BA 4055 WAREHOUSE MANAGEMENT

UNIT-I INTRODUCTION WAREHOUSING

Introduction warehousing - Basic warehousing decisions - Warehouse Operations - Types of

Warehouses – Functions - Centralized & Decentralized - Storage systems - Warehousing Cost Analysis
- Warehouse Layout - Characteristics of Ideal warehouse

Storage Systems

1. Static Shelving

As the name suggests, static shelves are storage mechanisms that are designed to stay in one place. For
the most part, they are meant to hold inventory that is fairly lightweight (a few hundred pounds per shelf). It’s
commonly used for storing inventory that needs continuous replenishment.

2. Mobile Shelving

Similar to static shelving, mobile shelving is a completely adjustable solution that is meant to hold
your manually-picked items, but the difference here is that many of these systems are designed to hold more
items in less space. Without mobile shelving, shelves or cabinets are mounted on carriage and rail systems,
eliminating fixed aisles and increasing productivity by making inventory more accessible even when space is
tight.

3. Pallet Racking

For the business and largest warehouses, pallet racking systems are usually treated as the centerpiece
of the operation. Typically, pallet racking systems are made out of wood, metal or plastic and hold inventory
that is received in large boxes. Depending on the height, the boxes are placed on the pallet racking system
with the help of a forklift or an automated mechanism.

There are a variety of sub-categories of pallet racking systems, including carton-flow racking,
cantilever racking, coil racking, double deep racking, drive-in-racking, drive-through racking, high-bay
racking, mobile racking, narrow aisle racking, pallet live racking, pus back racking, shuttle racking, and
vertical racking. Most often, warehouses will choose systems based on weight limits, flexibility, and whether
or not the system demands a change in infrastructure.

4. Multi-Tier Racking

A great choice for large stocks of items that have small unit sizes, multi-tier racking is a system that is
designed to capitalize on vertical space. Because no warehouse is one-size-fits-all, many multi-tier racking
options are flexible, with the ability to add or remove tiers depending on current needs.
 5. Mezzanine Flooring

If you have the budget and your strategic warehouse layout allows for it, mezzanine flooring is an
effective and space-saving storage option. Essentially, mezzanine flooring is a second (or third, or fourth)
floor that is constructed above the main warehouse floor.

Because of the instructive nature of the build, tis is likely one of the more expensive options that a
warehouse can choose. But, it also hat the most potential for customized features, such as lighting, lift-systems
and conveyors.

WAREHOUSE COST ANALYSIS

Ascertaining these costs warrants a clear approach, which many organizations lack. Most firms inquire
about their operational costs from 3rd party Logistics (3PL) provides by soliciting requests for Quotations.
(RFQs). However, this does not give an idea of what these principal activities really cost. The most common
approaches to warehousing costing include:

• Benchmarking
• Clean sheet Analysis

Benchmarking

The benchmarking method uses a top-down approach to analyze costs based on industry benchmarks.
However, accessibility of benchmarks at lower levels is hard to access, since benchmarks available for
comparison are predominantly at high levels. E.g., Total warehouse cost as a proportion of cost of Goods
sold. Industry Benchmarking fails to take into considerations distinct product or service offerings.

Clean sheet Analysis

Clean sheet (or a Bottom-up Analysis) is a more comprehensive method to estimate warehousing costs.
It is a numerical approach to ascertain precise costs of critical components of warehousing operations,
including facility spread out, workforce and equipment. This method facilitates in understanding where
the costs exceeds and how it can be eliminated.

The clean sheet analysis comprises of 3 main steps:

o Ascertain critical Parameters

o Perform Bottom-up Calculations
o Determine Ideal throughput Metrics

WAREHOUSE LAYOUT

Designing a warehouse layout seems like a simple undertaking, but its actually quite complex. In fact,
the design and layout of your warehouse can make or break your operation’s productivity, impacting picking
time, labor hours, and even increasing safety risks through poor traffic flow.
CHARACTERISTICS OF IDEAL WAREHOUSE

An ideal warehouse constitutes of the following features:

i. Proper Location:

For effective movement of goods and cost saving, warehouse should be established at places, which
are convenient to both the buyer and the seller. These warehouses should be set up near railway stations,
major highways, seaports, and airports, where goods can be loaded and unloaded conveniently. It is also
recommended to have go downs in open places so that the vehicles can move around easily.

ii. Use of Mechanical Appliances:

In the warehouses, mechanical appliances should be used to load and unload the goods. It not only
results in safety of men and material but also reduces wastages in handling goods and overall handling
costs

iii. Sufficient Space:

For an ideal warehouse, adequate space should be covered for maximum storage and to keep the goods
in proper order. Each trader(big or small) would want that all of his merchandise should be accommodated
in one warehouse so that he need not travel to different places to manage the loading and unloading of his
goods.
 iv. Proximity to the Market:

The warehouses should be established at a place where market for raw materials and for selling finished
goods is as close as possible. This is the reason that big warehouses are close to commercial places or bus
stands.

v. Parking Facility:

Parking along road, public places in the urban/suburban areas to continue to be a harrowing experience
for the traders who visit from outstations. Hence, in warehouses, proper arrangements should be made
inside the premises to assist quick loading, unloading and safe parking.

vi. Safety Measures:

A warehouse, which basically is used to store eatables or perishable goods like bread, butter, fruits,
eggs and vegetables should be equipped with proper cold storage, moisture resistance etc., facilities.
Further, efforts should be made to secure the warehouse against possibilities of theft and damage from
heat, rainwater, insects, pests and fire. The use of fire extinguishers, safety alarms, budgets and round the
clock security arrangements should be there to secure warehouses from unforeseen mis-happenings.

vii. Economical:

The warehouse location, layout, construction and maintenance should be done in such a way that
ensures maximum storage of goods at minimum expense.

viii. Proper Management:

If warehouses are not managed properly, all the money spent will go waste. Mis management may lead
to theft, loss, errors and omissions of goods stored by various traders. Hence, a strict control over the
warehouse is essential on permanent basis. A permanent officer should be appointed for proper
arrangements of incoming and outgoing goods.
 UNIT-II

INVENTORY MANAGEMENT

Inventory – Basic Concepts – Role in Supply Chain – Role in Competitive Strategy – Independent
Demand Systems – Dependent Demand Systems – Functions – Types – Cost – Need for Inventory –
Just in Time

Inventory

According to True Tamplin, ”Inventory Management is the process of fixing lead minimum and
maximum limits of an inventory and determining the size of inventory to be maintained”.

Concepts of Inventory Management

o Ordering Products
o Receiving a shipment
o Storing inventory
o Minimizing Loss

Role in Supply Chain

1. Increase Customer Service

One of the most important supply chain roles and responsibilities is to manage customer service.
The customers should always get what they are looking for. Whether it is a product, a solution to their
issues, or answers to their questions. The international supply chain management team as to assure that
the customer service platform is accessible 24/7 so the customers will feel connected to the organization
they would like.

2. Reduce Production Cost

The first and most important thing managers have to do is to reduce the production cost of the
items. It is done by:

➢ Introducing machines in the industry

➢ Buy the raw materials directly from the factories or the wholesale markets.
➢ Reduce the number of rejected or failed items.
➢ Increasing the efficiency of the workforce.
3. Improve Quality of Products

It is a fact that the production cost of the products has to be reduced but at the same time, the
quality of the items has to be enhanced. It has to be assured that the raw material and manufacturing of the
items in high-class because only then customers will be attracted. They have to be durable, reliable, and
long- lasting, so they can give the best result in all supply chain management industries.
 4. Improve Financial Position

The company has to improve its financial status. It has to be assured that the customers will return
to buy the products once again because they are satisfied with the previous items. The supply chain
management has to work in such a way that

➢ The cash flow of the company will increase.

➢ The number of fixed assets will decrease.
➢ The profit leverage will increase.

It will make the customer believe that the company is progressing and showing positive results.

5. Development of Best Marketing Strategies

The supply chain management team has to develop the best marketing strategies for the
company to assure that its products will be present in the best possible way. Customers often decide
whether they would buy a certain item or not by looking at the advertisements shared on different
platforms.

ROLE IN COMPETITIVE STRATEGY

A well-planned competitive strategy can help a business make informed decisions and improve its
products or services sustainably. It also contributes to increased brand awareness, leading to a broader
customer base and overall company growth

ROLE OF COMPETITIVE STRATEGY

A competitive strategy is a long-term marketing plan that companies develop to defend their market
position and gain a competitive advantage.

Why is having a competitive strategy important?

The higher the competition in your industry, the harder it is to keep pace. When you enter a
concentrated market, you should set a high bar, or else you won't manage to compete with your business
opponents, especially with those who sell similar products.

To build a successful business in such a competitive environment, you should thoroughly analyze your
competitors' strengths, weaknesses, and advantages. Take into account all possible threats as well. Consider
researching the needs, problems, and preferences of your potential clients to cope with this task. They can tell
you what your current products lack so that you can enhance them accordingly. With a thought-out competitive
strategy, businesses can make more informed decisions and constantly improve their products or services.
Types of Competitive Strategies

1. Cost leadership strategy

It suits large businesses that can produce a big volume of products at a low cost, and that is why
Walmart implemented this strategy. It means that companies using a cost leadership strategy are the lowest
price sellers on the market. Hence, the cost price of a product should be low to make a profit. This is
possible with the help of large-scale production and high capacity utilization along with a variety of
distribution channels. The competitive advantage within this strategy is the lowest price.

2. Differentiation leadership strategy

This is a killer strategy that allows brands to stand out armong competitors. It requires identifying a
unique quality that makes a company different. With this strategy, businesses become superior to their
rivals on the market, which allows them to charge more for their products. Starbucks and Apple belong to
brands using this strategy.

3. Cost focus strategy

This strategy is similar to the cost leadership strategy in terms of providing customers with the lowest
price. The only difference is that a cost focus strategy implies targeting a specific market segment with its
unique needs and wants. This way, it's easier for companies to establish brand awareness. Companies using
this strategy often concentrate their efforts on geographic markets with special needs.

4. Differentiation focus strategy

Companies using this strategy also focus on specific market segments, but their driving force is the
unique value. While cost focus strategy means providing the lowest price in a small niche, differentiation
focus strategy means improving the product with the help of unique features that will make your company
stand out on the market. For example, there are a few hotels in Egypt or Turkey for adults only. This way,
people can relax and be sure that no child will bother them.

The Role of Competitive Advantage

• Differentiates the farm from its competitors

• Can create a sustainable competitive advantage
• Represents the company's focus on quality management to achieve continuous improvement
and meet customers' demand for quality

INDEPENDENT AND DEPENDENT DEMAND SYSTEM

Independent demand is the demand for a finished good, such as a car, while dependent demand is the
demand for a component part of a finished good, such as the tires on a car. Dependent demand is derived from
the demand for a finished good.
Independent vs. dependent demand

Independent demand:

• Influenced only by market conditions

• Independent, from operations
• Example: finished goods

Dependent demand:

• Related to the demand for another item with independent demand

• Example: product components, raw materials, labor

FUNCTIONS OF INVENTORY MANAGEMENT

1. Improve Productivity Efficiency

Inventory management software enables us to increase productivity and efficiency by implementing

automated daily manual tasks. This will assist you to maximize the growth of your business. The software
saves uncountable hours and gives the opportunity to print shipping labels, process and dispatch orders.
manage stock, create and update the listing on the system.

2. Avoid Stock-outs and Over-stock

When it comes to maintaining the balance sheet of inventories and its management, it is a difficult and
challenging task to handle. Case of less stock leads to stock-out which not only disrupt customer relation
but cause a possible loss whereas in case of over-stock its storage creates a problem. With inventory
management software installed, you can set a limit for re-ordering so that stock when drops it gets
automatically re-ordered.

3. Quality Management

The software has the ability to identify and track issues that can cause delayed shipment or broken
packages. Through the already feed data provides guidance to quality management.

4. Easy Inventory Management

The software makes the process of inventory management a lot easier which saves money and time
both. It assists to automate the business processes and guides to make smarter decisions.

5. Improved Profitability:

The software helps to reach the maximum amount for business investment. It uses marketing and
production to increase profits. With the software's ability to automatically operate the business in terms of
management of inventory possibility of fulfilling tasks efficiently and accurately, increases. It can be in
 any terms from managing stocks to updating lists on all channels. Then the processing orders will turn to
reduce expenses and maximize profitability.

6. Planned Management:

You can identify the possibilities of opening multiple stock storehouses located near the customers'
location. This will increase efficiency and improve service levels.

TYPES OF INVENTORY MANAGEMENT

COSTS OF INVENTORY MANAGEMENT

Ordering, holding, carrying, shortage and spoilage costs make up some of the main categories of
inventory-related costs. These groupings broadly separate the many different inventory costs that exist, and
below we will identify and describe some examples of the different types of cost in each category.

1. Ordering Cost

Ordering costs include payroll taxes, benefits and the wages of the procurement department, labor
costs etc. These costs are typically included in an overhead cost pool and allocated to the number of units
produced in each period.

• Transportation costs
• Cost of finding suppliers and expediting orders
• Receiving costs
• Clerical costs of preparing purchase orders
• Cost of electronic data interchange
2. Inventory Holding Cost

This is simply the amount of rent a business pays for the storage area where they hold the inventory.
This can be either the direct rent the company pays for all the warehouses put together or a percentage of
the total rent of the office area utilized for storing inventory.

• Inventory services costs

• Inventory risk costs
• Opportunity cost - money invested in inventory
• Storage space costs
• Inventory financing costs
3. Shortage Cost
Shortage costs, also known as stock-out costs, occurs when businesses become out of stock for
various reasons. Some of the reasons might be as below:
• Emergency shipments costs
• Disrupted production costs
• Customer loyalty and reputation
4. Spoilage Cost
Perishable inventory stock can rot or spoil if not sold in time, so controlling inventory to prevent
spoilage is essential. Products that expire are a concern for many industries. Industries such as the food
and beverage, pharmaceutical, healthcare and cosmetic industries, are affected by the expiration and use-
by dates of their products.
5. Inventory Carrying Cost
This is the lesser-known aspect of inventory cost. This cost requires a certain amount of calculation
to understand the extent of its impact on your P&L statement. Inventory carrying costs refers to the amount
of interest a business loses out on the unsold stock value lying in the warehouses.
NEED OF AN INVENTORY MANAGEMENT
1. Meet variation in Production Demand
Production plan changes in response to the sales, estimates, orders and stocking patterns. Accordingly
the demand for raw material supply for production varies with the product plan in terms of specific SKU as
well as batch quantities.
Holding inventories at a nearby warehouse helps issue the required quantity and item to production
just in time.
2. Cater to Cyclical and Seasonal Demand
Market demand and supplies are seasonal depending upon various factors like seasons; festivals etc.,
and past sales data help companies to anticipate a huge surge of demand in the market well in advance.
Accordingly they stock up raw materials and hold inventories to be able to increase production and rush
supplies to the market to meet the increased demand.
3. Economies of Scale in Procurement
Buying raw materials in larger lot and holding inventory is found to be cheaper for the company than
buying frequent small lots. In such cases one buys in bulk and holds inventories at the plant warehouse.
4. Take advantage of Price Increase and Quantity Discounts
If there is a price increase expected few months down the line due to changes in demand and supply
in the national or international market, impact of taxes and budgets etc., the company’s tend to buy raw
materials in advance and hold stocks as a hedge against increased costs.
Companies resort to buying in bulk and holding raw material inventories to take advantage of the
quantity discounts offered by the supplier. In such cases the savings on account of the discount enjoyed would
be substantially higher that of inventory carrying cost.
5. Reduce Transit Cost and Transit Times
In case of raw materials being imported from a foreign country or from a far away vendor within the
country, one can save a lot in terms of transportation cost buy buying in bulk and transporting as a container
load or a full truck load. Part shipments can be costlier.
In terms of transit time too, transit time for full container shipment or a full truck load is direct and
faster unlike part shipment load where the freight forwarder waits for other loads to fill the container which
can take several weeks.
There could be a lot of factors resulting in shipping delays and transportation too, which can hamper
the supply chain forcing companies to hold safety stock of raw material inventories.
6. Long Lead and High demand items need to be held in Inventory
Often raw material supplies from vendors have long lead running into several months. Coupled with
this if the particular item is in high demand and short supply one can expect disruption of supplies. In such
cases it is safer to hold inventories and have control.
JUST IN TIME
The just-in-time (JIT) inventory system is a management strategy that aligns raw-material
orders from suppliers directly with production schedules. Companies employ this inventory strategy to
increase efficiency and decrease waste by receiving goods only as they need them for the production process,
which reduces inventory costs. This method requires producers to forecast demand accurately.
JIT Inventory System
The just-in-time (JIT) inventory system minimizes inventory and increases efficiency. JIT production
systems cut inventory costs because manufacturers receive materials and parts as needed for production and
do not have to pay storage costs. Manufacturers are also not left with unwanted inventory if an order is
canceled or not fulfilled.
One example of a JIT inventory system is a car manufacturer that operates with low inventory levels
but heavily relies on its supply chain to deliver the parts it requires to build cars on an as-needed basis.
Consequently, the manufacturer orders the parts required to assemble the vehicles only after an order is
received.
For JIT manufacturing to succeed, companies must have steady production, high-quality
workmanship, glitch-free plant machinery, and reliable suppliers.
JIT Practices
The JIT methodology, also known as the Lean production model, is commonly associated with
manufacturers in post-World War II Japan. Faced with a lack of working capital and natural resources,
Japanese companies had to incorporate lean, efficient business practices into their manufacturing processes.
This meant building smaller factories and producing items in smaller batches, while paying close attention to
the efficiency of their production processes
E.g.
Toyota was at the forefront of the JIT effort in Japan, implementing JIT practices so successfully that the
company's approach became known as the Toyota Production System (TPS). According to TPS philosophy,
manufacturers are susceptible to seven types of waste:
1. Overproduction. More items are produced than are currently required by customers.
2. Waiting. Items sit waiting for other processes to complete before production can continue forward.
3. Inventory. The manufacturer has too much inventory on hand, requiring extra storage and
management.
4. Transportation. Materials or products are transported unnecessarily during the production process.
5. Processing. Inefficient processing results in unnecessary efforts, equipment or time spent in
production.
6. Motion. Workers move inefficiently and unnecessarily during the production process.
7. Defects. Defective products result in wasted time, materials and effort and can impact the company's
reputation.
Advantages of JIT
o Reduce Space Needed
o Smaller Investments
o Waste Elimination/reduction
Disadvantages of JIT
o Risk of Running out of stock
o Dependency on Suppliers
o More Planning Required
 UNIT-III

Inventory Control – ABC Inventory Control – Multi-Echelon Inventory Systems – Distribution

Requirement Planning – Bull Whip Effect – Using WMS for Managing Warehousing Operations

INVENTORY CONTROL
Inventory control also called the stock control is the process of ensuring the right amount of supply is
available in an organisation. With the appropriate internal and production controls, the practice ensures the
company can meet customer demand and delivers financial elasticity.

ABC INVENTORY CONTROL

ABC analysis is a method in which inventory is divided into three categories, i.e. A, B, and C in
descending value. The items in the A category have the highest value, B category items are of lower value
than A, and C category items have the lowest value.
Inventory control and management are critical for a business. They help to keep their costs under
control. The ABC analysis helps the business to control inventory by letting the management focus on the
highest value goods (the A-items) and not on the many low-value goods (the C-items).
 Item A:
In the ABC model of inventory control, items categorized under A are goods that register the
highest value in terms of annual consumption. It is interesting to note that the top 70 to 80 percent of
the yearly consumption value of the company comes from only about 10 to 20 percent of the total
inventory items. Hence, it is crucial to prioritize these items.
Item B:
These are items that have a medium consumption value. These amount to about 30 percent of
the total inventory in a company which accounts for about 15 to 20 percent of annual consumption
value.
Item C:
The items placed in this category have the lowest consumption value and account for less than
5 percent of the annual consumption value that comes from about 50 percent of the total inventory
items.
Policies Governing the ABC Method of Inventory Management
The idea behind using the ABC analysis is to leverage the imbalances of sales. This means that each
item must be given the appropriate amount of weight depending on their class:
Item A:
a) These are subjected to strict inventory control and are given highly secured areas in terms of storage
b) These goods have a better forecast for sales
c) These are also the items that require frequent reorders on a daily or a weekly basis
d) They are kept as a priority item and efforts are made to avoid unavailability or stock-out of these items
Item B:
a) These items are not as important as items under section A or as trivial as items categorized under C
b) The important thing to note is that since these items lie in between A and C, they are monitored for potential
inclusion towards category A or in a contrary situation towards category C
Item C:
a) These items are manufactured less often and follow the policy of having only one of its item on hand or in
some cases they are reordered when a purchase is actually made
b) Since these are low demand goods with a comparatively higher risk of cost in terms of excessive inventory,
it is an ideal situation for these items to stock-out after each purchase
c) The questions managers find themselves dealing with when it comes to items in category C is not how
many units to keep in stock but rather whether it is even needed to have to these items in store at all.

Advantages of ABC Inventory Control

✓ This method helps businesses to maintain control over the costly items which have large amounts of
capital invested in them.
 ✓ It provides a method to the madness of keeping track of all the inventory. Not only does it reduce
unnecessary staff expenses but more importantly it ensures optimum levels of stock is maintained at
all times.
✓ The ABC method makes sure that the stock turnover ratio is maintained at a comparatively higher
level through a systematic control of inventories.
✓ The storage expenses are cut down considerably with this tool.
✓ There is provision to have enough C category stocks to be maintained without compromising on the
more important items.
Disadvantages of ABC Inventory Control
✓ For this method to work and render successful results, there must be proper standardization in place
for materials in the store.
✓ It requires a good system of coding of materials already in operation for this analysis to work.
✓ Since this analysis takes into consideration the monetary value of the items, it ignores other factors
that may be more important for your business. Hence, this distinction is vital.

ABC Analysis
Benefits of ABC Analysis

Multi-Echelon Inventory Systems

A multi-echelon inventory system is one that relies heavily on layers of suppliers distributed across
multiple distribution centers and that is based on outsourced manufacturing. In such a system, new inventory
shipments are first stored at a central or regional distribution center (RDC).
Multi-Echelon Inventory Optimization:
Multi-echelon inventory optimization (MEIO) right-sizes safety stock buffers across the entire supply
chain, taking into account the complex interdependencies between stages, as well as variables that cause
chronic excess inventory, such as long lead times, demand uncertainty, and supply volatility.
However, there are some significant issues in optimizing a multi-echelon inventory system:-
✓ Demand variation measure for the RDC.
✓ Demand measure for the RDC, and how to forecast this demand.
✓ Defining optimal service level goals between the RDC and its “customers” - the DCs.
✓ Allocation of inventory down to the DCs when faced with a limited supply situation at the RDC.

Managing Inventory in Multi-Echelon Networks:

The objective of multi-echelon inventory management is to deliver the desired end customer service
levels at minimum network inventory, with the inventory divided among the various echelons. With the
primary focus on inventory, transportation and warehouse operations expenses also are taken care of, because
their cost factors are part of the overall optimization.
The inventory drivers are
• Replenishment review frequency
• Order supply strategy
• Service level goal
With a multi-echelon approach, the decisions regarding the inventory drivers are made at the enterprise level
in a single optimization exercise rather than in a sequence of sub-exercises for each echelon.
A multi-echelon approach optimizes the networks inventory on various counts:-
• Avoid multiple independent forecast updates per echelon:
The forecasts in all echelons are dependent on the primary customer demand signal at the DCs. A
multi-echelon approach, however, is independent of demands from the immediate downstream
customer.
• Account for all lead times and its variations:
In each echelon, the replenishment decisions account for lead times and its variations of all
upstream suppliers, not just the immediate suppliers.
• Monitor and manage the bullwhip effect:
The enterprise measures the demand distortion and determines the respective root cause in order
to take corrective measures.
• Enable visibility up and down the demand chain:
Each echelon takes advantage of visibility into the other echelon’s inventory positions—what is
on hand, on order, committed and back ordered.
• Synchronizing order strategies:
Synchronizing the ordering cycles at the DCs with RDC operations reduces lead times and lead
time variation between the RDC and the DCs. Multi-echelon models can evaluate the impact on both
echelons of different synchronization strategies.
• Offering differentiated service levels, etc.:
The RDC can provide different service levels (for the same product) to different DCs. A multi-
echelon approach makes this possible, because the enterprise controls how and when a product enters and
leaves the RDC.

DISTRIBUTION REQUIREMENT PLANNING

Distribution requirement planning is the extension of Extension Requirement Planning. It is a process
to make the delivery of goods efficient by determining its quantity and the location where it is more required.
Basically, it is the application of MRP principles to the distribution environment, integrating the special needs
of distribution.
It is utilized by the firms to ensure the availability of right amount of materials at the right time and
right place. It uses time phased schedule so that it can ensure the timely production of end product. The key
elements in DRP is :
1) Demands
2) Current Inventory levels
3) Target safety stock
4) Quantities
5) Replenishment lead times.
Terminologies related to DRP
A few related terms need to know before proceeding are,
• Production schedules
It is a business term used in operations management that refers to manufacturing or assembling
products in a factory according to a specific timetable.
• Supply chain
It is the network of organizations involved in creating and efficiently delivering a product or service.
• Customer demand
It is how much of a product or service customers are requesting.
• Distribution center
It is a facility that receives, stores, and distributes products to retailers or other businesses.
Distribution Requirement Planning Process
1. Establish delivery centers and supply locations
2. Identify market demand and distribution planning parameters
3. Plan for specific inventory control parameters
4. Determine allocation requirements and resource requirements
5. Generate a disbursement plan
6. Evaluate results and make necessary adjustments
Distribution Network

DC is a facility that receives, stores, and distributes finished goods to retailers and other businesses. It is the
backbone of the logistics network, and it is essential to have one or more delivery centers to serve consumers
effectively.
Many factors go into choosing the optimal locations for centers. Some of the most important factors include:
• The distribution network map includes the distribution centers, suppliers, and buyers. Therefore, it
should be easy to identify where each entity is located and connected.
• The customer base is essential to consider where most of your customers are located. This will help
you determine how many locations for holding goods you need and how far apart they should be.
• The distribution network topology – This is how the locations are connected. There are three main
topologies: radial, star, and mesh. It can also be a tree-like structure.
• The distribution requirements include the number of products, the weight and dimensions of
products, and the delivery time.
• The transportation network includes the modes of transportation (road, rail, water, and air), the
distance between warehouses, and the delivery time.
• Labor availability – It is vital to ensure enough workers are available at the allocation center when it
opens.
• Cost – The warehouse should be located where the price is the lowest.
Strategies for DRP Success
An effective distribution center (DC) network is also essential for getting products to customers
quickly and efficiently.
Finally, having a well-run inventory management system is critical for ensuring that products are available
when customers need them while minimizing shortages.
Six must-consider ideas while making supply chain optimization strategies are,
1. Adjusting the warehouse locations
2. Planning production schedule
3. Allocating resources to meet disbursement demands
4. Minimizing shortages and maximizing customer satisfaction
5. Set safety stock levels.
6. Considering disbursement requirements in inventory control
The supply chain strategies should try to achieve the following.
▪ Distribute products quickly and efficiently
▪ Minimize shortages
▪ Follow key tips for success
Key Parameters for distribution requirements plans
Some of the key parameters for supply chain distribution requirements plans include:
❖ Customer orders
❖ Safety stock
❖ Inventory management
❖ Central planning
❖ Central facility
❖ Distribution planning
❖ Supplying location
❖ Actual demand signals
❖ Minimize shortages
❖ Regional facilities
Software Tools for Distribution Requirement Planning
Few software solutions that enable DRP are,
– Microsoft Dynamics AX
– Oracle EBS distribution
– Infor Distribution Planning
– JDA Distributed Order Management
– SAP Distributed Order Management
– Manhattan SCALE
Some of the benefits of using this software include:
– Increased accuracy and timeliness of data
– Improved network design
– More effective inventory control
– Easier compliance with government regulations

Bullwhip Effect
The bullwhip effect is a concept for explaining inventory fluctuations or inefficient asset allocation as
a result of demand changes as you move further up the supply chain. As such, upstream manufacturers often
experience a decrease in forecast accuracy as the buffer increases between the customer and the manufacturer.
To minimize the Bull Whip Effect
1. Accept and understand the bullwhip effect
The first and the most important step towards improvement is the recognition of the presence of
the bullwhip effect. Many companies fail to acknowledge that high buffer inventories exist throughout
their supply chain. A detailed stock analysis of the inventory points from stores to raw material suppliers
will help uncover idle excess inventories. Supply chain managers can further analyze the reasons for excess
inventories, take corrective action and set norms.

2. Improve the inventory planning process

Inventory planning is a careful mix of historical trends for seasonal demand, forward-looking
demand, new product launches and discontinuation of older products. Safety stock settings and min-max
stock range of each inventory point need to be reviewed and periodically adjusted. Inventories lying in the
entire network need to be balanced based on regional demands. Regular reporting and early warning
system need to be implemented for major deviations from the set inventory norms.

3. Improve the raw material planning process

Purchase managers generally tend to order in advance and keep high buffers of raw material to
avoid disruption in production. Raw material planning needs to be directly linked to the production plan.
Production plan needs to be released sufficiently in advance to respect the general purchasing lead times.
Consolidation to a smaller vendor base from a larger vendor base, for similar raw material, will improve
the flexibility and reliability of the supplies. This, in turn, will result in lower raw material inventories.

4. Collaboration and information sharing between managers

There might be some inter-conflicting targets between purchasing managers, production managers,
logistics managers and sales managers. Giving more weight to common company objectives in
performance evaluation will improve collaboration between different departments. Also providing regular
and structured inter-departmental meetings will improve information sharing and decision-making
process.

5. Optimize the minimum order quantity and offer stable pricing

Certain products have high minimum order quantity for end customers resulting in overall high
gaps between subsequent orders. Lowering the minimum order quantity to an optimal level will help
provide create smoother order patterns. Stable pricing throughout the year instead of frequent promotional
offers and discounts may also create stable and predictable demand.
WAREHOUSR MANAGEMENT SYSTEM
A warehouse management system (WMS) is a software solution that offers visibility into a business’
entire inventory and manages supply chain fulfillment operations from the distribution center to the store shelf.
A WMS, or warehouse management system, is software that helps companies manage and control
daily warehouse operations, from the moment goods and materials enter a distribution or fulfillment center
until the moment they leave. WMS software systems are a key component of supply chain management and
offer real-time visibility into a company’s entire inventory, in warehouses and in transit. In addition to
inventory management, a WMS offers tools for picking and packing processes, resource utilization, analytics,
and more.
Benefits of a warehouse management system
A robust, digital warehouse management system is essential for any business with on-hand inventory – and
can help save money and gain new efficiencies in many areas. The top five benefits of a WMS system are:
1. Improved operational efficiency:
WMS systems automate and streamline warehouse processes from inbound receipts to outbound
deliveries – for improved efficiency, smoother operations, and the ability to handle higher volumes. They
reduce errors in picking and shipping goods and eliminate duplicate and unnecessary work. A WMS also
shares data with ERP and transportation management systems, giving you a holistic outlook that extends
beyond your warehouse and helps expedite the movement of goods.
2. Reduced waste and costs:
If you have date-restricted or perishable stock, WMS software can identify which items need to be
picked first, or which might need a sales push, to minimize waste. It can also help you determine the most
effective use of warehouse space, from inventory placement to optimal travel paths. Some systems offer
advanced simulations to create floor plans and place pallets, shelves, and equipment in the best locations
to run at peak efficiency and save time and money.
3. Real-time inventory visibility:
Using barcoding, RFID tagging, sensors, or other location tracking methods, a WMS system gives you
real-time insight into your inventory as it moves into your warehouse, around it, and on to the next location.
With this visibility, you can create more accurate demand forecasts, run a just-in-time inventory strategy,
and improve traceability – which is especially important in the event of a recall.
4. Improved labor management:
A WMS can help you forecast labor needs, create schedules, optimize travel time within a warehouse,
and assign the right task to the right employee based on skill level, proximity, and other factors. A good
WMS system can also assist in boosting employee morale by creating a more relaxed, organized, and safe
environment where workers feel their time is valued and being used wisely.
 5. Better customer and supplier relationships:
With a WMS, customers enjoy improved order fulfillment, faster deliveries, and fewer inaccuracies –
which increases their satisfaction and loyalty and improves your brand reputation. Suppliers can also
experience reduced wait times at loading bays and docks, for improved relations.
Types of warehouse management systems
There are three main types of WMS software: Standalone (on-premise and often a homegrown legacy
system), cloud-based, and applications built into ERP or supply chain management platforms (either on-
premise or hosted in the cloud). Each type of WMS has advantages and drawbacks, and the best type will
differ from business to business:
1. Standalone WMS: These systems are usually deployed on the company’s own premises using their
own hardware. They can generally support greater customization (though these can be costly) and the
organization can maintain tighter control over their data and software. Although the initial cost of the
system is substantially higher than other options, once a company owns it, they own it. At the same
time, updates, maintenance, and the costs associated with them are the responsibility of the
organization. As the WMS ages, it becomes increasingly difficult to integrate with other platforms and
to implement new technologies.
2. Cloud WMS: Cloud-based WMS systems can be rapidly deployed with lower up-front costs.
Delivered as software-as-a-service (SaaS), they provide more flexibility to support seasonal and other
changing market conditions – and they are easier to scale as companies grow. Through regular updates,
warehouse management in the cloud offers a quicker path to innovation. And someone else takes on
the burden of maintaining and updating the system. SaaS vendors also invest a lot of money and
expertise into security measures and provide disaster recovery capabilities. Cloud warehouse
management systems can also be more easily integrated with other solutions.
3. Integrated ERP and SCM-based WMS: Some warehouse management systems are built as modules
or applications that integrate with ERP and supply chain platforms. The advantage of these is that they
are able to play better with other solutions in overlapping areas, such as accounting and business
intelligence. They provide a holistic view across the business and logistics chain to allow for end-to-
end transparency and for warehousing and logistics processes to be orchestrated and executed together.
Ultimately these capabilities can be used to optimize operations and provide fast, agile fulfillment
experiences.
Warehouse Operations
The six fundamental warehouse processes comprise receiving, put away, storage, picking, packing,
and shipping. Optimizing these six processes will allow you to streamline your warehouse operation, reduce
cost & errors, and achieve a higher perfect order rate.
1. Receiving
Receiving is the first warehouse process and one of the most crucial. To perform the receiving process
properly, the warehouse should be able to verify that it has received the right product, in the right quantity, in
the right condition, and at the right time. Failing to do so will have consequent impacts on all subsequent
operations

Receiving also involves the transfer of responsibility for the goods to the warehouse. This places
accountability on the warehouse for maintaining the condition of the goods until they are shipped. Properly
receiving cargo will allow you to filter out damaged goods and avoid liability for them.
2. Put-Away
Put-away is the second warehouse process and is the movement of goods from the receiving dock to
the most optimal warehouse storage location. Failing to place goods in their most ideal location can impair
the productivity of warehouse operation. When goods are put away properly, there are several benefits:
– Cargo is stored faster and more efficiently
– Travel time is minimized
– Safety of goods and employees is ensured
– Warehouse space utilization is maximized
– Cargo is easier and faster to find, track, and retrieve
3. Storage
Storage is the warehouse process in which goods are placed into their most appropriate storage space.
When done properly, the storage process fully maximizes the available space in your warehouse and increases
labor efficiency.
4. Picking
Picking is the warehouse process that collects products in a warehouse to fulfill customer orders. Since
it is the costliest process in the warehouse, comprising as much as 55% of the total operating expense,
optimizing this process will allow you to reduce costs significantly and increase your warehouse efficiency.
Streamlining of this process should also focus on achieving higher accuracy, as errors can have a direct impact
on your customer satisfaction.
5. Packing
Packing is the warehouse process that consolidates picked items in a sales order and prepares them for
shipment to the customer. One of the primary tasks of packing is to ensure that damages are minimized from
the time items leave the warehouse. Additionally, packaging must be light enough so as not to increase the
weight of the goods and minimal enough to control packaging costs.
6. Shipping
Shipping is the final warehouse process and the start of the journey of goods from the warehouse to
the customer. Shipping is considered successful only if the right order is sorted and loaded, is dispatched to
the right customer, travels through the right transit mode, and is delivered safely and on time.
Previous processes, such as ordering, putaway, picking, and packing, are also vital to the success of
shipping because they greatly affect whether the order is fulfilled accurately and safely.
 UNIT-IV

Principles and Performance Measures Of Material Handling Systems – Fundamentals of

Material Handling – Various Types of Material Handling Equipments – Types of Conveyors –
Refrigerated Warehouses- Cold Chain- Agri SCM

MATERIALS HANDLING SYSTEMS

Material handling is the movement, protection, storage and control of materials and products
throughout manufacturing, warehousing, distribution, consumption and disposal. As a process, material
handling incorporates a wide range of manual, semi-automated and automated equipment and systems that
support logistics and make the supply chain work. Their application helps with:
• Forecasting
• Resource allocation
• Production planning
• Flow and process management
• Inventory management and control
• Customer delivery
• After-sales support and service
Usage of Material Handling Equipment
There is a variety of manual, semi-automated and automated material handling equipment and
technologies available to aid in the movement, protection, storage and control of materials and products
throughout manufacturing, distribution, consumption and disposal. These include:
• Automated storage and retrieval systems
• Automatic guided vehicles (AGVs)
• Automatic identification and data collection
• Casters and wheels
• Controls
• Conveyors
• Dock equipment
• Ergonomics
• Hoisting equipment
• Industrial robots
• Integrated material handling systems
• Item order fulfillment systems
• Lift trucks
• Monorails and workstation cranes
 • Overhead cranes
• Packaging
• Protective guarding
• Racks
• Software
• Sortation
• Storage
Principles of Material Handling
When designing a material handling system, it is important to refer to best practices to ensure that all
the equipment and processes—including manual, semi-automated and automated—in a facility work together
as a unified, system. By analyzing the goals of the material handling process and aligning them to guidelines,
such as the 10 Principles of Material Handling, a properly designed system will improve customer service,
reduce inventory, shorten delivery time, and lower overall handling costs in manufacturing, distribution and
transportation. These principles include:

1. Planning: Define the needs, strategic performance objectives and functional specification of the
proposed system and supporting technologies at the outset of the design. The plan should be developed
in a team approach, with input from consultants, suppliers and end users, as well as from management,
engineering, information systems, finance and operations.
2. Standardization: All material handling methods, equipment, controls and software should be
standardized and able to perform a range of tasks in a variety of operating conditions.
3. Work: Material handling processes should be simplified by reducing, combining, shortening or
eliminating unnecessary movement that will impede productivity. Examples include using gravity to
assist in material movement, and employing straight-line movement as much as possible.
4. Ergonomics: Work and working conditions should be adapted to support the abilities of a worker,
reduce repetitive and strenuous manual labor, and emphasize safety.
5. Unit load: Because less effort and work is required to move several individual items together as a
single load (as opposed to moving many items one at a time), unit loads—such as pallets, containers
or totes of items—should be used.
6. Space utilization: To maximize efficient use of space within a facility, it is important to keep work
areas organized and free of clutter, to maximize density in storage areas (without compromising
accessibility and flexibility), and to utilize overhead space.
7. System: Material movement and storage should be coordinated throughout all processes, from
receiving, inspection, storage, production, assembly, packaging, unitizing and order selection, to
shipping, transportation and the handling of returns.
 8. Environment: Energy use and potential environmental impact should be considered when designing
the system, with reusability and recycling processes implemented when possible, as well as safe
practices established for handling hazardous materials.
9. Automation: To improve operational efficiency, responsiveness, consistency and predictability,
automated material handling technologies should be deployed when possible and where they make
sense to do so.
10. Life cycle cost: For all equipment specified for the system, an analysis of life cycle costs should be
conducted. Areas of consideration should include capital investment, installation, setup, programming,
training, system testing, operation, maintenance and repair, reuse value and ultimate disposal.
Performance Measures of material Handling Systems
The number of loads completed is considered as a performance measure. Some industry measures the
time required for the material handling system to deliver a specified set of loads. The mean load waiting time
is defined as the mean time loads wait in queues for material handling transportation.
REFRIGERATED WAREHOUSES
We can define the Refrigerated Warehouse as an industrial complex consisting of facilities and
equipment intended permanently or temporarily for the storage of refrigerated food and maybe an autonomous
refrigeration industry, connected to another larger center or with annexes to its activities
Reefer Container
A reefer is the term used to refer to a truck, trailer, or shipping container that is equipped with a
refrigeration unit for the transportation of temperature sensitive cargo. For LTL shipments, the common
options available are to keep the freight in a "cool" or "fresh" temperature range, or a frozen temperature
range. The "cool" range is typically used for freight such as fresh produce or other perishable items. If shipping
a Truckload in a reefer unit, a more specific range can be requested.
Reefer Ship
A reefer ship is a refrigerated cargo ship; a type of ship typically used to transport perishable
commodities which require temperature-controlled transportation, such as fruit, meat, fish, vegetables, deiry
products and other foods.
Reefer Truck
A refrigerator truck is a van or truck designed to carry perishable freight at specific temperatures. Like
refrigerator cars, refrigerated trucks differ from simple insulated and ventilated vans (commonly used for
transporting fruit), neither of which are fitted with cooling apparatus.
Refrigerator trucks can be ice-cooled, equipped with any one of a variety of mechanical refrigeration systems
powered by small displacenient diesei engines, or utilize carbon dioxide (either as dry ice or in liquid form)
as a cooling agent.
COLD CHAIN
A cold chain is a low temperature-controlled supply chain network. An unbroken cold chain is ant
uninterrupted series of refrigerated production, storage and distribution activities, along with associated
equipment and logistics, which maintain quality via a desired low-temperature range.
Elements of the cold chain
Temperature-sensitive products must be kept cold at every link of the cold chain. The chain has many
components, including the following:
Storage
Contrary to popular belief, the cold chain doesn't start when temperature-sensitive products leave a
manufacturer's premises. It starts with the storage of the products at a refrigerated facility. If manufacturers of
cold chain products don't have storage equipment needed to keep their products cold, they'll have to farm out
their cold chain operations to a partner who can provide the equipment. Many 3PL companies offer warehouse
facilities for the storage of cold chain products for some time,
whether at an intermediary location for easy distribution to the local market or awaiting shipping to a distant
market.
Some common types of cold storage equipment and facilities include refrigerated containers, cold
rooms, chillers, cold boxes, blast freezers, and vaccine carriers.
Packaging
For temperature-controlled products to maintain their quality during shipment, they have to be
packaged correctly. Proper packaging helps minimise the risk of product contamination but also ensure
energy- efficient storage of products along the cold chain.
Monitoring
Suppliers of cold chain products may need to keep track of specific types of information about their
shipment, depending on the type of products they manufacture. This information includes temperature ranges
and other environmental parameters, such as humidity levels that can compromise the integrity of temperature-
sensitive cargo. Armed with this information, shippers can audit their supply chain processes to detect
environments and activities that lead to inefficiencies.
AGRI SCM
▪ Agri-SCM assists farmers and agribusinesses in managing crop activities.
▪ Easy to collect, store and analyze data from all agricultural activities (planting, harvesting,
▪ fertilizing, etc.)
▪ Specific step-by-step instructions to comply with VietGAP, GlobalGAP or GS1 standards.
▪ Analyze quality and optimize crops.
▪ 100% free for farmers.
BENEFITS
▪ Increase productivity and profits.
▪ Minimize management costs.
▪ Secure and private data storage.
▪ Automate schedules for farmers, intermediaries and supervisors.
▪ Assign responsibilities to all systems.
▪ Allow customers to review product information.
▪ Reduce manpower.
 UNIT-V

Modern Warehousing – Au mated S rage & Retrieval Systems & their Operations – Bar Coding
Technology & Applications in Logistics Industry – RFID Technology & Applications – Advantages of
RFID
MODERN WAREHOUSING
Some popular technologies being integrated into the modern warehouse include Internet of Things
(IoT), Robotics for picking, sorting, and handling of SKUs, Augmented Reality (AR), Radio Frequency
Identification (RFID), drones for inventory monitoring, and blockchain for data encryption.
Modern warehouses are incorporating physical changes, as well as operational ones. Here are a few of
the trends that warehouses are or soon will be-adopting to remain efficient and competitive links in an ever-
evolving supply chain.

Some popular technologies being integrated into the modern warehouse include Internet of Things
(IoT). Robotics for picking, sorting, and handling of SKUs. Augmented Reality (AR), Radio Frequency
Identification (RFID), drones for inventory monitoring, and blockchain for data encryption

AUTOMATED STROAGE & RETRIVAL SYSTEM OPERATION

Automated storage and retrieval systems (AS/RS) are computer- and robot-aided systems that can
retrieve items or store them in specific locations. The system is usually comprised of predefined locations
where machines can follow established routes to get items.

As long as everything is stored in its proper location, these systems help to speed up manufacturing
and shipping tasks. Typically, automated storage and retrieval systems are used when high volume loads must
be moved rapidly and accurately. Let's explore the main types of AS/RS systems, how they work and their
advantages and disadvantages.

Types of automated storage and retrieval systems and examples

The two primary types of AS/RS include unit-load and mini-load systems. Unit-load AS/RS is used for large
loads such as handling full pallets or cases of items. Unit-load AS/RS handle the big jobs that may require
moving objects or pallets that weigh a few thousand pounds. A typical unit-load AS/RS uses moveable-aisle
cranes or fixed-aisle cranes:

• Fixed-aisle cranes usually stay fixed to one area or row of pallets, in this scenario. They travel along
the designated area or path to retrieve items. Moveable-aisle cranes are similar, but they're designed
to retrieve or store items in multiple areas instead of along one path or aisle.
• Mini-load AS/RS, such as case-handling or tote-stacking systems, are smaller cranes or robots that
handle lightweight loads such as trays or cartons. Mini-load AS/RS typically use cranes or shuttles:
Mini-load AS/RS cranes move along narrow aisles to retrieve or store products. It's essentially a much smaller
version of a fixed-aisle crane.

• Mini-load AS/RS shuttles run along a track and deliver items or move them between automated
racking systems. Imagine a small flatbed truck that runs out and grabs a box, tote or tray for you. They
can work at multiple levels if designed for the job, but most of them run along a single path.
• Other types of AS/RS include carousel-based systems and vertical lift modules. Carousel-based
AS/RS retrieve and store products with the help of an inserter extractor. The carousel spins until the
shelf or bin is in the proper position for the inserter extractor to either place or remove the item. This
system can usually move vertically or horizontally in a fixed area. Most carousel-based automated
storage and retrieval systems handle smaller jobs than heavy lifters like unit-load systems.
• Vertical lift modules (VLM) work in a similar fashion to carousel-based systems. In this case, the
inserter extractor is located in the center of an enclosed structure and is surrounded by columns of trays
on both sides. It locates the correct tray and delivers it to an operator who then completes the order
and returns the tray.

Automated Storage And Retrieval Systems Work

Each type of AS/RS operates in slightly different ways, all with the goal of speeding up warehouse
processes. Each type of system outlined above automates the process of storing products in appropriate
bins, shelves or other storage locations or retrieving items or loads from storage areas. They reduce the
time and manpower needed retrieve and store items.

Advantages Dis Advantages

▪ Automated storage and retrieval systems offer a
few advantages, including:
▪ Reduced labor costs
▪ Improved accuracy. productivity efficiency and
▪ Reduced safety risks for employees (reducing the
need to lift and move heavy or bulky items)
▪ AS/RS can work in environments that aren't ideal
for human workers, such as freezer storage areas.
They can function at heights. that are difficult for
human workers to navigate. as well, allowing
warehouse operators to maximize floor space by
making better use of vertical space.
▪ Despite their advantages, there are several
downsides to AS/RS solutions.
▪ The equipment is often large and bulky, requiring a
significant upfront investment and substantial
changes the warehouse
▪ infrastructure and layout.
▪ Regular equipment maintenance is required to keep
AS/RS systems functioning at peak performance.
▪ When breakdowns do occur, productivity suffers
substantially, sometimes grinding operations to a
halt.
▪ Finally, warehouses that handle varying products at
different times, such as seasonal items, may
experience decreased productivity during these
transitions while retraining the AS/RS to fetch or
move new products.
Right Automated Storage And Retrieval System
To keep pace with consumer demand, retain their competitive edge and maintain a robust bottom line,
businesses need to utilize every square inch of warehouse space effectively, maximize asset utilization and
improve labor efficiency. To this end, some businesses choose to deploy AS/RS systems to automate
warehousing and streamline product storage and retrieval operations.
However, the complexity of even the most basic AS/RS systems makes choosing the right one a very
challenging task. To simplify the selection process, let's review some of the features and factors to look for.
Reliable software
ASRS systems have four major components: Storage and retrieval (S/R) equipment
▪ Input/output system Storage rack
▪ Computer management system
▪ The computer management system handles the loading and unloading of SKUS in an AS/RS system
via a dedicated software that keeps track of inventory details such as:
✓ The specific location of items
✓ How long they were in storage
✓ Where these items came from
The right AS/RS should come with robust and well-designed software to facilitate seamless scheduling of
retrieval and storage operations. All instructions to the AS/RS system are passed through this software, so you
must ensure that it's easy to use, reliable and free of technical glitches.
Height and weight limitations
While AS/RS systems can be customized to handle virtually any type of item, certain types of systems
are best for certain products. The system must be able to handle the maximum weight per unit load for your
operations (approximately 5500 lb). Shuttle and mini-load systems are designed to handle small loads (totes,
cases, etc.) while unit load AS/RS systems are ideal for heavier weights (large totes, drums, pallets, etc.)
The vertical length should also match the overhead space of your facility. The most common types of
storage racks are approximately 40 feet, although some systems can reach up to 100 feet. The higher you build
your AS/RS system, the less expensive (per vertical foot) it becomes.
Speed
The right AS/RS system should occupy a small footprint (to maximize floor space) and come with multiple
speed options that can comfortably handle picking and order fulfillment operations during peak demand
periods. For e-commerce operations, it's best to deploy a system with a high-speed buffer designed for quickly
moving high load volumes in and out of storage. Since inventory accuracy is extremely high, companies can
lower the amounts of safety stock in storage and reduce work-in-process (WIP) inventory, allowing them to
accommodate more SKUs in the same warehouse space and offer customers more product choices and faster
fulfillment times.
Customer Service
Always purchase an AS/RS system from a vendor that offers fast and reliable customer service. In the
event of technical issues, a non-functioning AS/RS system can create a domino effect of stoppages, reduced
productivity and unfulfilled orders that can disrupt supply chains and result in an unsatisfied customer base.
The ability to get professional help quickly is critical to your reputation and bottom line.
Automated storage and retrieval systems (AS/RS) cost
As with most warehouse automation systems, the cost of an automated storage and retrieval systems
can vary widely. The cost is dependent on several factors but can range from $70K for one standalone vertical
carousel to more than $5 million for a fully integrated mini-load system that manages tens of thousands of
SKUS.
Some of the factors that influence the final cost of an AS/RS system include:
✓ The cost of the AS/RS equipment itself and weight of products to be handled
✓ Overall size Storage space
✓ Operating environment (AS/RS systems for climate controlled and cleanroom environments cost much
✓ more)
✓ Special handling requirements
✓ Required throughput
✓ The complexity of the software and machine controls The cost of customizing and reconfiguring the
equipment and your facility to maximize benefits
✓ Cost of shipping, delivery and installation of the system
✓ Integration with existing processes

BAR CODING TECHNOLOGY

A barcode is a printed series of parallel bars or lines of varying widths used to input data into a
computer system. The bars are usually black on white, and their width and quantity vary depending on the
application. The bars are used to represent the binary digits 0 and 1, which can then represent numbers ranging
from 0 to 9 and processed by a digital computer.
The computer interprets the presence or absence of a bar of a specific width in a specific position in a
sequence as a 0 or 1. Most of such codes use bars with only two widths (thick and thin), though some use four
widths. A barcode's representation of numbers are also printed out at its base.
Types of Barcode Technology

1. MSI PLESSEY
MSI Plessey (or Modified Plessey) barcodes are used in retail environments for inventory
management, such as labeling supermarket shelves. They're also used in warehouses and other storage
facilities to help with inventory accuracy.
MSI Plessey codes can only encode numbers, but they can be produced in any length, allowing them
to encode almost any amount of data. Its binary format is also less trustworthy and efficient than newer, more
cost-effective barcodes.
2. UPC CODE
UPC barcodes are used to label and scan consumer goods at points of sale around the world,
primarily in the United States, but also in the United Kingdom, Australia, and New Zealand. The UPC-A
variant encodes twelve numerical digits, whereas the UPC-E variant encodes only six numerical digits.
UPC is an abbreviation for universal product code. The purpose of this barcode in retail is to make it
easy for users to identify specific product features (such as size or color) when an item is scanned at checkout.
UPC codes, besides making the checkout process more efficient, aid in inventory tracking within stores
and warehouses. UPCs allow for accurate and efficient product tracking throughout the manufacturing
process.
 3. EAN CODE
EAN barcodes are also used to label consumer goods for point-of-sale scanning around the world,
primarily in Europe. They resemble UPC codes in appearance, with the main difference being their
geographical application. While EAN-13 (13 digits) is the standard form factor, EAN-8 (eight digits) barcodes
can be found on products with limited space, such as small candies.
The main benefit of EAN codes is their adaptability. EAN-13 codes are high-density barcodes that can
encode relatively large amounts of data in a small area, whereas EAN-8 codes are ideal for identifying
extremely small products or assets. EAN codes are also simple to read by 1D scanners, making the scanning
process quick and easy.
4. CODE 39
Code39 barcodes (or Code 3 of 9) are widely used to label goods in many industries, including the
automotive industry and the United States Department of Defense.
It supports both digits and characters, and its name derives from the fact that it could only encode 39
characters—though the character set has been expanded to 43 in its most recent version. It is comparable to,
but not as small as, the Code 128 barcode.
One disadvantage of Code39 is its low data density. Because of the size required for these barcodes,
they are unsuitable for tiny goods and assets. However, Code39 remains a popular and versatile option,
because it eliminates the need to generate a check digit—and can be decoded by almost any barcode reader.
5. CODE 128
Code 128 barcodes are compact, high-density codes used for ordering and distribution in the logistics
and transportation industries. They are intended for non-point-of-sale products, such as when supply chain
applications label units with serial shipping container codes (SSCC). Code 128 barcodes can store a wide
range of data because they support any character from the ASCII 128 character set.
The most significant advantage of Code 128 is its high data density. Because these barcodes can store
large amounts of linear data in a small space, they are ideal for identifying shipped or packaged containers
and items. Because of these advantages, Code 128 barcodes are an obvious choice for shipping and supply
chain operations.

RFID TECHNOLOGY
Radio Frequency Identification (RFID) is a method that is used to track or identify an object by
radio transmission uses over the web. Data digitally encoded in an RFID tag which might be read by the
reader. This device work as a tag or label during which data read from tags that are stored in the database
through the reader as compared to traditional barcodes and QR codes. It is often read outside the road of sight
either passive or active RFID.
Kinds of RFID :
There are many kinds of RFID, each with different properties, but perhaps the most fascinating aspect
of RFID technology is that most RFID tags have neither an electric plug nor a battery. Instead, all of the energy
needed to operate them is supplied in the form of radio waves by RFID readers. This technology is called
passive RFID to distinguish it from the(less common) active RFID in which there is a power source on the
tag.
1. UHF RHID ( Ultra-High Frequency RFID ). It is used on shipping pallets and some driver’s
licenses. Readers send signals in the 902-928 MHz band. Tags communicate at distances of several
meters by changing the way they reflect the reader signals; the reader is able to pick up these
reflections. This way of operating is called backscatter.

2. HF RFID (High-Frequency RFID ). It operates at 13.56 MHz and is likely to be in your passport,
credit cards, books, and noncontact payment systems. HF RFID has a short-range, typically a meter
or less because the physical mechanism is based on induction rather than backscatter.
There are also other forms of RFID using other frequencies, such as LF RFID(Low-Frequency RFID), which
was developed before HF RFID and used for animal tracking.
There are two types of RFID :
✓ Passive RFID – In this device, RF tags are not attached by a power supply and passive RF tag stored
their power. When it is emitted from active antennas and the RF tag are used specific frequency like
125-134MHZ as low frequency, 13.56MHZ as a high frequency and 856MHZ to 960MHZ as ultra-
high frequency.
✓ Active RFID – In this device, RF tags are attached by a power supply that emits a signal and there is
an antenna which receives the data.
Working Principle of RFID :
Generally, RFID uses radio waves to perform AIDC function. AIDC stands for Automatic
Identification and Data Capture technology which performs object identification and collection and mapping
of the data.
An antenna is an device which converts power into radio waves which are used for communication between
reader and tag. RFID readers retrieve the information from RFID tag which detects the tag and reads or writes
the data into the tag. It may include one processor, package, storage and transmitter and receiver unit.

Features of RFID :
✓ An RFID tag consists of two-part which is an microcircuit and an antenna.
✓ This tag is covered by protective material which acts as a shield against the outer environment effect.
✓ This tag may active or passive in which we mainly and widely used passive RFID.
Application of RFID :
✓ It utilized in tracking shipping containers, trucks and railroad, cars.
✓ It uses in Asset tracking.
✓ It utilized in credit-card shaped for access application.
✓ It uses in Personnel tracking.
✓ Controlling access to restricted areas.
✓ It uses ID badging.
✓ Supply chain management.
✓ Counterfeit prevention (e.g., in the pharmaceutical industry).
Advantages of RFID :
✓ It provides data access and real-time information without taking to much time.
✓ RFID tags follow the instruction and store a large amount of information.
✓ The RFID system is non-line of sight nature of the technology.
✓ It improves the Efficiency, traceability of production.
✓ In RFID hundred of tags read in a short time.
Disadvantages of RFID :
✓ It takes longer to program RFID Devices.
✓ RFID intercepted easily even it is Encrypted.
✓ In an RFID system, there are two or three layers of ordinary household foil to dam the radio wave.
✓ There is privacy concern about RFID devices anybody can access information about anything.
✓ Active RFID can costlier due to battery.