, the warehouse provides a large number of ----------------------

transport to the depositors. They collect items from the product place and
send the goods at the request of the depositors. ----------------------
----------------------
2.5 FUNCTIONS: RECEIVING
----------------------
The acquisition process includes creating malware in the warehouse to
meet storage or customer orders. Receiving is the process of slipping, inspection, ----------------------
and staging of goods transported in the warehouse. Receiving for the following ----------------------
activity being put into warehouse or cross-docking. Occasionally, the sort of
content and value of the resellers are made as a part of the activities of receiving ----------------------
activity.
----------------------
Purchase orders are issued to suppliers to arrange shipment of ordered
goods in a particular purchase transaction. This item is given to shoppers for ----------------------
warehouses. Depending on the terms and conditions of the purchase order, the
----------------------
Notes supplier sends the invoice to an advanced shipping notice (ASN).
ASN has information about the contents (case, carton, frames, etc.)
----------------------
included in the shipments sent to the warehouse. Generally, a specific serial
---------------------- number can be given to each item at the time of its creation which will be
helpful so that the re-labelling requirement will be eliminated as part of the
---------------------- warehousing function.
---------------------- The following are basic steps:
1. Lift of material from the vehicle. (Truck, wagon, etc.)
----------------------
2. Check ASNs with each unit listed in ASN and identify suppliers and
---------------------- affiliate materials.
---------------------- 3. Assign new list features (numbers) to the item in the stock record file, the
designated number should be with the repacking material.
----------------------
4. Under the given specification, the material is inspected to ensure that some
---------------------- (or all) differences in the material obtained should be taken separately for
the results of the test. The test result should be recorded properly and
---------------------- reported.
---------------------- 5. Create a unit to keep away. (It can be in shelves or known places)
---------------------- 6. Update the stock of items in the inventory list and assign the units to the
area obtained in the Inventory Location records.
----------------------
7. Prepare the acknowledgment confirmation document.
---------------------- 8. Add units to queue for action by the content handling team or device.
---------------------- 2.5.1 Logistic Support for Inward Transports
---------------------- Inbound Logistics is a content that deals with the distribution of raw
materials and parts in sourcing, acquisition, storage, and warehousing. Inbound
---------------------- logistics is a part of the production process for a firm engaged in the production
business.
----------------------
Inbound Logistics is an important activity that focuses on purchasing and
---------------------- scheduling raw material, tools. Also, the activity supplies and schedules the
final items, production units from suppliers, warehouses or retail stores.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Fig. 2.1 Inbound logistics
----------------------
All those activities, which, as per their requirement, are important in Notes
providing the goods for the operational process, are involved in the inbound
logistics process. ----------------------
Includes inbound logistics activities, content handling, stock control, ----------------------
inspection, and traffic, etc. It is necessary to facilitate the creation or distribution
of products. ----------------------
In other words, for a production plant, inbound logistics means reaching ----------------------
plants from raw materials or suppliers. In the warehouse, the carrier’s transport
network designs, the choice of the transportation system, and the cargo handling ----------------------
of each customer make a decision regarding a particular transport system.
----------------------
The main objective of the ship is to reduce the total expenditure related to
a particular demand and at the same time to fulfil the promise to the customer. ----------------------
Below are some main price related components that should be kept in mind, ----------------------
1) Transportation expenses ----------------------
2) The price of the list
----------------------
3) Convenience cost
----------------------
4) Process Cost
5) Service expenses ----------------------
2.5.2 Unloading, Inspection ----------------------
It is examined that before loading the material, the clarity of the paperwork ----------------------
and the supply of the right material are done. The supplier’s note with the cargo
provider provides the necessary identification and purchase details of this item, ----------------------
which helps in getting the necessary documents - procurement order and delivery
schedule - to be obtained from their internal purchase account beforehand. ----------------------
Quality control is given for quality inspection and certification by opening ----------------------
and verifying the quantity of packing. Upon receipt of GRR, the inspection
----------------------
department inspects necessary and submits the investigation results (amount
accepted/rejected) and non-conformity (if any) in GRR. Some companies use a ----------------------
document known as “Disclaimer Notes” to take note of the observation findings.
----------------------
This work of inspection, unpacking and checking the general condition of
the package items for transit loss, certifying the quantity against the supplier’s ----------------------
packing slip and notifying the inconsistency (if any).
----------------------
If there is an inconsistency, appropriate action should be taken and to
make claims with the insurance agency, generally, all incoming goods are ----------------------
insured against loss or loss by the carrier. The packages/events of the package
must be obtained from the premises (railway, steamer agent or carrier agency) ----------------------
from that effect.
----------------------
Until the negotiation and inspection by the respective authorities related
to incompatibilities, the substance moved to a separate attached store called ----------------------
“Quarantine Store” should be removed. ----------------------
Notes In the cargo and discrepancy against the contents of the packages, the
supplier must communicate using the form known as “anomaly note”. Please
---------------------- ensure return the defective content to the suppliers.
---------------------- Lossless content is retained in the rejection store. A separate registration
is called “reject registration”, in which every rejected good is entered. Suppliers
---------------------- are asked to collect aborted material if they are local than suppliers. Outstation
suppliers are notified and the lossless content is supplied to suppliers, usually
----------------------
on a “payable basis” basis.
---------------------- Suppliers get all charge chargeable blank back.
---------------------- All empty items, empty gas barrels, vacant chemical tanks, steel pallets,
etc., without any charge, are returned to the supplier according to the purchase
---------------------- order.
---------------------- 2.5.3 Acceptance and Recording
---------------------- Owner’s acceptance and recording includes the following clerical actions:
i. Verify the number of packets/cases as notes with notes.
----------------------
ii. To check for obvious damages on packages (if any).
----------------------
iii. Signature / signature from the carrier confirming deficiency / loss.
---------------------- iv. Guide the carrier to unload bare to handle the content.
---------------------- v. To register the details of the owner in the goods receipt registration
(GRR).
----------------------
vi. GRR number is given to each incoming consolidation and entered the
---------------------- details of the contract in the GRR register.
---------------------- vii. The items in each cargo are written in the register.
viii. Print the paper (further) along with the details of the interior.
----------------------
ix. Give the receipt to the carriers. The carrier copy is also printed and
---------------------- updated with receipt details.
---------------------- For each owner, the material receipt report (GRR) is prepared by the
receipt of the physical verification of goods after the receipt of the goods.
---------------------- The item receipt document is also known as GIN (Goods Inward Note), MRR
---------------------- (Material Reports Report), Mini (Material Inward Notes), RCIA (Receipt-cum-
Inspection Advice), etc.
---------------------- This is an important document that connects with suppliers, stores,
---------------------- inspections, purchases and accounts departments.
The Goods Receipt Report (GRR) in the company is often made in
---------------------- multiple copies. The following copies are delivered:
---------------------- 1. Original copy (Supplier’s Copy): It is sent to accept receipts on a
specified scale and communicate the results of the investigation.
----------------------
2. Copy of the accounts: This copy has been sent to the Department of
---------------------- Account to confirm the amount actually received and the amount accepted.
This allows you to check the number of runs operated by the supplier. Notes
3. Copy of Indenter: The copy has been sent to the content indicator.
----------------------
Knowing the contents of the materials obtained and checking information
is to be found. ----------------------
4. Main store copy: It has been released in the main store. In the main store,
----------------------
work is done to keep approved material, stock card post, etc.
5. Copy of purchase: This copy is given to the shopping department. The ----------------------
buyer has been able to register receipt content on the PO follow-up copy.
----------------------
6. Receipt-cum-Inspection copy: This copy has been made to maintain
GRR entries. ----------------------
Distribution of checked content in the appropriate store ----------------------

After the inspection, the material is sent a copy of Goods Reit Report ----------------------
(GRR) to their respective stores. Accepted items are moved to the main store
and rejected or rejected for non-confirmation content are sent to the store. ----------------------
----------------------
2.6 STORING
----------------------
Storage or removal is the process of transferring from the receiving area
to the storage location or in cross-docking directly to the shipping area. ----------------------
If using warehouse management system software (WMS software) ----------------------
program is used in addition to put algorithms, and to locate the locations where
each unit of the item can be stored in a removable queue. ----------------------
Alternatively, manual warehouses also follow the process of identifying ----------------------
process or storage space and physically moving its identified designated space.
----------------------
After receiving and removing, it all depends on the proper and proper
performance of the operation of all the next warehouse operations (e.g., storage, ----------------------
picking, and outbound logistics). There are many factors that affect the location
selection for the location. ----------------------
These elements can be summarized as described below. ----------------------
●● Environment - This feature is used to prevent the storage of items stored ----------------------
on the item. For example, the quarantine area for inspection of materials
for refrigerated storage, caged area, lock and key features, high-value or ----------------------
controlled objects.
----------------------
●● Container type (pallet, case or piece) - In a location, there will be a
feature that identifies the type of container it holds. Identify the container ----------------------
type with the system matching item type. For example, an item can be
stored in a hair or palette location and a case can be stored at the palette ----------------------
location if needed. ----------------------
●● Product Processing Type - Specifies the location of the process area that
is best to select feature items. For example, floor, movable or unstable. ----------------------
----------------------
Notes ●● Velocity (A, B, or C) - The rate of material movement in relation to receipts
and draft receipts from warehouses helps in matching the turnover of the
---------------------- items with storage and storage. For example, A, Faster; B, Middle C, Dim
---------------------- ●● Priority put away zone - Warehouses will have some local priority areas as
items. This is to say that the item must be stored in the same area according
---------------------- to the corresponding items in order to improve the picking efficiency or
such other factors.
----------------------
A typical process or system of putting away is as follows:
---------------------- 1. If the customer has already been ordered, he/she is moved to the shipping
---------------------- area (cross-docked).
2. If goods are kept for the check, they are moved to a place like quarantine
---------------------- storage; If no place is found, keep the unit at its current location.
---------------------- 3. If the goods are not checked or kept for inspection:
---------------------- A) Search for the available space that matches the characteristics of
the goods, container type, production process type, velocity, and
---------------------- priority zone features.
---------------------- B) If no space is found, then do not search again without searching
away from the zone features.
----------------------
C) No space was found to improve location by speeding up the best
---------------------- pace with the next best pace.
---------------------- D) If there is no search after the above speed is not searching, restore
the original velocity value and replace the product process again to
---------------------- find a search with the next revision type feature.
---------------------- E) Report an exception to the operator and warehouse manager for
taking proper decision on the location of the premises if no space is
---------------------- found yet.
---------------------- 2.6.1 Space Allocation
The following is a list of the following for a particular product unit:
----------------------
1. Raw material
----------------------
2. Part Complete
---------------------- 3. In the process
---------------------- 4. Finished goods
---------------------- 5. Tools
---------------------- 6. Supply
7. Including Machinery Equipment
----------------------
Basically, the practice has two systems of storage systems:
----------------------
1. Off-store system
---------------------- 2. Open store system.
1. Closed store system: In a closed storage system, the material is stored in Notes
a physically closed area. Except for store employees, no other person is
permitted in this area. Only the official documents are allowed in the store ----------------------
and out of the material.
----------------------
Closed store systems allow accounting for a rigid security system and
strict material. ----------------------
2. Open Stores System: In the open storage system, the content is stored ----------------------
close to the point of use/usage. Generally, there are no store rooms or
rooms. ----------------------
The Open Store system allows less or security and is useful ----------------------
1. Material is too heavy/heavy to handle (for example, heavy casting). ----------------------
2. Chances of theft or theft or not.
----------------------
3. There is a small chance of spoilage/deterioration in the material.
----------------------
Allotment of seats is done on the basis of list classification. Areas and
rack or shelf or racking systems are allocated for each category or owner type. ----------------------
For example, in selling items, damaged or rejected items, or in transit items.
----------------------
It is important that the materials stored in the warehouse should be ----------------------
regularly counted after taking the stock regularly. The physical calculation is ----------------------
not required just because our record must be accurate but due to other costs and
productivity reasons. ----------------------
Physical counting is required ----------------------
1. Production control
----------------------
2. Financial Statement
----------------------
3. Initial research of obsolete and latent stocks
4. Audit Store ----------------------
2.6.3 Guarding & Recording ----------------------
Industries use different types of stores such as hardware, delicate glass ----------------------
sheets, rubber parts, colours, and machinery parts, etc. Some of these items are
made with materials which can be damaged by nature. A warehouse person or ----------------------
shopkeeper should ensure that the goods in stock are free of harm and bad and
retain their required assets. ----------------------
Protective, technically, the protection of the store from heat, moisture, ----------------------
dust, forest, rust, and fire, etc., so that the original material can be retained.
----------------------
Reasons for Deterioration
----------------------
Deterioration means a loss in value of the object (i.e., reducing the
capacity of the item), its purpose (that is, a particular purpose) to be fulfilled. ----------------------
Many factors contribute to stock deterioration.
----------------------
Notes The following are important:
A) Fault storage area which allows entry by broken windows, ventilators,
----------------------
roof roofs, and bad doors.
---------------------- B) Failure to comply with the supplier’s storage instructions as outlined on
package or delivery documents.
----------------------
C) Storage bad temperature and humidity.
----------------------
D) Incorrect or negligent handling of such material which may cause
---------------------- breakage, recessions, scratch, dents, damages, etc.
---------------------- E) Content pollution (for example, oil drum storage with food) due to the
collection of various adjacent materials.
---------------------- E) The first-in-first-out inspection fails, which eliminates the use of old
---------------------- capital, so that after the expiry of shelf life, the account is worthless.
There are many warehousing centres, which means that instead of just
----------------------
storing your products, people are likely to be taken to your warehouses. Clients
---------------------- and potential partners are coming to your warehouse for regular cleaning.
People who you work with also show that you’re serious about your business.
----------------------
Some benefits to make sure that your warehouse is clean on a regular schedule.
---------------------- A) Improve performance
---------------------- B) Increase pride in the work
---------------------- C) Health improvements

D) Improves security
----------------------
E) Creates a business environment
----------------------
Control issue of stock
---------------------- The stock held by the company represents the money and needs money.
---------------------- To avoid losses, some control is required to issue the stock.
For example, every employee in the organization cannot be allowed to
---------------------- authorize the problem. The store administration should give a list of nominees
---------------------- who can authorize the material content. The list of authorized persons has to
be updated regularly. Their numbers must be enough. If a very small number
---------------------- of employees are official, they may delay the stock problem and many of them
may be vulnerable if they are given rights.
----------------------
----------------------
Warehouses store and store large amounts of goods fairly and regularly.
---------------------- They protect the goods in the matter of heat, air, storm, humidity, etc. and due
to bad, also reduce the losses caused by wasting. Apart from this basic work, the
---------------------- warehouse also performs many other functions. See risk handling, processing,
grading, and branding.
----------------------
----------------------
Risk Bearing Notes
Take risks for the storage of warehouse items. Once goods are delivered
----------------------
to the cargo collector, then the responsibility of these items goes to the godown-
keeper. In this way, the risk of damage or loss of goods in storage is taken from ----------------------
the warehouse. Since the goods are in good condition, the warehouse has all the
precautions to avoid any mishap. ----------------------
Due to the risks related to investments made or procured for goods ----------------------
production, this also helps the owners of the goods. It works as a risk-sharing or
transfer method. ----------------------
Processing ----------------------
Some items are not manufactured. They need a process for consumption. ----------------------
For example, rice is grown to be converted into rice, or fruits grow before being
sent in the market for sale. The warehouse owners also do the work done on ----------------------
behalf of value added activities.
----------------------
Some products must be processed before they can be consumed. Generally,
such a product is produced and kept in warehouses in semi-complete condition ----------------------
and starts the process before sending it to use the warehouse.
----------------------
Grading and Branding
----------------------
On request, warehouses also work on grading and branding of goods on
behalf of importers, wholesalers or commodities importers. The warehouse also ----------------------
provides mixing, mixing and packaging facilities for handling facilities. Such
kind of action is done regularly for agricultural production. ----------------------
----------------------
2.7 ISSUING SERVICES
----------------------
The issue function is the main activity of the store, which relates to the
content of the right quality (such as the specification of the material), in the ----------------------
right quantity and at the right time.
----------------------
The material has been released,
----------------------
1. Production for the manufacture of commodities for product orders or for
stock purposes. ----------------------
2. Maintenance and Maintenance of Machinery for Maintenance
----------------------
3. Toolroom for jigs and fixtures manufacturer.
----------------------
4. Contractor to convert the made into products/materials.
----------------------
5. Providing back “loan” suppliers (for example, measuring instruments,
gauges, jigs, and fixtures) ----------------------
6. Sister companies on “Loans” from the stock placed
----------------------
7. Contractor to manufacture products/goods against contracts, which agree
to provide some material free of charge. ----------------------
8. Crib stores / sub-stores to repay stock used by them. ----------------------
Notes 9. Laboratory for a re-evaluation of the quality of the material (when the
material is stored outside its shelf life).
----------------------
10. Amendment to the amendment agreement (for example, redistribution of
---------------------- the machine, repair of machines).
11. Employee or scrap contractor (for example, selling scrap material).
----------------------
12. Sell products made by customers as sales.
----------------------
13. The information of the company’s divisions is given in relation to volatility
---------------------- in the process of volatility, the extent of the volatility allowed from time
to time and the extent of current stock usage.
----------------------
14. Paying the budget (or fixed amount) in every time (department or
---------------------- department) every period (maybe a month or a quarter). Specific examples
of items issued under this category are lubricants, cotton waste, soap,
---------------------- stationery, etc.
---------------------- 2.7.1 Issuing: Order Preparation
---------------------- Original documents to authorize stock issue are known as “store issue
notes” or material requirements. Even though the demand structure has
---------------------- changed slightly from the organization to the organization, the general content
requirement is shown below:
----------------------
Problems time
----------------------
Content should be provided only in specific activities of the day. This
---------------------- allows the store keeper to attend other duties outside of hours. However, if the
necessary demands are presented outside the prescribed time, they should meet
---------------------- voluntarily and happily.
---------------------- Problem processing
---------------------- The steps taken during the last issue of stock and the last issue of the store
department are as follows.
----------------------
a) Preparation of material issue note/material request
---------------------- b) Authorization
---------------------- c) Introducing MR in the store
---------------------- d) Identifying essential items

e) Issue of necessary goods
----------------------
f) Collection / Distribution
----------------------
g) Price allocation
---------------------- h) Update stock records and stock controls
----------------------
----------------------
----------------------
Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig. 2.1 Typical format for material requisition
----------------------
2.7.2 Picking
----------------------
The selection of content removal from being stored in response to specific
customer order or product store floor orders is to choose. Order picking is at the ----------------------
intersection of warehousing and order processing.
----------------------
Piking includes the physical content handling process related to recovering
(or selecting) items properly and efficiently and processing information related ----------------------
to updating and updating search listings as an order is full.
----------------------
Generally, inbound material is a large number of load containers or palettes,
and usually, a lesser unit load carrying mechanism is made in the warehouse. ----------------------
The process of selecting is usually from many small objects according to the
customer or plant requirements. From the point of view of the operation, the ----------------------
selection of warehouses is usually labour intensive. ----------------------
Therefore, the order takes the activities of the most expensive warehouses.
At present, representatives of 55% of all warehouses are represented. ----------------------
The type and extent of the item required by the warehouse receipt are ----------------------
notified. Each particular type of item is called a stock holding unit (SKU). The
----------------------
unit is an example of an SKU. Orders are assigned to each SKU-Quantity pair.
The Warehouse will make a pick-up list based on the orders and items ----------------------
ordered. Item retrieval activity is done by content handling equipment operators
----------------------
or manual workers as per peak list.
A Pick List indicates the order in which SKU’s storage space should be ----------------------
met with the number of units selected from each location for one or more orders. ----------------------
Order groups are selected during the scheduled time of the wave. During each
shift, there may be one or more waves. ----------------------
The convenience and shipping schedule uses multiple waves to coordinate ----------------------
picking with other geographic currents.
----------------------
Notes The following basic steps include:
1. Identify the location of each choice.
----------------------
2. Confirm crop.
----------------------
3. Demonstrating a shortage of product.
---------------------- Different identification and communication tools can be used to implement
---------------------- the selection process. During the communication link picking process, wired
management system and pickers enable real time re-billing of pick-up during
---------------------- the picking process.
---------------------- Order Picking Methods

There are three basic methods for order picking, the Zone-Batch Packing
---------------------- Method is a combination method:
---------------------- Independent Picking
---------------------- A single picker chooses all items for a single order. Without ordering and
ordering, the entire order can be packed. If the number of orders is less than the
---------------------- picker will have many people required for duplicate travel and picking.
---------------------- This can lead to a fewer number of orders in order, and if a large number
of orders are placed, Alice can break.
----------------------
Selecting Zone
---------------------- Each picker simply selects the order of the order in the assigned area. This
---------------------- can be used by various techniques and equipment in every different section and
can reduce the time of travel until the fastest moving SKU is placed, but it can
---------------------- be difficult to balance the workload in each section (“bucket brigade” technique
can be used dynamically in every zone
----------------------
There are two variations of zone picking
----------------------
A) Collected picking, where the items are assembled at the same time for
---------------------- the order and then bundled. This reduces the total time required for the
order (if it has multiple waves on each shift it would be useful)
----------------------
B) Progressive assembly, in this method the order is sent from one zone to
---------------------- another, decreasing the need for order integration, but increases the time
to pick up the total (also called pick-and-pass)
----------------------
In the batch picking process, the single picker chooses all the items for
---------------------- multiple orders. In this way, we can reduce the time of travel (this is possible
when batch orders are nearby) and if multiple orders are available in general,
---------------------- then the search time can also be reduced.
---------------------- But items need to be sorted into separate orders (sorting can occur during
or after selection), and it may take a long time to store almost enough orders, in
---------------------- which items located nearby are nearby.
---------------------- Zone Batch Picking
---------------------- This is a combination of zones and batch packing methods. In this method,
multiple pickers take each part of multiple orders. Notes
This provides more opportunities for batching because the objects in
----------------------
the same area are nearby and more orders with large sized items can be batch
because the picker does not complete the order. ----------------------
But in order for these methods to take effect, this method requires the
----------------------
highest coordination (e.g. consolidation and order may both be necessary).
Method Pickers per Order Orders per Picker ----------------------
Discrete Single Single ----------------------
Zone Multiple Single
----------------------
Batch Single Multiple
Zone-Batch Multiple Multiple ----------------------
Table 2.1 Picking method and picker ----------------------
Order picking level
----------------------
There are three main levels of order picking based on the size of the
selected unit: ----------------------
1. Pallet picking: In this, a full sheet of paper or paper layer is retrieved ----------------------
(also known as unit load picking).
----------------------
2. Case picking: In this case, a full box of items are recovered (choose the
split case if the inner packs of goods are recovered from the container). ----------------------
3. Choosing a piece: In this, the item’s customer is retrieved the individual ----------------------
units of the problem (also known as Tund-Case picking).
2.7.3 Dispatching/Delivery & Recording ----------------------
The last stop in the warehouse is the shipping department. Before ----------------------
reaching this section, the outbound loads for accuracy have been checked, they
have received their final packaging (with functions such as foam groundnuts, ----------------------
tapping, sewing wrapping, and palletting) and are ready to send to outbound ----------------------
trucking services.
----------------------
Automatic weight inspection is constantly used to check the accuracy of
outbound shipments. The Conveyor line passes through the “Check Weights” ----------------------
station where each stone has a weight. The computer automatically checks the
carton’s weight according to the contraction and rough weight of the carton. If ----------------------
weigh the weight, Carton will go to the final packaging.
----------------------
If the weight does not match, the station will be manually sent for manual
inspection. ----------------------
Outbound shipments leave the warehouse in a variety of ways, which include: ----------------------
A) Customers can send their own truck to lift the order. ----------------------
B) The warehouse or DC can arrange your own trucks to deliver the order.
----------------------
C) Transporters or other integrated carriers can order orders at the warehouse
or delivery centre directly. ----------------------
Notes D) Loads can be loaded directly into the car for outbound movement.
An outline movement of paper rolls is an example of the outdoor car
----------------------
movements in the warehouses. Deliver outbound shipments at the Truck
---------------------- Bay suitable for conveyer system and/or forklift loading in the warehouse.
Sometimes, forklift loads directly outbound trucks.
----------------------
2.7.4 Handling
---------------------- While adjusting the balance of trade in uncertain circumstances, warehouse
managers face a huge challenge for performance.
----------------------
There are challenges faced by the Warehouse manager to handle the content,
----------------------
1. Weak process
---------------------- 2. Poor feature layout
---------------------- 3. The demand fluctuation
---------------------- 4. High labour expenditure
---------------------- 5. Wrong list

The store issue function includes content handling
----------------------
1. Handle the contents on the storage system
----------------------
2. Handling content in the store or warehouse
---------------------- There are two popular methods of handling the list
---------------------- 1. FIFA (First out first)
---------------------- 2. LIFO (First In First Out)

The warehouse has problem areas handling content with solutions,
----------------------
1. Insufficient warehouse space
----------------------
It is necessary to provide adequate storage space and proper planning of
---------------------- the warehouses for the easy business expedition. Unorganized warehouse
spaces can lead to unnecessary labour cost and misuse of storage systems
---------------------- and racking system allows many companies to find their warehouses
shelves, and there is no room for a new listing.
----------------------
Solution
----------------------
The most popular list is in front of the warehouse, where it is readily
---------------------- available, can reduce travel time to the warehouse and save you for a long
time.
----------------------
2. Slow picking process and stock inconsistency
---------------------- Each day spent on every list can increase day by day, so there is a big
---------------------- impact on operating expenditure. When the listing location is neat and not
easily available, it will take more time to find items that need to be sent.
---------------------- This can eventually be backed up by workers.
----------------------
Solution Notes
Bar code technology eliminates multiple processes and human handling.
----------------------
Accurate inspection of the list reduces inconsistency in the stock order
and increases performance while choosing the order. ----------------------
In addition, using a handshake scanner to scan barcodes ensures that
----------------------
information will be identified with minimal data entry errors at that time.
Please also consider ordering order picking. This gives a packing list to ----------------------
the employees, who visit every select location in the warehouse, which
----------------------
reduces the overall travel time. With reduced ordering costs and the
reduction in labour costs will be minimized due to more planned order ----------------------
picking process.
----------------------
3. Warehouse slotting problem
Forklift operators often have multiple trips around the warehouse looking ----------------------
for a slot in the ranking for the new list. This slots the palette of objects ----------------------
where they appear on the empty space.
Because the palette family and size are not carefully considered in its ----------------------
allocation, you will eventually get a large list of unsafe methods, without ----------------------
any room to reorganize for a limited warehouse.
----------------------
Solution:
Pre-planning and organization warehouses can identify the most effective ----------------------
location for all information, identify product characteristics, and factoring
----------------------
in family and supply needs, preventing them from being unorganized.
Reconsider your storage and ranking system for your particular warehouse ----------------------
needs and layout. For example, feature racking, powered mobile racking,
----------------------
double bass racking and drive in the racking.
2.7.5 Transportation and Storage of ISO Containers ----------------------
The goods of ISO or intermodal container are used for the rental intermodal ----------------------
transport. They are designed according to the International Organization for
Standardization (ISO) and are suitable for many traffic methods like a truck, ----------------------
train or ship. ----------------------
Intermodal containers are present in many sizes and certified sizes,
----------------------
but ninety percent of world container baby “dry cargo” or “general purpose”
containers, durable closure steel boxes, most of either 20 or forty feet (6.1 or ----------------------
12.2 m) standard length The normal height is 8 ft. 6 in (2.6 m) and 9 ft. 6 in
(2.9 m) - the latter is known as a hou cube or a high-cube container. ----------------------
Container ships, trucks and cargo can be travelled without taking part in a ----------------------
single journey. Units can be secured in transit using the “twistock” point in each
corner of the container. ----------------------
Each container has an external colour bic code for external identification ----------------------
and tracking and it is able to go up to 20-25 metric tons. For transport, a twenty-
second equivalent unit (TEU) is calculated. ----------------------
Notes Load-bearing stacking has a 40-foot container standard unit length, and
45 ft., 48 ft. and 53 ft. all stacks on a 40 ft. coupling width. Only two units
---------------------- (40 ft. coupler width) can be compacted on 20 feet units, but 20 feet units cannot
be stacked at 40 feet units or any other large container at the top.
----------------------
Coupler holes require double male twist lock which collects stacked
---------------------- containers together.
---------------------- Containers are transferred between container cranes between the train,
the truck and the ship on the container terminal. It is possible to load and unload
---------------------- a truck or train outside the container terminal to reach forklifts, stackers, striped
careers and cranes.
----------------------
Swap bodies, side lifts, shrimp deck trucks and hook trucks allow trucks
---------------------- and transfers without any additional equipment. ISO-standard containers can be
handled and their corners can be lifted in different ways.
----------------------

---------------------- Multiple Choice Single Response.
---------------------- 1. What needs to be prepared while giving complete details of the goods
required by the requisitioner?
----------------------
i. Material Requisition
----------------------
ii. Authorisation
---------------------- iii. Issue procedure
---------------------- iv. Identification of required items
----------------------
----------------------
Activity 2
----------------------
Prepare a checklist of your department for ensuring the correct issue of
---------------------- material.
----------------------
---------------------- 2.8 UTILITY AND ADVANTAGES OF WAREHOUSES

---------------------- The warehouse will give many benefits to the business community. Even
if it is an industry or trade, it provides many benefits listed below.
----------------------
1. Conservation and protection of goods - Warehouses provide businesses
---------------------- with essential commodities when they are not required to store their
belongings. It protects the stock and ensures its security and prevents
---------------------- interruptions. It reduces the losses in scarcity, quality, deformity, etc.
---------------------- Possibly the warehouse generally uses the latest technology to avoid
damage.
----------------------
2. A regular flow of goods - Many things like rice, wheat, etc. are made Notes
during a particular season but they are used throughout the year.
Warehousing ensures regular supply of such seasonal items throughout ----------------------
the year.
----------------------
3. Consistency in the product - Warehouse enables the growers to
continuously produce continuous production without worrying about the ----------------------
raw material storage. Providing seasonal raw material without any season
----------------------
for the production of finished goods.
4. Convenient location: In order to facilitate the movement of goods, ----------------------
warehouses are usually arranged in a convenient location near roads,
----------------------
railways or waterways. Convenient location transportation reduces
transport costs. ----------------------
5. Easy handling - Modern warehouse generally uses mechanical equipment
----------------------
to handle the goods. The use of sophisticated equipment can be used to
load strong and large items, and such items reduce the handling costs. ----------------------
Mechanical handling reduces wastage during loading and unloading.
----------------------
6. Useful for small businesses - For the construction of own warehouses,
there is a need for heavy capital investment, which small businessmen ----------------------
cannot afford. In such cases, by filling a nominal amount in the form of
fare, they can save the produce made in their raw materials and public ----------------------
warehouse. ----------------------
7. Employment Generation - Warehouses have created employment
opportunities for skilled and unskilled workers in every part of the ----------------------
country. They are the source of income for improving the lives of people. ----------------------
8. Facilitates the sale of commodities - Various steps required for the sale
of goods such as potential buyers, grading, branding, packaging, and ----------------------
inspection of items such as labelling, can be run by godowns. The transfer ----------------------
of warehouses can be easily transferred to the purchasers by the transfer
of warehouses. ----------------------
9. Financing available - Loan against warehouse-keeper warranty can be ----------------------
borrowed from banks and other institutions. In some cases, the warehouse
advances depositors in advance for securities. ----------------------
10. Reducing the risk of damage - Warehouses are well protected and ----------------------
protected. To protect against theft, the warehouse can economically
provide employment to employees, use insecticides for protection and ----------------------
provide cold storage facilities for destructive items. To prevent fire, they
----------------------
can install fire extinguishers. In case of loss, insured money may also be
insured on the insured amount. ----------------------
----------------------
----------------------
----------------------
Notes 2.9 PROBLEMS AND ISSUES IN RECEIVING
PROCESSES
----------------------
The store contains steps involved in obtaining physical processing,
----------------------
1. Internal Access to Safety Gate
----------------------
2. Verification of the correctness and supply of documents
---------------------- 3. Keeping the contract in the receiving store
---------------------- 4. Verification of the scale
---------------------- 5. Indentor and purchase notification for receipt of material

6. Preparation of receipt of the goods
----------------------
7. Checking the literature
----------------------
8. Distribution of verified content to the appropriate store
---------------------- 9. Restore the defective material to the suppliers
---------------------- 10. Return all the charges to the suppliers to make the refundable
---------------------- There are specific areas for issues related to receiving content or challenges,
1. Time to complete the process
----------------------
2. Exclusion error
----------------------
3. Commissions omission (theft, theft, and misconduct)
---------------------- 4. Defective handling
---------------------- 5. Labour/Human Resource Issues (Professional Health and Safety Issues)
---------------------- 6. Training
7. Technology related issues (connectivity, skills, and knowledge)
----------------------
8. Security and Security
----------------------
---------------------- Fill in the Blanks.
---------------------- 1. __________ are conducted to verify stock held without prior notice,
thereby providing no time to stores personnel to replace stocks
---------------------- illegally.
----------------------
---------------------- Activity 3
---------------------- Visit a nearby retail outlet and list the methodology used for stock
checking.
----------------------
----------------------
Summary Notes
●● Warehousing means holding or preserving goods in huge quantities from ----------------------

the time of their purchase or production until their actual use or sale.
----------------------
●● Warehousing is one of the important auxiliaries to trade. It creates time
utility by bridging the time gap between production and consumption of ----------------------
goods.
----------------------
●● Receiving store exercises control on the quantity and quality of materials,
from the time that they are received until they are accepted and taken into ----------------------
stock. The receipt procedure comprises ten steps, namely:
----------------------
1. Inwarding at the security gate.
----------------------
2. Verification of the correctness of paperwork.
3. Inwarding of consignment in the receiving store. ----------------------
4. Verification of quantities. ----------------------
5. Notifying indentor. ----------------------
6. Preparation of Goods Receipt Report.
----------------------
7. Inspection of materials.
----------------------
8. Delivery of inspected materials to appropriate stores.
9. Return of defective materials to the suppliers. ----------------------
10. Return of all chargeable empties to the suppliers. ----------------------
●● The function of the issue is a key activity of the Store, which concerns the ----------------------
issue of materials of the right quality, in the right quantities and at the right
time. ----------------------
●● Physical inventories check or stock verification is a must for an efficient ----------------------
scientific inventory control system besides being a statutory requirement.
●● No inventory control system can work unless stock records stay correct ----------------------
and the quantities shown as book balance tally with the physical balance. ----------------------
●● The different methods of stocktaking are annual stocktaking, continuous
stocktaking, and re-order point stocktaking. Annual stocktaking is generally ----------------------
less effective than the other two methods of stocktaking.
----------------------
●● A surplus item is one whose existing stock is likely to last longer than its
normal period of consumption. ----------------------
----------------------
Keywords
----------------------
●● Warehouse: The place where goods are kept is called ‘warehouse’.
----------------------
●● Warehouse keeper: The person in-charge of the warehouse is called
‘warehouse-keeper’. ----------------------
●● Warehousing: Refers to the activities involving storage of goods on a
----------------------
Notes large-scale in a systematic and orderly manner and making them available
when needed.
---------------------- ●● Advance shipping notice (ASN): Electronic information concerning a
---------------------- single shipment of movable units sent to a warehouse management system
(WMS) from suppliers and sent from a WMS to customers.
---------------------- ●● Order picking: The process of removing material from storage in response
---------------------- to specific customer orders or shop orders
●● Picking: Short for order picking
----------------------
●● Put away. The process of moving material from a receiving area to a
---------------------- storage location.
●● Putting: Putting reverses the typical picking process: in picking, units of
----------------------
many items are picked into one order; in putting, units of one item are put
---------------------- into many orders.
●● Receiving: The process of unloading, verifying, inspecting, and staging of
----------------------
material transported to a warehouse in preparation for putaway or cross-
---------------------- docking, sometimes including sorting and repackaging of the material.
●● Shipping: The process of staging, verifying, and loading orders to be
----------------------
transported from a warehouse.
---------------------- ●● Delivery challan: A delivery challan is a document sent by the local
supplier/manufacturer, trader, and dealer with the material. It lists the item
---------------------- details and the number of packages being sent by the carrier.
---------------------- ●● Obsolete stock: An item is said to be obsolete when it is superseded by
another item due to change in design, modification or due to the process of
---------------------- substitution.
---------------------- ●● Railway Receipt (RR)/Lorry Receipt (LR): Railway Receipt (RR)/Lorry
Receipt (LR) issued by the railways/transporter is a document that acts as
---------------------- an authorisation slip for getting the delivery of goods by the purchaser
---------------------- from the railways or transporters.
●● Store Issue Note or Material Requisition: This is the basic document to
---------------------- authorise the issue of stock.
---------------------- ●● Stock verification: Stock verification, also called physical inventories
or stocktaking, is the process of ascertaining - by counting, weighing, or
---------------------- measuring - whether the physical stock of materials tallies with the balance
---------------------- shown in the stock records.
●● Surplus stock: An item is said to be in surplus when its existing stock is
---------------------- likely to last longer than the normal period of consumption.
---------------------- ●● Preservation: The protection of stores from heat, moisture, dust, corrosion,
rust, fire, etc. so as to maintain materials in their original form.
----------------------
----------------------
----------------------
Notes
----------------------
1. What is meant by Warehousing? Explain the need for warehousing.
2. Describe any six characteristics of an ideal warehouse. ----------------------
3. Classify the various types of warehouses. Explain them briefly. ----------------------
4. Distinguish between public and private warehouse. ----------------------
5. Explain the functions of warehouses.
----------------------
6. What is meant by a public warehouse? State any three functions of a
public warehouse. ----------------------
7. Describe the advantage of warehouses to the businessmen. ----------------------
8. How is a bonded warehouse useful for the importers? ----------------------
9. Warehousing is one of the important auxiliaries to trade. Explain this
statement. ----------------------
----------------------
----------------------
----------------------
1. True ----------------------
2. False ----------------------
3. True ----------------------
4. False
----------------------
5. False
----------------------
6. True
Multiple Choice Single Response. ----------------------

1. What needs to be prepared while giving complete details of the goods ----------------------
required by the requisitioner?
----------------------
i. Material Requisition
Fill in the Blanks. ----------------------

1. Spot checks are conducted to verify stock held without prior notice, ----------------------
thereby providing no time to stores personnel to replace stocks illegally.
----------------------
----------------------
----------------------
Notes
Suggested Reading
----------------------
1. Jhamb, L. C. Modernisation of Materials Management. Pune: Everest
---------------------- Publishing House.
2. Mehta, Kamlesh N., Ramesh P. Patel, and Vinod Sood. “Project
----------------------
Procurement and Monitoring” Materials Management Review.
---------------------- 3. Menon, K. S. Stores Management. New Delhi: Macmillan India Limited.
---------------------- 4. Belapure, Ashutosh Madhukar, Export & import management, Horizon
books, ISBN-978-93-84044-04-6.
----------------------
References
----------------------
1. Adams, N.D., et al., 1996, Warehouse & Distribution Automation
---------------------- Handbook, McGraw-Hill.
2. Bartholdi, III, J.J., and Hackman, S.T., 2014, Warehouse & Distribution
----------------------
Science, version 0.96,
---------------------- 3. www2.isye.gatech.edu/~jjb/wh/book/editions/wh-sci-0.96.pdf.
---------------------- 4. Frazelle, E., 2002, World-Class Warehousing and Material Handling,
McGraw-Hill.
----------------------
5. Mulcahy, D.E., 1994, Warehouse Distribution & Operations Handbook,
---------------------- McGraw-Hill.
---------------------- 6. Mulcahy, D.E., and Dieltz, J., 2004, “Order-Fulfillment Systems,” in
Order-Fulfillment and Across-the-Dock Concepts, Design, and Operations
---------------------- Handbook, St. Lucie Press, pp. 111–140.
---------------------- 7. Piasecki, D., 2005, “Order Picking: Methods and Equipment for Piece
Pick, Case Pick, and
----------------------
8. Pallet Pick Operations,” InventoryOps.com, www.inventoryops.com/
---------------------- order_picking.htm.
---------------------- 9. https://www.aalhysterforklifts.com.au/index.php/about/blog-post/
common_warehousing_issues
---------------------- 10. https://logisticallyyours.wordpress.com/2013/04/25/warehousing/
---------------------- 11. https://nios.ac.in/media/documents/swayam/Swayam_E-book.pdf
---------------------- 12. SCDL Materials Management SLM
----------------------
----------------------
----------------------
----------------------
----------------------
Warehouse Types
UNIT
Structure:
3
3.1 Introduction
3.2 Warehouse
3.2.1 Own Warehouses
3.2.2 Hired Warehouses
3.3 Types of warehouses
3.4 Types Based on Ownership
3.5 Types Based on the Basis of Commodity Stored
3.6 Types Based on Functions
Summary
Keywords
Suggested Reading
Annexure
Warehouse Types 47
Notes
Objectives
----------------------
----------------------
• Explain the meaning of warehousing
----------------------
• Recognise the need for warehousing
---------------------- • Identify different types of warehouses
---------------------- • Explain the characteristics of ideal warehouses
---------------------- • Describe the functions of warehouses

• Enlist the advantages of warehouses
----------------------
----------------------
3.1 INTRODUCTION
----------------------
The warehouse is different for storing various types of items. A place
---------------------- which is good to store cement is not an ideal place to store milk. Also, the larger
institution has large amounts of additional land and there is also a fund for their
----------------------
own product structure and for the preparation of warehouses.
---------------------- This means that even though the warehouse is defined as the storage
---------------------- space, it actually has different types of criteria.
Interpretation
----------------------
Warehouses and distribution centres are defined as structures that are
---------------------- mainly used for distributing inventory, temporary storage, processing, value
addition, and distribution of commodities where they are used from production
---------------------- sites.
---------------------- Warehouses and distribution centres are such sites where the value is
added to their products running. Examples of value added actions include final
----------------------
summation and customization of products and for the sale floor (including
---------------------- packaging and tagging) products.
---------------------- 3.2 WAREHOUSE

---------------------- The warehouse is a commercial building. Generally, it is a big three-story
---------------------- building in the city and city of the industrial area. They provide a loading dock
to load and unload the truck or sometimes the warehouses are constructed to
---------------------- load and unload directly from trains, aircraft carriers or ships. Large warehouses
also have cranes and forklifts for moving objects, which are usually placed on
---------------------- the ISO standard palette.
---------------------- Some warehouses are completely automated without any worker working
within the warehouse.
----------------------
Palettes and production are automatically replaced by an automated
---------------------- conveyor system and programmable logic controllers and logistics automation
software or computers running on warehouse management software with Notes
automatic storage and recovery machines.
----------------------
Automated warehouses are usually made to mix special items and
warehouses, such as refrigerated warehouses where automatic storage systems ----------------------
can use vertical space in places where the product is poor in temperature and
expensive on the ground. ----------------------
The high-bay storage area is 10 meters high and some 20 meters tall in ----------------------
such an automated godown.
----------------------
In the next section, you will see and compare the benefits of taking a
warehouse and rented warehouse. ----------------------
There are many aspects to whether you should buy a readymade warehouse ----------------------
or build your own warehouse or rent a warehouse by outsourcing to a third
party logistics company. ----------------------
The existing infrastructure in your business and the types of services ----------------------
that you offer to the industry affect the decisions that are appropriate for your
business. ----------------------
3.2.1 Owned warehouse ----------------------
Benefits of owning warehouse spaces are mentioned below:
----------------------
Cost
----------------------
Price ownership of your own warehouse will save your money and it will
also be the cheapest price during the long run. ----------------------
The overall benefits of managing warehouses and managing total logistics ----------------------
are far bigger than third-party warehousing services.
Control ----------------------
The biggest benefit of owning warehouses is direct control over your ----------------------
employees and the list. You can control individually and make sure that your
----------------------
products are stored, handled, and taken properly.
For better control, there are various Warehouse management softwares ----------------------
that can assist you in tracking inventory and custom order to ensure order
----------------------
accuracy and efficiency.
Location Feature ----------------------
When you create or buy your own warehouse, you have the option of ----------------------
choosing a location that is convenient or close to your business headquarters
and needs. ----------------------
Location plays an important role in the overall performance of the logistics ----------------------
and supply chain, as it enables to improve quality related and other problems.
----------------------
Tax Benefits
----------------------
The place of your warehouse is considered as a commercial real estate,
which means that you can take advantage of numerous tax benefits at the state ----------------------
Warehouse Types 49
Notes and federal levels. Government of India is giving tax incentives and other policy
benefits to encourage warehouses.
----------------------
3.2.2 Hired Warehouse
---------------------- Benefits of Rented Warehouses
---------------------- The initial cost of setting up the price godown is always high. Filling up the
service of a third party Warehousing company can save your initial warehouse
---------------------- or save the initial cost of the building. Also, third party logistics companies can
also get more traffic rates through volume discounts, which saves extra money.
----------------------
The operator’s skills will be knowledgeable in terms of price negotiation
---------------------- and warehousing and distribution management, being part of the third party
---------------------- logistics company warehouse industry. Their service providers will have access
to the latest technology in their experience and warehousing problems like
---------------------- investment management, tracking, and reporting.
---------------------- One of the main distributors for time warehouses is the speed of operation.
When the time comes, the third party logistics company will give your company
---------------------- many benefits. Primarily, meeting the needs of managing warehousing and
total supply chain will help in more time and attention on other aspects of your
---------------------- business.
---------------------- Scalability: In addition to optimizing your company’s logistics, third
party logistics companies can easily scale and optimise the continuous growth
---------------------- of your business.
---------------------- According to the requirements of your list, it provides the ability to certify the
location, labour, and transportation.
----------------------
---------------------- 3.3 TYPES OF WAREHOUSES

---------------------- In the above section, we discussed the advantages of warehousing and
own warehouse and the need to hire warehouses. The defined warehouse is a
---------------------- commercial building that meets the storage needs of various goods. There are
---------------------- different types of warehouses.
Various types of warehouses that can be classified to meet their needs are
----------------------
listed below,
---------------------- 1) Based on ownership
---------------------- A) Private warehouse
---------------------- B) Public warehouse

C) Government Warehouse
----------------------
D) Bonded Warehouse
----------------------
E) Cooperative Warehouse
---------------------- 2) Based on the type of commodities stored
---------------------- A) General Warehouse
B) Special Commodity Warehouse Notes
C) Refrigerated Warehouse
----------------------
3) Based on the function
----------------------
A) Cross-docking and trance loading warehouses
B) Disposal of large scale warehouses ----------------------
C) Storage Warehouse ----------------------

D) Distribution warehouse ----------------------
E) Aggregation Warehouse
----------------------
3.4 TYPES BASED ON OWNERSHIP ----------------------
A) Private Warehouse ----------------------

Manufacturers or traders, in particular, owned and managed warehouses ----------------------
for placing their own goods stores, are known as private warehouses.
Generally, the warehouse farmers are built near their fields, by vendors and ----------------------
retailers near their business centres and by growers with their factories.
----------------------
These warehouses are specially designed and the facilities provided in
them are of the nature of the products being stored in them. ----------------------
B) Public Warehouse ----------------------
Warehouses for general public goods are known as public warehouses. ----------------------
Anyone can store their belongings on rent in these warehouses.
Individual, Partner Company or any company may own the warehouse. ----------------------
To start such warehouses, a license from the government is necessary. ----------------------

The government also controls the work and functions of the warehouses.
----------------------
C) Government Warehouse
----------------------
These warehouses are owned, managed and controlled by the central/
state government, public corporations or local authorities. Government ----------------------
and private companies can use these warehouses to store their belongings.
Central Warehousing Corporation, State Warehousing Corporation, and ----------------------
Indian Food Corporation are examples of government warehousing
----------------------
agencies.
D) Bonded Warehouse ----------------------
Bonded Warehouse is used to store imported goods, which do not have to ----------------------
pay the import duty.
----------------------
These warehouses are controlled and managed by the government, as well
as private agencies. Private binding warehouses are required to obtain a ----------------------
license from the government.
----------------------
●● These warehouses are built especially at the airports and stored
items are accepted till the goods are imported by the importers. ----------------------
Warehouse Types 51
Notes ●● These warehouses have been licensed by the government for this
purpose.
---------------------- ●● The warehouse owner gives an undertaking to the government that
---------------------- customs duty will be collected from the owner of the person before
the person can be removed from the warehouse before the goods
---------------------- are removed.
---------------------- ●● In other words, the goods stored in this warehouse are compulsory.
●● Bonded warehouse ownership may be owned by the dock officer or
---------------------- privately owned, but they have to work under the supervision and
---------------------- control of license officials.
The following services are provided by binding warehouses.
----------------------
1. Importers save on time and also payment of customs duty because
---------------------- they carry goods.
---------------------- 2. Operations required to handle the quality of spraying and dusting

are done regularly.
---------------------- 3. Imported goods can be re-exported.
---------------------- Importers can distribute goods without paying an import duty of imported
goods. Thus avoiding the crisis of reimbursement of taxes on imported
----------------------
goods and refund of goods exported.
---------------------- E) Co-operative Warehouse
---------------------- These warehouses are owned, managed and controlled by cooperatives.
---------------------- They provide warehousing facilities at the cheapest rates to their members.
Generally, warehouses in rural areas are in India are cooperative
---------------------- warehouses.
---------------------- Agricultural products have been stored for the common use of cooperative
warehouses.
----------------------
---------------------- 3.5 TYPES BASED ON THE BASIS OF COMMODITY

STORED
----------------------
A) General Warehouses
----------------------
General merchandise warehouse is a warehouse for things that do not
---------------------- have a temperature specific requirements, e. g. Goods like clothes, raw
---------------------- materials, automobile components, industrial products, general non-
perishable products, etc.
---------------------- They do not require any cold storage system to control the warehouse
---------------------- temperature at low levels. Common godowns make up the largest part of
the warehouse industry.
---------------------- There are large scale buildings with huge storage in industrial areas in
---------------------- cities, towns and villages. They are loading the docks, which can load and
unload the trucks. They can also implement these capabilities in trains, Notes
ports, and airports.
----------------------
They usually have cranes and forklifts to transfer goods.
B) Special Commodity Warehouse ----------------------
These warehouses are designed to store a specific type of commodity, ----------------------
e.g. Tobacco, cotton, wheat, etc. Commodity format is important when
choosing the type of warehouses. ----------------------
For example, to store petrol, storage tanks are needed and warehouses are ----------------------
needed to store agricultural products.
----------------------
Indian oil companies, FCI and Central Warehousing Corporation are the
major players in special commodity warehouses. ----------------------
C) Refrigerated Warehouse ----------------------
Cold storage is required to protect agricultural products. Food products
----------------------
are not stored for more than one year. The storage temperature for
most destructive products is generally less than -25°C, as low levels. ----------------------
Refrigerated storage helps to destroy spots, rooting and pesticides.
----------------------
Cold storage helps to stabilize the prices of the market and distributes
goods both in demand and timely. Farmers get the opportunity to produce ----------------------
cash crops to get profitable prices. Customers get a supply of perishable
items with lower fluctuations. ----------------------
Ammonia and frozen compressor are commonly used in cold storage ----------------------
warehouses to maintain temperature. The ammonia refrigerant is cheap,
it is easily available and the heat of evaporation is high, but it is very ----------------------
poisonous and it can make an explosive mixture when it is mixed with ----------------------
fuel oil.
To reduce cold loss and to keep warehouses different at different ----------------------
temperatures, insulation is also important. ----------------------
There are two main types of refrigeration systems used in cold storage
warehouses: ----------------------
A) Vapour absorption system (VAS) ----------------------

B) Vapour-compression system (VCS) ----------------------
VAS, however, is relatively expensive to install, which is more economical
----------------------
in operation.
The temperature required for protection depends on the timely and product ----------------------
type of storage required. ----------------------
Generally, there are three groups of products,
----------------------
1. Living food (e.g. fruits and vegetables)
----------------------
2. Foods that are no longer alive and processed in some form (e.g.
meat and sea food products) ----------------------
Warehouse Types 53
Notes 3. The item availing storage at controlled temperature (e.g. beer,
tobacco)
----------------------
The place is important for the cool storage facility to be successful. It
---------------------- must be close to the growing area as well as the market, it is easy to access
vehicles and provide uninterrupted power.
----------------------
---------------------- 3.6 TYPES BASED ON FUNCTIONS
---------------------- A) Cross-docking and trance loading warehouses

Cross-Dock service and trans-load services include manufacturing and
----------------------
distributing multiple destinations by different trucks or containers than
---------------------- inbound shipments.
Trance-load services transfer container cargo from one load unit to the
----------------------
other. When a container trance is loaded, it is usually done at a facility
---------------------- near to the port terminal. It is taken in a facility and transferred to domestic
containers or truckloads.
----------------------
Most often, the product is pelleted in warehouse facilities, as many of
---------------------- the 20-feet or 40-feet ocean container are floor loaded during the trans-
loading process.
----------------------
It is possible to switch the truck from a container to save the list price and
---------------------- traffic costs. However, there are areas of concern for the delays of ports,
damages, and theft.
----------------------
Cross-Dock services include unloading products/items on the other trucks
---------------------- for direct sale from a truck or a container. Items are not put away but
merely staged near dock doors to await loading.
----------------------
Therefore, there is no storage between receipts and shipment and time
---------------------- is about to change. The time taken for cross docking is generally less
than 24 hours. This quick turnover requires excellent communication and
---------------------- coordination with warehouse or 3PL with vehicles and shippers.
---------------------- Trans-load and cross-dock services provide the speed of delivering
products directly to customers and shipping directly to them. The speed
----------------------
of distribution and distribution of goods, storage in the warehouses is
---------------------- achieved without incurring the cost and delays related to production and
warehousing.
----------------------
The cross-dock service and trans-load services include customization of
---------------------- products like labelling and kitting.
---------------------- With the continuous progress in the supply chain of computer technology,
trans-loading services and cross-dock services have become more
---------------------- effective and they are expected to increase faster.
---------------------- B) Disposal of large scale warehouses

Break-Bulk: In this case, the warehouse is aimed to carry large quantities
---------------------- of goods through economic space, long space transport, and different
customers that are broken into smaller pieces for local distribution. This Notes
enables small shippers in small spaces instead of smaller cargo ships.
----------------------
Once you’ve prepared a large amount using a consolidation warehouse,
there should be a method to break that large number into a small shipment. ----------------------
There is a reason why the merger has been done because small shipments
have been gathered on a large scale for the economic purpose and sent to ----------------------
the destination.
----------------------
If there is a consolidated shipment at the aggregated site or destination,
then it is necessary to break a large amount if it is for multiple customers ----------------------
to distribute. The Break Bulk Warehouse plays an important role here.
----------------------
Break bulk warehouses are similar to combine operations that are
inversion to consolidation. The aggregated content is broken into smaller ----------------------
sections and given to the individual customers according to the needs
----------------------
of the customer. The economy helps to manage sub-scales for this last
customer. ----------------------
Break Bulk Operations collects customer orders from a manufacturer and ----------------------
then send the material to the individual customers as necessary.
The break bulk warehouse divides individual orders into basic order ----------------------
and arranges local distribution. Break bulk helps to make large-scale ----------------------
transportation over large amounts of local delivery.
For example, Plant A is sending material to multiple customers P, Q, and ----------------------
R, who are all in the same area or nearby area. Then this bigger product ----------------------
goes to a break bulk warehouse and customers in P, Q, and R, depending
on the order, fall into smaller parts and are distributed locally using local ----------------------
distribution traffic methods.
----------------------
This is another example of break bulk where two breaks from A, B and C
are first integrated into the bulk warehouse and then the customer D, E, ----------------------
and F are delivered according to requirements.
----------------------
Why is the need for a break bulk warehouse here? If the customer receives
the contents directly from the D, A or C Plant then the price of the logistics ----------------------
is very high.
----------------------
In this case, the cost of logistics is managed by the break bulk operators
and the same is received by the order they give to the customer D, E, and ----------------------
F. Although the break bulk warehouse receives a joint shipment. ----------------------
C) Storage Warehouse
----------------------
Storage is the function or method of stocking something. Items are also
stored even when they are to be used in the future. There are various types ----------------------
of storage warehouses,
----------------------
1. Fixed - Includes all fixed shelf shapes and configuration of different
sizes. These materials are for simple storage. ----------------------
2. Dynamic - Known to provide high levels of space usage. ----------------------
Warehouse Types 55
Notes 3. Semi-Automatic - Includes mobile, vertical shifting, and vertical
and horizontal carols.
---------------------- 4. Automatic system - Offers high level security.
---------------------- 5. In agriculture, underground and surface structures are preferred.
Advantages of the storage warehouse:
----------------------
1. Ensures consistent exports in the storage market.
----------------------
2. It is to protect against harmful commodities.
---------------------- 3. Helps in the price constraints by balancing the demand and supply
system.
----------------------
4. Provides employment and income with the benefits of pricing.
---------------------- D) Distribution Warehouse
---------------------- Distribution warehouse is a place where goods are distributed. This
warehouse works as a distributor for products from the producer before
---------------------- distributing it to different retail customers.
---------------------- For example, the creators have created products that they want to distribute
to customers all over the world, and in order to do so, they will distribute
---------------------- these goods to the distributors in a particular area.
---------------------- To deliver such large quantities of products and goods, distributors require
this distribution warehouse where they can easily store these goods before
---------------------- distributing them in retail stores.
---------------------- Most storage warehouses also have warehouse storage systems to keep
storage items and products more secure and more convenient.
----------------------
The distribution centre may also be called warehouse, DC, compliance
---------------------- centre, cross-dock facility, a big brake centre, and package handling
centre. The name known as Distribution Centre is usually based on the
----------------------
purpose of the operation.
---------------------- For example, “Retail Distribution Centre” generally distributes objects
to retail stores, the “Order Completion Centre” generally delivers direct
----------------------
items to customers and the cross-dock facility stores a little or no product
---------------------- but delivers the goods to other destinations.
---------------------- A common retail distribution network works with centres set up in the
entire business market and each centre offers multiple stores. Large
---------------------- distribution centres offer 50-125 stores for companies like Wal-Mart.
---------------------- Supplier ship truckloads which stores and supplies to the distribution
centre where the right quantities of stores are kept until required by the
---------------------- retail location.
---------------------- E) Consolidation Warehouse
A type of warehousing that combines small shipments from many suppliers
----------------------
in the same geographical area and combines large, more meaningful,
---------------------- shipping loads for the same area.
Small, flexible transmission - Large, financial outbound shipments. Notes
In this concept, manufacturers stay away from multiple warehouses for
----------------------
downstream storage and combine their distributors with other producers,
in which the internal distribution centres or third party logistics providers ----------------------
are replaced.
----------------------
Benefits of consolidation Warehousing:
1. Low shipping costs for participants ----------------------
2. No capital investment required (reduces risk) ----------------------
3. Required decrease list level ----------------------
4. Speed and Functionality
----------------------
5. Able to serve small customers
----------------------
1. Warehousing removes the hindrance of time. ----------------------
2. Warehousing is not an important auxiliary to trade.
----------------------
3. The objectives of warehousing may be to carry over the surplus
goods, for consumption in the future during the period of scarcity. ----------------------
4. Warehousing is not used to store the goods of seasonal nature. ----------------------
5. Warehousing is not useful for large scale trading.
----------------------
6. Warehousing helps in continuous production of goods in the factories.
----------------------
----------------------
Summary
----------------------
●● arehouses and distribution centres are defined as structures that are
W
primarily used for the receipt, temporary storage, possible modification/ ----------------------
customisation and distribution of goods that are en route from production ----------------------
sites to where they are consumed.
●● arehouses and DCs are often sites where value is added to the products
W ----------------------
moving through them.
----------------------
●● A warehouse is a commercial building for storage of goods.
----------------------
●● A warehouse could be owned or hired.
●● enefits of Owning a Warehouse Space are minimum cost, control, the
B ----------------------
convenience of location and Tax Benefits.
----------------------
●● enefits of a hired warehouse are cost, the expertise of operator, time and
B
scalability. ----------------------
●● The warehouse can be classified based on, ----------------------
Warehouse Types 57
Notes o On the basis of ownership
o On the basis of the type of commodities stored
----------------------
o On the basis of function
----------------------
●● Types of warehouses based on ownership are
---------------------- o Private Warehouses
---------------------- o Public Warehouses
---------------------- o Government Warehouses

o Bonded Warehouses
----------------------
o Co-operative Warehouses
----------------------
●● Types of warehouses on the basis of Type of Commodities Stored are,
---------------------- o General Warehouses
---------------------- o Special Commodity Warehouses
o Refrigerated Warehouses
----------------------
●● Types of a warehouse on the basis of Function are,
----------------------
o Cross Docking and Trans-loading Warehouses
---------------------- o Break Bulk Warehouses
---------------------- o Storage Warehouses
---------------------- o Distribution Warehouses
o Consolidation Warehouses
----------------------
---------------------- Keywords
---------------------- ●● Bonded Warehouses – Special warehouse which is used to store imported
---------------------- goods for which import duty is yet to be paid.
●● General Warehouses: These are ordinary warehouses used for storage of
---------------------- most of the food grains, fertilizers, etc.
---------------------- ●● Special Commodity Warehouses: These are warehouses, which are
specially constructed for the storage of specific commodities like cotton,
---------------------- tobacco, wool and petroleum products.
---------------------- ●● Refrigerated Warehouses: These are warehouses in which temperature
is maintained as per requirements and are meant for such perishable
---------------------- commodities as vegetables, fruits, fish, eggs, and meat.
---------------------- ●● Distribution Warehouse/Distribution Centre: A building and a place
where items for distribution are stored.
----------------------
●● Consolidated Warehouse: A form of warehousing that pulls together
---------------------- small shipments from a number of suppliers in the same geographical
area and combines them into larger, more economical, shipping loads
---------------------- intended for the same area.
Notes
----------------------
1. Explain the meaning of warehousing.
2. What are the different classifications of the warehouse? ----------------------
3. Explain the types of warehouses based on the basis of ownership. ----------------------
4. Discuss warehouses on the basis of the type of commodities stored. ----------------------
5. Discuss warehouse on the basis of Function.
----------------------
Answers to Check your Progress ----------------------

1. True
----------------------
2. False
----------------------
3. True
4. False ----------------------
5. False ----------------------
6. True ----------------------
----------------------
Suggested Reading
----------------------
2. Belapure, A. M. Export & Import Management. Horizon books. ISBN: ----------------------
978-93-84044-04-6. ----------------------
References
----------------------
1. https://en.wikipedia.org/wiki/Warehouse
----------------------
2. https://www.mbaskool.com/business-concepts/operations-logistics-
supply-chain-terms/15539-general-merchandise-warehouse.html ----------------------
3. https://www.weberlogistics.com/blog/california-logistics-blog/ ----------------------
bid/286744/The-Difference-Between-Crossdock-Services-and-
Transload-Services ----------------------
4. https://reachoutsol.com/2016/03/28/owning-a-warehouse-space-vs- ----------------------
using-a-third-party-logistics-company/
5. https://old.nios.ac.in/secbuscour/cc11.pdf ----------------------
6. https://specialities.bayt.com/en/specialties/q/184148/what-is-break-bulk- ----------------------
warehouses/
----------------------
7. https://novojuris.com/2016/09/26/warehouses-checklist-of-licenses-and-
registrations/ ----------------------
Warehouse Types 59
Notes Annexure
---------------------- Warehouses – Checklist of Licenses and Registrations
---------------------- There are numerous licenses and registrations for operating a warehouse.
With the new economy of sharing warehouse space, it becomes essential to
---------------------- ensure compliances of both the operator and the depositor of the goods.
---------------------- Below is a checklist, listing the licenses and registrations to be obtained

from the operator and the depositor. Many licenses are very specific to the goods
---------------------- stored.
---------------------- The Warehousing (Development and Regulation) Act, 2007 defines
“warehouse” as any premises (including any protected place) conforming to all
---------------------- the requirements including manpower specified by the Authority by regulations
wherein the warehouseman takes custody of the goods deposited by the
----------------------
depositor and includes a place of storage of goods under controlled conditions
---------------------- of temperature and humidity.
Registration
----------------------
1. GST Registration/Certificate
----------------------
2. Sales Tax Registration
---------------------- 3. Excise Registration with Central Excise Department (Manufacture of
---------------------- Dutiable goods)
4. Customs Registration
----------------------
5. Registration certificate issued by the Accreditation Agencies registered
---------------------- with National Cooperative Development Corporation (NCDC))
---------------------- 6. PAN Card
---------------------- 7. TIN Number (Synonymous with VAT and CST registration)

8. Profession Tax Certificate (N/A for Delhi)
----------------------
9. CST Certificate (Now synonymous with VAT/TIN registration)
----------------------
10. TAN Certificate
---------------------- 11. Import of Goods – IEC Number
---------------------- 12. Registration Certificate (Shops and Establishments Act)
---------------------- 13. For Manufacturer

14. Factory Registrations:
----------------------
●● SSI (small scale); or
---------------------- ●● MSME (micro-small-medium); and
---------------------- ●● DIC registration.
---------------------- 15. With local authority:
----------------------
16. For the land location of a production unit, permission from a local Notes
municipal corporation or other units of the city/district; like BDA or
BBMP in Bangalore. ----------------------
Licenses ----------------------
NOC or warehouse license from the Municipal Corporation or local
----------------------
authority
Factory License (for Karnataka issued by Karnataka, Department of ----------------------
Factories, Boilers, Industrial Safety, and Health)
----------------------
All Vehicle used for transportation to have valid documents (as per the
Motor Vehicle Act, 1939) ----------------------
Insurance ----------------------
If the stock is purchased: ----------------------
Transportation and Transit Insurance
----------------------
NOTE: Insurance of imported goods/equipment would need to be arranged
on a very selective basis and only for cases where the value of the individual ----------------------
shipment is expected to be in excess of Rs. 5 crores.
----------------------
Statutorily required insurances:
----------------------
●● I nventory and Goods Insurance (Rule 3 (8), Warehouse Regulations,
2011) ----------------------
●● Fire Insurance (Rule 3 (8), Warehouse Regulations, 2011) ----------------------
●● orkmen’s Compensation Insurance/Employees Liability Insurance
W
(Workmen Compensation Act, 1923) ----------------------
●● Burglary Insurance (Rule 3 (8), Warehouse Regulations, 2011) ----------------------
●● Product liability insurance
----------------------
●● I nland cargo Insurance (Specifically for covering goods that are transported
within the country- a form of Marine Insurance) ----------------------
●● Truck Cargo Policy ----------------------
●● Stock Throughput Insurance
----------------------
Insurance Policies:
●● Special fire perils policy (for a value not less than the actual value of the ----------------------
stocks held in storage at a given point of time and if the stocks exceed ----------------------
the limit of insurance cover value/sum insured then warehouseman shall
immediately get enhanced the value of sum insured from insurance ----------------------
company otherwise, the warehouse has to bear the cost of un-insured
stocks and has to pay to the depositor in case of any loss of stocks). The ----------------------
policy should give details of different stocks with “held in trust” clause. ----------------------
●● ther risks such as floods and riots, strikes or terrorism shall be covered
O
as an add on the policy of special fire perils ----------------------
----------------------
Warehouse Types 61
Notes ●● heft and burglary policy – The warehouseman has to take this policy on
T
first loss basis and he shall ensure that the policy adequately covers the
---------------------- risks.
---------------------- ●● isappropriation – The warehouseman shall take the policy of covering
M
losses of goods etc. due to fraudulent activities of an employee of the
---------------------- warehouse, then the said risks shall be adequately covered.
---------------------- ●● pecial fire perils policy (for a value not less than the actual value of the
S
stocks held in storage at a given point of time and if the stocks exceed
---------------------- the limit of insurance cover value/sum insured then warehouseman shall
immediately get enhanced the value of sum insured from insurance
---------------------- company otherwise, the warehouse has to bear the cost of un-insured
---------------------- stocks and has to pay to the depositor. In case of loss of stocks). The
policy should give details of different stocks with “held in trust” clause.
---------------------- Security
---------------------- Proper and adequate packaging of the goods:
---------------------- ●● Ensuring that all goods are transported in a safe manner to the Warehouse.
●● he goods are to be accompanied by a person who has sufficient skill to
T
---------------------- handle the goods which also includes unloading from the vehicles and
---------------------- packing the same in the shifts.
●● aintaining a proper register of the goods which were unloaded in the
M
---------------------- warehouse.
---------------------- ●● nsure that a copy of such list of goods is handed over to the warehouse
E
in charge.
----------------------
Measures for the Warehouse:
---------------------- ●● Well protected boundary walls/barbed wire fencing etc.
---------------------- ●● Gates with appropriate locking arrangements.
●● Entry points & Exit Points guarded by trained security.
----------------------
●● Security Cabin.
----------------------
●● Gate-Pass to be issued for the goods passing in and out from the warehouse.
---------------------- ●● Register for incoming/outgoing vehicles and employees.
---------------------- ●● CCTV and/or biometrics systems in place.
●● acking and storage requirements as per Warehouse Manual for
P
---------------------- Operationalising of Warehousing (Development & Regulation) Act, 2007
---------------------- (37- 2007)
Standards
----------------------
●● All godowns of 25000 MTs or above capacity will be preferably Railway
---------------------- siding godowns and all other godowns should be preferably within 8 km
of Railway goods shed with full rake Railway siding facility.
----------------------
●● Certificate from Bureau of Indian Standards (BIS)/CWC/FCI Standards
---------------------- ●● If the warehouse does not have its own arrangement for pest control
activity for scientific treatment, assaying of stocks and other activities Notes
such as security arrangements, etc. then the authority will allow third
party agreement with service providers and a copy of such agreements ----------------------
may be obtained by accreditation agency for submission to WDRA.
----------------------
●● FSSAI License/Registration
Ownership Documents ----------------------
●● Proof of ownership (Sale Deed, Tax Receipt, etc.); or ----------------------

Registered lease Deed (rights with the warehouseman to use the relevant ----------------------
warehouse for the purposes of operating a warehouse)
Proof of Address/Location of the Manufacturing (If Manufacture) ----------------------
●● ddress Proof of the Company (Title deed/lease deed/rent agreement

A ----------------------
of the premises, leased or rented out specifically for conducting such
----------------------
business)
●● Proof of Address/Location of the Manufacturing company ----------------------
●● ccupancy Certificate (if claiming Ownership over the manufacturing
O ----------------------
land)
●● ease Deed/Rent Agreement (if the place of the manufacturing unit is
L ----------------------
rented/leased). ----------------------
Incorporation Documents
----------------------
●● Incorporation Certification
●● Memorandum of Association ----------------------
●● Articles of Association ----------------------
Receipts of the purchase
----------------------
Bills that show that the purchase of the good is complete.
----------------------
Delivery records
----------------------
To authenticate actual delivery of the goods purchased, records of the same
reaching the user. ----------------------
Agreement of Sale
----------------------
To show that there is a subsisting agreement between the user and his source,
for the subsequent sale of the particular good. ----------------------
Import Proof ----------------------
Bill of Lading/Airway Bill/Rail receipt or any other despatch document, issued ----------------------
by a government agency (like the Department of Posts) or an agency duly
authorised by the concerned Ministry/Department. ----------------------
Environmental ----------------------
●● OC from Fire and Emergency Services Department (e.g. In Karnataka it
N
----------------------
is issued by Karnataka Fire and Emergency Services Department)
----------------------
Warehouse Types 63
Notes ●● OC from the State Pollution Control Board (with the consent for
N
establishment and consent for operations)
---------------------- ●● Fire-fighting arrangements including Fire Extinguishers, Sand Buckets
---------------------- ●● Equipment’s, such as sprayers, gas mask, canisters, gloves, gum boots,
goggles, aprons, etc. available at the Warehouse (depending on the nature
---------------------- of goods being deposited at the warehouse)
---------------------- ●● uantity of pesticides – insecticides for prophylactic treatment, fumigants
Q
for fumigation and rodenticides for rodent control.
----------------------
●● I f the warehouse does not have its own arrangement for pest control
---------------------- activity for scientific treatment, assaying of stocks and other activities
such as security arrangements, etc., then Authority will allow third party
---------------------- agreement with service providers and a copy of such agreements may be
obtained by accreditation agency for submission to WDRA.
----------------------
●● OC – Explosive Clearance License (Explosive Act, 1908 and Explosive
N
---------------------- Rules, 2008)
---------------------- ●● Clearance under Essential Commodities Act, 1955
Labour Laws Compliances
----------------------
●● he proposed minimum manpower requirement is approved by the
T
---------------------- Authority with suggestions that in case pest control and security services
are out sourced, the manpower requirement may be adjusted accordingly.
----------------------
●● Registration under Employee State Employee State Insurance Act, 1948
----------------------
●● egistration Certificate under Contract Labour (Regulation and Abolition)
R
---------------------- Act, 1970
Compliances
----------------------
Legal Meteorology act compliances (since the weight/storage capacity plays a
---------------------- major role in the warehouse)
---------------------- ●● Proper and adequate packaging of the goods.
●● Ensure that all goods are transported in a safe manner to the Warehouse
----------------------
●● he goods are to be accompanied by a person who has sufficient skill to
T
---------------------- handle the goods which also includes unloading from the vehicles and
packing the same in the shifts.
----------------------
●● aintaining a proper register of the goods which were unloaded in the
M
---------------------- warehouse.
---------------------- ●● nsure that a copy of such list of goods is handed over to the warehouse
E
in charge.
---------------------- Maintaining Net-Worth:
---------------------- The minimum Net-worth applies to the warehouse on the basis of the total
storage capacity of goods in tonnes. The minimum net-worth requirements for
---------------------- registration with the Authority is 0.5 Crores where the total storage capacity in
---------------------- tonnes is at least Less than 1,000 tonnes
State Specific Notes
Layout plan of the Warehouse (for e.g. Warehouse in Bangalore region
----------------------
requires a BBMP Approval or any such development authority approval,
depending on the area i.e. Urban or Rural/SEZ, etc.) ----------------------
Others
----------------------
●● raining for Warehouse Supervisor: Training is also tailored to the
T
Warehouse Supervisor who has the primary authority and responsibility ----------------------
for overseeing the management of warehouse inventories.
----------------------
●● Warehouse operations
----------------------
●● Key Performance Measurement
●● Leading MRO materials team ----------------------
●● ABC Analysis ----------------------
●● Min./Max. Modeling
----------------------
●● Maintenance and Operations Coordination
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Warehouse Types 65
Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Warehousing and Value Added Services
UNIT
Structure:
4
4.1 Introduction
4.2 Characteristics of Ideal Warehouses
4.3 Warehouse Layout
4.4 Warehouse Designing and Configuration
4.5 Services Areas of Value Addition
4.6 Tips to Create Value Addition of Services
Summary
Keywords
Suggested Reading
Warehousing and Value Added Services 67

Notes
Objectives
----------------------
----------------------
• Know the characteristics of ideal warehouses
----------------------
• Understand the concept of warehouse Layout
---------------------- • Analyse the issues related to warehouse designing and configuration
---------------------- • Explain the Services Areas of value addition
---------------------- • Create value addition of services
---------------------- 4.1 INTRODUCTION

---------------------- We have seen different types of warehouses. As a basic function adequate
---------------------- arrangements are made to keep the goods in proper conditions in warehouses.
Now warehouses of today are moving beyond the basic function of storing and
---------------------- delivery of products and offering value added services. These are services which
complement and enhance warehousing, transportation, and logistics offerings.
----------------------
By using value added services, companies are able to lower inventory
---------------------- footprints of finished goods by doing the labelling and final assembly of products
only once the customer orders are received. This is a cost effective supply chain
---------------------- strategy that gives companies more flexibility over their inventory management
---------------------- function.
The value in warehousing has to be seen from the dimension of basic
----------------------
facility and infrastructure being provided by the warehouse in terms of design,
---------------------- layout, and facilities and also the services that are offered by the warehouse.
The three main objectives of modern warehousing and distribution centres are:
----------------------
1. Speed: moving goods through Just-in-time (JIT) logistics management
----------------------
2. Value addition: assembling and customizing products ready for
---------------------- consumption
---------------------- 3. Customer Service: ensuring products are ready as per the needs of
consumer and stores
---------------------- The major objectives of velocity and value addition are dependent largely
---------------------- on the layout design and configuration and facilities being provided by the
warehouse.
----------------------
Let us first understand issues related to ideal warehouse characteristics
---------------------- and its design considerations and later in the unit we will look at different areas
of value addition that are being offered by warehouses of today.
----------------------
----------------------
----------------------
4.2 CHARACTERISTICS OF IDEAL WAREHOUSES Notes
A warehouse is said to be an ideal warehouse if it has characteristics given ----------------------
below:
----------------------
1. The warehouse should be located at a convenient location near highways,
railway stations, airports and seaports where the loading and unloading of ----------------------
goods can be done easily.
----------------------
2. Mechanical appliances should be present to load and unload the goods.
This would reduce the wastages in handling and also reduces handling ----------------------
costs.
----------------------
3. Availability of sufficient storage space for the proper keeping of material.
----------------------
4. Warehouses for perishable items should have cold storage facilities.
5. There should be a proper arrangement to protect the goods from sunlight, ----------------------
rain, wind, dust, moisture, and pests.
----------------------
6. Sufficient parking space should be present to facilitate easy and fast
loading and unloading of goods. ----------------------
7. Round the clock security should be provided to avoid theft of goods. ----------------------
8. Latest fire-fighting equipment should be installed to avoid loss of goods ----------------------
due to fire.
----------------------
4.3 WAREHOUSE LAYOUT ----------------------
Warehouse layout means the physical arrangement of space for storage, ----------------------
materials movement, material handling equipment, office, and its records.
Factors to be considered for a good warehouse layout are - ----------------------
i) Ease of receipt, storage, and issue of materials ----------------------

ii) Adequate space for easy movement of men and material handling ----------------------
equipment
----------------------
iii) Optimal utilisation of storage space
iv) Proper identification of materials ----------------------
v) Fast location of items ----------------------

vi) Facilitates ease in the physical stocking of material ----------------------
vii) Protection against fire risk to the main warehouse area and the rest of the
----------------------
premise
viii) Easier and efficient supervision of the warehouse ----------------------
ix) Sufficient capacity and provision for future expansion ----------------------
Materials within the warehouse must be arranged keeping “efficient ----------------------
service” as the main criteria i.e. minimum time consumed in receipt and issue
of materials. ----------------------

Notes Heavier and bigger items should be stored near the issue window while
lighter and smaller items may be located in the bins and racks farther from issue
---------------------- counter.
---------------------- Similarly, heavy items should be kept in lower racks nearer to the ground
level while lighter items can be kept in the upper racks.
----------------------
Frequency of issue of material should be considered while deciding its
---------------------- location within the store. For efficient and economic receipts and issues, fast
moving items should be stored near the issue window.
----------------------
The systematic arrangement of items in the store is necessary for their
---------------------- quick and easy location at the time of issue. Different practices are found in the
industry. Some companies try to arrange the items sequentially according to the
---------------------- part number, some try to arrange the item’s product wise or project wise or even
department wise while others arrange according to code numbers.
----------------------
General principles of locating materials within the store are given below:
----------------------
Nature of item The preferred location for
---------------------- material in the warehouse
---------------------- 1 High usage items As close to the issue counter as
possible
---------------------- 2 Heavy items that are difficult to Near the point of use, or near broad
transport gangways, or near the gate, or in the
----------------------
open
---------------------- 3 Oils, greases, paints or messy items In separate store
4 Inflammable and dangerous items In an isolated fireproof place with
---------------------- sprinkler system
---------------------- 5 Rubber and rubber parts In the air-conditioned store
6 Costly items like bearings etc. In locked cupboards
----------------------
7 Bulky items impervious to weather Outside yard
----------------------
4.4 WAREHOUSE DESIGNING AND CONFIGURATION
----------------------
Ten steps for efficient Master Planning and Warehouse Layout Design
----------------------
1. Choose the proper Unit Load
----------------------
2. Fixed or Random Storage System – Calculation of requisite Storage
---------------------- Capacity
3. Choice of Storage Systems (Integration with Handling Systems)
----------------------
4. Storage & Structural Module
----------------------
5. Receipts & Dispatch Areas – Supporting Areas & Facilities
---------------------- 6. Warehouse External Dimension (should be close to 2:1)
---------------------- 7. Aisles Orientation – Aisles Length – Warehouse Monitoring
---------------------- 8. Materials Flow, Goods In, Goods Out
9. Efficient Loading & Unloading and Manoeuvring Area Width Notes
10. Warehouse Expansion
----------------------
Factors to be kept in mind while designing a warehouse are,
----------------------
1. Types of space requirements
2. Space configurations ----------------------
3. Durability and functionality ----------------------

4. Energy-efficiency ----------------------
5. Safety/security of people and material
----------------------
6. Occupational health/comfort
----------------------
1. Types of Space requirements
Based on the design and configurations requirements of the warehouse ----------------------
being designed, space types may differ. ----------------------
Typical warehouse requires space for,
----------------------
1. Storage
----------------------
2. Office
3. Loading Docks for shipping and receiving ----------------------
4. Light Industrial Space ----------------------
5. Computer Centre ----------------------
2. Space Configurations
----------------------
Warehouses should be designed based on current and future needs.
----------------------
1. Warehouse space should help in case of changes in business or
due to growth in the size of business or population of people of ----------------------
the warehouse. Warehouse space should be easily adapted to new
functions such as office (on the ground or upper levels), computer ----------------------
centre or light industrial/fabrication.
----------------------
2. Adjust to the need for creating additional space for loading docks,
truck space, and car parking spaces. ----------------------
3. Consider the future changes in technologies and processes related ----------------------
to material handling equipment and also business practice, such
as “just-in-time” storage, which have fundamentally changed the ----------------------
operation of warehouses and distribution. ----------------------
4. Roof design should include features with the built-in extra structural
capacity to handle the addition of future rooftop equipment. ----------------------
5. The warehouse should be designed with fire protection to provide ----------------------

protection in storing of materials with a greater fire hazard.
----------------------
----------------------

Notes 6. Maximise space utilisation while providing adequate circulation
paths for people and material handling equipment like forklift
---------------------- trucks etc.
---------------------- 7. Use higher bays to take advantage of the height available in the
warehouse.
----------------------
8. Optimise layout and configuration of the warehouse for operation
---------------------- and material storage.
9. Inbound receiving and outbound shipping operations should be
----------------------
related to the process flow of goods through the warehouse.
---------------------- 10. Provide for separate receiving and shipping functions so as to avoid
---------------------- congestion at the loading dock areas in the building and in the truck
manoeuvring areas.
---------------------- 11. Building related aspects, such as aisle widths, lighting design, need
---------------------- for mezzanine space, fire protection and egress design will depend
on the different alternative methods of material handling.
---------------------- 12. Design space keeping in view that, businesses often use different
---------------------- methods of storage handling simultaneously for different products.
3. Durability and functionality
----------------------
1. The warehouse should be planned in such a way so as to accommodate
---------------------- loads of stored materials as well as associated material handling
equipment.
----------------------
2. Design of warehouses should be based on the dead and live load
---------------------- requirements of the structure. Rain, Snow, wind and seismic loads
---------------------- should be considered as applicable. For example, Racking system
in seismic areas must be built stronger and be better braced.
---------------------- 3. The warehouse should be designed keeping in mind the effect of
---------------------- wind uplift. Building codes recognise that wind velocity is greater
across open areas, typical for warehouse zones. For example, Wind
---------------------- uplift can cause great damage to roofs and metal roof copings at the
roof edge.
----------------------
4. Warehouse walls to be designed in such a way so as to permit any
---------------------- infiltrating water to evaporate without collecting in the wall cavities
or damaging the stored product. Especially since wind-driven rain
---------------------- can easily penetrate the vast surface areas of the warehouse walls.
---------------------- 5. Proper floor types are an important consideration in the design.
General warehouse space should be floored with a concrete slab
----------------------
to carry wheel loads and withstand the abrasion generated by the
---------------------- forklift trucks. For example, consider adding hardeners and dust
roofers to protect the concrete of the flooring and to consider using
---------------------- an epoxy coating on concrete floors near battery charging areas.
----------------------
6. Floor flatness and levelness requirements are critical, especially for Notes
high ceilinged warehouse storage and for the safe operation of high-
lifting material handling the equipment. ----------------------
7. Adequate space must be provided for, truck manoeuvring and ----------------------
parking of trucks, for car parking for employees and for future
office expansion and landscaped areas. ----------------------
8. The warehouse should be designed to ensure that no structural ----------------------
member will interfere with the spacing of rail car doors or truck
berths at dock spaces. For example, Dock heights on the rail side of ----------------------
the terminal should be approximately 3’-9” above the top of the rail
----------------------
to ensure that the rail car floor is even with the dock floor.
9. Dock heights on the truck side of the terminal should be ----------------------
approximately 4’-40” above the pavement, with appropriate ramps,
----------------------
scissor lifts, or dock levellers at each truck berth to safely bring the
height of the truck bed in line with the dock height. ----------------------
10. Tops of warehouse doors should be high enough to accommodate ----------------------
full height pallet handling from the highest size of trucks.
11. Dock widths and areas inside outside doors leading to dock space ----------------------
must be planned for manoeuvrability of forklift trucks and other ----------------------
material handling the equipment. Consider using a non-slip finish
on the concrete floor near loading areas for safety. ----------------------
4. Energy-efficiency ----------------------
1. The warehouse should be designed with passive solar concepts,
----------------------
solar geometry and building load requirements in mind.
2. The warehouse should have a light coloured roof to reflect a large ----------------------
percentage of solar radiation and thus reducing HVAC loads and
----------------------
energy consumption. When a large roof area is anticipated, this
effect can be significant, especially for temperature controlled ----------------------
warehouses. Greater heat reflection will lead to higher worker
productivity in summer. ----------------------
3. The warehouse should be planned with interior dock space for ----------------------
colder climates so as to reduce energy consumption and provide
more tolerable winter working conditions. ----------------------
4. It is suggested to use ceiling mounted fans to reduce heat stratification ----------------------
and provide air movement, thus increasing worker comfort in both
summer and winter. The fans should be mounted above the highest ----------------------
forklift level for worker safety. ----------------------
5. It is suggested to consider specifying white painted metal roof
decking so as to increase ceiling surface reflectivity and lighting ----------------------
efficiency. This would lead to worker comfort without any added ----------------------
energy cost.
----------------------

Notes 6. It is suggested to use energy-efficient fixtures, systems, and
appliances, e.g., motion sensor instant-on lighting systems,
---------------------- wherever feasible.
---------------------- 5. Safety/security of people and material
1. It is suggested to address the traditional life-safety and health
----------------------
concerns common to all buildings, including measures to prevent
---------------------- occupational injuries and illnesses, Ensure electrical safety,
and eliminate exposure to hazardous materials. The examples
---------------------- of operations which contribute to warehouse injuries and are
considered to be the most hazardous are, docks, powered industrial
----------------------
trucks, conveyors, material storage, manual lifting/handling, roof
---------------------- ladders and hatches, and charging stations. Other serious operational
safety problems include inadequate fire safety provisions, improper
---------------------- blocking of exits and egress paths, chemical exposure, improper
use of lockout procedures, lack of ergonomics and failure to wear
----------------------
personal protective equipment.
---------------------- 2. The warehouse should have proper signage to clearly warn of
hazards or to direct personnel to take precaution. The specific
----------------------
strategy for the warehouse’s signs must be determined early in the
---------------------- facility design process.
---------------------- 3. Warehouse floor should be processed with non-slip surface

treatments for the floors which are subject to wetting, such as
---------------------- outdoor docks, to eliminate slips and falls of personnel.
---------------------- 4. Warehouse facility should be designed with fire sprinkler systems

engineered to cover the specific commodity classification in the
---------------------- specific storage configuration for the warehouse. The adequacy of
the sprinkler system must be evaluated when changes occur that
---------------------- can increase the hazard classification, such as introducing a new
---------------------- product line, using a different packaging material or changing from
wood pallets to plastic pallets.
---------------------- 5. Warehouse design should include appropriate security systems
---------------------- incorporated into the overall warehouse design.
6. Occupational health/comfort
----------------------
1. The warehouse should have provision for proper ventilation under
---------------------- all circumstances.
---------------------- 2. Warehouse design should provide for exhaust outlets and fans for
restrooms, kitchens, janitor’s closets, copy rooms, battery-charging
---------------------- areas, etc.
---------------------- 3. The warehouse should install CO2 sensors to provide real time
monitoring of air quality.
----------------------
4. Warehouse design should integrate day lighting with the electric
---------------------- lighting system.
5. Warehouse design should provide lighting controls that turn off Notes
lights when sufficient daylight exists and consider dimming controls
that adjust lighting levels to daylight conditions. ----------------------
6. Warehouse design should consider the different natural lighting ----------------------
designs for warehouses.
----------------------
7. Warehouse design should ensure that the HVAC system noise is
minimised. ----------------------
8. The warehouse should use furnishings, chairs, and equipment that
----------------------
are ergonomically designed and approved for that use.
9. Design equipment and furnishings which reflects healthy work ----------------------
practices in an effort to eliminate repetitive motions as well as ----------------------
prevent strains and sprains.
10. Warehouse design should strive to create a ‘sense of place’ such ----------------------
that the warehouse has a unique character that engenders a sense ----------------------
of pride, purpose, and dedication for individual workers and the
workplace community. ----------------------
----------------------
----------------------
Fill in the Blanks.
----------------------
1. ___________ costs are permanent in nature and remain the same
irrespective of the quantity stored in the warehouse. ----------------------
2. _____________ costs vary with the quantity stored in the warehouse.
----------------------
3. _____________ location is the process of selecting a site for the store
building in the organisation. ----------------------
4. Materials should be stored in locations, which minimise the ----------------------

__________.
----------------------
5. Store location should be such that it results in overall ___________of
factors. ----------------------
----------------------
Activity 1 ----------------------
----------------------
Visit the manufacturing industry and find out how warehouse management
adds to customer satisfaction and organisational profit. ----------------------
----------------------
4.5 SERVICES AREAS OF VALUE ADDITION
----------------------
Warehousing functions have evolved over the years. Especially with
----------------------
technological advancements, it has become possible to provide additional value
and benefits to the users and operators of the warehouse. ----------------------

Notes Value addition also has to be seen from a customer perspective.
Value-added services help optimize the supply chain management, create
----------------------
higher value and deliver products efficiently to customers.
---------------------- Typical warehouse activities involve,
---------------------- 1. Handling (Inbound and outbound)
---------------------- 2. Storage
Some typical value added warehousing in the area of handling and storage are,
----------------------
1. Products Picking Service
----------------------
2. Products Insurance Service
---------------------- 3. Products Quality Checking Service
---------------------- 4. Products Order Fulfilment and Invoice Printing
---------------------- 5. Products Co-packing / Repacking Service

6. Products Other Services
----------------------
1. Products Picking Service
----------------------
Picking of products in a warehouse as a value added product is the process
---------------------- to ensure accurate and fast issuing of stocks in the warehouse irrespective
of the volume, batches or description of the materials.
----------------------
The accuracy and speed are achieved by installing automated systems
---------------------- that make put away easy and accurate. This leads to faster picking as it
becomes convenient to locate and issue out.
----------------------
2. Products Insurance Service
---------------------- Insurance Service is one of our value added services with which materials
---------------------- in the warehouse are protected from losses. In case of any incidents like fire
outbreaks, flood, earthquake, etc. The contract of insurance indemnifies
---------------------- the warehouse keeper or the owners of the material from the loss. This
is helpful and useful as an unforeseen situation (the act of God) could
---------------------- happen anytime.
---------------------- 3. Products Quality Checking Service
---------------------- Quality Checking Service is the process by which warehouse ensures
that the products/goods stored in the warehouse are properly screened,
---------------------- checked and certified okay for usage or consumption.
---------------------- The warehouse would have high ultra-modern physical and chemical
laboratories with qualified quality control staff that check all materials
---------------------- with the right specification before issuing out. This eliminates the cost of
reverse logistics due to defects or damages.
----------------------
4. Products Order Fulfilment and Invoice Printing
----------------------
Order fulfilment and invoicing is the process by which warehouse would
---------------------- process and despatch material to the customers of the material. With this
service, end customers of the clients of the warehouse will be issued stocks Notes
only after approval by the client of the warehouse (i.e. confirmation of
payment or within the set credit limit). ----------------------
5. Products Co-packing/Repacking Service ----------------------
Co-packing and repacking services have become inevitable especially
----------------------
with the competition in the market to win the customers. The warehouse
should have co-packing services for facilitating modern trade convenience ----------------------
packing. With the outsourcing of warehousing function, the companies
are also asking warehouses to invest in the packaging process of breaking ----------------------
bulk and packing in small lots. The warehouse also offers the repacking
----------------------
process to salvage client products from total loss due to damages or defect.
6. Products Other Services ----------------------
1. Labelling service ----------------------
2. Bundling service ----------------------
3. Stamping service
----------------------
4. Gift packing
----------------------
5. Barcode printing
6. POP display assembly ----------------------
7. Price Ticketing ----------------------
8. Kitting. ----------------------
4.6 TIPS TO CREATE VALUE ADDITION OF SERVICES ----------------------
Although the value added services vary from one customer to the next, ----------------------
warehouses can improve their processes if they keep a few things in mind. Such ----------------------
as,
1. Create uniformity into the process: In a normal situation, any request ----------------------
for value-added services are often added in a text box on an order. This ----------------------
requires someone in the warehouse to interpret what has to be done. A
better approach would be to standardise it by creating value added service ----------------------
codes that allow uniformity in the process. Similar orders can then be
released together, and managers can do analysis to determine to the cost ----------------------
of the same. ----------------------
2. Employ activity-based costing: In general, the pricing for value added
----------------------
services does not reflect clearly what it really takes to do perform the
service. It is suggested that warehouse managers should create simple ----------------------
engineered standards to do activity-based costing. To know what value-
added services are really costing, you have to align it with labour standards ----------------------
and unit load movements. For example, Typical activity based costing
----------------------
would include a base cost for moving a case, adding a ticket, and printing
and applying a label. ----------------------

Notes 3. Use intelligent postponement: Orders for rainbow boxes or pallets (a
carton or pallet) with an assortment of the product rather than just one
---------------------- SKU – are common in distribution warehouses. It is suggested to design
a process to create some standard assortments ahead of time, but at a rate
---------------------- slightly below typical orders for customers who order assorted packs in a
---------------------- large volume. The balance can be processed when the customer actually
places an order.
----------------------
4. Design value-added operations like a production process: Although
---------------------- value-added services are performed in a warehouse, they have more
in common with the manufacturing floor than typical pick and pack
---------------------- operations. Warehouse managers and companies should hire engineers
and other employees who understand manufacturing, rather than
----------------------
warehousing, to design their value-added processes.
---------------------- 5. Use WMS: Old warehouse management systems software and process
systems were not designed with value-added processes capabilities, but
----------------------
now many newer systems do include modules for value-added services.
---------------------- Whenever possible, integrate your value added process with warehouse
management system so that it can be managed in a WMS like any other
---------------------- process in your operation. That allows the warehouse to determine what
supplies you need and how many labour hours to allocate to your orders.
----------------------

---------------------- State True or False.
---------------------- 1. Typical warehouse activities involve handling and storage.
---------------------- 2. Value added services will vary from one customer to another customer.
3. For designing value added services, companies should hire
----------------------
manufacturing engineers.
----------------------
---------------------- Activity 2
---------------------- Visit the warehouse of any organisation and find out which elements of
value added services are implemented there.
----------------------
----------------------
Summary
----------------------
●● alue added warehousing services are those which complement and
V
---------------------- enhance warehousing, transportation, and logistics offerings. Using our
---------------------- services enables companies to lower inventory footprints of finished goods
by delaying the labelling and final assembly of products until customer
---------------------- orders are received. This is a cost effective supply chain strategy that
gives companies more flexibility over their inventory.
----------------------
●● arehouse layout means physical arrangement of space for storage,
W Notes
materials movement, material handling equipment, office and its records
and thereby provide for the most efficient receipt, storage and issue of ----------------------
materials.
----------------------
●● I dentification of materials is the tracing of the part description or part
number including size, the material of construction, source of supply, ----------------------
batch number, etc.
----------------------
●● roper identification is necessary to ensure the issue of correct items,
P
sort out mix up of materials of same size of different specifications, ----------------------
track identity of the batch number through different stages of operations,
identify source of supply for the material accepted initially but found ----------------------
defective during further processing, differentiate items manufactured/ ----------------------
procured to current and obsolete drawings.
●● aterials within the warehouse must be arranged keeping “efficient
M ----------------------
service” as the main criteria i.e. minimum time consumed in receipt and ----------------------
issue of materials.
●● actors to be kept in mind while designing a warehouse are Types of
F ----------------------
Spaces, Space Configurations, Durability and functionality, Energy-
----------------------
Efficient, Safety/Security of Personnel and Material, Occupational health/
comfort. ----------------------
●● alue-added services help optimize the supply chain management, create
V
----------------------
higher value and deliver products efficiently to customers.
●● Some tips to create value addition of services are, ----------------------
o Create uniformity into the process when possible ----------------------
o Employ activity-based costing
----------------------
o Use intelligent postponement
----------------------
o Design value-added operations like a production process
o Preferably use WMS ----------------------
----------------------
Keywords
----------------------
●● arehouse layout: It means the physical arrangement of space for
W
----------------------
storage, materials movement, material handling equipment, office and its
records and thereby provides for the most efficient receipt, storage, and ----------------------
issue of materials.
----------------------
●● Velocity: Moving goods through Just-in-time (JIT) logistics management
●● dding Value: Assembling and customizing products ready for
A ----------------------
consumption
----------------------
●● Customer Service: Ensuring products are consumer and shelf ready
●● WMS – Warehouse management system software solution ----------------------
----------------------

Notes
----------------------
1. List down the characteristics of ideal warehouses.
---------------------- 2. What is the warehouse Layout? What are the essentials for a good
warehouse layout?
----------------------
3. Explain different areas of consideration while designing a warehouse.
----------------------
4. Identify the areas to create value addition in warehouse services.
----------------------
----------------------

Fill in the Blanks.
----------------------
1. Fixed costs are permanent in nature and remain the same irrespective of
---------------------- the quantity stored in the warehouse.
---------------------- 2. Variable costs vary with the quantity stored in the warehouse.
3. Warehouse location is the process of selecting a site for the store building
----------------------
in the organisation.
---------------------- 4. Materials should be stored in locations, which minimise the fire hazards.
---------------------- 5. Store location should be such that it results in the overall integration of
factors.
----------------------
----------------------
---------------------- 1. True
---------------------- 2. True
---------------------- 3. True
---------------------- Suggested Reading

----------------------
1. Jhamb, L.C. 2005. Materials & Logistics Management. Pune: Everest
---------------------- Publishing House.
2. Meindl, Peter and Sunil Chopra. 2012. Supply Chain Management. New
----------------------
Jersey: Prentice Hall.
---------------------- 3. Adams, N.D., et al., 1996, Warehouse & Distribution Automation
---------------------- Science, version 0.96,
McGraw-Hill.
----------------------
6. Mulcahy, D.E., 1994, Warehouse Distribution & Operations Handbook, Notes
McGraw-Hill.
----------------------
7. Mulcahy, D.E., and Dieltz, J., 2004, “Order-Fulfillment Systems,” in
Order-Fulfillment and Across-the-Dock Concepts, Design, and Operations ----------------------
Handbook, St. Lucie Press, pp. 111–140.
----------------------
8. Piasecki, D., 2005, “Order Picking: Methods and Equipment for Piece
Pick, Case Pick, and Pallet Pick Operations,” InventoryOps.com, ----------------------
----------------------
books, ISBN-978-93-84044-04-6 ----------------------
11. SCDL. Material Management. ----------------------

12. SCDL Logistics and distribution management ----------------------
References
----------------------
1. https://tampabayfreight.com/wp-content/uploads/Value-Added-
Warehousing-A-New-Dynamic-for-the-Logistics-Industry.pdf ----------------------
2. https://specialties.bayt.com/en/specialties/q/266232/what-are-the- ----------------------
principles-to-be-followed-in-warehouse-designing-building/
----------------------
3. www.inventoryops.com/order_picking.htm.
4. www2.isye.gatech.edu/~jjb/wh/book/editions/wh-sci-0.96.pdf ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
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Warehouse Internal Operations
UNIT
Structure:
5
5.1 Introduction
5.2 Measures and Metrics of Warehouse Operations
5.3 Logistics in the Warehouse
5.4 Locating Materials in a Warehouse
5.5 Identification and Classification of Materials and Products in the
Warehouse
5.6 Managing the Material/Products Turns in Warehouse (FIFO/LIFO)
5.7 Problems and Issues in Shipment Processes
Summary
Keywords
Suggested Reading
Warehouse Internal Operations 83

Notes
Objectives
----------------------
----------------------
• Know the measures and metrics of warehouse operations
----------------------
• Understand Logistics in the warehouse
---------------------- • Explain how to locate materials in a warehouse
---------------------- • Evaluate the methods for managing the material turns in the warehouse
by FIFO and LIFO
----------------------
---------------------- 5.1 INTRODUCTION

---------------------- There is an efficient warehouse operation on the establishment of every
---------------------- successful business brand. This is an area that can destroy your business or
help build customer loyalty for the brand. But getting it right is not easy. All
---------------------- things that are necessary to run a warehouse like a watch, this unit includes
everything - how they can be managed, the best picking and packaging process
---------------------- and problems related to the shipment process.
---------------------- A study conducted by the Big Commerce in the Omni Channel Retail
Report has found that: 80% of respondents said “shipping is very effective” at
---------------------- the price and speed of shipping. It is said that 80% of buyers are “very effective”
---------------------- in their purchase price and in the shopping area.
This means that the need for effective warehouse management is more
----------------------
important than ever.
---------------------- Warehouse management is the process of organizing and controlling
everything in our warehouses - and to ensure that all of these are in the best
----------------------
possible way.
---------------------- Where:
---------------------- ●● Arrange the warehouse and its list.
●● Maintaining proper equipment.
----------------------
●● Convenience is available in new stock.
----------------------
●● Picking, packing, and shipping orders.
---------------------- ●● Track and improve total warehouse performance.
---------------------- ●● Most of the development organizations use automation tools (such as
some form of warehouse management system) to control this part of their
---------------------- supply chain.
----------------------
----------------------
----------------------
Notes
----------------------
----------------------
----------------------
----------------------
Fig. 4.1 Typical warehouse functions ----------------------

However, it is important to think from a manual perspective and there are many ----------------------
issues which are covered in this unit.
----------------------
5.2 MEASURES AND METRICS OF WAREHOUSE ----------------------
OPERATIONS
----------------------
It needs to work to improve this in all parts of the tracking performance
and supply chain management. And when warehouse management comes, they ----------------------
are not different. Generally, these are two things: ----------------------
1. To fulfil customer orders (without damages)
----------------------
2. Customer order completion (without harm)
----------------------
The focus areas for measuring the warehouse management process are
the main areas: ----------------------
I. Efficiency
----------------------
In simple words, the warehouse team will have to complete the acquisition
and study how long the warehouse will take to remove the new delivered ----------------------
purchase order. It’s a good idea to record the exact time: ----------------------
1. New stock is being distributed.
----------------------
2. When it is ready to keep the stock away.
----------------------
3. Then the stock has been thrown out again.
You can then calculate the differences between the time between each ----------------------
point and work the average for the month - Allows you to see how the
----------------------
performance is performing in this area of your warehouse operations.
II. Rate of returns ----------------------
Every order or sale refund received cannot be due to issues related to ----------------------
the warehouse. Therefore it is necessary to categorize the reasons for the
return. In this way, the warehouse or operation manager can have high ----------------------
activity and start exploring the reason for making policies to resolve. ----------------------
Determine the reasons for returning many different contents and use the
following equation to analyze each one: ----------------------
Rate of return = number of units returned / number of units sold ----------------------

Notes III. Picking accuracy
You can analyse picking accuracy by choosing the Real Return Rate - Part
----------------------
of the data.
---------------------- To calculate the accuracy of the selection, use your total number of data
over the rate of return of the following equations:
----------------------
Picking Accuracy = (Total number of orders - Refund of wrong item /
---------------------- Total number of orders) x100
---------------------- IV. Order lead time
---------------------- Order lead time (or order processing time) specifies that how long it
takes for the customer to order. You might want to divide it into different
---------------------- categories. But generally, the low warehouse is a lead time, which your
customers will be happy with - as long as it is delivered in the right
---------------------- conditions.
----------------------
5.3 LOGISTICS IN WAREHOUSE
----------------------
Careful planning of materials must be planned in the warehouse. Physical
---------------------- handling equipment and travel time of any owner in the warehouse are the
---------------------- import components of the total functionality and productivity of any warehouse.
Systematic handling should be analysed to reduce the travel under material
---------------------- in the warehouse and to ensure speed or recovery and recovery.
---------------------- There are some issues to keep in mind.
---------------------- 1. External Assimilation: The movement of incoming and outgoing material
is studied. This phase is related to inbound and outbound logistics.
----------------------
2. Overall handling Plan: Full content handling is considered. This includes
---------------------- the transportation interval of materials from one place to another and used
for transportation purposes. In this phase, decisions should be taken based
---------------------- on the basic needs of physical handling (Muthar and Hagans, 1969).
---------------------- 3. Detailed Handling Plan: Content handling and traffic intervals in specific
areas are analysed. (Muthar and Hagans, 1969).
----------------------
4. Installation: No plans are applied till completion. After the plan is
---------------------- completed, necessary steps are taken, such as physical handling facilities,
buying equipment, etc.
----------------------
All the steps mentioned above and the key components of the system are
---------------------- systematized by Systematic Handling Analysis, which can be divided into the
material analysis, activity analysis, and modules analysis.
----------------------
Material Analysis
----------------------
Content classification is based on physical activity. There are two factors
---------------------- that are considered.
1. The first one is physically active, which includes transported physical and
----------------------
chemical properties.
2. The second factor is the effect of logical influences, which reflect on Notes
process, quality, equipment, etc. (Lee, 2010).
----------------------
To study the analysed physical features, it must be relevant to the
experimental findings of the material in its detail. The following steps to find ----------------------
empirical data (Lee, 2010):
----------------------
1. Mark all objects in groups according to the same group or operating
system. ----------------------
2. It is necessary to record physical, chemical and other properties.
----------------------
3. Analyse points out to find important things.
----------------------
4. Create detailed visualized tables for physical analysis.
Activity Analysis ----------------------
To analyse the content handling process, the physical flow must first be ----------------------
examined (Lee, 2010). This analysis includes material traffic, start and end
----------------------
points, and content handling material (Muthr and Hagans, 1969).
For example, two different methods are used for activity analysis. ----------------------
1. The first is to carry an analysis of work flow or flowing analysis, used for ----------------------
single and very small varieties of products (Li, 2010). The whole process
of the material flow has to be followed and recorded. ----------------------
2. The second one is From- To point analysis. If there are fewer categories ----------------------
of material, the material flow route is targeted and data is recorded.
----------------------
Modules Analysis
----------------------
This particular phase is a combination of various handling modules.
----------------------
----------------------
Fill in the Blanks.
----------------------
1. _________ to study how long it takes for the warehouse team to
complete the receiving and putting away of a newly delivered ----------------------
purchase order to the warehouse.
----------------------
2. Most high growth organisations use _________tools to control
warehousing operations. ----------------------
----------------------
Activity 1 ----------------------
Draw an organisation chart for the warehouse department of a large scale ----------------------
organisation.
----------------------
----------------------
----------------------

Notes 5.4 LOCATING MATERIALS IN A WAREHOUSE
---------------------- Location Number
---------------------- In a small factory, where there is a small store, the warehouse valve will
usually be remembered by the location of the physical location, but in large
---------------------- industrial units where the storekeeper cannot ban the bank in its memory where
thousands of items are handled. To assist the storekeeper at the store facility,
---------------------- there is some kind of system of content needed.
---------------------- The location number of the item is the essential location in the store where
the necessary material can be found. The right place for the item:
----------------------
i) It facilitates receipt and issue of stock.
----------------------
ii) It helps to know where everything is kept. This avoids the need to
---------------------- remember. In any case, it is impossible to remember in thousands of items
stored in the store.
----------------------
iii) Reduces the likelihood of an item’s wrong issue.
---------------------- iv) It improves home maintenance and gives a streamlined and streamlined
---------------------- look at the store.
v) It reduces the likelihood of coming to the wrong place of the item.
----------------------
vi) It makes the work of physical stock easy and efficient.
----------------------
The most popular system for finding goods in Indian industry is:
---------------------- ●● All racks from one end of the store to the other end are 1, 2, 3 ... according
to the order.
----------------------
●● In each rack, the overlays are sorted alphabetically from top to bottom as
---------------------- A, B, C, ...
---------------------- ●● Doves in every shelf are numbered from left to right from numeric.
For example, location number 03-D-02 will show:
----------------------
●● Third rank in the store
----------------------
●● The fourth shelf at the top of the third rack (shown by D)
---------------------- ●● From left to second pigeon hole.
---------------------- The storage area is marked where there is content in the floor or open
premises (in the case of open storage system), floor area is filmed, block and
---------------------- similarly codified.
----------------------
5.5 IDENTIFICATION AND CLASSIFICATION OF
---------------------- MATERIALS AND PRODUCTS IN WAREHOUSES
---------------------- Receive and Manage New Stocks
---------------------- Receiving, unpacking, removing and receiving book an important part of
warehouse management is capable of taking books as efficiently as possible.
----------------------
The faster it will be, the stock will be available for sale as soon as possible. Notes
And, after the error or inefficiency of this process, the entire supply chain
----------------------
exits from the rest of the series.
Receive via Digital Mobile Scanner ----------------------
It is worth noting that mobile scanner devices can make it faster and more ----------------------
accurate in the entire booking process.
----------------------
Instead of having to sit on a computer and find and update each product
individually, you can: ----------------------
1. Scan the product or purchase order ----------------------
2. Update list levels on mobile screens
----------------------
3. Keep it away in the warehouse - make it a simpler and faster process
----------------------
Keep at the right place
Temporary home in your acquired area, without the risk of loss in the ----------------------
newly delivered stock, and people must have enough space to do their due. ----------------------
Record everything
----------------------
It’s a good idea to record specific details to return if there is any problem
- e.g. The exact time is drawn when new stock arrives. ----------------------
Have workers appointed ----------------------
New stock must be handled as soon as possible - not left to prepare. Give
----------------------
people clear roles and responsibilities.
Put away ----------------------
Physically add any necessary labeling or barcodes before storing the stock ----------------------
in its respective warehouse space.
----------------------
Check carefully
Dedicate some time and resources to ensure that all new deliveries are ----------------------
accurate in numbers and are harmless. It also has the opportunity to identify any ----------------------
vendor, inbound shipping or packaging problem.
----------------------
Update inventory list
Make sure all stock layers are updated correctly on each sales channel or ----------------------
list management system - that means it’s ready and ready for purchase.
----------------------
Warehouse Management fulfilment Policy
----------------------
Being able to complete the order quickly and accurately is a major place
of warehouse management. First of all, this is the whole reason for the existing ----------------------
warehouse in the first place. Here’s what you need to think about choosing,
packing, shipping, and distributing your distribution tasks: ----------------------
Piking looks like a simple concept for the first time. And this is - when you ----------------------
have only a few orders to handle. Once you have ordered hundreds (or thousands)
of orders with multiple items per day, it becomes a different thing once. ----------------------

Notes A recent study concluded that 70% of the labour time is spent when the
product is selected for processing. And 60% of the picker is just slipped around
---------------------- the warehouse.
---------------------- That’s why a robust picking system has a big impact on the entire
distribution productivity.
----------------------
There are four main picking systems used by medium to large organizations:
---------------------- Single order
---------------------- This is the most basic picking method - especially used only by those
people. Easily, the picker will complete an order at one time before moving
---------------------- ahead.
---------------------- Best: Warehouses that are new and have just started operations, which are
not big enough to take advantage of more complicated picking methods.
----------------------
Avoid: If the warehouse is shipping more than 20 customers, then one day
---------------------- (or make a plan for the near future).
---------------------- Batch picking
The picker is assigned a lot of batch ordering, selecting them at the same
----------------------
time and then returning to the packing desk.
---------------------- Then select the new batch to select the picker. The number of orders
---------------------- allocated to each batch is usually between 10 and 30. But this really depends on
the actual size of your products and the size of the average order.
---------------------- Best: The high number of orders with one or fewer products per order.
---------------------- Avoid: If there is a high level of products for each order in the warehouse
(or is this goal in the future).
----------------------
Zone picking
----------------------
Each of these pickers has brought the warehouse along with their own
---------------------- area (or zone) which only selects products stored in that particular area. Before
returning to the packing desk, the pickers in that area have ordered all the parts
---------------------- to add the necessary material. It’s great to prevent multiple pickers from getting
to each other’s way, but it may cause a slight delay in shipping because every
----------------------
order must be passed around the warehouse.
---------------------- Best: retailers usually ship a large number of order orders.
---------------------- Avoid: If the warehouse normally ships one or a few items, or if there are too
few pickers.
----------------------
Wave picking
---------------------- Similar to zones, but all zones are selected at the same time. Different
---------------------- objects are selected in that area and later given to the packer which will combine
all the different choices for each order. This is faster than the zones, but more
---------------------- time to pack orders together before the need to send increases the labour cost.
----------------------
Best: Retailers usually ship a large number of order items and still take Notes
care of the process faster.
----------------------
Avoid: If the warehouse usually ships one or a few items in an order, very
few pickers or price is more important than the transmission speed. ----------------------
Picking Order Volume Items per Best for ----------------------
method order
Single order Low Medium – High Startup ----------------------
Batch Low – High Low – Medium Haigh volume of single
----------------------
per orders
Zone High Low – medium Haigh volume with a lot ----------------------
of products per order
----------------------
Wave Medium – High Medium - High Haigh volume with
multiple items per order ----------------------
Optimize your packing process
----------------------
There is more to packing than to throw items in the box as soon as possible.
This is a chance to make sure that you are sending the right products to the right ----------------------
customers and the most effective way. Here’s what you need to ask: ----------------------
Box size: Most shipping companies include package dimensions in their
prices - instead of weight-based only. The meaning box sizes can have a direct ----------------------
impact on costs. ----------------------
However, there is a great way to overwhelm packers with up to 50 different
----------------------
box-size options and make slow warehouse operations. So there’s a balance
here that has to be hit here. Of course, it depends on your personal professional ----------------------
needs. If you know that each order has the same physical size it is important to
have a box size - and it’s very easy for the packer. ----------------------
But a general retailer usually works best with about 3-5 size options. ----------------------
Keeping these things manageable for a packer while allowing the room to
reduce the cost of courier costs. ----------------------
Packaging materials ----------------------
Another factor in the packing process is choosing the most suitable ----------------------
packaging material. During this transit, one balance is needed to protect the
goods, reduce the total weight of the package (and therefore the courier costs) ----------------------
and keep the cost of packaging material down.
----------------------
Of course, forge egg shipping is more secure than the shipping of a
book, and more expensive packaging material is guaranteed. So to analyze the ----------------------
range of packaging materials available to you, analyse your product catalogue
(recording to distribute the damaged item). ----------------------
Here are some common things: ----------------------

Air pillow ----------------------
A well-ventilated plastic bag, very lightweight and good protection, but
----------------------
the balloon needs to work. 90% protection rating.

Notes Light wool
Luge Fill Wool which is light but limited shock protection. 60% protection
----------------------
rating.
---------------------- Peanut packing
---------------------- Biodegradable or Recycling Foam Peanuts. 90% protection rating.
---------------------- Bubble wrapping

Two layers are hidden near the products using a hat for sale 75% Protection
---------------------- rating
---------------------- Cutting paper
---------------------- Cheap and lightweight but limited protection 50% Protection Rating
Crunched paper
----------------------
Crushed with paper dispenser and pager. Limited protection 50%
---------------------- Protection Rating
---------------------- Shipping your order
---------------------- The following steps are straightforward in your warehouse management process:
1. Package weight
----------------------
2. Print the related shipping label (and currency, if it is not already done) *
----------------------
3. Mark the order as ‘sent’ on the respective sales channel or order
---------------------- management system
---------------------- 4. Send ‘shipping confirmation’ and ‘tracking’ email to customers ** (A

quality order management system will do this for you automatically).
----------------------
----------------------

1. Single order picking is good if the warehouse is shipping to more than
---------------------- 20 customer orders a day.
---------------------- 2. Batch picking is useful if the warehouse has a high number of products
per order.
----------------------
3. If warehouse typically ship single or low item orders have very few
---------------------- pickers or cost is more important than speed of dispatch, wave picking
should be adopted.
----------------------
----------------------
Activity 2
----------------------
---------------------- Write down the approaches to material categorisation applied in your

organisation.
----------------------
5.6 MANAGING THE MATERIAL/PRODUCTS TURNS Notes
IN WAREHOUSE (FIFO/LIFO)
----------------------
FIFO and LIFO are the cost-price procedures used to evaluate the prices
of sold prices and to eliminate the series. ----------------------
FIFO - First In, First Out ----------------------

FIFA is the abbreviation of the word “first, first out” and it means that ----------------------
the goods connected to the inventory are considered to be the first items drawn
from the list for sale. ----------------------
LIFO - Final, First Out ----------------------
LIFO is an abbreviation of the term “last, first-off”, and this means that the ----------------------
goods eventually linked to the list are considered to be the first goods derived
from the owner for sale. ----------------------
So, FIFA and LIFO have two opposite methods of moving the stock ----------------------
through our warehouses.
----------------------
Benefits of FIFO
If your products have a shelf life, first “first in first out” is a good plan. ----------------------
They can be perishable things like food, products that are similar to those of a
----------------------
cycle like fashion or do anything with products. With this, you definitely want
to move whatever comes into your warehouse. If you sell new things on the ----------------------
shelf, you can lose money (and maybe it will be) out of money, out of fashion
or no longer the latest model. ----------------------
Think something simple like milk. When you take milk from your ----------------------
warehouse and keep it in the store, you need first milk in front of the refrigerator.
There is no use to keep the freshest milk in front - there will be first milk, the ----------------------
customer will buy it and the milk will be eaten at the back.
----------------------
Benefits of LIFO
----------------------
It is a bit clearer to understand that “first change is the best”. The main
advantages of using this method are linked to accounting, but this is to be ----------------------
mentioned here - especially if there are things manufactured by your products.
Using LIFO allows you to adjust your earnings against your most recent expense. ----------------------
When your pricing is going up, it’s a good way. If so, you have to spend most ----------------------
of your most recent product. If you’ve sold the first at a cheap price, you reduce
the price of the product and concentrate more on your gains because you are ----------------------
currently working with the old information rather than what is happening. So,
using LIFO, you have more credible and good quality information on your ----------------------
earnings. ----------------------
This goes directly for another benefit - tax. If you report a good report
about your profits (less salary than you do), then you can make a deduction. ----------------------
You may be less affected by any market price for items you have produced ----------------------
because you are going to sell your products that make the most for the first time.
----------------------

Notes So you will have fewer write-downs.
When news of LIFO and warehouse management comes in, this method
----------------------
is used only for household items like coal, sand, stone or bricks. When a batch
---------------------- comes in the warehouse, it sits at the top of the old batch and is the first to be
used the newest.
----------------------
This method is easy even if there is not enough room for a batch to really
---------------------- fit your warehouse - if space is tight and your products do not have shelf-life,
why should you give yourself more trouble?
----------------------
Which is good
---------------------- It depends on your products. For products with perishable commodities
---------------------- or life cycles or life span, it is always necessary to have FIFA - or you will lose
money.
---------------------- For other products, you need to be integrated with your account or
---------------------- whoever needs to take financial care to work out of stock in your warehouse
and work out the best way to go outside.
---------------------- Whatever you choose, make sure that the stock layout in your warehouse
---------------------- reflects so that it will be quick and easy to carry on. If you are using LIFO,
you might want to “push-back” or “drive-in” shelfing and pallet racking. This
---------------------- allows you to keep the latest product from bringing the latest product shelf
back on. When you need to recover the product, the latest things are ready to be
---------------------- removed at the end of the shelf.
----------------------
5.7 PROBLEMS AND ISSUES IN SHIPMENT PROCESSES
----------------------
The following main steps are required to achieve the literature:
----------------------
1. In warding off in the security gate
----------------------
2. Verification of the correctness and supply of documents
---------------------- 3. Maintain a contractor in the receiving store
---------------------- 4. Verification of the scale
---------------------- 5. Notify indent and purchase for receipt of materials

6. Preparation of receipt of the goods
----------------------
7. Checking the literature
----------------------
8. Distribution of verified content to the appropriate store
---------------------- 9. Restore the defective material to the suppliers
---------------------- 10. Return all the charges to the suppliers to make the refundable
---------------------- Essential of correct issue

The requirements of appropriate issues are as follows:
----------------------
1. Content should be issued as per the written requirement.
----------------------
2. Content should be issued against authorised requests only. Notes
3. Material, especially in case of C-Class, should be given in pre-determined
----------------------
scale.
4. The need for material should be obtained before one day in advance. ----------------------
5. Materials for FIFA (first-in-first-out), especially low shelf life items, must ----------------------
be issued. However, the prototype approved by the supplier (s) should be
issued. ----------------------
6. Literature should be given in bags/dubs, so that if the movement is not ----------------------
damaged/dined/ chips.
----------------------
7. Material to be issued to avoid mixed-up must have a familiar tag/sticker
(only when identification details are printed on specific/contract). ----------------------
----------------------
Summary
----------------------
●● olid warehouse operation is at the foundation of every successful retail
S
brand. It’s an area that could either destroy your business. Or propel it ----------------------
into something customers trust time and time again. But getting it right is
no simple task. ----------------------
●● arehouse management means making sure your warehouse operations
W ----------------------
run in the most optimal way possible.
----------------------
●● arehouse layout should be balanced on providing enough storage space
W
and working space for staff. ----------------------
●● ticking with simple alphanumeric combinations makes it easier for
S
----------------------
pickers to understand the location.
●● ow detailed you go with labelling depends on the size and complexity
H ----------------------
of warehouse operations.
----------------------
●● n optimally arranged warehouse can save a lot of time overall and
A
reduce costs. ----------------------
●● acking is an opportunity to make completely sure that you’re sending
P ----------------------
the right products to the right customers in the most efficient way.
●● arehouse management is a monumentally complex task with a wide
W ----------------------
variety of plates to keep spinning. But getting it right can be the difference ----------------------
between retail success or failure.
●● It all comes down to: ----------------------
 Arranging your layout properly and then organising your inventory ----------------------
within this.
----------------------
 Having a well-drilled system in place for staff to repeat time and
time again when it comes to receiving stock and fulfilling orders. ----------------------
 Measuring efficiency, then identifying and fixing problem areas. ----------------------
----------------------

Notes  And knowing when it’s time to invest in a digital Warehouse
Management System (WMS).
----------------------
●● et these aspects right and you’ll soon be running your warehouse like
G
---------------------- clockwork – and fulfilling customer orders quicker and more accurately
than ever before.
---------------------- ●● Receiving store exercises control on the quantity and quality of materials
---------------------- from the time that they are received until they are accepted and taken into
stock. The receipt procedure comprises ten steps, namely:
---------------------- 1) Inwarding at the security gate.
---------------------- 2) Verification of the correctness of paperwork.
---------------------- 3) Inwarding of consignment in the receiving store.
4) Verification of quantities.
----------------------
5) Notifying indentor.
----------------------
6) Preparation of Goods Receipt Report.
---------------------- 7) Inspection of materials.
---------------------- 8) Delivery of inspected materials to appropriate stores.
---------------------- 9) Return of defective materials to the suppliers.
10) Return of all chargeable empties to the suppliers.
----------------------
●● he function of the issue is a key activity of the Store, which concerns
T
---------------------- the issue of materials of the right quality (as specified in the material
---------------------- requisition), in the right quantities and at the right time.
---------------------- Keywords
---------------------- ●● rder lead time: Order lead time (or average order processing time) is
O
---------------------- quite simply how long it takes for a customer to receive an order.
●● icking accuracy: Tracking and segmenting rate of return properly lets
P
---------------------- you also analyse picking accuracy – a particularly key piece of data.
---------------------- ●● LIFO: Last in first out
●● FIFO: First in fist out
----------------------
---------------------- Self-Assessment Questions

---------------------- 1. What are the measures and metrics of warehouse operations?
---------------------- 2. Explain how to locate materials in a warehouse.
---------------------- 3. Explain different picking methods for material in the warehouse.
4. Explain LIFO and FIFO and discuss which is a better method for stoke
----------------------
movement from the warehouse.
----------------------
5. Write short notes on: Notes
a. The main steps to be followed when receiving material
----------------------
b. Essentials of Correct Issues
----------------------
Fill in the Blanks.
----------------------
1. Receiving efficiency to study how long it takes for the warehouse team to
complete the receiving and putting away of a newly delivered purchase ----------------------
order to the warehouse.
----------------------
2. Most high growth organisations use Automation tools to control
warehousing operations. ----------------------

1. False
----------------------
2. False
----------------------
3. False
----------------------
Suggested Reading ----------------------
1. Menon, K. S. Stores Management. New Delhi: Macmillan India Limited. ----------------------
----------------------
books, ISBN-978-93-84044-04-6.
References ----------------------
Warehouse Management: A Complete Guide for Retailers – veeqo. ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Warehousing Equipment
UNIT
Structure:
6
6.1 Introduction
6.2 Material Handling Equipment and Systems
6.3 Safety - Matting, Industrial Safety Equipment
6.4 Storage Types and Storage Unit Management
6.5 Material Storage Systems
6.5.1 Benefits
6.5.2 Methods
6.6 Industrial Shelving
6.7 Industrial Storage Bins
6.8 Spill Containment Systems
Summary
Keywords
Suggested Reading
Warehousing Equipment 99
Notes
Objectives
----------------------
----------------------
• Know about the different types of material handling systems
----------------------
• Understand storage types and unit management concepts
---------------------- • Analyse the role and importance of safety in warehouse
---------------------- • Evaluate different material storage system
---------------------- • C
reate and identify ideal storage equipment based on their usage for
any warehouse
----------------------
---------------------- 6.1 INTRODUCTION

---------------------- Material handling cannot be avoided in logistics, but can certainly be
reduced to minimum levels. The productivity potential of logistics can be
----------------------
exploited by selecting the right type of handling equipment.
---------------------- The selection of material handling equipment cannot be done in isolation,
---------------------- without considering the storage system. Investment in the material handling
system will be a sheer waste if it is not compatible with the warehouse layout
---------------------- plan.
---------------------- The layout will create obstacles for free movement of equipment and
goods, resulting in poor equipment productivity. Recent trends indicate a
---------------------- preference for automated systems with higher logistical productivity to enhance
the effectiveness of human energy in material movement.
----------------------
---------------------- 6.2 MATERIAL HANDLING EQUIPMENT AND

SYSTEMS
----------------------
Classification of the material handling system is based on the degree of its
----------------------
sophistication. The most preferred way of material handling is manual, where
---------------------- volumes handled are less and the investment in handling equipment does not
ensure more benefits.
----------------------
In such cases, the idle time of equipment will be more and the equipment
---------------------- is underutilised. Handling systems can be classified as follows:
---------------------- ●● Manual
●● Mechanised
----------------------
●● Semiautomatic
---------------------- ●● Automatic
---------------------- ●● Information guided
The major criteria for selection of the right system are: units moved per
---------------------- hour, and the distance it is moved.

Higher volumes over large distances call for more sophisticated systems, Notes
which attract higher investment. Sophisticated systems enhance the speed of
material handling, ensuring reliability and productivity. ----------------------
Manual System ----------------------
This is the cheapest and the most common method of material movement
----------------------
used in warehousing. The limitations of this system are low volumes, slow
speed, physical characteristics of the product, and distances. In warehouses ----------------------
where cartons do not weigh more than 20 kg and volumes handled are not large,
material loading, unloading, and movement are done manually. ----------------------
The investment in equipment is not justified in such cases. In developed ----------------------
countries where the manual labour is scarce and the cost of employment is very
high, the use of manual handling is discouraged. But in developing countries, ----------------------
because of the availability of cheap labour, manual systems with very limited
----------------------
mechanisation, such as manual trolleys, is common.
Mechanised System ----------------------
The prime consideration before going in for mechanised material handling ----------------------
systems is the layout of the warehouse. Investment in the material handling
system will be a sheer waste if it is not compatible with the warehouse layout ----------------------
plan. The layout will create obstacles for the free movement of equipment and ----------------------
goods.
Mechanised equipment requires space for free movement across the ----------------------
warehouse. The equipment should have accessibility to the storage area for ----------------------
material loading and unloading during storage and retrieval.
----------------------
The other benefit of mechanisation is a transfer of fatigue from humans
to machines. The human element in material movement is removed, bringing ----------------------
speed and reliability in material movement. Mechanisation enhances system
productivity. ----------------------
The mechanised system need not be powered equipment. For example, ----------------------
the wheeled trolley with a handle is driven manually. However, in this case, the
load is transferred to the trolley and a person needs to use little force to facilitate ----------------------
its movement over longer distances.
----------------------
The purpose of machinery is to increase the abilities of man beyond his
own physical and mental capacities. Mechanisation helps in enhancing the ----------------------
effectiveness of human energy in material movement. ----------------------
Stacker cranes
----------------------
These are electric power driven and operate on fixed rails at the base and
top of each aisle. Stacker cranes are used for lifting loads up to two tonnes and ----------------------
up to a height of 60 feet and are not economical for lifting objects lesser than 30
feet high. Stacker cranes are normally used in large warehouses where a large ----------------------
number of pallets are to be picked and stacked. A typical installation may house ----------------------
more than 1000 pallets per aisle.
----------------------

Notes The criteria for choosing a machine for material movement in the
warehouse should be:
----------------------
●● Improvement of space utilisation
---------------------- ●● Reduction of time taken for material movement
---------------------- ●● Speeding up the overall material flow
●● Reduction in material damages during material handling
----------------------
●● Ensuring the safety of operating labour
---------------------- The mechanised system includes a wide variety of handling equipment.
The equipment most commonly used are wheeled trolley, forklift, pallet truck,
----------------------
tractor-trailer device, conveyors, cranes, and carousels.
---------------------- Semiautomatic System
---------------------- In the semiautomatic system, mechanised handling equipment may be
used but specific handling requirements of a particular warehouse operation
---------------------- may be performed automatically. The automation done is in parts, i.e., the
---------------------- individual equipment may be fully automatic and computerised, but the other
equipment in the warehouse are mechanised and manually operated.
----------------------
Hence, the semiautomatic warehouse is a mixture of mechanised and
---------------------- automatic handling equipment. The following are the various versions of
automated equipment in the semiautomatic warehouse system.
----------------------
Sorting Device: Sorting devices are normally used along with powered
---------------------- conveyors. The sorting device will sort the material based on the sorting code.
The optical sensing reads the bar code on the items, which can be diverted to
---------------------- the packing section for unitisation of load into boxes, or it may be sorted out
on a regional basis and guided to a specific shipment dock for transportation
----------------------
through an assigned vehicle. The automatic sorting device increases system
---------------------- productivity through speed, accuracy, and elimination of manual labour.
Pneumatic tube system
----------------------
These are used for movement of granular or powdered material over short
---------------------- distances. These systems are quite common in cement and fertiliser plants,
---------------------- wherein the material in powder form is moved to storage silos using pneumatic
flow. Air, at 7 kg/sq. cm pressure, is normally used for transporting material.
---------------------- The pressurised air carries the powder in the direction of the flow. In
---------------------- modern food grain warehouses, food grains in bulk quantity are stored in silos.
Pneumatic tube systems are used for storage and retrieval of material. In some
---------------------- cases, vacuum pumps are also used for material retrieval. These systems ensure
a faster and reliable material movement. For bulk transfer of powered material,
---------------------- these systems are cost effective and reliable.
---------------------- Automatic System
---------------------- Automated material systems are custom built and attract heavy investment.
The human factor is minimised substantially and restricted to programming
---------------------- and controls. The advantages are speed and accuracy, which enhance the

productivity of the system. The main disadvantages of the automated system Notes
are high investment, complexity in development, and absence of flexibility.
----------------------
An automated material handling system is always developed along with
a storage system specific to its requirements for synchronous operations. The ----------------------
storage system accounts for 40-50% cost of the total system.
----------------------
For example - ITC Bhadrachalam uses an unmanned automated storage
and retrieval system at its plant in Bhadrachalam. This system can, using an ----------------------
automatic stacker crane, move 3500 pallets, each ranging from 600 to 1400
mm, at the rate of 25-40 pallets an hour. A conventional system, by contrast, can ----------------------
handle a maximum of 6 to 8 pallets an hour. Source: Business Today February
----------------------
7, 2000
Information guided ----------------------
Robotics ----------------------
These are human-like machines with microprocessors to perform the ----------------------
programmed activity or series of activities. Wide scale usage of robotics is seen
in manufacturing centres where repetitive activities are performed continuously ----------------------
or activities are performed in hazardous working conditions, which are harmful
to human life. In warehouses, robotics can be used for break bulk or consolidation ----------------------
operations. ----------------------
Robotics can also be used in extreme temperature environments like
cold storage or deep freezers. The capability of robotics to perform activities ----------------------
without fatigue and with accuracy makes it an attractive proposition alternative ----------------------
to manual methods.
----------------------
Automatic guided vehicle system (AGVS)
The AGVS is a mechanised material handling equipment without an ----------------------
operator. The system consists of four components, i.e., a vehicle for movement,
----------------------
pickup and drops off locations, guidance system, and a computer control system.
The vehicle moves on a fixed magnetic or optical path. The vehicle reaches ----------------------
its destination by tracing the assigned path, covering the pickup and drop off
stations without the help of an operator. ----------------------
These systems operate at the speed of 150-250 feet per minute, which is ----------------------
slower than the typical forklift truck that operates at 300-500 feet per minute.
In cases where a magnetic system is used the path is energised using a magnetic ----------------------
wire installed on the warehouse floor and for optical systems, a light beam ----------------------
guides the vehicle.
The AGVS is used in warehouses for material movement through fixed, ----------------------
assigned paths during pickup and drop operations. In advanced AGVS, which is ----------------------
in use in developed countries and is based on the latest IT and video technology,
the fixed path movement of the vehicle can be eliminated. The economic ----------------------
justification of the system is a trade-off between lower operating cost and higher
investment. ----------------------
----------------------

Notes
----------------------
----------------------
1. Material handling cannot be avoided in logistics, but can certainly be
---------------------- reduced.
---------------------- 2. Classification of the material handling system is based on the degree
of its sophistication.
----------------------
3. Stacker cranes are not economical for lifting objects lesser than 30
---------------------- feet high.
----------------------
---------------------- Activity 1
---------------------- Search the internet for the application of robotics in warehouse

management. List down the benefits and use for pharmaceuticals industry.
----------------------
----------------------
6.3 SAFETY - MATTING, INDUSTRIAL SAFETY
---------------------- EQUIPMENT
---------------------- When it comes to the warehouse, safety procedures are frequently
disregarded in a variety of workplaces due to insufficient time, inadequate
----------------------
resources or an opportunity to cut corners in an attempt to save money.
---------------------- However, when safety procedures are properly implemented there
are major benefits such as higher employee satisfaction as well as increased
----------------------
productivity. By minimising the risk of injury, fewer workplace disruptions
---------------------- take place and absenteeism associated with injury is also reduced. Equipment
downtime is another factor which can be avoided through the appropriate use
---------------------- of safety procedures.
---------------------- Broadly the area of safety in a warehouse would cover,
---------------------- 1. Warehouse operations

2. Warehouse flooring
----------------------
3. Equipment being used in warehouse
----------------------
Flooring
---------------------- Warehouse flooring requirements
---------------------- 1. Warehouse facilities require flooring that can withstand the demands of
on-going activities.
----------------------
2. The flooring must be durable and resistant enough to withstand forklift
---------------------- and pallet truck traffic. These lifts and trucks carry heavy loads on a daily
basis.
----------------------

3. The flooring must be resistant enough to protect against this heavy traffic Notes
as well as boxes being dragged across the facility floors.
----------------------
4. Warehouse flooring must always be presentable for customers, workers,
and tours. ----------------------
Qualities of warehouse flooring
----------------------
Warehouse flooring is needed in order to handle the harsh impacts of heavy
loads. A typical warehouse floor is, ----------------------
1. Heavy duty & resistant to impact ----------------------
2. Resistant to harsh chemicals & abrasions ----------------------
3. Fast to dry & easy to install
----------------------
4. Able withstand high levels of compression
----------------------
Depending on the type of usage flooring could be given as,
Forklift Areas ----------------------
i. Epoxy ----------------------
ii. Polished concrete ----------------------
iii. Sheets for wall protection
----------------------
iv. Sheets for corner guards
----------------------
v. Entrance matting
Production Areas ----------------------
i. Linoleum ----------------------
ii. Vinyl Composition Tile (VCT) ----------------------
iii. Epoxy
----------------------
iv. Polished concrete
----------------------
v. Rigid sheets for wall protection
vi. Rigid sheets for corner guards ----------------------
Office ----------------------
i. Linoleum ----------------------
ii. Luxury Vinyl Tile
----------------------
iii. Commercial carpet
----------------------
iv. Vinyl Composition Tile (VCT)
v. Sheets for wall protection ----------------------
vi. Sheets for corner guards ----------------------

vii. Entrance matting ----------------------
----------------------

Notes Parking and driveways
i. Epoxy
----------------------
ii. Waterproofing systems
----------------------
iii. Waterproofing systems
---------------------- iv. Expansion joints
---------------------- v. Entrance matting
---------------------- Industrial Safety Equipment

Safety equipment is mainly of two types
----------------------
1. Detection
----------------------
2. Protection
---------------------- Some typical classifications of equipment are,
---------------------- 1. Personal protection (eye, respiratory, hearing body)
---------------------- 2. Process Safety System
a. Process Shutdown System, (PSS)
----------------------
b. Safety Shutdown System (SSS)
----------------------
3. Dropped Object Prevention Solutions
---------------------- 4. Instruments of detection (air quality etc.)
----------------------
6.4 STORAGE TYPES AND STORAGE UNIT
---------------------- MANAGEMENT
----------------------
The storage system in a warehouse has an important role to play in the
---------------------- total cost and success of warehousing operations. Firms give more importance
to the way inventories are handled rather than how they are stored. Invariably,
---------------------- in the industry, investment planning is done more on the basis of handling
equipment rather than on the storage system.
----------------------
In fact, efficient use of material handling equipment is possible provided
---------------------- the storage system allows easy access to storage and retrieval of inventory.
---------------------- A well designed storage system is a compromise between the maximum
utilisation of the available space and the need for easy and quick access to
---------------------- stored goods. In general, the following rules are followed in designing effective
storage systems.
----------------------
●● Minimisation of travel distance
----------------------
●● Maximising utilisation of available space
---------------------- ●● Providing easy and quick access to stored goods
---------------------- ●● Facilitation of easy tracking of material
●● Provision of security against fire, damage, and theft
----------------------

●● Prevention of contamination and deterioration of goods Notes
6.5 MATERIAL STORAGE SYSTEMS ----------------------
The criteria for selecting a storage system for a particular application ----------------------
depends on the following factors:
----------------------
Product characteristics
----------------------
Products with contamination risk require a storage facility that will isolate
them from other product groups. For example, flowers pose a great risk of ----------------------
odour contamination and similarly, hazardous chemicals pose a risk of damage
to other products or human life. Hence, the design consideration for these types ----------------------
of products needs special attention. ----------------------
Configuration
----------------------
Products that are uniform in shape and size may be stored in stacks or put
in an enclosure, while odd shaped products may require open space. For example, ----------------------
steel sheets, billets, rods, angles, pipes, etc. are stored in the open in a steel yard.
----------------------
Shelf life
----------------------
The storage system design is based on first-in-first-out considerations,
that is, perishable products are stacked such that consignments stored earlier are ----------------------
distributed first.
----------------------
Product variety
The system needs to segregate products for ease in identification during ----------------------
storage and retrieval. ----------------------
6.5.1 Benefits
----------------------
Benefits of storage design
----------------------
Proper planning of storage systems helps in improving the efficiency of
the entire logistics system, which helps in the speedy movement of goods across ----------------------
the supply chain, resulting in improved productivity.
----------------------
Space economics
Proper design of a storage scheme can result in substantial savings on the ----------------------
available space, which helps in planning for additional storage load without ----------------------
investment in space.
Enhance throughput ----------------------
A well designed storage scheme will reduce the movement of material ----------------------
handling equipment and idle time, resulting in significant improvement in the
----------------------
system’s productivity.
Ease in material location and tracking ----------------------
A proper storage scheme helps in quick location and tracking of inventory ----------------------
items during the material pickup operation, resulting in compressed order cycle
time. ----------------------

Notes Security, safety, and housekeeping
A well designed system will bar unauthorised access to the inventory,
----------------------
ensuring security against theft and pilferage. The system will also reduce
---------------------- accidents due to fatigue, strain, and collapse of the equipment. As the number
of product handlings is reduced, the risk of damage to products is greatly
---------------------- minimised.
---------------------- 6.5.2 Methods
Storage methods depend on the physical characteristics (size, weight,
----------------------
shape) of the product and the volumes to be stored or handled. The other variants
---------------------- are brittleness and crushability in case of fragile products. The requirements of
the material handling system (manual or automatic) may call for the installation
---------------------- of a tailor-made system.
---------------------- This is the simplest type of storage method and does not attract any
financial investments. Boxes, cartons, or sacks containing the material are
---------------------- stored in the spread or stacked form in the area assigned for storage. Stacking is
---------------------- done on the floor or on a wooden platform.
However, the following are the most commonly used material storage
---------------------- systems:
---------------------- 1. Block Storage
---------------------- 2. Racking System
3. Shelving System
----------------------
4. Pallets
----------------------
5. Containers
---------------------- 6. Automatic Storage and Retrieval System (ASRS)
----------------------
6.6 INDUSTRIAL SHELVING
----------------------
Racking System
----------------------
Racks arc used for storage of items that are longer, apart from small
---------------------- containers, boxes, pallets, etc. When the weight of unit loads are beyond human
handling capacity, mechanical material handling equipment is normally used
---------------------- for storage and retrieval operations.
---------------------- The racks may be further divided into two types such as stationary and
portable.
----------------------
The stationary rack structure is built using the wall and roof of the
---------------------- warehouse building for support.
---------------------- The only limitation to the height of the stationary rack structure is the roof
of the building and the vertical reach of the material handling equipment. The
---------------------- racks can be designed for making good use of the vertical storage space of the
building.
----------------------

The stationary racking system ensures excellent storage density for the Notes
given space, for uniform sized unit loads. The racking system is commonly
used in warehouses where large volumes of uniform unit loads are required to ----------------------
be stored.
----------------------
In the stationary type, for getting higher storage density, drive-in type of
racks are widely used. The structure consists of stationary racks with rails for ----------------------
the movement of pallets or boxes, which can be pushed deep into the rack width
----------------------
or length.
The drive-in racks, closed at one end, are suitable for the last-in-first-out ----------------------
(LIFO) inventory technique, while racks open at both ends may be used in
----------------------
the first-in-first-out (FIFO) technique. The advantage of this system is higher
storage density and throughput. Portable racks are self-contained structures ----------------------
with a number of decks that can be stacked during loading and can be knocked
down when not being used to conserve space. ----------------------
The system of movable aisles is commonly used for high density storage, ----------------------
when the quantities handled are high but storage and retrieval activities are
lower. The structure consists of rows of racks installed on carriages or plat- ----------------------
forms. The racks can be moved back and forth or sideways to have the desired
----------------------
aisle gap between the racks from where material can be stored or retrieved, as
and when required. ----------------------
Shelving System ----------------------
These systems are in use for non-palletised or non-uniform types of load.
The material is stored and retrieved in the shelf by hand. The shelves are closed ----------------------
or open type, depending on the product configuration. The size of the unit shelf ----------------------
opening can be changed using dividers, modular drawers, etc. The structure can
be easily modified to suit the desired functionality, by incorporating various ----------------------
accessories.
----------------------
Some examples -
----------------------
Container, stillage and carton storage
i. Shelving for storage and order picking ----------------------
ii. Carton live storage ----------------------
iii. Automatic small parts storage (mini load) ----------------------
Long goods storage and platforms
----------------------
i. Cantilever racking
----------------------
ii. Mezzanine platforms
iii. Multi-tier shelving ----------------------
----------------------
----------------------
----------------------

Notes
----------------------
----------------------
1. When safety procedures are properly implemented they lead to higher
---------------------- employee satisfaction.
---------------------- 2. Efficient use of material handling equipment is possible if the storage
system allows easy access to storage and retrieval of inventory.
----------------------
3. Storage methods depend on the physical characteristics (size, weight,
---------------------- shape) of the product and the volumes to be stored or handled.
4. The racks can be divided into two types such as stationary and
----------------------
portable.
----------------------
---------------------- Activity 2
----------------------
Check the website of any warehousing company like FCI or CWC and
---------------------- list down the different types of storage systems being used by them.
----------------------
6.7 INDUSTRIAL STORAGE BINS
----------------------
Containers
----------------------
Containers are most commonly used in manufacturing plants for in-process
---------------------- material handling applications. Containers are quite popular in the engineering
industry because they help to increase productivity and space utilisation and
----------------------
facilitate fast material movement on the shop floor.
---------------------- The container is basically a cubical construction with one (top) side
open for the deposit and removal of material. The different types of containers
----------------------
commonly used are:
---------------------- Welded wire containers
---------------------- These are light in weight, self-cleaning, make it possible to view the
material, and allow ventilation. These containers can be stacked one above the
---------------------- other and ensure uniform weight for movement.
---------------------- Corrugated metal containers
---------------------- They are used in the engineering industry where high strength and very
high damage resistance features are required. These containers are sturdy in
---------------------- construction and resist abuse. These are popularly used in the automobile
industry for storage and movement of parts and components.
----------------------
----------------------
----------------------

Plastic containers Notes
These are moulded polymer constructions, similar to metal containers,
----------------------
used for material storage, handling, and shipping. They are light in weight and
can be cleaned. ----------------------
Cabinets
----------------------
Foe special high value parts like dies and other items, a small but closed
store is required. Typically cupboards with pigeon holes or lockable cabinets ----------------------
are used.
----------------------
6.8 SPILL CONTAINMENT SYSTEMS ----------------------
Pallets ----------------------
These are specially designed platforms for storage of goods with a view ----------------------
to the whole load being moved by forklift, wherever it is required. These are
widely used for in-house material handling systems. Pallets can be broadly ----------------------
classified into two groups:
----------------------
●● Sturdy, multiple reusable pallets
----------------------
●● One-way non-returnable pallets
Multiple usage pallets are used in physical distribution systems. These are ----------------------
sturdy in construction and are durable.
----------------------
Other types of pallets are one-time use pallets. These are non-returnable
types and are used in sea or air shipments. Pallets are made out of wood, metal, ----------------------
or plastics, depending on the product, type of load, and working conditions. The ----------------------
most common material is wood. The standard size of pallets in use is 40 inch x
48 inch. ----------------------
The goods are stored loose on the pallets or strapped with metal strips to ----------------------
prevent goods movement during transit. Pallets are available with either two-
way entry or four-way entry constructions. Two-way entry allows the forklift to ----------------------
handle the pallet from two sides, while the four-way pallet allows the forklift to
handle it from all four sides. ----------------------
Some examples - ----------------------

Pallet storage ----------------------
i. Adjustable pallet racking
----------------------
ii. Adjustable pallet racking
----------------------
iii. for narrow aisles
iv. Single position racking ----------------------
v. Clad rack silo ----------------------

vi. Mobile racking ----------------------
vii. Pallet live storage
----------------------

Notes viii. Push back racking
ix. Drive in/drive through racking
----------------------
x. Shuttle compact warehouse systems
----------------------
Automatic Storage and Retrieval System (ASRS)
---------------------- Warehouses designed for high rise storage, due space constraints, and
---------------------- operating on a high throughput rate use the ASRS along with an automated
material handling system. Due to the automated material handling equipment,
---------------------- the aisles are narrow, leaving more space for material storage equipment,
resulting in high storage density.
----------------------
---------------------- Summary
---------------------- ●● Material handling is an important activity in the logistics system.
●● The speed of material flow across the supply chain depends on the type of
----------------------
material handling equipment and the sophistication in the system.
---------------------- ●● In logistics operations, the material handling system is designed in and
around the warehouse.
----------------------
●● Commonly, the following material handling operations are performed in
---------------------- the warehouse:
---------------------- o Unloading the incoming material from the transport vehicle,
o Moving the unloaded material to the assigned storage place,
----------------------
o Lifting the material from its storage place during order picking,
----------------------
o Moving the material for inspection and packing, and
---------------------- o Loading packages onto the transport vehicle.
---------------------- ●● hese operations are performed using manual, mechanised, or
T
computerised material handling the equipment.
----------------------
●● he mechanised system shifts fatigue to the machine and brings
T
---------------------- effectiveness to human efforts. The selection of an appropriate system
depends on factors such as volumes to be handled, speed in handling,
---------------------- product characteristics (weight, size, shape), and the nature of the product
---------------------- (hazardous, perishable, crushable).
●● he prime consideration before going in for mechanised material handling
T
---------------------- systems is the layout of the warehouse.
---------------------- ●● I nvestment in the material handling system will be a sheer waste if it is
not compatible with the warehouse layout plan. The layout will create
---------------------- obstacles for the free movement of equipment and goods.
---------------------- ●● Mechanised equipment requires space for free movement across the
----------------------
----------------------

warehouse. They should have accessibility to storage areas for material Notes
loading and unloading during storage and retrieval. In mechanised
versions, a variety of equipment is used for specific applications. ----------------------
●● he commonly used equipment include wheeled trolleys, forklift trucks,
T ----------------------
conveyors, cranes, towlines, and carousels. The more sophisticated
systems such as robotics, automatic storage and retrieval, and automatic ----------------------
guided vehicle systems are used in semi or fully automatic warehouses
for speedy material movement. ----------------------
----------------------
Keywords
----------------------
●● aterial handling efficiency: Actual material handled (tonnage, cases,
M
or volumes) by the material handling equipment, as against its designed ----------------------
capability. ----------------------
●● ptime: It is the percentage of the actual time the equipment is available
U
for operation. ----------------------
●● torage density: It is the ratio of the material stored (in tonnage) to
S ----------------------
the warehouse space (in cubic feet) available for the actual storage of
products. ----------------------
●● arehouse occupancy: It is the average occupancy level of the available
W ----------------------
storage area in the warehouse through a period of one year. It is worked
out in terms of percentage. ----------------------
●● utomatic guided vehicle system (AGVS): The AGVS is a mechanised
A ----------------------
material handling equipment without an operator.
----------------------
Self-Assessment Questions ----------------------
1. How can the material handling system enhance productivity in the ----------------------
logistics system? Explain with illustrations.
----------------------
2. Unitisation of load plays an important role in the effectiveness of the
material handling system installed in a warehouse. Explain. ----------------------
3. Discuss the criteria for selection of a material handling system for a ----------------------
warehouse.
----------------------
4. Which is the recommended system for material handling of perishable
products in temperature controlled warehouse? Discuss. ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes Answers to Check your Progress
---------------------- Cheick you Progress 1
---------------------- State True of False.

1. True
----------------------
2. True
----------------------
3. True
---------------------- Cheick you Progress 2
---------------------- State True of False.
---------------------- 1. True
2. True
----------------------
3. True
----------------------
4. True
----------------------
---------------------- Suggested Reading

----------------------
books, ISBN-978-93-84044-04-6.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Inventory Management
UNIT
Structure:
7
7.1 Introduction
7.2 Need for Holding Inventory
7.3 Types of Inventories
7.4 Costs Associated with Inventories
7.5 Inventory Control Systems
7.6 Inventory Classification
7.7 Inventory Ledger
Summary
Keywords
Suggested Reading
Inventory Management 115

Notes
Objectives
----------------------
----------------------
• Explain the role of inventory management in a supply chain
----------------------
• List the various inventory control systems
---------------------- • Develop a framework for making EOQ Model
---------------------- • Demonstrate the relationship between inventory and customer
----------------------
7.1 INTRODUCTION
----------------------
Inventory incurs costs, ties up working capital, it consumes space
---------------------- and must be managed in and out. Stocks can deteriorate or get stolen. Most
operations, capacity planning and scheduling depend on inventory. Stocks serve
----------------------
to smooth out timing gaps in the rates of supply and demand. The inventory
---------------------- offers insurance and good planning/control can minimise the associated costs
and satisfy efficiency/effectiveness requirements. This is the reason for a justin-
---------------------- time approach to inventory.
---------------------- Services generally are not stocked nevertheless in car repair services
and retail distribution, inventory of support items are components of service
---------------------- transactions. For a central heating installation company, if a fitter has to drive to
and queue at a supplier to obtain a minor part - this adds to service costs.
----------------------
All organisations keep inventories - some trivial, some highly significant.
----------------------
Even the trivial can from another perspective e.g. health and safety take on
---------------------- a different degree of importance. What is trivial to one organisation is important
to the next e.g. cleaning materials - trivial in a factory but essential to a supplier
---------------------- of cleaning materials. Spares, stationery, consumables are common inventory to
---------------------- all organisations.
---------------------- 7.2 NEED FOR HOLDING INVENTORY

---------------------- The most important task in a supply chain is the management of
inventories. Inventory is a very large and costly investment that every stage of
----------------------
the supply chain needs to incur. Every stage works independently to make the
---------------------- supply chain profitable.
---------------------- Thus, it is very important that every stage of the supply chain coordinates
and together forms the inventory policy. Now let us come to the main theme of
---------------------- this unit.
---------------------- How can you manage inventories in the supply chain? There are five main
points that describe the need for holding inventories, namely:
---------------------- a) Achieve economies of scale
---------------------- b) Balance demand and supply

c) Specialisation Notes
d) Protection from uncertainty and order cycles
----------------------
e) Act as a buffer between the stages of the supply chain
----------------------
a) Achieve economies of scale
In order to achieve economies of scale in purchasing, transportation, ----------------------
and manufacturing, a firm needs to hold inventory. For example, a ----------------------
manufacturer of a certain product maintains inventory only in order to
take advantage of the per unit price reductions that are associated with ----------------------
volume purchases from his suppliers. This is due to the purchase made in
lot sizes by the manufacturer. ----------------------
However, when the volume of purchases increase, purchase contracts ----------------------

are negotiated based on the annual purchases or annual volumes and not
on individual lot sizes or individual orders. Also, due to the increase in ----------------------
volumes purchased, there is a lower transportation cost per unit. This is ----------------------
because full truck loads receive lower transportation rates than smaller
shipments. ----------------------
The same can be said for holding finished stock inventory, as transportation ----------------------
economies are possible with large volume shipments by consolidating a
number of customer orders into one shipment and then paying for the ----------------------
local delivery of products from warehouses to the local markets served.
----------------------
Also having a finished goods inventory is essential as it provides various
manufacturing economies by reducing the cost per unit of production. ----------------------
b) Balance demand and supply ----------------------
Seasonal changes in the supply and demand of products make it very ----------------------
necessary for firms to hold inventory. Let us say for example, during
the festival of Diwali, sweets experience a significant increase in sales ----------------------
volume. The cost of establishing a production capacity which can manage
the volume of sweets at this peak demand period would be very high. ----------------------
Also, the availability of idle capacity and labour fluctuations need to ----------------------
be managed. Thus, the decision of maintaining a stable workforce and
production at a constant level throughout the year helps to build up ----------------------
inventory and that too at a lower cost per unit. The seasonal inventory can ----------------------
be stored in freezers near the production units.
It may also happen that the demand for particular products may be stable ----------------------
throughout the year, but the raw material is available only at certain ----------------------
periods in the year.
----------------------
For example, fruits like apple, watermelons, etc., are seasonal and
available only during certain months. Producers of canned food stuff may ----------------------
have to produce in excess of the current demand and store them unless the
fruits can be procured from abroad during different growing seasons. ----------------------
However, this would be very expensive. In this case, a firm must compare ----------------------

Notes the increased acquisition costs with the inventory carrying costs or holding
costs associated with the local supplies.
----------------------
c) Specialisation
---------------------- Inventory makes it possible for a firm’s plant to specialise in its production.
These finished products are shipped to mixed warehouses from where
----------------------
customer orders can be shipped. These enable economies of scale due to
---------------------- larger production runs and savings in transportation costs which offset
the costs of additional handling. Companies like Cummins and JCB
---------------------- have found significant cost savings in the operation of consolidation
warehouses that allow the firm to specialise production by plant location.
----------------------
d) Protection from uncertainty and order cycles
----------------------
Inventory is also held by firms as protection from uncertainties. Raw
---------------------- material inventories in excess of the quantity required to support the
production are a result of speculative purchases made when the firm
---------------------- believes that there will be a price increase, the possibility of strikes, etc.
---------------------- Work in progress inventories is maintained, usually in order to avoid a
shutdown if a critical piece of equipment were to break down, and also
---------------------- sometimes in order to maintain the rate of production.
---------------------- Shortage of raw material can lead to stoppage of production lines and
thereby lead to modification of the production schedule which will, in
---------------------- turn, affect the costs and the customer responsiveness to a great level.
---------------------- Finished goods inventory can be used to improve customer service levels
by reducing the likelihood of a stock out due to unanticipated demand.
---------------------- Increase in finished goods inventory will enable a manufacturer to
maintain higher levels of product availability and lower the chances of a
---------------------- stock-out.
---------------------- e) Act as a buffer between the stages of the supply chain
---------------------- Inventory in the form of safety stock combat the variation in either demand
or replenishment. A lot of planning is required to determine the size of
---------------------- safety stocks. Safety stock is as good as purchasing insurance when it
is necessary to protect inventory position in times of uncertainty. Safety
----------------------
stocks provide a cover of two uncertainties, the first being the demand in
---------------------- excess of the forecast during the performance cycle and the second being
the uncertainty involving delays in performance i.e. length of the cycle
---------------------- itself.
---------------------- An example for the first case is a customer demanding for more or less
quantity of the goods ordered for. An example of the second case would
---------------------- be delays in order processing or delay in transportation, etc.
----------------------
----------------------
----------------------

7.3 TYPES OF INVENTORIES Notes
Inventories can be categorised into the following types: ----------------------
a) Cycle inventory ----------------------
b) Safety inventory
----------------------
c) Speculative inventory
----------------------
d) Seasonal inventory
e) Dead stock ----------------------
Let us study these in detail. ----------------------
a) Cycle inventory ----------------------
The cycle inventory can be defined as the average inventory that exists in
a supply chain, either due to production or the purchase of products in lot ----------------------
sizes that are larger than those demanded by the customers. A lot size is ----------------------
the number of products produced or purchased by a firm at a given time.
----------------------
For example, an electronic appliances dealer who sells on an average
4 television sets a day, places an order of 80 television sets with his ----------------------
supplier. Here, the lot size is 80 television sets. Given the daily sales of 4
television sets a day, it takes 20 days before the dealer sells the entire lot ----------------------
and purchases a replenishment lot. The dealer holds an inventory because
----------------------
he purchases a lot size larger than the daily sales. Thus, we can conclude
from this example, the meaning of cycle inventory. ----------------------
With the help of cycle inventory, we can obtain information about the
----------------------
average flow time of the product resulting from cycle inventory.
Let us take, for example, Shopper’s Stop which has a stable demand for ----------------------
jeans at 100 jeans per day. The manager, however, orders a lot size of
----------------------
1000 jeans.
Because the lot size is 1000 units and the daily demand is only 100, it ----------------------
would take 10 days for the lot to be completely sold out. The inventory ----------------------
declines from 1000 to 0 units in ten days. When the demand is steady, the
cycle inventory = lot size/2 = the average inventory. Here, in this case, the ----------------------
cycle inventory would thus be 500 jeans (1000/2=500). From this, we can
conclude that cycle inventory is directly proportional to the lot size. ----------------------
Now, Average flow time = Average inventory/Average Flow Rate In any ----------------------
supply chain the average flow rate is the demand itself
----------------------
Therefore, average flow time resulting from cycle inventory = cycle
inventory/demand = 500/100 = 5 days ----------------------
From the above, we can conclude that Shopper’s Stop adds 5 days to the ----------------------
amount of time the jeans spent on an average in the supply chain. The
larger the cycle inventory, the larger the lead time. However, smaller lead ----------------------
times are preferable as larger time lags leave a firm vulnerable to the
----------------------

Notes demand changes in the market place.
Also, lower cycle inventories require lesser working capital.
----------------------
b) Safety inventory
----------------------
Safety inventory can be defined as the inventory carried for the purpose
---------------------- of satisfying the demand that exceeds the amount forecasted for a given
period of time. Due to this uncertainty in the demand for products, a
---------------------- product shortage may result if the actual demand exceeds the forecasted
demand.
----------------------
This helps a supply chain manager to make the necessary trade-offs at
---------------------- the time of planning safety inventory. The first is that raising the level
---------------------- of safety inventory increases product availability and also gets a higher
margin from customer purchases. But the second point to be kept in mind
---------------------- is that raising the level of safety inventory raises the overall holding costs
for the firm.
----------------------
c) Speculative inventory
---------------------- Speculative inventory is the stock that is held for reasons other than
---------------------- satisfying current demand. For example, a manufacturer may purchase a
large quantity of material, larger than what is actually needed to serve the
---------------------- current demand.
---------------------- This may be done in order to receive large quantity discounts because of
a future price increase or due to a future shortage of the material. This
---------------------- provides material for production during seasons or even throughout the
year at a constant level.
----------------------
d) Seasonal inventory
----------------------
Seasonal inventory is a form of speculative demand that involves the
---------------------- accumulation of inventory before any season begins in order to maintain
stable production or maintain a stable work force during periods of
---------------------- seasonal demand.
---------------------- e) Dead stock
---------------------- Dead stock refers to those products for which no demand has been
registered over a large period of time. These products are treated as
---------------------- obsolete and block the working capital of the firm. They may also have
been stocked over a long period of time at a particular location and if so,
---------------------- may be shipped to another location in an attempt to try and sell it there.
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
Fill in the blanks.
----------------------
1. One should explore the possibility of uses at another location for the
_____ stock. ----------------------
1. Inventory is not required for
----------------------
i. Protection from uncertainties
----------------------
ii. Buffering between stages of manufacturing
iii. Reducing the cost of capital ----------------------
iv. Achieving economies of scale ----------------------
----------------------
Activity 1 ----------------------
As a supply chain manager of a chocolate confectionery firm, what would ----------------------

you do to monitor inventory, especially during the festival seasons?
----------------------
----------------------
7.4 COSTS ASSOCIATED WITH INVENTORIES
----------------------
Inventory holding costs are estimated as the sum of the following costs.
We usually mention the holding cost as a percentage of the cost of the product: ----------------------
a) Cost of capital ----------------------

b) Spoilage cost ----------------------
c) Handling cost
----------------------
d) Occupancy cost
----------------------
e) Miscellaneous cost
a) Cost of capital ----------------------
The cost of capital is the most important component of holding a cost. ----------------------
One can calculate the holding cost using the weighted average cost of
capital (WACC). ----------------------
----------------------
----------------------
Where, ----------------------
E = amount of equity ----------------------
D = amount of debt ----------------------

Notes Rf = risk free rate of return
b = the firm’s beta
----------------------
MRP = market risk premium
----------------------
Rb = rate at which a firm can borrow money
---------------------- t = tax rate
---------------------- WACC is calculated after tax results, however, inventory is calculated
before taxes are paid. Therefore, pre tax WACC = post tax WACC/(1-t).
----------------------
b) Spoilage cost
----------------------
The spoilage cost estimates the rates at which the value of the product that
---------------------- firm stores, drops following a drop in the market value of the product or
because of quality deterioration. The rate of spoilage depends upon the
---------------------- type of products, like foodstuff having high spoilage rates and even non-
perishable items like microprocessors having spoilage rates upto 100%.
----------------------
On the other hand, products like gasoline take a long time to get spoilt.
---------------------- For such products, a very low spoilage rate may be applicable.
---------------------- c) Handling costs
---------------------- Handling costs should include receiving and storage cost of the products.
These costs vary with the number of products received. Handling costs
---------------------- based on the number of orders should also be included in the total handling
---------------------- cost. Quantity dependent costs remain stable if the quantity of products
remains within certain limits.
----------------------
Thus, there is no additional or incremental handling cost on the products
---------------------- that lie within this range. But if there are any incremental costs that arise
due to a larger quantity of products, then these costs must also be included
---------------------- in the holding costs.
---------------------- d) Occupancy costs
The occupancy cost must show an incremental change in the space cost
----------------------
due to the change in the cycle inventory. If the firm is charged on the
---------------------- number of units stored, then we call it the direct occupancy cost. If firms
lease a particular space, and if a marginal change in the quantity stored
---------------------- does not affect the occupancy cost, but there is an increase in the quantity
stored which leads to an increase in the leased space, then this incremental
----------------------
cost must be added to the holding cost too.
---------------------- e) Miscellaneous costs
---------------------- Miscellaneous costs deal with a large number of costs such as costs due
to theft, damage, tax, and insurance that may be incurred by the company.
---------------------- Any incremental costs arising due to a change in the cycle inventory must
---------------------- also be added to the holding cost.
----------------------

Ordering costs Notes
All additional or incremental costs associated with the placing or receiving
----------------------
of an extra order, independent of the size of the order, are called ordering costs.
These are: ----------------------
i) Buyer time costs ----------------------
ii) Transportation costs ----------------------
iii) Receiving costs
----------------------
iv) Other costs
----------------------
i) Buyer time costs
Buyer time is the incremental time of the buyer placing an extra order. ----------------------
This cost should be included in the order cost, if and only if, the buyer
----------------------
places an order and is utilised fully. With the help of e-commerce, one
can place orders on the internet. This also helps to reduce the costs for the ----------------------
supplier.
----------------------
ii) Transportation costs
A fixed transportation cost is often incurred by firms regardless of the size ----------------------
of the order. For example, if a truck is sent to deliver every order, it costs ----------------------
the same amount to send a half empty truck as it does a full truck. Less
than truck load pricing also includes a fixed and variable component. The ----------------------
variable component increases with the increase in the quantity shipped.
----------------------
The fixed component should be included in the order cost.
----------------------
iii) Receiving costs
Receiving costs are incurred by a firm regardless of the size of the order. ----------------------
These costs include some administrative work such as purchase order ----------------------
matching and other clerical work associated with updating the inventory
records. ----------------------
iv) Other costs ----------------------
Every order placed or received can have a cost unique to it, which should ----------------------
be considered if they are incurred independent of the quantity of the order
placed. ----------------------
----------------------
7.5 INVENTORY CONTROL SYSTEMS
----------------------
It is important to understand the systems of inventory management. As
demand and lead times vary, we can order fixed quantities of stock at variable ----------------------
times or order variable quantities at fixed times. Each has implications for safety
stock, operational responsiveness, the level of risk involved given variable ----------------------
demand and supply and security. ----------------------
Many factories will use a two-bin replenishment system. Stock records
systems, computerised more often than not today, provide more detailed control ----------------------

Notes over stock levels, issues, and receipts.
They are essential to stores management. The data content and flows of
----------------------
such systems are needed by just-in-time methods.
---------------------- Inventory Control Systems
---------------------- As demand and lead times are variable, we can either
---------------------- ●● order fixed quantities of stock at variable times or

●● order variable quantities at fixed times
----------------------
Fixed quantity systems (Re-order levels)
---------------------- ●● easy to manage
---------------------- ●● cope well with demand variability/changes and facilitate lower stocks
●● o rders can also be processed for convenience e.g. small orders can be
----------------------
consolidated to secure supplier discounts
---------------------- Using EOQ, fixed systems initiate replenishment orders when a stock falls
below a pre-determined (re-order) level. Re-order level is calculated as mean
----------------------
demand during the mean lead time, plus the safety stock. As a rough indicator,
---------------------- half the mean lead time usage can be taken as the safety stock (RoL = I.5DL).
Economic Order Quantity (EOQ)
----------------------
We could buy-in, or make for stock either a few large orders or frequent
---------------------- small orders for a given usage. Few big orders involve the low acquisition and
---------------------- high holding costs. Conversely many small orders result in low holding and
high acquisition costs.
---------------------- Purchasing an economic order quantity (a.k.a. economic batch quantity,
---------------------- economic lot size or EOQ) seeks to reconcile ordering and holding costs to
obtain an optimum order size.
---------------------- Cost of holding stock and ordering/acquisition cost is represented by the
---------------------- formulae
●● he value of the average stockholding = (Q/2 x item cost/value) where
T
----------------------
Q is the order quantity. The holding cost/unit (Ch) is derived from the
---------------------- average inventory value) multiplied by the cost of carrying the item over
the period (one year) expressed as a % of the item cost/value.
----------------------
●● rder cost (Co) is derived from the number of orders placed (D/Q –
O
---------------------- demand p.a. divided by order quantity) multiplied by the cost of placing
an order.
---------------------- ●● Order/acquisition cost or set-up cost for a make-to-stock situation.
---------------------- Holding costs = Ch x Q/2
---------------------- Ch is the holding cost/unit
Ordering Costs = Co x D/Q
----------------------
Co is the ordering cost
----------------------

Therefore, Total cost = Ch + Co Notes
These relationships can be seen in the graphic representation of EOQ.
----------------------
The EOQ is found at the lowest point on the total cost curve. Here the
order size optimises the cost of stockholding with the cost of acquisition. ----------------------
The equation is:
----------------------
----------------------

As an example, in a company where order cost is estimated at Rs.10 and ----------------------
with a holding cost of 25% of item value if annual demand is 1000 units at
a supply price of Rs.36, if we substitute these figures in the EOQ formula ----------------------
then the EOQ is 48 units (47.1 Kango hammers will not be supplied).
----------------------
----------------------
----------------------
EOQ Evaluation and Assumptions of Simple EOQ
●● emand (units of supply, not issue) is known and steady, so average
D ----------------------
inventory can be estimated.
----------------------
●● uantity discounts do not apply - the effect of buying discount/price
Q
breaks needs to be calculated additionally. ----------------------
Quantity discounts ----------------------
The order cost is spread over more items (larger batches) with discounts!
----------------------
But there are higher holding costs.
----------------------
●● rders arrive in one batch with a known lead time, arriving just as stock
O
is exhausted. ----------------------
●● ome order placement/receiving costs are independent of order quantity,
S ----------------------
others are dependent.
●● conomies or diseconomies of scale do not apply to hold stock (assumption
E ----------------------
= holding costs are a fixed % of stock value). Order quantities should ----------------------
not exceed shelf-life expectations, room for storage or what is affordable
(nb. at the end of a year - a school of hospital department may buy small ----------------------
(retail) quantities, as the budget is depleted).
----------------------
●● Someone can buy 10000 in a batch when usage is in millions.
●● OQ assumes good information on variable costs e.g. we know that by
E ----------------------
placing few big orders, Rs.95 per order, say, can be saved; or that with
----------------------
smaller quantities the opportunity cost of tied up capital and associated
warehouse space costs are saved. But such data on actual costs may be ----------------------
at best a good estimate. This is less of a problem as EOQ is not very
sensitive to error so long as the magnitude of the cost/demand data is ----------------------
reasonably accurate.
----------------------
----------------------

Notes
----------------------
Fill in the Blanks.
----------------------
1. ________ on working capital is a dominant factor in the cost of
---------------------- keeping inventory.
1. Fixed quantity system is easy to manage.
----------------------
----------------------
Activity 2
----------------------
1. As a Supply Chain Manager, do you think it is important for a company
---------------------- to hold large inventory? Do you think it is expensive for a company to
hold higher inventory during seasonal demand?
----------------------
2. Imagine you are the supply chain manager of a company producing
---------------------- mobile phones. What costs come to your mind when you think of
---------------------- products that have short life cycles?
----------------------
7.6 INVENTORY CLASSIFICATION
----------------------
Selective treatment of inventories is based on the following basic
---------------------- philosophy of business:
---------------------- “No one can control everything nor should one try to do so (even if one
can). Uniform control is rarely effective. Effectiveness results when important
---------------------- aspects of a problem are pursued more rigorously than others. A major portion
of managerial time should be spent in performing more important jobs. Less
----------------------
important tasks - those involving routine decisions and which involve less risk
---------------------- - should be delegated to a lower level.”
---------------------- Table 7.1 Types of Classification

Classification Criterion employed
---------------------- 1 ABC analysis Usage value (i.e. consumption per
---------------------- period x price per unit)
2 HML analysis (High-Medium- Unit price (i.e. it does not take
---------------------- Low) consumption into account)
3 VED analysis (Vital – Essential – The criticality of the item (i.e. loss
---------------------- Desirable) of production)
---------------------- 4 SDE analysis (Scarce-Difficult- Procurement difficulties
Easy)
---------------------- 5 GOLF analysis (Government- Source of procurement
Ordinary-Local-Foreign)
----------------------
----------------------

Classification Criterion employed Notes
6 S-OS analysis (Seasonal- Off Seasonality
Seasonal) ----------------------
7 FSN analysis (Fast-Slow- Non- Issues from stores
----------------------
moving)
8 XYZ analysis Inventory investment ----------------------
7.7 INVENTORY LEDGER ----------------------
An inventory ledger is a document or computer record that tracks ----------------------

inventory transactions. The total of all transactions listed in this ledger should ----------------------
match the total for the corresponding account in the general ledger.
----------------------
There are several variations on this ledger concept, which are:
Perpetual inventory ledger ----------------------
This ledger incorporates every change to an inventory item, so the ----------------------
recorded inventory balance should always match the cost and/or quantity on
hand. This ledger maintains a beginning balance, against which are netted all ----------------------
receipts and uses of inventory.
----------------------
This type of ledger is typically maintained at the individual unit level,
especially when only tracking inventory quantities. It may also be maintained ----------------------
at an aggregate level, usually when tracking the entire cost of a company’s total ----------------------
inventory asset.
This approach works best in an environment where there is a considerable ----------------------
investment in inventory, and the inventory turns over regularly. ----------------------
Periodic inventory ledger
----------------------
This ledger is periodically updated by purchases of the inventory asset
and by physical counts. Since physical counts are relatively uncommon, the ----------------------
accuracy of this ledger will lag behind that of the actual unit counts and valuation
----------------------
of the inventory.
This approach works best in an environment where there are little ----------------------
inventory turnover and only a small investment in inventory.
----------------------
Cost-based inventory ledger
----------------------
This ledger compiles the costs of inventory items, and so uses as inputs
the prices paid to suppliers and other costs incurred to acquire and/or transform ----------------------
inventory. This ledger can be used in either the perpetual or periodic inventory
formats. ----------------------
Unit-based inventory ledger ----------------------

This ledger compiles the unit counts of inventory items, and so uses ----------------------
as inputs received quantities, units scrapped, units transferred to production,
units shipped, and so forth. This ledger is most likely to be used in a perpetual ----------------------
inventory format.
----------------------

Notes Depending upon the type of usage, an inventory ledger can be considered
a subsidiary ledger of the general ledger.
----------------------
However, if only unit counts are being tracked, this ledger has no association
---------------------- with the general ledger; instead, it is more likely to be linked to a warehouse
management system that monitors on-hand and incoming unit counts.
----------------------
---------------------- Summary
---------------------- ●● he most important task in a supply chain is the management of

T
inventories. Inventory is a very large and costly investment that every
---------------------- stage of the supply chain needs to incur. Every stage works independently
to make the supply chain profitable. Thus, it is very important that every
---------------------- stage of the supply chain co-ordinates and together forms the inventory.
---------------------- ●● I nventory incurs costs, ties up working capital, it consumes space and
must be managed in and out. Stocks can deteriorate or get stolen. Most
---------------------- operations, capacity planning and scheduling depend on inventory. Stocks
---------------------- serve to smooth out timing gaps in the rates of supply and demand.
●● he inventory offers insurance and good planning/control can minimise
T
---------------------- the associated costs and satisfy efficiency/effectiveness requirements.
---------------------- This is the reason for a just-in-time and MRP approach to inventory.
●● e could buy-in, or make for stock either a few large orders or frequent
W
---------------------- small orders for a given usage. Few big orders involve the low acquisition
---------------------- and high holding costs. Conversely many small orders result in low holding
and high acquisition costs. Purchasing an economic order quantity (a.k.a.
---------------------- economic batch quantity, economic lot size or EOQ) seeks to reconcile
ordering and holding costs to obtain an optimum order size.
----------------------
●● Need for holding inventory
---------------------- a. Achieve economies of scale
---------------------- b. Balance demand and supply
---------------------- c. Specialisation
d. Protection from uncertainty and order cycles
----------------------
e. Acts as a buffer between the stages of the supply chain
----------------------
●● Types of inventory
---------------------- a. Cycle inventory
---------------------- b. Safety inventory
c. Speculative inventory
----------------------
d. Seasonal inventory
----------------------
e. Dead stock
----------------------
----------------------

Keywords Notes
----------------------
●● uffer Stock: Safety stock to combat the variation in either demand or
B
replenishment. ----------------------
●● peculative Inventory: It is the stock that is held for reasons other than
S
satisfying current demand. ----------------------
●● poilage cost: The spoilage cost estimates the rates at which the value of
S ----------------------
the product that firm stores, drops following a drop in the market value of
the product or because of quality deterioration. ----------------------
●● OQ (Economic Order Quantity): It seeks to reconcile ordering and
E ----------------------
holding costs to obtain an optimum order size.
----------------------
Self-Assessment Questions ----------------------
1. Explain the role played by cycle and safety inventory in a supply chain. ----------------------
Which are the different types of inventories in a supply chain?
----------------------
2. How can you determine poor inventory levels in a supply chain?
----------------------
3. What do you mean by EOQ? Provide the statistical expression for finding
the economic ordering quantity. ----------------------
4. Explain the various costs associated with cycle inventory. ----------------------

Fill in the Blanks. ----------------------
1. One should explore the possibility of uses at another location for the dead ----------------------
stock.
1. Inventory is not required for ----------------------

iii. Reducing the cost of capital ----------------------
----------------------
Fill in the blanks.
----------------------
1. Interest on working capital is a dominant factor in the cost of keeping
inventory. ----------------------
1. True
----------------------
----------------------
----------------------

Notes
Suggested Reading
----------------------
1. Toomey, John. Inventory Management: Principles, Concepts, and
---------------------- Techniques. Springer Publications.
2. Wild, Tony. Best Practice in Inventory Management. Routledge Publisher.
----------------------
References
----------------------
SCDL Material Management. Self-learning Material.
----------------------
----------------------
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----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
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Safety and Security in Warehouses
UNIT
Structure:
8
8.1 Introduction
8.2 Warehouse Productivity Analysis
8.3 Safety Considerations
8.4 Hazardous Material
8.5 Safety Equipment for Warehouses
8.6 Safety and Loss Prevention and Control
8.7 Cleanliness and Sanitation Issues
8.8 Warehousing Security
8.9 Security Equipment at Warehouses
8.10 Security Risk Prevention and Control
Summary
Keywords
Suggested Reading
Annexures
Safety and Security in Warehouses 131

Notes
Objectives
----------------------
----------------------
• Understand the concept of safety in a warehouse
----------------------
• Know about the equipment being used in the warehouse safety
---------------------- • Analyse the different safety considerations
---------------------- • Evaluate the cleanliness and sanitation issues in warehouses
----------------------
8.1 INTRODUCTION
----------------------
Efficient and effective warehouse management can be a difficult task
---------------------- and having a motivated workforce would be difficult. This is largely due to
---------------------- repeatative nature and physically demanding nature of the work in a warehouse.
Also, due to the nature of the material stored and other infrastructure
---------------------- related to the structure of the warehouse operations can be dangerous for the
---------------------- people and warehouse property.
The use of technology in the working warehouses increases the efficiency
---------------------- of the workplace but the complexity of the working environment and technology
---------------------- increases the possibility of harm or injury or injury to people.
The issues related to warehouse safety and security need to be studied
----------------------
from a view of first understanding the different issues related to warehouse
---------------------- productivity which would help us to know the areas of focus in a warehouse.
The wide area of warehouse operations can be classified,
----------------------
1. Warehouse Productivity Analysis
----------------------
2. Security considerations
---------------------- 3. Hazardous materials
---------------------- 4. Warehousing Security
---------------------- 5. Cleanliness and sanitation issues
Security is an important factor of business efficiency. The purpose of
----------------------
security management is to prevent damages and losses. LOSS is always a
---------------------- resource that gets wasted and therefore this is one of the most detested word to
making.
----------------------
The loss is a cost and attemots must be made to reduce it or to try
---------------------- eliminate it completely. Warehousing loss seriously damages the profits of any
organisation because the huge amount of money is blockd in the store kept in
---------------------- the warehouse.
----------------------
----------------------

There are four main laws that cover occupational safety and health at work. Notes
1. The Factories Act, 1948 , covering factories wherein the enforcement of
----------------------
safety at workplace is by the Chief Inspector of Factories in the respective
states. ----------------------
2. The Mines Act, 1952 and Mines Rules, 1955 for mining industry where
----------------------
the enforcement is by the Directorate General of Mines Safety (DGMS)
under Ministry of Labour & Employment, Government of India. ----------------------
3. The Dock Workers (Safety, Health and Welfare) Act, 1986 followed by
----------------------
notification of the Dock Workers (Safety, Health and Welfare) Regulations,
1990 dealing with the major ports of India and the enforcement is by ----------------------
the Directorate General of Factory Advice Service &Labour Institutes
(DGFASLI), under Ministry of Labour & Employment, Government of ----------------------
India.
----------------------
4. The Building & Other Construction Workers (Regulations of Employment
and Conditions of Service) Act, 1996, covering construction workers at ----------------------
construction sites wherein the enforcement is by the Directorate General ----------------------
Labour Welfare in the central sphere and by the Labour Commissioners/
Factory Inspectorates in the States/UTs. ----------------------
----------------------
8.2 WAREHOUSE PRODUCTIVITY ANALYSIS
----------------------
Productivity can be understood as a function of input and output.
Depending on the nature of the operation, we can work on different productivity ----------------------
metrics to evaluate the warehouse productivity but not all the metrics are all
related to facilities. ----------------------
Some examples of factors for measurement of warehouse productivity are ----------------------
as follows:
----------------------
1. Cases shipped per person
2. Product lines shipped per person ----------------------
3. Pellets shipped per person ----------------------

4. Average warehouse capacity used ----------------------
5. Used forklift capacity ----------------------
6. Stock accuracy
----------------------
8.3 SECURITY CONSIDERATIONS ----------------------
Warehouse, distribution centres, and cross-docking facilities can be ----------------------
dangerous places. If safety and security is not provided in the warehouse, then
accident rate in the warehouse can be very high. ----------------------
Each warehouse operations system has a safety standard for warehouse ----------------------
equipment and operations. The government has set standards for this. These are
also known as, Occupational Health and Safety Standards. ----------------------

Notes Warehouse safety considerations can be broadly classified into three areas,
1. Heavy Equipment
----------------------
If you are using heavy equipment, it is natural for people to become
---------------------- develop a confort with the machine as it eases work. This can be a big
advantage in terms of productivity, but this can be a loss because you can
----------------------
forget about the danger of the machine.
---------------------- You should make sure that all your employees are well aware of the
potential dangers from a machine. Always be cautious and be careful
----------------------
when you are running any machine so as to avoide accidents.
---------------------- 2. Slip and Trip
---------------------- This can be easily one of the most preventable health and safety hazards,
but this also is one of the most prevalent causes of accidents. To avoid slip
---------------------- and trip one needs to keep in mind a lot of things.
---------------------- Make sure that you are free from some important factors that cause tripping
like liquids, boxes, bad lighting, and junk items on floor or unnecessary
---------------------- obstructions. Also, you can use the anti-slip tape on the floor to help you
---------------------- maintain floor grip.
3. Falls
----------------------
Next to the slips and trips, falls are the other accidents reason for a large
---------------------- number of workplace accidents. It is not important where and how we
work, the fall is always a problem and these are the most common reasons
----------------------
for the injury or damage.
---------------------- Ensure that you are always aware of your surroundings so that you
---------------------- understand where you are, make sure that there is a proper guard rail in all
the necessary areas and why you need them in the warehouse and make
---------------------- sure you install them in your warehouse.
---------------------- 4. Fire
This is one of the most neglected dangers in warehouses, but it can be one
---------------------- of the most devastating if it happen to your godown. Fire is a preventable
---------------------- risk and you can prevent it by having proper building licenses, clearly
marked exit points, and by installing fire alarms and extinguishers.
----------------------
Last but not least, experts are advised to avoid leaking flammable fluid
---------------------- storage and exposed electrical wires around the warehouse and ensure
that you should not run some cords hidden under the carpet.
----------------------
5. Heavy Material
---------------------- Ensure that you provide proper training to each employee for handling
heavy material.
----------------------
In addition, you should try and make sure that you avoid loading docks
---------------------- and be weary of any heavy materials that could possibly fall and crush
---------------------- one of your employees.

6. Harmful substances Notes
There are some serious problems when it comes to asbestos and other
----------------------
harmful material. Remember, if there are employees who are working in
situations that are not suitable for work your warehouse could get into ----------------------
inspections and penal action by regulator.
----------------------
Make sure your employees are cared for and taken care of, so that they
will always be happy and you will not have to worry about any surprise ----------------------
checks and inspection.
----------------------
7. Ergonomics
Everything around your employees has to be right and running and your ----------------------
employees are in good health and take care of their themselves and their ----------------------
body.
There are many ergonomic techniques that can ensure you ensure your ----------------------
employees do right things in the right way. Also always make sure to train ----------------------
your employees to work in the right way to eliminate the risk of harm.
8. Moving Part ----------------------
If you have noticed anything, you’ll find that one of the biggest concerns ----------------------
for workplace safety has to do with heavy machinery. You need to make
----------------------
sure you are always paying close attention to the warning labels on the
machines you are operating. ----------------------
Most of the machines are going to have moving parts and they can be
----------------------
very dangerous if not used the proper way. If they do not use the machine
properly, then it can results in some really serious injury or even death in ----------------------
some serious accidents.
----------------------
9. Falling objects
Unfortunately, there are many warehouses that have high racks, and ----------------------
that means that falling objects are always a health hazard when stacking ----------------------
objects incredibly high on shelves or other platforms.
If you want to do everything you can to try and avoid this problem, it’s ----------------------
recommended to keep heavy loads stacked ad neatly as you can so that ----------------------
the load does not shift on you when you carry or move it from place to
place. Additionally, if you happen to have objects that are cylindrical in ----------------------
shape, stacking them the right way can avoid the problem of having them
roll of the shelf you stacked them on. ----------------------
10. Lack of Education ----------------------

As unfortunate as it can be for just about anybody involved in this ----------------------
situation, there are a lot of situations where warehouses tend to skip the
training aspect for their employees because it helps to save them both ----------------------
time and money with their employees.
----------------------
With this particular situation, it’s possible that skipping the training can
lead to an increase in lawsuits and complaints which can actually cost ----------------------

Notes a lot more in the long run. If you do not have proper education in your
warehouse, then there is no way that it will perform at it’s fullest potential
---------------------- and run as smoothly as it should.
----------------------
8.4 HAZARDOUS MATERIALS
----------------------
A hazardous material is any item or agent (biological, chemical,
---------------------- radiological, and/or physical), which has the potential to cause harm to humans,
animals, or the environment, either by itself or through interaction with other
---------------------- factors.
---------------------- Hazardous materials require extra safety precautions for both the storage
site and active employees. Different materials require different safety measures
---------------------- and storage environments to keep them safe and maintain their efficacy.
---------------------- There are nine classes of hazardous material including flammable
substances, explosives, infectious agents, corrosive materials, radioactive matter
----------------------
and others. A wide variety of scientific, industrial and commercial industries
---------------------- utilize compounds in one or more of these categories, making their storage and
transport fairly common.
----------------------
The nine risk categories are as follows:
---------------------- Class 1: Explosive
---------------------- Class 2: Gas
---------------------- Class 3: Flammable and Combustible Liquids.

Class 4: Flammable Solids
----------------------
Class 5: Oxidizing Substances, Organic Peroxide
----------------------
Class 6: Toxic substances and infectious substances
---------------------- Class 7: Radioactive content
---------------------- Class 8: Corrosives
---------------------- Class 9: Miscellaneous Hazardous Materials

Some of the nine hazard classes are further separated into divisions based
----------------------
on their physical or chemical properties.
---------------------- Warehouse managers have to identify the kind of hazardous material that
is being stored and have to take safety related actions in handling, storage of
----------------------
these.
----------------------
8.5 SAFETY EQUIPMENT FOR WAREHOUSES
----------------------
All the warehouse security arrangements required to store and protect the
----------------------
harmful material must be installed. The equipment would serve the purpose of
---------------------- detection of unwanted event related to safety and prevention of loss.
----------------------

Safety processes and equipment would be designed for detention and protection Notes
of unwanted events. Typically a safety detection would be based on the different
triggers or cues which would be in types of, ----------------------
1. Visual Types of Cues ----------------------
2. Audio Types of Cues
----------------------
3. Touch Types of Cues
----------------------
4. Odor Types of Cues
1. Visual type of gestures ----------------------
This will help you to see clearly in the warehouse space. For example, ----------------------
liquid on floor or mechanical problems on the floor with forklift, leaking
packaging to contamination of other products. ----------------------
2. Audio type of gestures ----------------------

These would help in hearing clearly with in warehouse space. For ----------------------
example, loud machinery noise could be a signal of a mechanical issue
and may indicate an emergency, horns indicates presence of other vehicle ----------------------
3. Odour of gestures ----------------------
This will help in the smell of strangers in the warehouse space. For ----------------------
example, smoke or gas indicating explosive or fire hazards
1. Sirens / Hooters ----------------------
2. Gas detector ----------------------

3. Antiskid flooring ----------------------
4. Light
----------------------
5. Ventilation Windows
----------------------
4. Touch the type of gestures
1. Hints and boards ----------------------
2. Information Board ----------------------

3. Leakage on the wall and the anchoring system on the wall ----------------------
4. Signs of the floor on the pathways for men and forklifts ----------------------
5. Clean rooms and baths for radioactive material storage
----------------------
6. Check water on roofs and walls
----------------------
7. Racking and labelling of storage containers
8. Safety helmets and clothes ----------------------
9. Scrap Dish ----------------------
----------------------
----------------------

Notes 8.6 SAFETY AND LOSS PREVENTION AND CONTROL
---------------------- The steps involved in prevention and control of the losses are as follows:
---------------------- a) Whenever changes in production programme, design or product lines

are contemplated, a representative of materials management department
---------------------- should be kept informed.
---------------------- b) Periodic review of stock records should be done on a systematic basis so

that the entire list of materials are covered once or twice a year.
----------------------
c) Standards may be set to indicate the basis upon which an item should be
---------------------- declared surplus.
d) Process losses should be reduced by right examination of specification
----------------------
and standards.
---------------------- e) Use of standard parts should be encouraged wherever possible.
---------------------- f) Inventory control based on ABC analyses, accurate forecasting techniques
and proper prevention techniques should be adopted.
----------------------
---------------------- 8.7 CLEANLINESS AND SANITATION ISSUES

---------------------- In many industries such as the food service industry, clean lines and
cleanliness problems are especially important. Employee turnover reduces if it
---------------------- has a positive effect on employee safety, morale, and productivity.
---------------------- Cleanliness requires simple meanings and good work
---------------------- Warehouse cleanliness and safety should always be a priority for any
warehousing organization that wants to meet high standards of cleanliness and
---------------------- safety of warehouses. Some suggestions for keeping your warehouse clean and
safe.
----------------------
Plan and maintain a cleaning schedule.
----------------------
Keeping a warehouse clean is paramount yet if not planned can lead to
---------------------- overlap and assumptions which will compromise the hygiene of the warehouse.
This is simplified with setting up a clear and abiding by a well-defined cleaning
---------------------- schedule known to all employees so that even during cleaning time all staff
respect the process so that its completed within the desired timeframe and
----------------------
operations resume smoothly.
---------------------- Implement the First In, First Out (FIFO)
---------------------- Keeping track of the inventory relevance dates is important to avoid certain
products sitting for a long time and collecting storage dust. Implementing the
---------------------- FIFO inventory mechanism simplifies stock flow since the items that arrived
first are the first to be dispatched out of the warehouse.
----------------------
Thoroughly label all key areas of the warehouse.
----------------------
The warehouse has a lot of foot traffic and activity during operation hours
---------------------- which presents unavoidable accident occurrences even at the highest degree

of care. Its therefore a good practice to endeavour to have proper labels of Notes
hazardous zones for it reminds the staff and visitors to be cautious even if it had
skipped their minds. ----------------------
Plan and conduct safety drills, inspections and audits. ----------------------
Safety standards should continuously be tested, updated, checked and
----------------------
revised to always improve standards. Constant safety drills, inspections and
audits effectively check all the involved safety stakeholder which include the ----------------------
staff, equipment, systems, organization structure, standards and procedures and
when feedback from such initiatives is acted upon leads to improvement for the ----------------------
better.
----------------------
Have a clear floor labelling done.
----------------------
Arrangement of items in the website depends on compatibility, access
and other factors. This implies the hygiene sensitivity varies based on items and ----------------------
with a clear floor label plan provided to the staff simplifies the hygiene process
and time frames. ----------------------
Ensure installation and use of safety gear at all times. ----------------------

With the various activities in the warehouse like fork lift driving, heavy ----------------------
lifting, operating of heavy machinery among others present scenarios of hazard
occurrence which can only be reduced or eliminated by ensuring staff always ----------------------
wear safety gear like helmets, eye protectors, heavy duty gloves and the
warehouse is fire proof with various fire extinguishers, fire escape routes and a ----------------------
functional sprinkler system. ----------------------
Plan, schedule and hold training sessions for all staff.
----------------------
This is very important in creating a safety culture in the organization as
staff are up to date and aware of the safety practices in the workplace which ----------------------
enforces a personal check by every staff to uphold these practices which is
----------------------
amplified to a strong safety culture.
----------------------
----------------------
1. Cleanliness requires simple meanings and good work.
----------------------
2. Warehouse standards may be set to indicate the basis upon which an
item should be declared surplus. ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes 8.8 WAREHOUSING SECURITY
---------------------- The degree of security measures adopted in warehouses are dependent
upon the following factors:
----------------------
a) Warehousing systems of inventory management, receipt, storage,
---------------------- dispatch, handling and housekeeping
---------------------- b) Shrinkages/pilferages
c) Fire
----------------------
Shrinkages
----------------------
LOSS in warehouse is concerned with the disappearance of materials and
---------------------- stocks. Warehouses take a physical inventory periodically. When the count is
completed, the difference between the actual inventory on hand and what is
---------------------- should be according to receipt and issue records, is called shrinkage.
---------------------- Some of the reasons of shrinkages are:
---------------------- 1) Internal theft

2) Unauthorized mark downs
----------------------
3) Manipulation of receipts and issue records.
----------------------
---------------------- 8.9 SECURITY EQUIPMENT AT WAREHOUSES
---------------------- Some of the security equipment used in the warehouse are listed below.
Although the nature and type of the equipment would depend on the location of
---------------------- the warehouse and the nature of goods stored in the warehouse.
---------------------- 1. Fire alarm
2. Burglar alarm
----------------------
3. Strong rooms
----------------------
4. Boundary walls and fencing
---------------------- 5. Automatic gates
---------------------- 6. CCTV system
---------------------- 7. Auto telephone dialler
8. Access control system
----------------------
9. RFID tags
----------------------
10. Rodent killers
---------------------- 11. Human Security
---------------------- 12. Locking system (locks and other related items)
---------------------- 13. Vehicle tracking system
14. Flood lights
----------------------

8.10 SECURITY RISK PREVENTION AND CONTROL Notes
1) Improve morale of employees through implementing positive programs of ----------------------
employees relations build around fair compensation, proper surroundings
and employer sponsored activities. ----------------------
2) There should be a highly visible security program and a rigid company ----------------------
policy of prosecuting any employee caught stealing.
----------------------
3) Pre-employment screening should be done to secure information regarding
the education, background, experience and ethical code of the employees. ----------------------
4) Wherever possible employees should be required to used a designated ----------------------
entrance when coming to or leaving work and security personnel should
be posted at such location. ----------------------
5) Periodic checking of garbage areas and remote corners as employees find ----------------------
them ideal place to hide the stolen goods.
----------------------
6) Strong tamper resistant locks should be provided at important location
particularly where valuable items are stored. ----------------------
7) Incoming shipments should be physically counted and verified against ----------------------
the accompanying documents. Receipts given to delivery people should
indicated any shortage found. Test counts can be done randomly as a ----------------------
security measure.
----------------------
8) Under cover investigation should be carried out. Investigators posing as
employees are placed within the warehouse. ----------------------
9) All employees should be involved in the security management ----------------------
programmes.
----------------------
10) Awards and incentives can be provided to employees to encourage interest
and participation in case of no shrinkage found. ----------------------
11) The marking and tags should not be loose or easily removable.
----------------------
12) Frequent stock taking of valuable items should be carried out to reconcile
stocks. ----------------------
13) Wherever possible loads should be planned so that vehicles leave or enter ----------------------
the warehouse filled to capacity and gross weight ascertained.
----------------------
14) Ensure good housekeeping – A place for everything and everything in
place. ----------------------
15) Install electronic alarm systems and closed circuit TV for ensuring ----------------------
security within the warehouse.
----------------------
16) Conduct training programmes of employees on attitudinal development
and security awareness. ----------------------
----------------------
----------------------

Notes
Activity 1
----------------------
Visit a food manufacuturing unit and list down the various safety
----------------------
considerations for a food warehouse.
----------------------
---------------------- Summary
----------------------
●● Efficient and effective warehouse management can be a difficult task and
---------------------- can be a barrier to inspire the workforce. This can be largely due to repeated
work and physical demand in the warehouse.
----------------------
●● Also, the nature of the store and other infrastructure related to the structure
---------------------- of the warehouse and the warehouse can be dangerous for the people and
warehouse property.
----------------------
●● Productivity can be understood as a function of input and output. Depending
---------------------- on the nature of the operation, we can work on different productivity
metrics to evaluate the warehouse productivity.
---------------------- ●● Hazardous materials require extra safety precautions for both the storage
---------------------- site and active employees.
●● There should be a very visible security program and there should be a
---------------------- firm company policy to take any action that employees have committed to
---------------------- stealing.
●● The nature and type of the security equipment would depend on the location
---------------------- of the warehouse and the nature of goods stored in the warehouse.
----------------------
Keywords
----------------------
●● FIFO: First in first Out
----------------------
●● LIFO: Last in first out
---------------------- ●● Ergonomics: The study of people’s efficiency in their working environment.
---------------------- ●● Shrinkage: Loss in warehouse concerned with the disappearance of
materials and stocks.
----------------------
---------------------- Self-Assessment Questions

---------------------- 1. Explain terms warehouse productivity analysis.
---------------------- 2. List warehouse safety considerations.
3. Write your comments on cleanliness and sanitation issues.
----------------------
4. Explain security risk prevention and control.
----------------------
----------------------

5. Write short notes on Notes
a) Fatal Material
----------------------
b) Cleanliness and Sanitation Issues
----------------------
c) Warehousing Security
d) Security Equipment at Warehouses ----------------------
e) Security Risk Prevention and Control ----------------------
----------------------
----------------------
1. True ----------------------
2. True ----------------------
----------------------
Suggested Reading
----------------------
Handbook, McGraw-Hill. ----------------------
2. Bartholdi, III, J.J., and Hackman, S.T., 2014, Warehouse & Distribution ----------------------
Science, version 0.96,
----------------------
3. Frazelle, E., 2002, World-Class Warehousing and Material Handling,
McGraw-Hill. ----------------------
4. Mulcahy, D.E., 1994, Warehouse Distribution & Operations Handbook,
----------------------
McGraw-Hill.
5. Mulcahy, D.E., and Dieltz, J., 2004, “Order-Fulfillment Systems,” in ----------------------
Order-Fulfillment and Across-the-Dock Concepts, Design, and Operations ----------------------
6. Menon, K. S. Stores Management. New Delhi: Macmillan India Limited. ----------------------
7. Belapure, Ashutosh Madhukar, Export & import management, Horizon ----------------------

books, ISBN-978-93-84044-04-6
----------------------
Pick, Case ----------------------
Pick, and Pallet Pick Operations,” InventoryOps.com, ----------------------
References
----------------------
1. Datta A.K., Material Management, Inventory Control, and Logistics Jaico
Publishing ----------------------
2. House, Bombay. ----------------------
----------------------

Notes 3. Gopalkhrishana, P and Sundareasan, M., Materials Management – An
Integrated Approach, Practice Hall of India, New Delhi.
----------------------
4. Khanna, O.P., Industrial Engineering and Management, Dhanpat Rai,
---------------------- Delhi.
5. Lee L. and Dobler D.W., Purchasing and Materials Management, Text
----------------------
and
---------------------- 6. Cases, Tata McGraw Hill, New Delhi.
---------------------- 7. Moore, J.M., Plant Layout and Design, Macmillan, New York
---------------------- 8. www.inventoryops.com/order_picking.htm.
9. www2.isye.gatech.edu/~jjb/wh/book/editions/wh-sci-0.96.pdf.
----------------------
---------------------- Annexure 1
---------------------- OSH Laws Relating to Substance, Machinery & Environment
---------------------- 1. The Indian Boilers Act, 1923 (amended 2007)
2. The Dangerous Machines (Regulation) Act, 1983
----------------------
3. The Motor Transport Workers Act, 1961 (amended 1986)
----------------------
4. The Plantation Labour Act, 1951 (amended 2010) and Rules there under
---------------------- 5. The Beedi & Cigar Workers (Conditions of Employment) Act, 1966
---------------------- (amended 1993)
6. The Shops and Commercial Establishments Acts
----------------------
7. The Explosives Act, 1884 (amended 1983)
----------------------
8. The Petroleum Act, 1934
---------------------- 9. The Inflammable Substances Act, 1952
---------------------- 10. The Insecticides Act, 1968 (amended 2000)
---------------------- 11. The Insecticides Act, 1968 (amended 2000)

12. The Petroleum and Natural Gas Regulation Board Act, 2006
----------------------
13. The Environment (Protection) Act, 1986 (amended 1991)
----------------------
14. The Water (Preventions Control of Pollution) Act, 1974 (amended 1988)
---------------------- 15. The Water (Prevention & Control of Pollution) Cess Act, 1977 (amended
---------------------- 2003)
16. The Air (Prevention & Control of Pollution) Act, 1981 (amended 1987)
----------------------
17. The Public Liability Insurance Act, 1991 (amended 1992)
----------------------
18. The National Green Tribunal Act, 2010
---------------------- 19. The Motor Vehicles Act, 1988 (amended 2013)
---------------------- 20. The Atomic Energy Act, 1962 (amended 1987)

21. The Electricity Act, 2003 (amended 2007) Notes
22. The Energy Conservation Act, 2001 (amended 2010)
----------------------
23. The Disaster Management Act, 2005
----------------------
24. Dock Workers (Safety, Health & Welfare) Act, 1986 & The Dock Workers
(Safety, Health & Welfare) Regulations, 1990 ----------------------
25. The Employee’s State Insurance Act, 1948 ----------------------
Annexure 2 ----------------------
Authority or body, responsible for OSH ----------------------

1. National OSH Supervision and Administration ----------------------
2. National Tripartite OSH Committee ----------------------
3. The Indian Labour Conference
----------------------
4. Tripartite Committee in Docks
----------------------
5. Tripartite Committee in Mines
6. Directorate General Factory Advice Service & Labour Institutes ----------------------
(DGFASLI) ----------------------
7. Directorate General of Mines Safety(DGMS)
----------------------
8. Other relevant Minister and other institutions in OSH
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Future Trends in Warehousing
UNIT
Structure:
9
9.1 Introduction
9.2 Role of Technology in Warehousing
9.3 Warehouse Management System
9.4 Global Warehousing Industry
Summary
Keywords
Suggested Reading
Future Trends in Warehousing 147

Notes
Objectives
----------------------
----------------------
• Explain the role of technology in warehousing
----------------------
• Demonstrate the warehouse management system
---------------------- • Explain the global warehousing industry
----------------------
9.1 INTRODUCTION
----------------------
Today, the technology role has changed with automation and quality
---------------------- control and technology now has a more strategic role as a key component of
competitive advantage.
----------------------
In the last decade of the 20th century, rapid technological progress has
---------------------- been made especially in IT.
---------------------- Increasing IT growth and knowledge creation can increase the wages and
maturity of India’s warehouses. IT has provided the possibility of savings of a
---------------------- large number of operating savings and simultaneously improving the quality of
---------------------- the process.
Demand for warehousing technology is increasing due to rising logistics,
---------------------- retail and manufacturing sectors, and governmental encouragements. The main
---------------------- users of technology are the manufacturing and retail sectors.
Until recently, the logistics industry was unorganized, comprising of medium
----------------------
and small sized LSPs. The trend now is of increased service quality and
---------------------- increased organised players.
Logistics and dedicated warehousing companies are using technology to
----------------------
improve warehousing and supply chain management. This helps them increase
---------------------- warehousing efficiency.
---------------------- 9.2 ROLE OF TECHNOLOGY IN WAREHOUSING

----------------------
Information technology has the following advantages, which help
---------------------- warehousing players to increase their competitiveness:
Low Labour Costs
----------------------
Automatic storage and order picking systems can reduce warehouse
---------------------- labour and mechanical equipment requirements. In the automatic warehouse,
the order-picking system is bringing the right material to the right person at the
----------------------
right time.
---------------------- The technology eliminates the need for walking and SKU’s slow
---------------------- movements. Actually, productivity with Automation increases by 10 times
more than traditional zone-picking or pick-to-flat method.
----------------------

High productivity also reduces the number of operators needed for Notes
automated system storage, picking, packing, etc.
----------------------
Improved Space Performance
By reducing the height of the shelving and decreasing the aisle width, the ----------------------
automatic storage system (for palettes, bins, and cartons), we can reduce the
----------------------
need for a footprint for land and storage expenses for stock storage.
Improved Ergonomics and Security ----------------------
Automated Storage Systems reduces the need for forklift trucks and pallet ----------------------
movements must be related to other tasks like order-picking.
----------------------
Provide automatic goods at a personal palleting station for sliding instead
of lifting goods. ----------------------
Plus, ergonomic pick-ups for short and split-hair items, reduce swamps, ----------------------
reduce injuries, reduce complaints, and spend time.
----------------------
The flexibility of Different Order Profiles
Automatic order-picking systems are equally productive for small and ----------------------
large orders, and productivity is different from the number of SKUs compared
----------------------
to manual systems, where more SKUs are telecommunications and thus less
productive. ----------------------
High Customer Satisfaction ----------------------
Technology helps establish an automated order-picking system that offers
more flexibility with order pickup, improved response times, and quality and ----------------------
consistency. ----------------------
They all contribute to high customer satisfaction.
----------------------
Quick Response and Access to Information
----------------------
Warehouse management system technology helps gather information
quickly and efficiently and helps to remove documents and expensive shipwreck ----------------------
errors.
----------------------
Track and Trace
The warehouse management system can track all production movements ----------------------
from one place to another. ----------------------
Certified Process
----------------------
Warehouse management systems use standardization of processes and
procedures such as setting standards for production receipt, monitoring vendor ----------------------
performance, managing customer lists, managing more effectively, etc.
----------------------
----------------------
----------------------
----------------------

Notes 9.3 WAREHOUSE MANAGEMENT SYSTEM
---------------------- IT intervention in the Warehousing sector
---------------------- Warehouse Management System (WMS) is one of the most important

technologies used for logistics, enabling effective management of physical
---------------------- streams, keeping track of the movements of goods properly and timely delivery
to customers. WMS is a system for managing the department of enterprise
---------------------- logistics functions that are responsible for storage and handling. The supply
---------------------- receipt at the time of storage and starts with the end.
This is a software application that supports daily operations in the
---------------------- warehouse, through which centralized management of stocks such as stock
---------------------- levels and tracking of stock locations is enabled. Their main aims are to manage
the resources of warehouses, such as space, labour, equipment, works, and
---------------------- materials.
---------------------- The warehouse management system includes picking, inventory control,
label printing, returning material authorization (RMA), acquisition and
---------------------- automatic data collection (ADC), wave/batch/zone picking, task-interleaving,
automatic material handling the equipment. Bicycle-counting, crossdocking,
----------------------
pick-to-carton / pick-to-light, yard management, transport management, labour
---------------------- management and voice-picking, multiple inventory ownership, billing and
currency, voice-directed distribution and more.
----------------------
There are many WMS options available in the market. The WMS
---------------------- requirement is totally dependent on the warehousing operations (size and
volume) and the complexity of the throttle efficiency (operational productivity).
----------------------
The traditional way of managing operations with a small number of
---------------------- inventory, with small warehouse service providers, including local dealers and
suppliers, and the tracking list is still the best bet.
----------------------
Warehousing management solutions are available for regional distributors
---------------------- working in regional, inbound and outbound operations and inventory.
---------------------- Customized Warehouse management systems are also available for large
warehousing service providers and multiple customers and facilities with 3PL
---------------------- companies.
---------------------- These organizations have many transactions and inventory movements
inside and outside their network. For these organizations, WMS system,
---------------------- inbound, outbound, value-added service, work order management, quality
check, picking, packing, shipping, RFID aggregation, global listing view,
---------------------- intelligent analysis, ERP integration, etc. Can manage.
---------------------- Good warehouse management system software requires a feature
---------------------- ●● Completion of order in time
●● Financial management of resources
----------------------
●● User-friendly features
----------------------

●● Ability to meet general Indian requirements (including legal and statutory Notes
requirements, road permits, etc.)
●● Enhanced functionality, which has the potential to increase the volume ----------------------
globally ----------------------
●● The ability to manage and operate the movements of the warehouse
----------------------
●● Small implementation cycle
●● The ability to track, track, and center-manage stocks across all channels, ----------------------
territories, and networks
----------------------
●● Intelligent analysis and dashboard for managing the main performance
indicators ----------------------
●● Easily merge into ERP (like SAP and Oracle) ----------------------
●● Competitive price
----------------------
What to look for in a warehouse management system
----------------------
Finding the right warehouse management system for you depends on the
various aspects of your business. But the main retailers need to consider making ----------------------
the decision:
----------------------
●● Warehouse organization
Stores the exact places for each SKU and can guide you through the ----------------------
warehouse in the best possible way.
----------------------
●● Digital barcode
----------------------
Operators use mobile scanners and barcodes to reduce paper requirement
while picking, packing and booking and optimize accuracy in a new scan. ----------------------
●● Necessary integration
----------------------
Any required store, marketplace, shipping partner, number of warehouses
and any integration that are unique to your business. ----------------------
●● Easy to use system ----------------------
A simple platform to help all current, new and temporary team members
----------------------
to operate easily.
●● All-in-One Solutions ----------------------
With the order, listing, and shipping - the ability to operate and manage ----------------------
other major areas of your retail operation
----------------------
●● Records and responsibilities track and hold the history of each action in the
warehouse to define management control and responsibilities. ----------------------
Emerging Technology: Cloud Computing ----------------------
There are challenges for technology implementation, price, support
system availability and skill set and training problems. This has led to the idea ----------------------
of ways to build more accessible and affordable products and services and ----------------------
technology to address real-life challenges of warehousing players.
----------------------

Notes Large web-based companies like Google, Amazon, and Salesforce.com
are providing web infrastructure to provide IT solutions that are affordable
---------------------- for internet data storage, scalability. These solutions are provided by Cloud
Computing.
----------------------
According to the NIST, “Cloud Computing is a model for on-demand
---------------------- network access to a shared pool of configurable computer resources that can
be provided with minimal management efforts or with the interaction of the
----------------------
service provider rapidly.”
---------------------- Cloud computing is an online service model through which customer
needs-based hardware and software services are distributed. Customers pay
----------------------
for operating expenses without spending. There are three popular models of
---------------------- service,
1. Software-level service
----------------------
2. Platform-level service
----------------------
Infrastructure
---------------------- Models, such as cloud computing based on virtual technology, enable
---------------------- resource users to access storage sources and fees according to resources.
The cloud computing platform is based on a utility model that maximizes
----------------------
credibility, scalability, efficiency, and requirement-based configurations. This
---------------------- capability is available at a relatively cheap price compared to all the basic
infrastructure.
----------------------
Benefits of cloud computing, price savings, speed, flexibility, scalability,
---------------------- and enhanced functionality.
---------------------- From a financial perspective, using an application provider’s service is

less expensive. The models are:
---------------------- 1) To provide the application
---------------------- 2) To host the application
---------------------- The advantages are that you pay a monthly fee without having an initial
investment for this service. There is no operational expense, no investment in the
---------------------- server, no hardware supervision, and highly skilled IT personnel not working.
The service provider confirms that the application is provided to the client and
----------------------
that all users are logged in to use it. This software is known as the provision of
---------------------- software or software.
However, there are arguments against cloud computing.
----------------------
The main point of this issue is that the hosted application cannot have
---------------------- commercial functionality or flexibility.
---------------------- Players in the warehouse industry cannot depend on the technology to
run complex processes. The effect of running an in-house development team
---------------------- is that they may have a higher price, which can be expensive, the ability of
---------------------- the suppliers to adapt and customize the cloud computing model can be large

enough according to their ability. Notes
Data security is a potential problem, but hosted application providers may
----------------------
have more security measures such as anti-hacking protocols, disaster recovery
provisions, and automatic backup service. ----------------------
Financial risks and financial resources for small and medium warehousing
----------------------
players, financial benefits, which allow business owners/managers to concentrate
on the main business process rather than distract resources to create an internal ----------------------
hierarchy for the maintenance of WMS.
----------------------
The real advantage of cloud computing is that the WMS application
provider is able to provide an easy system for even one user. ----------------------
Cloud Computing has the potential to change the IT landscape in the ----------------------
Indian warehouse area, which brings some obstacles to IT dependence.
----------------------
----------------------
1. The importance of the computer control system lies in the ability
----------------------
to acquire and assimilate a large amount of information with speed,
accuracy, and flexibility. ----------------------
2. Automation of warehouse operations reduces paperwork.
----------------------
3. The warehouse management system is a software application that
supports the day-to-day operations in a warehouse. ----------------------
----------------------
Activity 1 ----------------------
Visit a warehouse and list the output reports that it generates from ----------------------
computers. Prepare the list of reports, which you would like to generate for ----------------------
the warehouse management of your company.
----------------------
9.4 GLOBAL WAREHOUSING INDUSTRY ----------------------
Smart Warehousing ----------------------
Like smartphones, smart warehouses are those that effectively perform ----------------------
multiple functions with the help of technology. They have the ability to think
----------------------
and therefore they are also referred to as intelligent warehouse or warehouse.
In the smart warehouse, all the gadgets and device sensors are ready and ----------------------
connected to each other through the internet. This connectivity gadget gives
----------------------
the ability to coordinate their processes so that uninterrupted operation will be
enabled. The components of the concept of Smart Warehouse are the Internet, ----------------------
Things, Cloud Computing, Big Data Analytics, Robotics, and Automation.
They are all essential components of a larger integrated environment. ----------------------

Notes Amazon is famous for leading the Smart Warehouse model, and therefore
this concept is sometimes known as the Amazon Effect. Amazon has set up a
---------------------- benchmark with its warehouses in the US and Europe.
---------------------- Increased Reality
Increased reality is the real-time merger of digital information with an
----------------------
existing environment. This technology is used in a labour environment and
---------------------- combined, experienced or thrown with virtual information. This concept of
perspective is the most popular application. With smart eye glasses, faster,
---------------------- hand-free operation, the simpler work of warehouses, such as picking, sorting,
and assemblies, is easy.
----------------------
In the US and Europe, smart specs are constantly used in warehousing
---------------------- operations. DHL has reported 25% growth in efficient performance using smart
glasses working in its warehouses in the Netherlands. (Source: DHL Logistics
----------------------
Trends Radar 2016)
---------------------- Robotics
---------------------- New and advanced robotics can help increase the productivity of logistic
operations. These robots are equipped with high-resolution cameras, pressure
---------------------- sensors and self-learning capabilities, which can be used to assist and support
---------------------- manual labour.
For example, in a warehouse, robots can be programmed to do things like
---------------------- items, packing and sorting or loading or loading stuff. They are used for the
---------------------- market for final-mile distribution work in developed markets like the US and
Europe.
----------------------
For example, saar, the armed robot is designed for logistics operations.
---------------------- (Source: DHL Logistics Trends Radar 2016)
Temperature Controlled Warehouse
----------------------
Known as cool-chain warehousing, they are equipped with the
---------------------- temperature-controlled environment, especially for dairy products, frozen
---------------------- foods, photography films, chemicals and medicines, which are sensitive to
temperature change and have a small shelf-life or pay check to their sensitive
---------------------- chemical composition.
---------------------- To avoid damage to such products, they must maintain a certain

temperature in the environment. This requires cool chain warehouses.
---------------------- The temperature of the drug industry is 2 to 8 degree Celsius and the
---------------------- temperature of 15 degree Celsius is 25 degrees Celsius. (Source: Industry
dialogue)
----------------------
This temperature control system needs to maintain the parameters like
---------------------- air quality (CO2, oxygen, humidity, and others). In addition, to ensure smooth
operation, such systems must be complemented with efficient and 24-hour
---------------------- monitoring tools.
----------------------

Multi-storey Warehousing Notes
Multi-storey warehouses were set up to use square feet in the soil with
----------------------
soil shortage. They are gradually becoming popular in other countries. Such
warehouses require a good architectural design as well as technical planning so ----------------------
that all supply chain operations can be run on all floors.
----------------------
Multi-storey warehouses are common in Tokyo, Singapore, and Hong
Kong. There is a limited amount of land and therefore there is a need to use ----------------------
more space available.
----------------------
Drone
The industry is excited about the industrial use of warehouse drains and ----------------------
robots. However, in large warehouses, drones and robots are getting standardized ----------------------
regularly for regular distribution warehouses.
According to the credit counsellors, two drones can work in place of 100 ----------------------
people over the given period. This means they can do many tour warehouses ----------------------
(also at night), compare performance, identify discrepancies, and make the
most accurate picture faster. ----------------------
Unmanned aerial vehicles (UAV) - The drones can be successfully ----------------------
deployed to improve the warehouse process. A good example is that special
aerial drones can be used by the optical sensor (cameras) to locate objects in the ----------------------
warehouse or to scan related RFID tags.
----------------------
In larger warehouses, the use of the drone system can be used to measure
the level in the list and the data can be transmitted directly to the warehouse ----------------------
management system. This facilitates the faster search of individual items and
----------------------
avoids errors related to the list.
The drone makers claim 100% accuracy of scanning accuracy. These are ----------------------
reducing the cost of warehouses, but they are pushing people out of work.
----------------------
Drones have been found to be a winning technology, faster and more
accurately than other technology applications, and many companies are eager ----------------------
to accept it.
----------------------
But it is important to see the limit before adopting it. The main limit is
security, payload capacity restrictions, and political acceptance. ----------------------
Block Chains ----------------------

The new millennium manager is the area to hold the block chain in ----------------------
warehousing operations.
----------------------
In relation to the context that block chains may affect warehousing in
many ways, small companies are using smart contracts and process payments ----------------------
clearly and publicly to avoid disputes.
----------------------
Large companies of efficient warehouses will be able to integrate more
efficiently with block chain machinery and technology transparency, scalability, ----------------------
good real-time access, and per-transaction less expensive advertising.
----------------------

Notes
----------------------
----------------------
1. A logistics park is a stipulated area that facilitates domestic and
---------------------- foreign trade by providing logistics related services.
---------------------- 2. Augmented reality is real time integration of digital information with
the existing environment.
----------------------
3. In a smart warehouse, all gadgets and devices are fitted with sensors
---------------------- and are connected to each other via the Internet.
----------------------
----------------------
Activity 2
---------------------- 1. Find out the Government initiatives for Warehousing in India.
---------------------- 2. List down the impact of GST on warehousing in India.
----------------------
Summary
----------------------
●● To obtain the cutting edge in the market, logistics and dedicated warehousing
---------------------- companies are adopting new technologies to improve warehousing
---------------------- and supply chain management. This enables them to achieve maximum
warehousing efficiency.
---------------------- ●● It’s totally dependent on your individual business needs if/ when you’re
ready to upgrade your warehouse.
----------------------
●● Finding the correct Warehouse Management System technology for you
---------------------- depends on a variety of aspects unique to your business.
---------------------- ●● Warehouse Management Systems (WMS) is one of the most significant
technologies used for logistics which enables efficient management of
---------------------- material flow, proper tracking of the movement of goods and on-time
delivery of goods to customers.
----------------------
●● WMS is a system to manage the segment of an enterprise’s logistics
---------------------- function responsible for the storage and handling of inventories beginning
with supplier receipt and ending at the point of consumption.
----------------------
●● It is a software application that supports the day-to-day operations in a
---------------------- warehouse, by enabling centralised management of tasks such as tracking
inventory levels and stock locations.
----------------------
●● The primary objective of WMS is to manage a warehouse’s resources,
---------------------- including space, labour, equipment, tasks, and flow of material.
---------------------- ●● Free Trade Warehousing Zones (FTWZ) was established by the government
to develop infrastructure to facilitate import and export of goods and
---------------------- services with the freedom to carry out trade transactions in the free currency.

●● In a smart warehouse, all gadgets and devices are fitted with sensors and Notes
are connected to each other via the Internet. This connectivity gives the
gadgets the ability to coordinate their processes thereby enabling seamless ----------------------
operations.
----------------------
●● Internet of Things, Cloud Computing, Big Data Analytics, Robotics and
Automation, drones, block chain technology together enable the concept of ----------------------
a Smart Warehouse. They are all necessary elements of a larger integrated
ecosystem. ----------------------
----------------------
Keywords
----------------------
●● Multi-storey warehouses: started coming up as a solution in the land–
----------------------
constrained countries to increase the usable floor space per square foot of land.
●● Logistics park: A stipulated area that facilitates domestic and foreign trade ----------------------
by providing services such as warehousing, cold storage, multi-modal ----------------------
transport facility, CFS, ICDs, etc.
●● IoT: Internet of things ----------------------
●● UAV: Unmanned aerial vehicles ----------------------
----------------------
----------------------
1. Discuss the role of technology in warehousing.
2. What is warehouse management system? List down its characteristics. ----------------------
3. Explain the concept of Free Trade Warehousing Zones. ----------------------

4. Discuss the trends in the global warehousing industry. ----------------------
----------------------
1. True ----------------------
2. True ----------------------
3. True
----------------------
----------------------
1. True ----------------------
2. True ----------------------
3. True ----------------------
----------------------

Notes
Suggested Reading
----------------------
---------------------- Science, version 0.96,
McGraw-Hill.
---------------------- 5. Belapure, Ashutosh Madhukar, Export & import management, Horizon
books, ISBN-978-93-84044-04-6.
---------------------- 6. Mulcahy, D.E., 1994, Warehouse Distribution & Operations Handbook,
McGraw-Hill.
----------------------
7. Mulcahy, D.E., and Dieltz, J., 2004, “Order-Fulfillment Systems,” in
---------------------- Order-Fulfillment and Across-the-Dock Concepts, Design, and Operations
----------------------
---------------------- Pick, Case Pick, and Pallet Pick Operations,” InventoryOps.com,
References/Bibliography
----------------------
1. CRISIL Research
---------------------- 2. National Skill Development Corporation (www.nsdcindia.org)
---------------------- 3. McKinsey Quarterly – “Transforming India’s Logistics infrastructure”
4. Department of Commerce
---------------------- 5. Warehousing Development Regulatory Authority (WDRA)
6. Jones Lang LaSalle Meghraj – “The Transforming Landscape of Indian
---------------------- Warehousing”
---------------------- 7. Colliers – “ Logic of Logistics, 2009”
8. World Bank
---------------------- 9. AT Kearney’s report on retailing
10. BMI India Retail report
----------------------
11. Society of Indian Automobile Manufacturers (SIAM)
---------------------- 12. Journal Of Computing, Volume 2, Issue 5, May 2010, ISSN: 2151-9617
13. Financial Express (www.financialexpress.com/news/logistics-space-is-
---------------------- hotting-up/613895/0)
---------------------- 14. India Brand Equity Foundation (www.ibef.org/artdisplay.aspx?cat_
id=109&art_id=25460)
---------------------- 15. Livemint (www.livemint.com)
16. India Private Equity (www.indiape.com)
---------------------- 17. VCCircle (www.vccircle.com)
---------------------- 18. Frost and Sullivan – “Strategic Analysis of Growth Opportunities in
Indian Warehousing Market” Deal Curry (www.dealcurry.com)
---------------------- 19. www.pwc.com/india
20. www.inventoryops.com/order_picking.htm.
----------------------
21. www2.isye.gatech.edu/~jjb/wh/book/editions/wh-sci-0.96.pdf.

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WAREHOUSE MANAGEMENT

(FOR PRIVATE CIRCULATION ONLY)

COURSE DESIGN AND REVIEW COMMITTEE

Published by Symbiosis Centre for Distance Learning (SCDL), Pune

Copyright © 2019 Symbiosis Open Education Society

4. Warehousing and Value Added Services 67-82

---------------------- 1.1 INTRODUCTION

3. Warehouse service providers are offering value-added services to ----------------------

---------------------- According to a survey conducted by PWC with 1200 chief executives

Major challenges for warehousing sector in India can be broadly ----------------------

---------------------- 8. Complicated Tax Regime

4. Relatively less attractive promotions and benefits ----------------------

4. Depending on the Paper Documentation, Billing and Reporting ----------------------

---------------------- Check your Progress 2

---------------------- 1.6 GOVERNMENT INITIATIVES ON WAREHOUSING

• World-class information system for Cargo tracking etc. ----------------------

3. Warehousing is an emerging sector of India’s logistics domain Discuss. ----------------------

---------------------- Answers to Check your Progress

---------------------- Check your Progress 1

---------------------- 10. BMI India Retail report.

17. VCCircle (www.vccircle.com). ----------------------

---------------------- • Discuss the functions of warehouses

---------------------- Make a comparison statement of the functions of a store and a warehouse.

---------------------- 2.4 FUNCTIONS OF WAREHOUSE

7. Transport - In some cases, the warehouse provides a large number of ----------------------

Distribution of checked content in the appropriate store ----------------------

---------------------- C) Health improvements

---------------------- d) Identifying essential items

---------------------- Order Picking Methods

---------------------- 5. Wrong list

---------------------- 2. LIFO (First In First Out)

---------------------- Check your Progress 2

---------------------- 2.8 UTILITY AND ADVANTAGES OF WAREHOUSES

---------------------- 5. Indentor and purchase notification for receipt of material

---------------------- Check your Progress 3

---------------------- Fill in the Blanks.

●● Warehousing means holding or preserving goods in huge quantities from ----------------------

Multiple Choice Single Response. ----------------------

Fill in the Blanks. ----------------------

---------------------- • Describe the functions of warehouses

---------------------- 3.2 WAREHOUSE

---------------------- 3.3 TYPES OF WAREHOUSES

---------------------- B) Public warehouse

C) Storage Warehouse ----------------------

A) Private Warehouse ----------------------

To start such warehouses, a license from the government is necessary. ----------------------

---------------------- 2. Operations required to handle the quality of spraying and dusting

---------------------- 3.5 TYPES BASED ON THE BASIS OF COMMODITY

A) Vapour absorption system (VAS) ----------------------

---------------------- 3.6 TYPES BASED ON FUNCTIONS

---------------------- A) Cross-docking and trance loading warehouses

---------------------- B) Disposal of large scale warehouses

---------------------- o Government Warehouses

Check your Progress 1 ----------------------

---------------------- Below is a checklist, listing the licenses and registrations to be obtained

---------------------- 7. TIN Number (Synonymous with VAT and CST registration)

---------------------- 13. For Manufacturer

---------------------- 15. With local authority:

●● Proof of ownership (Sale Deed, Tax Receipt, etc.); or ----------------------

●● ddress Proof of the Company (Title deed/lease deed/rent agreement

Warehousing and Value Added Services 67

---------------------- • Create value addition of services

---------------------- 4.1 INTRODUCTION

i) Ease of receipt, storage, and issue of materials ----------------------

3. Warehouse service providers are offering value-added services to ----------------------