WAREHOUSE MANAGEMENT

K.RAMACHANDRAN
THE WAREHOUSING REQUIREMENTS OF SUCCESS ARE :

1.PROFESSIONALISM :

WAREHOUSING WILL BE VIEWED AS A CRITICAL LOGISTICS STEP AND A

COMPETITIVE STRENGTH AND NOT AS A NECESSARY EVIL.

2.CUSTOMER AWARENESS :

SUCESSFUL WAREHOUSE OPERATIONS WILL HAVE A HIGH REGARD FOR

THE CUSTOMER , WILL KNOW THE CUSTOMER’S REQUIREMENTS , AND
WILL CONSISTENTLY MEET THESE REQUIREMENTS .

3. MEASUREMENT :

WAREHOUSE STANDARDS WILL BE ESTABLISHED , PERFORMANCE WILL

BE MEASURED AGAINST THESE STANDARDS AND TIMELY ACTIONS
WILL BE TAKEN TO OVERCOME ANY DEVIATIONS.
4.OPERATIONS PLANNING :

SYSTEMS AND PROCEDURES WILL BE PUT INTO EFFECT THAT ALLOW

THE WAREHOUSE MANAGER TO PROACTIVELY PLAN THE OPERATIONS
AS OPPOSED TO REACTIVELY RESPOND TO EXTERNAL CIRCUMSTANCES.

5.LOGISTICS NETWORK :

WAREHOUSES WILL NOT BE VIEWED AS INDEPENDENT OPERATIONS,

BUT AS ELEMENTS OF THE OVERALL , WELL – PLANNED LOGISTICS
SYSTEM.

6.THIRD PARTY :

THE REDUCTION OF LEAD TIMES , SHORTER PRODUCT LIVES ,AND

INCREASED INVENTORY TURNOVER WILL RESULT IN AN INCREASED
USE OF THIRD PARTIES.
7.PACE :

THE REDUCTION OF LEAD TIMES , SHORTER PRODUCT LIVES , AND

INCREASED INVENTORY TURNOVER WILL RESULT IN AN INCREASE
IN THE PACE OF THE WAREHOUSE .

8.VARIETY :

MORE SKU’S AND MORE SPECIAL CUSTOMER REQUIREMENTS WILL

RESULT IN AN INCREASE IN THE VARIETY OF TASKS PERFORMED IN THE
WAREHOUSE .

9.FLEXIBILITY :

DUE TO THE INCREASE IN WAREHOUSE PACE AND VARIETY , ALL

WAREHOUSE SYSTEMS , EQUIPMENT AND PEOPLE WILL BE MORE
FLEXIBLE.
10. UNCERTAINTY :

ALL UNCERTANITY WILL BE MINIMIZED , DISCPLINE WILL BE INCREASED.

11.INTEGRATION :

ACTIVITIES WITHIN THE WAREHOUSE ( RECEIVE ,STORE , PICK AND SHIP )

WILL BE MORE INTEGRATED AND THE WAREHOUSE WILL BE MORE
INTEGRATED WITHIN THE OVERALL LOGISTICS SYSTEM .

12.INVENTORY MANGEMENT :

REAL TIME WAREHOUSE MANAGEMENT SYSTEMS WILL UTILIZE CYCLE

COUNTING TO MANAGE INVENTORY ACCURACY , AND ACCURACY
ABOVE 99 % WILL BE THE NORM .

13.SPACE UTILIZATION

SPACE WILL BE MORE EFFICIENTLY AND EFFECTIVELY UTILIZED .

14. HOUSEKEEPING :

QUALITY HOUSEKEEPING WILL BE A PRIORITY AND A SOURCE OF

EMPLOYEE PRIDE .

15. ORDER PICKING :

THE CRITICALITY OF ORDER PICKING WILL BE UNDERSTOOD AND

PROCEDURES AND LAYOUTS WILL BE DESIGNED TO MAXIMISE
PICKING EFFICIENCY AND EFFECTIVENESS .

16.TEAM – BASED CONTINIOUS IMPROVEMENT :

THE POWER OF PEOPLE WILL BE UNLEASHED VIA A METHODICAL

TEAM – BASED PROCESS .

17.CONTINIOUS FLOW :

THERE WILL BE A CLEAR FOCUS ON PULLING PRODUCT THROUGH

THE LOGISTICS SYSTEM AND NOT ON BUILDING HUGE INVENTORIES.
18.WAREHOUSE MANAGEMENT SYSTEMS :

A REAL –TIME , BAR CODE BASED , RF COMMUNICATION WMS WILL

BE REQUIRED TO MEET TODAY’S REQUIREMENTS.

19.TOTAL COST OF LOGISTICS :

THE GOAL WILL BE TO MINIMIZE THE TOTAL LIFE CYCLE COSTS OF

LOGISTICS , FROM ORDER SUBMISSION TO PRODUCT DELIVERY ,
WHILE PROVIDING EXCELLENCE IN CUSTOMER SERVICE .

20.LEADERSHIP :

THERE MUST BE A BALANCE BETWEEN THE CONTROL ASPECTS OF

MANAGEMENT AND HARNESSING THE ENERGY OF CHANGE TO
CREATE PEAK – TO – PEAK PERFORMANCE OF LEADERSHIP .
WAREHOUSE OPERATIONS
ASSESSMENT
AN OPERATIONS ASSESSMENT IS A
PROCESS THAT EVALUATES TEN
CATEGORIES
OF PERFORMANCE IN THE WAREHOUSE .
1. CUSTOMER SERVICE

2. CONTROL SYSTEMS

3. INVENTORY ACCURACY

4. SPACE UTILIZATION

5. LABOR PRODUCTIVITY

6. FACILITY LAYOUT

7. EQUIPMENT METHODS

8. EQUIPMENT UTILIZATION

9. BUILDING FACILITIES

10. HOUSEKEEPING AND SAFETY

CUSTOMER SERVICE

MUST BE A PRIMARY COCERN OF ALL MEMBERS OF THE

COMPANY MANAGEMENT TEAM . CORPORATE GOALS
FOR CUSTOMER SERVICE MUST INCLUDE INPUT FROM
AND ACCEPTANCE BY A SIGNIFICANT % OF IMPORTANT
CUSTOMERS . ONCE GOALS ARE ESTABLISHED ,
MEASUREMENT OF ORDER – TO – DELIVERY CYCLES AND
ORDER COMPLETION RATIOS WILL OCCUR.
CONTROL SYSTEMS

EVALUATION LOOKS AT PAPERWORK USED , HOW DATA

INTEGRITY IS MAINTAINED , THE DUPLICATION OF
EFFORTS OR PAPERWORK THAT EXISTS , HOW SPECIAL
REQUESTS ARE SERVICED , AND HOW EFFECTIVELY
COMPUTER SYSTEMS AND CONTROLS ARE USED.
MOST TOP – RATED WAREHOUSES USE REAL – TIME ,
ON-LINE ,ORDER ENTRY SYSTEMS THAT DEVELOP TRUCK
LOADS , BATCH ORDERS FOR PICKING , PRE-ROUTE
AND POST –POST PICKING ,AND MANAGE LABOR WITH
REAL –TIME INSTRUCTIONS VIA DATA TERMINALS THAT
ARE STRATEGICALLY LOCATED THROUGHOUT THE WAREHOUSE.
INVENTORY ACCURACY

IT IS CRITICAL SINCE CUSTOMER SERVICE , RESUPPLY FROM

VENDORS , LABOR UTILIZATION , AND SYSTEMS INTEGRITY
ALL RELY ON INVENTORY AVAILABILITY AND ACCURACY.
CORPORATE GOALS FOR THE ACCURACY OF TOTAL
INVENTORY LEVELS AND INDIVIDUAL SKU’S SHOULD BE
DEVELOPED , AND ACCURACY RATINGS ASSIGNED BASED
ON PERFORMANCE AGAINST CORPORATE GOALS .
SPACE UTILIZATION

IT IS CALCULATED FOR THE ENTIRE WAREHOUSE . THE

UTILIZATION OF EACH FUNCTIONAL AREA , THE SQUARE
FOOTAGE OF THE AREAS , AND THE TOTAL SQUARE
FOOTAGE OF THE WAREHOUSE ARE USED TO
CALCULATE THE OVERALL UTILIZATION . MEASURED
UTILIZATION IS THEN COMPARED TO THE MAXIMUM
EFFICIENCY UTILIZATION , USUALLY 80 TO 90 % , TO
DETERMINE THE OPERATING UTILIZATION.
LABOR PRODUCTIVITY

MEASURES HOW EFFECTIVELY LABOR IS UTILIZED

RELATIVE TO PROPERLY ESTABLISHED PROCEDURES
AND STANDARDS .
FACILITY LAYOUT

IT IS INTEGRAL TO SUCESSFUL PERFORMANCE IN ALL OPERATIONAL AREAS.

EVALUATION OF THE FACILITY LAYOUT RATES HOW WELL THE FOLLOWING
OBJECTIVES ARE BEING MET :

1.EFFECTIVE SPACE UTILIZATION

1.EFFICIENT MATERIAL HANDLING

1.ECONOMIC STORAGE RELATIVE TO COST OF EQUIPMENT , USE OF

SPACE , DAMAGE TO MATERIALS AND MATERIALS HANDLING LABOR.
EQUIPMENT METHODS

IT REFERS TO THE APPROPRIATENESS OF THE TYPES OF EQUIPMENT

AND THE USE OF THE EQUIPMENT . EVALUATION RATINGS ARE
BASED ON HOW EFFECTIVELY EQUIPMENT IS USED , NOT HOW MUCH
EQUIPMENT IS USED .
EQUIPMENT UTILIZATION

IT IS CALCULATED FOR EACH GROUP OF EQUIPMENT , EG . FORKLIFTS ,

STORAGE / RETRIEVAL SYSTEMS , CONVEYORS , CAROUSELS , AND
AUTOMATIC GUIDED VEHICLES .
BUILDING FACILITIES

EVALUATION CONSIDERS THE AVAILABILITY , LOCATION , AND UTILIZATION

OF THE FOLLOWING ESSENTIAL AND CRITICAL AREAS :

1.DOCK CAPACITY

1.LIGHTING

1.PERSONNEL SERVICES ( OFFICES , RESTROOMS , BREAK AREAS ,ETC .)

1.FIRE PROTECTION

1.OUTSIDE SPACE ( TRUCK APRONS , SERVICE AREAS , ETC . )

HOUSE KEEPING / SAFETY

IT IS MEASURED AGAINST OPERATIONAL , INDUSTRY , AND GOVERMENTAL

STANDARDS OF PERFORMANCE . ATTENTION TO THE ISSUES OF
HOUSEKEEPING AND SAFETY IS DIRECTLY RELATED TO PROFESIONALISM.
RATING METHODLOGY

EACH OF THE 10 PERFORMANCE CATEGORIES IS RATED

ON A SCALE OF 1 TO 5 , WITH 5 BEING THE HIGHEST .

RATINGS ARE BASED ON QUANTITATIVE AND QUALITATIVE

ASSESSMENTS . SINCE CATEGORIES VARY IN IMPORTANCE
FOR INDIVIDUAL WAREHOUSING OPERATIONS , EACH
CATEGORY IS WEIGHTED TO REFLECT ITS RELATIVE
IMPORTANCE . THE TOTAL OF ALL WEIGHTS IS 200 , WHICH
TOGETHER WITH THE MAXIMUM RATING OF EACH
CATEGORY (5 ) , YEILDS A MAXIMUM POSSIBLE SCORE
OF 1000 POINTS.
THERE WILL BE SITUATIONS THAT CAUSE THE REALISTIC MAXIMUM
RATING FOR A CATEGORY TO BE LESS THAN 5 . THEREFORE A TARGET
RATING IS ASSIGNED TO EACH CATEGORY.

THE CATEGORY RATING AND TARGET RATING ARE MULTIPLIED BY THE

CATEGORY WEIGHT TO OBTAIN A CATEGORY SCORE AND TARGET SCORE.
THE TOTAL CATEGORY SCORE IS THEN DIVIDED BY THE TOTAL TARGET
SCORE TO OBTAIN A PERFORMANCE INDEX.
 CALCULATION OF PERFORMANCE INDEX
TYPICAL RESULTS OF A AUDIT AND CALCULATION OF THE PERFORMANCE INDEX.

CATEGORY RATING TARGET WEIGHT CATEGORY TARGET

RATING SCORE SCORE

CUSTOMER SERVICE 3 5 40 120 200

CONTROL SYSTEMS 4 4 30 120 120
INVENTORY ACCURACY 5 5 30 150 150
SPACE UTILIZATION 3 4 20 60 80
LABOR PRODUCTIVITY 4 5 20 80 100
LAYOUT 5 5 20 100 100
EQUIPMENT METHODS 3 5 10 30 50
EQUIPMENT UTILIZATION 5 5 10 50 50
BUILDING FACILITIES 5 5 10 50 50
HOUSEKEEPING / SAFETY 4 5 10 40 50

TOTAL PERFORMANCE INDEX 800 950 ( 84 %

)
THE PERFORMANCE INDEX IS ONE PART OF THE ANALYSIS TO DETERMINE
THE WAREHOUSE CLASS . THE OTHER PART OF THE ANALYSIS NEEDED TO
DETERMINE THE CLASS IS BASED ON THE CONSISTENCY OF RATINGS.
THE NUMBER OF CATEGORIES WITH A RATING OF 3 OR LESS IS OBTAINED.

IN EACH CLASS , THERE IS A LIMIT TO THE NUMBER OF RATINGS THAT ARE

LESS THAN 3 . EXCEEDING THE NUMBER OF RATINGS LESS THAN OR EQUAL
TO 3 CAUSES A DROP IN CLASS , BUT THE INVERSE IS NOT TRUE . CLASS
CANNOT IMPROVE OVER THE PERFORMANCE INDEX ACHIEVED .
WAREHOUSE CLASSIFICATION METHOD.

WAREHOUSE CLASS PERFORMANCE INDEX RATING – 3

(A + ) EXCELLENT 95% - 100 % 0

(A ) VERY GOOD 90 - 94 % 2

( B ) GOOD 85- 89 % 3

(C ) AVERAGE 80 – 84 % 3

(D) BELOW AVERAGE 70 – 79 % 4

(E) POOR < 70 % <4

THE OPERATIONS ASSESSMENT IS A TOOL THAT ALLOWS WAREHOUSE
MANAGEMENT TO :

1.TRACK PERFORMANCE

1.COMMUNICATE PERFORMANCE

1.PLAN NEW IMPROVEMENTS

1.DEMONSTRATE PROFESSIONALISM

IT IS OF UTMOST IMPORTANCE TO DEFINE WHERE YOU ARE TODAY

BEFORE YOU BEGIN TO MAKE CHANGES IN YOUR OPERATIONS . THIS
ASSESSMENT ALLOWS YOU TO DEFINE PRESENT STATUS ,BUT ALSO
ALLOWS YOU PRIORITIZE AREAS OFFERING THE GREATEST OPPURTUNITY
FOR IMPROVEMENT . THEREFORE THIS ASSESSMENT OFTEN WILL
DIRECTLY PRECEDE THE PROCESS OF WAREHOUSE PLANNING.
SCIENTIFIC APPROACH TO WAREHOUSE PLANNING

WAREHOUSE PLANNING IS NOT SIMPLY POURING A CONCRETE SLAB ,

INSTALLING SOME RACKS, AND TILTING UP SOME WALLS . NOR IS IT
STATIC , ONE – TIME ACTIVITY . THE CHANGING ,DYNAMIC ENVIRONMENT
WITHIN WHICH WAREHOUSES ARE PLANNED QUICKLY RENDERS EXISTING
PLANS OBSOLETE . THEREFORE WAREHOUSE PLANNING MUST BE A
CONTINIOUS ACTIVITY IN WHICH THE EXISTING PLAN IS CONSTANTLY
BEING SCRUTINIZED AND MOULDED TO MEET ANTICIPATED REQUIREMENTS.
FOR A WAREHOUSE TO ACCOMPLISH ITS OBJECTIVES , WAREHOUSE
MANGERS MUST CONSIDER THE VARIABLE WAREHOUSE RESOURCES AND
MOLD THEM INTO AN EFFECTIVE PLAN .

A SUCCESSFUL WAREHOUSE MAXIMIZES THE EFFECTIVE USE OF THE

WAREHOUSE RESOURCES WHILE SATISFYING CUSTOMER REQUIREMENTS .
OBJECTIVES

THE RESOURCES OF A WAREHOUSE ARE SPACE , EQUIPMENT

,AND PERSONNEL . THE COST OF SPACE NOT ONLY INCLUDES
THE COST OF BUILDING OR LEASING THE SPACE , BUT ALSO
THE COST OF MAINTAINING THE SPACE . TYPICALLY , THE
COST OF SPACE IN A WAREHOUSE IS TO PER CU .FT.
PER YEAR FOR TAXES ,INSURANCE ,MAINTENANCE AND ENERGY.
A COMPANY WHICH IS INEFECTIVELY USING ITS AVAILABLE
CUBIC SPACE IS INCURRING EXCESSIVE OPERATING COST.
THE EQUIPMENT RESOURCES OF A WAREHOUSE INCLUDE DATA PROCESSING
EQUIPMENT , DOCK EQUIPMENT , UNIT LOAD EQUIPMENT , MATERIAL
HANDLING EQUIPMENT ,AND STORAGE EQUIPMENT , ALL WHICH COMBINE TO
REPRESENT A SIZABLE CAPITAL INVESTMENT IN THE WAREHOUSE . TO OBTAIN
AN ACCEPTABLE RATE OF RETURN ON THIS INVESTMENT , THE PROPER
EQUIPMENT MUST BE SELECTED AND BE USED PROPERLY.

MOST OF THE TIMES , THE PERSONNEL RESOURCE OF THE WAREHOUSE IS

THE MOST NEGLECTED , EVEN THOUGH ITS COST IS USUALLY THE GREATEST.
APPROXIMATELY 50 % OF THE COSTS OF A TYPICAL WAREHOUSE ARE LABOR
RELATED . REDUCING THE AMOUNT OF LABOR AND PURSUING HIGHER
LABOR PRODUCTIVITY , GOOD LABOR RELATIONS ,AND WORKER SATISFACTION
WILL SIGNIFICANTLY REDUCE WAREHOUSE OPERATING COSTS.
CUSTOMER REQUIREMENTS ARE SIMPLY THE DEMAND TO HAVE THE
RIGHT PRODUCT IN GOOD CONDITION AT THE RIGHT PLACE AT THE
RIGHT TIME . THEREFORE , THE PRODUCT MUST BE ACCESSIBLE AND
PROTECTED . IF A WAREHOUSE CANNOT MEET THESE REQUIREMENTS
ADEQUATELY , THE WAREHOUSE DOES NOT ADD VALUE TO THE PRODUCT
AND, IN FACT ,VERY LIKELY SUBTRACTS VALUE FROM THE PRODUCT.

THEREFORE , THE FOLLOWING OBJECTIVES MUST BE MET FOR A

WAREHOUSE TO BE SUCCESSFUL :

1.MAXIMIZE EFFECTIVE USE OF SPACE

2.MAXIMIZE EFFECTIVE USE OF EQUIPMENT
3.MAXIMIZE EFFECTIVE USE OF LABOR
4.MAXIMIZE ACCESSIBILITY OF ALL ITEMS
5.MAXIMIZE PROTECTION OF ALL ITEMS
THE TWO DISTINCT TYPES OF CONTINIOUS WAREHOUSE

PLANNING NEEDED TO PRODUCE AN EFFICIENT AND

EFFECTIVE WAREHOUSE OPERATION ARE CONTINGENCY

PLANNING AND STRATEGIC PLANNING . THE DIFFERENCES

BETWEEN THE TWO RELATE TO DEFENSIVE VERSUS

OFFENSIVE PLANNING .
CONTINGENCY PLANNING
IT IS A DEFENSIVE TOOL USED TO GUARD AGAINST A PREDICTABLE FUTURE
CHANGE IN WAREHOUSE REQUIREMENTS , THE TIMING OF WHICH IS
EXTREMELY DIFFICULT, IF NOT IMPOSSIBLE , TO ANTICIPATE .

ONE EXAMPLE WOULD BE THE BANKRUPTCY OF A PRIMARY SUPPLIER OF

GOODS TO THE WAREHOUSE . WHILE DIFFICULT TO ANTICIPATE ,SUCH
EVENTS OCCUR ,AND A CONTINGENCY PLAN IS NEEDED TO LOCATE AN
ALTERNATIVE SUPPLIER TO MAINTAIN SERVICE TO THE WAREHOUSE
CUSTOMERS . IN OTHER WORDS , CONTINGENCY PLANS ARE NEEDED TO
EFFICIENTLY AND EFFECTIVELY ADDRESS THE QUESTIONS :

“ WHAT COURSE OF ACTION IS REQUIRED IF A GIVEN UNANTICIPATED CHANGE

IN REQUIREMENTS OR CIRCUMSTNCES OCCURS ?”
SCIENTIFIC APPROACH TO WAREHOUSE PLANNING
WAREHOUSE PLANNING IS NOT SIMPLY POURING A CONCRETE SLAB , INSTALLING SOME
RACKS , AND TILTING UP SOME WALLS.

NOR IT IS A STATIC ,ONE –TIME ACTIVITY .

THE CHANGING DYNAMIC ENVIROMENT WITHIN WHICH WAREHOUSES ARE PLANNED

QUICKLY RENDERS EXISTING PLANS OBSOLETE . THEREFORE ,WAREHOUSE PLANNING
MUST BE A CONTINIOUS ACTIVITY IN WHICH THE EXISTING PLAN IS CONSTANTLY BEING
MOULDED TO MEET ANTICIPATED REQUIREMENTS.

FOR A WAREHOUSE TO ACHIEVE ITS OBJECTIVES , WAREHOUSE MANAGERS MUST

CONSIDER THE VARIABLE WAREHOUSE RESOURCES AND MOLD THEM INTO AN
EFFECTIVE PLAN .

A SUCESSFUL WAREHOUSE MAXIMIZES THE EFFECTIVE

USE OF THE WAREHOUSE RESOURCES WHILE SATIFYING
CUSTOMER REQUIREMENTS .
OBJECTIVES
FOLLOWING OBJECTIVES MUST BE MET FOR A WAREHOUSE TO BE SUCESSFUL -:

•MAXIMIZE EFFECTIVE USE OF SPACE

•MAXIMIZE EFFECTIVE USE OF EQUIPMENT

•MAXIMIZE EFFECTIVE USE OF LABOR

•MAXIMIZE ACCESSIBILITY OF ALL ITEMS

•MAXIMIZE PROTECTION OF ALL ITEMS

THE TWO DISTINCT TYPES OF CONTINIOUS WAREHOUSE PLANNING NEEDED

TO PRODUCE AN EFFICIENT AND EFFECTIVE WAREHOUSE OPERATION ARE
CONTINGENCY PLANNING AND STRATEGIC MASTER PLANNING . THE DIFFERENCE
BETWEE N THE TWO RELATE TO DEFENSIVE VERSUS OFFENSIVE PLANNING .
CONTINGENCY PLANNING
CONTINGENCY PLANNING IS A DEFENSIVE TOOL USED TO GUARD AGAINST A
PREDICTABLE FUTURE CHANGE IN WAREHOUSE REQUIREMENTS , THE TIMING
OF WHICH IS EXTREMELY DIFFICULT , IF NOT IMPOSSIBLE ,TO ANTICIPATE.

CONTINGENCY PLANS ARE REQUIRED TO EFFICIENTLY AND EFFECTIVELY

ADDRESS THE QUESTION :

“ WHAT COURSE OF ACTION IS REQUIRED IF A GIVEN UNANTICIPATED

CHANGE IN REQUIREMENTS OR CIRCUMSTANCES OCCUR’S ? “

THE NON PLANNING APPROACH ,OFTEN CALLED “ CRISIS MANAGEMENT “ OR

“ PUTTING OUT FIRES “ , ENTAILS DEVELOPMENT OF PLANS AFTER A CHANGE
IN REQUIREMENTS OR CIRCUMSTANCES OCCURS.

PROPER CONTINGENCY PLANNING DEVELOPS THE PLAN TO THE FULLEST EXTENT

POSSIBLE BEFORE THE CHANGE OCCURS .
STRATEGIC MASTER PLANNING
IT IS AN OFFENSIVE TOOL DESIGNED TO GUARD AGAINST A PREDICTABLE
CHANGE IN WAREHOUSE REQUIREMENTS , THE TIMING OF WHICH CAN BE
ANTICIPATED .

STRATEGIC MASTER PLANNING IS DIRECTED AT FORECASTING FUTURE

WAREHOUSING NEEDS SUFFICIENTLY IN ADVANCE OF THE ACTUAL
REQUIREMENTS TO ALLOW ENOUGH LEAD TIME TO EFFICIENTLY AND
EFFECTIVELY MEET THOSE NEEDS.

IN VIEW OF RAPIDLY ACCELERATING INVESTMENT AND OPERATING COSTS,

MORE AND MORE DECISION MAKERS ARE DEMANDING GOOD STRATEGIC
MASTER PLANS THAT EXPRESS FUTURE WAREHOUSE SPACE ,LABOR,AND
EQUIPMENT REQUIREMENTS.

CONTINGENCY PLANNING AND STRATEGIC MASTER PLANNING ARE

COMPLIMENTARY .

IN ESSENCE ABSENCE OF ONE PLANNING MODE SEVERELY LIMITS THE

EFFECTIVENESS OF THE OTHER.
DEVELOPING THE MASTER PLAN

GENERAL METHODOLOGY - SEVEN STEP PROCEDURE :

1.DOCUMENT EXISTING WAREHOUSE OPERATION.

1.DETERMINE AND DOCUMENT THE WAREHOUSE STORAGE AND THROUGHT

REQUIREMENTS OVER THE SPECIFIED PLANNING HORIZION.

1.IDENTIFY AND DOCUMENT DEFICIENCIES IN THE EXISTING WAREHOUSE

OPERATION.

1.IDENTIFY AND DOCUMENT ALTERNATIVE WAREHOUSE PLANS .

1.EVALUATE THE ALTERNATE WAREHOSUE PLANS .

1.SELECT AND SPECIFY THE RECOMMENDED PLANS.

1.UPDATE THE WAREHOUSE MASTER PLAN.

 MEASURING WAREHOUSING PERFORMANCE

NOT UNUSUAL TO FIND WARHEOUSE PERFORMANCE BEING UNMEASURED .

LACK OF MEASUREMENT PROVIDES A DISCONNECT IN THE FRAMEWORK FOR
ACHIEVING WAREHOUSE EXCELLENCE AS ILLUSTRATED BELOW.

OUTPUT RESULTS
IMPLEMENTATION

MEASUREMENT
PLANNING

NEEDS INFORMATION

UPSTREAM DOWN STREAM

ORGANISATION
ORGANISATION ORGANISATION
INPUT OUTPUT

THE FRAMEWORK OF WAREHOUSE EXCELLENCE

THE REALITY TODAY IS THAT IF YOU CANNOT MEASURE
YOUR PERFORMANCE,YOU CANNOT IMPROVE YOUR
PERFORMANCE.

WAREHOUSE PERFORMANCE MEASURES

INTERNAL ISSUES EXTERNAL PERFORMANCE
SPACE UTILISATION STOCK OUTS GOALS
EQUIPMENT UTILISATION FILL RATE STANDARDS
LABOR PRODUCTIVITY BACKORDER RATE FEEDBACK
INVENTORY ACCURACY COMPLAINTS OPPORTUNITY
SAFETY & HOUSEKEEPING ORDER ACCURACY MEANS
THEFT & PILFERAGE PROMISES KEPT COMPETENCE
CONTAMINATION &DAMAGE MOTIVE
BASE LINE PRINCIPLES OF PERFORMANCE MEASUREMENT TO BE APPLIED TO
WAREHOUSE OPERATIONS ARE :-

1.PERFORMANCE MEASUREMENT IS DYNAMIC.

2.PERFORMANCE MEASUREMENT SHOULD BE ALIGNED WITH CORPORATE
STRATEGY .
3.PERFORMANCE MEASUREMENT SHOULD LEAD TO APPROPRIATE ACTION
TO STIMULATE IMPROVEMENT .
4.PERFORMANCE MEASUREMENT MUST GO BEYOND ACCOUNTING DATA
TO INCLUDE OPERATIONAL MEASURES .
5.PERFORMANCE MEASUREMENT CHANGE MUST BE CROSS- FUNCTIONAL,
TOP-DOWN ,AND BOTTOM –UP.
6.PERFORMANCE MEASUREMENT MUST BE TOTALLY VISIBLE TO ALL
INVOLVED WITH IMPROVING WAREHOUSE OPERATIONS .
7.FOCUS MUST BE ON DIRECTION RATHER THAN PRECISION . “ BETTER
TO BE APPROXIMATELY RIGHT THAN PRECISELY WRONG. “
8.A FAMILY OF MEASURES MUST BE DEFINED FOR EACH ORGANISATION
LEVEL OR PROCESS.
9.STRATEGIC BENCHMARKING ( BUSINESS UNITS ) AND OPERATIONAL
BENCHMARKING ( PROCESSES ) ARE BEST DONE IN WORDS RATHER
THAN NUMBERS.
10.A PERFORMANCE MEASUREMENT SYSTEM MUST BE BALANCED TO BE
EFFECTIVE, EG :
* CUSTOMER * FINANCIAL * INTERNAL * INNOVATION & LEARNING .
SUPPORTING WAEHOUSE PERFORMANCE MEASUREMENT SYSTEMS.

1.WMS ( WAREHOUSE MANAGEMENT SYSTEMS )

A REAL –TIME MANAGEMENT AND CONTROL OPERATIONS SYSTEM
FOR WAREHOUSES THAT, AS A BY-PRODUCT,PROVIDE A BASE OF
DATA FOR ALL WAREHOUSE TRANSACTIONS .

2.WEIS ( WAREHOUSE EXECUTIVE INFORMATION SYSTEM )

AN HOURLY UPDATED SUMMARY OF ALL WAREHOUSE PERFORMANCE
AND ACTIVITIES . A MEASURE OF WAREHOUSE PERFORMANCE .

3.VMS ( VISUAL MANAGEMENT SYSTEMS )

A COMMUNICATION AND INFORMATION CENTER FOR ALL EMPLOYEES
TO UNDERSTAND AN ORGANISTION’S STRATEGIC DIRECTION,
PERFORMANCE ( A SCOREBOARD ), AND THE PROCESS OF IMPROVING
PERFORMANCE .
TRUE CHALLENGES OF TODAY’S LOGISTIC’S ENVIRONMENT .
1. WAREHOUSE PERFORMANCE MEASURES SHOULD BE BASED ON
ORGANISATIONAL STRATEGIES , OBJECTIVES, AND COMPETITIVE DEMANDS.

2. EFFECTIVE PERFORMANCE MEASUREMENT SYSTEMS GO BEYOND REPORTING

HISTORY TO IMPROVING FUTURE OPERATIONS .

3. THE PERFORMANCE MEASUREMENT SYSTEM MUST BE BALANCED BETWEEN

INTERNAL AND EXTERNAL PERSPECTIVES .

4. A PROPERLY DESIGNED PERFORMANCE MEASUREMENT SYSTEM WILL BE

A FOCAL POINT FOR PRIORITIZATION OF EFFORTS ,AND EVLUATION OF PROPOSALS.

5. A PERFORMANCE MEASUREMENT SYSTEM WILL BE BASED UPON A WMS ,

REPORTING TO MANAGEMENT VIA A WEIS ,AND SUMMARIZED TO ALL
EMPLOYEES VIA A VMS .

6. A MEASUREMENT SYSTEM SHOULD BE FOCUSSED ,SIMPLE ,TIMELY , VISIONARY

AND WIDELY COMMUNICATED.