A Term Paper on Warehousing and Storage

Department:
Geography and Planning (Transport Geography)

Course:
Transport Planning and Physical Distribution Management

Course Code:
GRY 830

Presented by:

SUNDAY, Ikechukwu Mathew (229082001)

TOWOLAWI, Adedoyin Rukayat (960503022)
OLALERE, Hammed Olanrewaju (229082012)

August, 2023
Introduction

Warehousing and storage play a crucial role in the field of logistics and supply chain
management. They serve as critical components in ensuring the smooth flow of goods from
manufacturer to end-consumer. Often used interchangeably, warehousing and storage are key
components of any business – retail or e-commerce. While it may seem like both these terms
refer to the same concept, in reality, there are a few significant differences between
warehousing and storage, which must be known in order to fully realize the benefits of the two.

There are a number of differences between storage and warehousing based on a few critical
factors. Some of the differences are listed in the table below:

S/ Attribute Warehousing Storage

N
1 Capacity Warehouses are built to store large Storage units are significantly
quantities of goods. Furthermore, smaller than warehouses and are
warehouses can store different kinds used for smaller items
of goods and even raw materials
2 Duration Warehousing is a long-term solution The goods are kept for smaller
wherein seasonal goods can be intervals
stored till they are in demand again
3 Cost Warehousing is much costlier, as this Storage does not necessarily
is a long-term solution and includes need as many resources as
several different components like warehousing; hence, it can be
management software, employees, much cheaper
transportation, etc.
4 Services The services included with Storage does not offer any other
warehousing are picking, sorting, service besides providing a space
packing, and even shipping. Hence, to keep goods intact and safe
warehousing plays an important role
in order fulfillment.
 S/ Attribute Warehousing Storage
N
5 Security Warehouses are big spaces, usually Storage might have security, but
buildings or big rooms, these have in several cases, it is negligible
much higher security measures.
6 Location Since transporting is a part of Storage can be done anywhere.
and warehousing, warehouses are In several cases, storage units
Accessibility usually located near hubs where it actually form a part of
can be easy to ship goods warehouses

According to the Warehousing Education and Research Council’s (WERC) WERCipedia (WERC’s
online dictionary) a warehouse is a “place for receiving, storing and shipping material and
merchandise and making changes to their packaging or configuration.

Due to the differences between the various forms of materials and goods moving through the
supply chain, warehouses are a necessary part of the supply chain.

Warehouses exist to provide storage of the items moving through the supply chain and provide
this storage at a location that is in close proximity to the customer. In general, the design of a
general supply warehouse must be based on the characteristics of the material being handled
and stored (shape, environment, stackability, etc.), the volume and flow pattern through the
facility (transaction and cube movement rate profile), and the inventory pattern (item count,
item cube, quantity mix, and inventory turnover patterns).

Warehousing refers to the process of storing and organizing products in a large space and then
delivered when the need arises. A warehouse can be a separate entity for different types of
businesses. For a home-based entrepreneur, for example, their warehouse can be a bedroom
from the day they pick up products when they get a new model. Similarly for SMEs or
manufacturing business, the warehouse consists of a number of components such as rack and
storage capacity compartment sets, systems for climate control products which includes
managing temperature, warehouse software and inventory control software. Warehousing
helps to solve many supply chain management processes seamlessly and optimize your
business to maximize revenue.

It is important that supply chain managers have an overall strategy for commodity
warehousing, particularly in resource poor environments where warehousing can provide a
buffer against uncertainties and breakdowns within the supply chain. Managers need to think
of warehouses not simply as four walls, a ceiling and a floor where inventory rests, but as
dynamic operations centers housing a varied range of distinct yet complementary activities that
combine to collect and hold products for subsequent shipment to service delivery points.

Products are warehoused at every facility in the pipeline. Good warehousing ensures the
physical integrity and safety of products and their packaging throughout the various storage
facilities until they are dispensed to clients. The various activities that occur within a warehouse
should be aligned so that products can be managed efficiently and orders can be filled and
distributed expeditiously.

Key Warehousing Activities

Material Receiving and Incoming Inspection

This activity occurs during the unloading of inbound vehicles and includes the visual inspection
of delivered packages to ensure that products were not damaged during transport. It is also
important during this activity that staff verify the quantities of products received against the
packing slip or shipping invoice and report any discrepancies.

Put Away

This process includes moving products from the unloading dock, or receiving area, after they
are released for storage; and assigning them to their designated storage area (rack, shelf, floor,
etc.). It is important that every product moved into or out of the racks, shelves, or any storage
area is correctly recorded on the stock keeping records.
Visual Inspection

The quality of storage conditions may vary along the supply chain and a manager may
occasionally need to verify the quality of some products. Visual inspection is the process of
examining products and their packaging to look for obvious problems with product quality.
Maintaining appropriate storage conditions and ensuring that damaged or expired products do
not reach a service delivery point where they could be inadvertently given to a client is
essential. To ensure the quality of the product in your warehouse and pipeline, conduct a visual
inspection when you do any of the following:

 Receive products from the manufacturer (usually at the central level)

 Conduct a physical inventory count
 Receive a complaint about a product you issued
 Identify a product that is about to expire
 Identify a damaged product
 Notice that a product has not been stored properly.

Two basic types of damage may occur during shipping and storage that affect product quality:
mechanical and chemical. Mechanical damage is caused by physical stresses, such as crushing
or tearing when the products are loaded, off-loaded, or when cartons or inner boxes are
stacked. This kind of damage is usually limited to crushed or torn parts. Chemical damage is
more difficult to detect and confirm during a visual inspection. Laboratory testing is usually
required. Some indications of chemical damage may include changes in the color, odor, or
consistency of the product.

Generally, mechanically-damaged items are removed from stocks; the remainder of the box, or
carton, is distributed as usual. Chemically-damaged items should be removed from inventory,
along with all like items (i.e., from the same lot), quarantined, and tested or disposed of
according to national guidelines.
Order Fulfillment

The activities that take place between the warehouse receiving the order and the consignee
taking possession of it is sometimes referred to as order fulfillment. Order fulfillment can be
divided into picking and packing and shipping.

Picking and Packing

To fill shipping requests (or picking lists), products must be located, pulled from inventory, and
prepared for shipment. But before that can take place, a request needs to be processed
through the inventory system to reserve those commodities that are available for picking. The
individual items that make up that order can then be picked from the storage locations
throughout the warehouse by warehouse staff and transported to a packing station. At the
packing station, staff will conduct a series of quality control checks to confirm that the right
products have been picked in the right quantity. To guarantee good shipping accuracy, the list
of products and their quantities must be checked against shipping orders, or requests, prior to
assembling the order into secure packing and making it ready for shipping.

Shipping

Shipping includes preparing commodities for shipment to customers and placing those
commodities on vehicles.

 After an order has been picked and packed, it will be ready for dispatch to the intended
recipient. At the dispatch location, the shipment will be weighed, labelled, and recorded
on a shipping manifest that provides a record of when the order was picked and when it
leaves the warehouse.
 In some cases, products need to be packed into shipping containers or palletized; and,
sometimes, bundled with other products into kits before being shipped. When any
packing or repacking activity takes place, the new package must be labeled correctly.
 To avoid damage during transit, products must be appropriately arranged and secured
within the vehicle.
  The last step in processing the order is to update the warehouse inventory to reflect
that the commodities have left the warehouse.

The routine of picking, packing and shipping operations should ideally follow a schedule that is
agreed upon between higher and lower levels in the supply chain and will depend on the
defined inventory strategy. Depending on the type of commodities being distributed and the
number of delivery points being serviced, the ordering frequency may vary. However, supply
chain managers should aim to have warehousing picking, packing, and shipping activities occur
on a regular schedule rather than in an ad hoc manner in order to gain efficiencies and to set
clear expectations for ordering and delivery for the warehouse staff as well as downstream
recipients.

Types of Warehouses

Warehouses can be classified into different types based on their purpose, ownership, and
functionality. Based on ownership, warehouses are classified into:

Private Warehouses

Private warehouses are owned and operated by individual companies for their exclusive use.
These facilities are often located near manufacturing plants or distribution centers, enabling
companies to have full control over their inventory and supply chain operations. Private
warehouses offer greater flexibility and customization options but require significant capital
investment and ongoing maintenance costs.

Public Warehouses

Public warehouses are owned and operated by third-party logistics providers who offer
warehousing and storage services to multiple businesses. These facilities are shared among
various companies, providing affordable storage solutions for those without the resources to
maintain their own warehouses. Public warehouses offer economies of scale, allowing small
and medium-sized businesses to access cost-effective storage options and benefit from shared
infrastructure and expertise.
Based on purpose and functionality, warehouses are classified into:

Cold Storage Warehouse

Cold storage warehouses are used for the storage of food items that require temperature-
controlled storage. Cold storage warehouses can be a standalone facility that is capable of
storing either climate-controlled storage (i.e., fresh fruits, meats, or vegetables) or frozen
storage. One of the critical considerations for operating a Cold Storage Facility is the
compatibility of the material handling equipment used with the items being stored and the
lower temperatures associated with cold storage facilities. A cold storage facility may be
collocated with a Dry Food Storage facility.

Dry Food Storage Warehouse

A Dry Food Storage Warehouse stores staple items such as canned goods and other food items
that do not require a “cold” temperature for long term storage. Just as there are considerations
for the equipment to facilitate the operation of a cold storage facility, the equipment used to
move dry storage food items require compatibility with the food items being stored. For
example, electric or propane forklifts are better for a dry food facility than gas-powered
forklifts.

General Supplies Warehouse

A General Supplies Warehouse is a facility that can handle almost any type of supply or
material. The limit to what can be stored in a General Supply Warehouse is the square footage
of the facility, the material handling equipment available, the size of the materials being stored,
and the compatibility of the items being stored.

Climate Controlled Facility

This type of facility differs from a Cold Storage Facility in that it is not designed or certified to
store food items. In the Kansas City, Missouri area, there are a number of caves used for
climate-controlled storage of items as diverse as old Hollywood movie props to old vintage films
and film canisters. The purpose of this type of facility is to provide protection for the items in
the warehouse that may deteriorate if stored at “room temperature” or in changing climatic
conditions.

Other miscellaneous warehouses include

Local Warehouse

The purpose of a local warehouse is to provision the stocks and materials closer to the
customer thus reducing the transit time for resupply of retailers or shorter transit time to the
customer.

Value Added/Service Center

The purpose of a value-added services center is to provide services not normally associated
with the warehouse or distribution center. The value-added center may be collocated with the
warehouse in order to provide overnight shipping coordination. In this case, the shipping
company such as UPS or FEDEX may collocate in the shipping area of the facility to speed the
shipment of overnight deliveries or parcel shipping.

Distribution Centers

Distribution centers are specialized warehouses designed to efficiently process and distribute
goods to various destinations. They are strategically located to optimize transportation
networks and reduce delivery lead times. Distribution centers often employ advanced
technologies, such as automated sorting systems and inventory management software, to
handle large volumes of goods and ensure rapid order fulfillment.

Inventory Management in Warehousing

Warehouses and any facility that stores products need to have inventory management systems
to maintain an appropriate stock level for all products to avoid shortages and oversupply.

In general, there are two methods for managing inventory in a warehouse—automated or

manual.
Manual Inventory Management

Warehouses often use manual inventory systems, which are hand-written stock keeping
records, such as ledgers, stock cards, and bin cards. Managing inventory manually is a low-cost
way to keep track of a limited number of stock keeping items (SKUs). A manual system is
organized according to date and transaction reference, which is the unique number of the
corresponding transaction record for a receipt or issue, and/or the name of the facility from
which products are received and issued. They record receipts; issues, losses, and adjustments;
balance on hand; and, sometimes, batch or lot numbers and expiry dates. They also record the
date and results of physical inventories; i.e., when items are counted to verify the quantity in
storage.

Automated Inventory Management

As the quantity and volume of commodities moving through or being stored in the warehouse
increase, automating inventory management might be considered if the benefits are enough to
justify the initial and ongoing costs. Automated systems are becoming more and more
appropriate for intermediate level warehouses as technology evolves and experience with
information and communication technology grows. However, their use must be carefully
considered based on human resources, ICT resources and skills, volume of transaction, number
of SKUs, and available budget.

An example of an automated inventory management is Warehouse Management System

(WMS). A WMS is primarily used to help manage materials within a facility and aids in
processing the associated transactions. When set up correctly, a WMS should direct picking,
replenishment, and put-aways and, if set up and used correctly, it can also do the following:

 Increase inventory accuracy.

 Increase labor productivity.
 Reduce reporting time.
  Reduce information errors.
 Optimize space utilization.
 Improve service to end users.

Warehouse De-Junking

Dejunking means removing all damaged and expired products, as well as other items that are
cluttering the warehouse or storage room—sometimes for many years—to free up space and
use best practices to organize the warehouse. The dejunking effort can create additional
storage space in warehouses, limiting the need for expensive new construction.
Functions of Warehousing and Storage

Warehousing and storage facilities fulfill several important functions in the supply chain. Some
of these functions include:

1. Inventory Management
Warehouses act as central hubs for managing inventory levels. They provide a buffer
between production and consumption, allowing businesses to balance supply and
demand effectively. By storing goods during periods of excess production or low
demand, warehouses help in stabilizing the flow of goods and preventing stock-outs or
overstock situations. Moreover, warehouses enable efficient allocation of inventory,
ensuring that goods are readily available for timely distribution.
2. Consolidation and Sorting
Warehouses serve as consolidation points, where goods from different sources are
combined into larger shipments for transportation to retailers or end-users. This process
eliminates the need for multiple smaller shipments, reducing transportation costs and
increasing efficiency. Warehouses also facilitate the sorting and segregation of products
based on various criteria, such as customer orders, destination, or specific
requirements.
3. Value Added Services
Modern warehouses offer various value-added services, such as packaging, labeling,
customization, and product assembly. These services enhance the product's value and
 allow businesses to meet specific customer demands efficiently. Additionally,
warehouses may provide quality control checks, ensuring that products meet the
required standards before they are dispatched.
4. Risk Mitigation
Warehouses act as a safeguard against unforeseen disruptions and uncertainties. By
storing excess inventory, businesses can hedge against supply chain disruptions caused
by production delays, transportation issues, or changing market demands. Warehouses
also provide a level of security against theft, damage, and natural disasters, protecting
valuable goods from potential losses.

5. Improved Order Fulfillment

Effective warehouse management ensures accurate and timely order fulfillment, leading
to enhanced customer satisfaction. By maintaining adequate inventory levels,
businesses can meet customer demands promptly, resulting in repeat business and
positive brand reputation.
6. Cost Optimization
Strategically located warehouses reduce transportation costs by minimizing the distance
between production facilities and end markets. Moreover, efficient inventory
management avoids unnecessary carrying costs and prevents stock-outs or overstock
situations. These cost optimizations contribute to improved profitability and operational
efficiency.
7. Adaptability to Market Demands
Modern warehouses are equipped with advanced technologies, such as real-time
inventory tracking systems and demand forecasting software. These tools enable
businesses to align their inventory levels and storage capacities with changing market
demands, minimizing the risk of excess or inadequate stock.
8. Integration of E-commerce
With the rise of e-commerce, warehouses have become key elements in the fulfillment
of online orders. E-commerce giants are increasingly investing in large-scale warehouses
 strategically located near major population centers to ensure quick and efficient
delivery. Furthermore, advanced warehouse automation technologies, such as robotics
and artificial intelligence, are being adopted to streamline e-commerce operations
further.

Problems faced by Warehouses in Nigeria

There are a number of problems faced by warehouses in Nigeria which can impact the smooth
running of operations and ultimately lead to lost productivity and revenue. Some of the main
problems include:

1. Lack of adequate storage space

This is often one of the biggest problems faced by warehouses in Nigeria. With a lack of
storage space, it can be difficult to keep track of inventory and ensure that products are
properly stored and protected.
2. Poor Lighting
Another common problem faced by warehouses in Nigeria is poor lighting. This can
make it difficult to see inside the warehouse, which can lead to accidents and injuries.
3. Lack of security
Unfortunately, many warehouses in Nigeria are not properly secured, which can lead to
theft and vandalism. This can be a major problem, as it can impact employees’ safety
and inventory security.
4. Electrical supply
Another issue faced by warehouses in Nigeria is the inconsistency of the electrical
supply. This can lead to disruptions in workflows and ultimately lost productivity.
5. Poor ventilation
Many warehouses in Nigeria do not have proper ventilation, which can lead to health
problems for employees. Additionally, it can also impact the quality of products stored
in the warehouse.
Warehousing and storage are indispensable components of the modern supply chain. Their
multifaceted functions, ranging from inventory management to value-added services, play a
vital role in ensuring operational efficiency and customer satisfaction. By embracing emerging
trends and leveraging advanced technologies, businesses can unlock the full potential of
warehousing and storage, achieving a competitive advantage in the dynamic global
marketplace. The effective utilization of these essential components will continue to shape the
future of logistics and supply chain management.

References

Freeman, R. (2012). "Warehousing and distribution in a logistics system." Springer Science &
Business Media.

Patil, A. L. & Rane, B. V. (2021). Significance of Warehousing in Supply Chain Management.

Journal of Oriental Research. ISSN: 0022-3301. Published 15 May, 2021

Rushton, A., Croucher, P., & Baker, P. (2014). "The Handbook of Logistics and Distribution
Management: Understanding the Supply Chain." Kogan Page Publishers.

The Supply Chain Manager’s Handbook: A Practical Guide to the Management of Health
Commodities. (2019). Journal of School Improvement.

“Warehouse,” WERCipedia, Warehousing Education and Research Council, www.werc.org,

accessed, August 30, 2010.