MBA –LSCM

ISCM
MODULE 5

Dr. Neeraj Anand

Prof. & HoD –DoTM, SoB
 Module 5
Session 33-34
Warehouse Management
Dr. Neeraj Anand
Dec., 2021
 Learning Outcomes
for Students
• Define Warehouse
• Discuss types of warehouses
• Explain factors affecting location decision for a warehouse
• Comprehend functions of warehouse
• Future of warehousing
 Warehouse..??? Warehousing..???

• The place where goods are kept or stored is called

‘warehouse’.
• Storage involves proper arrangement for preserving
goods from the time of their production or purchase
till the actual use. When this storage is done on a
large scale and in a specified manner it is called
‘warehousing’.
• The person in-charge of warehouse is called
‘warehouse-keeper’.
 Inventory Locations
• Warehouse (Suppliers W/H, Consolidation W/H, Manufacturing W/H, DC, Wholesaler and
Retailer)
• Distribution Centre
• Echelons
Warehouse: facilities used to store inventory.
• Warehouse Management Decisions:
• Site Selection
• No. of facilities in the system
• Layout design
• Methods of receiving, storing and retrieving of goods (APICS Dictionary, 14th Edition)
 Distribution Centre
• Is a type of warehouse. According to the APICS, a DC is a warehouse
with finished goods and /or service items. A company, for example,
might have a manufacturing facility in Chennai and DCs may be
located in NCR, Saharanpur, Jaipur or Indore or Nagpur.
• DC is synonymous with the term branch warehouse, although the
former has become more commonly used recently. When a
warehouse serves a group of satellite warehouses, It is usually called a
Regional Distribution Centre (RDC)
Need for Warehousing
Warehousing is necessary for the following
reasons:
• Seasonal Production
• Seasonal Demand
• Large-scale Production
• Quick/ Timely Supply
• Continuous Production
• Price Stabilization
• Avoid Stock-out Situations
Issues affecting Warehousing
The factors that should be considered
include the following:
• Market and product base stability
• Type of materials to be handled
• Warehouse Facility: type, size and location
• Inventory and Inventory Location
• Choice of Unit load
Selection of warehouse
The following flow chart clearly shows hierarchy of decisions to be made
about the selection of warehouses in the strategic marketing policies with an
objective of achieving maximum customer service level.
 Warehousing Decisions: Key Points

The following points to be ascertained during the

progression of making warehousing decisions.
• Should warehousing be used?
• What forms of warehousing should be used (public or private)?
• What should be the size and number of warehouses utilized?
• Where should warehouses be located?
• What warehouse layout and design approach should be
followed?
Location of warehouse
The location problem can be three types:
• Locating a warehousing system at the production
facility itself;
• Locating a single central distribution warehousing
system away from the production plant
• Locating warehousing system at more than one place.
Location of warehouse (Site Selection)

The following considerations determine the location of a warehouse:

1. Market service area and cost of distribution from the warehouse to the
market service area.
2. Satisfaction of transport requirements and facilities available in the form
of rail, link roads and road vehicles.
3. Transportation rates prevailing in the area and distribution costs per unit.
4. Competition by rival companies and whether they have warehouse in the
same area.
5. Availability of power, water, gas sewage disposal and their cost.
6. Labour supply and labour costs in the area.
Location of warehouse(Site Selection)

7. Pricing arrangements and the level of service desired to be rendered in terms of

availability of the product to the customer.
8. Real estate, excise and government taxes assessed in the area.
9. Attitudes of local residents and government towards establishment of the warehouse.
10. Restrictions associated with warehouses.
11. Potential for later expansion, 2-3 times of area should be purchased while buying land
for warehouse.
12. Cost of land for the warehouse and other costs, master plan/smart cities/FTWZ/SEZ
planned in the future. Zaver airport in Noida already commenced.
13. Possibility of change in the use of the facility at a later date if the company so desires,
and lease or sale of the land and buildings. Circle rate also keeps changing time to
time.
Factors Affecting the Number of
Warehouses
– Inventory costs
– Warehousing costs
– Transportation costs
– Cost of lost sales
– Maintenance of customer service levels
Types of Warehouses
In order to meet their requirement various types of warehouses came into
existence, which may be classified as follows.
i. Private Warehouses
ii. Public Warehouses
iii. Government Warehouses
iv. Bonded Warehouses
v. Co-operative Warehouses
Functions of Warehouses
MATERIAL STORAGE FUNCTIONS
• Hold
Manufacturing Warehouse
Plant Customer
(Finished Goods)

• Consolidation
• Break Bulk
• Cross-Docking
• Mixing
• Postponement
• Packing
Illustration of consolidation
and break-bulk arrangements
Sorting involves reconfiguring freight as it
flows from origin to destination
Functions of Warehouses
-Material Handling Functions
• Receiving
• Inspection
• Repackaging
• Put away
• Storage
• Order-Order picking / selection
• Sortation
• Packing and shipping
• Cross-docking
• Replenishing
Future of warehouse management?
• Will warehouses grow larger in the future?
• Offer a wider range of services?
• Offer Value Added Services?
• Will final assembly of goods be increasingly done in warehouses?
• Impact of GST (already there)
• Impact of COVID 19
• What is your solution to the “challenge of the last mile” posed by Dr.
Patrick Dixon?
• Video link (7:45 min.)
• http://www.youtube.com/watch?v=ZbPMaxNl3J4
• https://www.onpalms.com/product-tour.html
• https://
rakez.com/en/Promotions/makemanagemove/manageyourproducts?ut
m_source=google&utm_medium=search&utm_campaign=mmm

https://www.youtube.com/watch?v=gn6INCP6thI
THANK YOU