Warehousing

Management
Abdullah Athar
Introduction

Warehouse can be defined as that function of

a firm which stores product (raw material,
parts, good in process, finished goods) at and
between point of origin and point of
consumption
Also it provides information to management
on the status, condition and disposition of
items being used.
Introduction
Warehousing is probably the most
common function. These are found
in almost all industry types,
whether it deals with goods or offer
services to customers. They exist in
hospitals, airports, factories, hotels,
educational institutes etc
Uniqueness
Warehousing is unique due to its strategic
positioning
It is the last station of an organization where
material remains under its physical control.
Therefore, errors or mistakes done at warehouse end
are immediately transferred to customers.
 Such situation leads to loss of company reputation
and customer may be reluctant in further
purchasing company product. Therefore
warehousing operation requires special attention.
Warehouse Functions
Warehouses are almost inevitable due to following
To cope with the discrepancy between the relative
slow supply chain response and rapid changes in
quantities ordered
 To favor upstream production systems
 To configure and finalize products as near as possible
to the customer.
To execute additional operations like inbound
inspections, part preparation, kitting or packaging.
Inbound inspections mainly concern quality control.
Warehouse Functions

 Checking the state of the packaging

 Checking the inbound shipments
 Stocking and retrieving the items.
 To recondition the products to meet customers’
requirements.
 To reorganize the lots for transportation purpose.
This function includes sorting.
 To protect against technical glitches and security
threats.
 Warehouse Functions

 Repackaging
 Performing some assembly or disassembly operations.
 Performing overall quality control
 Repairing damages that occur during transport or
handling, assuming that these damages are limited.
 Executing finishing operations.
 Ticketing and labeling to fit with customers’ demands.
 Kitting that consists in repackaging items to gather
together components that will be assembled to form the
final products. This operation is usually time consuming.
DISTRIBUTION CENTRE
Warehouses that receive products in large quantities
and dispatch a large number of small lots. They are
also called distribution centers.
Centralized vs Decentralized warehouse

Centralized warehouse Decentralized warehouse

Low product High product
substitutability substitutability
High product value Low product value
Large purchase size Small purchase size
Special warehousing No Special warehousing
requirement requirement
Diverse product line Limited product line
Role of Warehousing in Organization

It add values to many positions in goods manufacturing &

distributing cycle. It acts as manufacturing support, as
product mixing, as break bulking, as consolidation. Its role
is very critical in logistics, inventory management, customer
services, product pricing .
Warehousing is considered as part of logistics system and
logistics system is considered as part of supply chain
management.
 2 (A) + 5 (B)+ 9 (C )
Role of Warehousing in Organization

Warehousing also support in customer service in

following way.
Support in customer services policies
Achieve in total operational cost as desired by
customers.
Maintaining of excess inventory to meet unexpected
demand.
Type of Warehousing Related Decision
Warehousing related decision may be one of following two
types
Strategic Decision These decisions are long term decision and
consider allocation of resources over long period of time
(usually more than a year). Example of these may be
warehousing should be owned or leased or rented or
combination, what should be the warehouse location
Operation Decision These decisions are short term decision
and consider selection of best alternative in routine operational
matter. Example may include decision on sequencing in
storage location, picker team formation etc.
 New Trends in Warehousing
 Traditional method of distribution was push system. In
this system, goods used to produce against anticipated
demand. In this system, if production rate was faster than
selling rate, inventory was accumulated. The corrective
measures used to expedite selling and to drop production
pace till inventory level reaches to safe level.
 However many industries has started switching to new
method of warehousing, which is pull system. It is based on
information. Its main feature is continuous monitoring of
demand. So warehouse acts as flow-through centre, and not
as material storage reservoir.
Types of Warehousing
Warehousing can be broadly classified into two types.
Public warehousing
Public warehousing is that type of warehousing in which
warehouse is rented.
Private warehousing
Private warehousing is that type of warehousing in which
warehouse is leased or owned.
Public warehousing classification

Public warehousing can be further classified into

following
General Merchandise Warehousing
As the name suggests, it is probably the most generalized kind.
It is used by manufacturer, distributor etc to store any goods.
Refrigerated Warehousing
This warehouse is also called cold storage warehouse. As the
name suggests these are used to store perishable goods like
vegetable & fruits. In addition they are also used to store
temperature sensitive item like medicine or raw material used
in pharmacy industry.
Bonded Warehousing
This warehousing types allows importer to keep their
imported material without immediate payment of duties.
Later the importer can withdraw the material from warehouse
both partially or fully against payment of duties during a
Public warehousing classification
Household Goods Warehousing
 This type of warehousing deals with house hold items storage.
This kind does not deal with merchandise item storage.
Special Commodity Warehousing
 This type of warehouse deals with special items only like grain
and cottons. These warehousing are made for an exclusive
product and do not deal with other. These warehouse are made
and maintained considering the requirement of that particular
product
Bulk Storage Warehousing
 These warehousing allows storage of liquids in dedicated tanks
or storage of dry products like coals in sheltered on open
premises. Usually these warehouses are of very big size and also
allow partial retrieval of material.
Public Warehousing Benefits
Merits includes
Conservation of capital
Ability to increase warehouse space to meet peak demand
Risk reduction
Economies of scale
Flexibility
Knowledge of exact warehouse storage and handling cost
Insulation from labor disputes
Demerits includes
Effective communication problem due to possible lack of
availability of computer technology
Lack of specialized services
Space limitation when you require.
Basic Warehousing Operations
Receiving
Storage
Retrieving
Transportation
Basic Operations (Receiving)
Lot is compared with the corresponding order
Quality control is performed (this may be limited to
visual checking) and any exception is noted.
Then, the product is registered (bar code or RFID
devices are usually used to perform this operation).
Basic Operations (Storage)
Storage includes sorting, transporting to storage
facilities and placing in stock.
 Sorting consists in putting together entities that will be
stocked at the same place and/or sent to the same
customer.
Transportation to the storage location and their facilities
are described hereafter.
Material Retrieving
Cases can also be stored on shelves, while items are stored in bins
or on shelves, depending on their size. Two methodology are
FIFO (first in – first out) racks retrieve first the pallet that has been
stored first in a lane. An example of the use of FIFO racks is the
storage of truck engines in spare-part warehouses. These items are
heavy and cannot be stored for more than one or two years, because
the lubricants for the engine decompose, thus damaging the engine.
LIFO (last in – first out) racks are similar. In this case, the slope is
reversed. Pallets are removed by the front of the rack and also stored
by the front. High throughput facilities often use this kind of
system.
Two types of system
Picker to part system
The order picker must travel to the pick location
within aisle.
Example includes
Bin shelving
Racks
Order picking vehicles
Two types of retrieval system
Parts to picker system the order pick location
reaches to picker by using an automated machine.
This system has high initial cost, but offers
operational efficient over long run.
Carrousel is its most common forms .Carrousel is
shelves or bins which are mutually linked through a
mechanical device that stores and rotates item for
order picking.
Carrousel can be of horizontal type or of vertical type.
Automated Storage and Retrieval Systems
(AS/RS)
AS/RS are used in warehouses to hold and buffer the
flow of materials moving through the manufacturing
process or waiting to be sent to customers.
An AS/RS is a combination of equipment and controls
that handles, stores, and retrieves materials with
precision, accuracy and speed.
Automated Storage and Retrieval Systems
(AS/RS)
Large systems typically store and retrieve pallet loads.
Smaller systems handle products in totes, trays or
cases.
These systems are particularly popular in countries
where labor is expensive and space is limited.
Automated Storage and Retrieval Systems
(AS/RS)
To conclude, the main benefits when using AS/RS
systems are:
• consistent improvement in operator efficiency and
storage density;
• reduction of work-in-progress (WIP) inventory;
• improvement of quality and just-in-time performance;
• ensuring real-time inventory control and
instantaneous reporting functionality.
Load Unitization
Equipment selection
Equipment importance

Although warehouse activity is primarily labor

intensive, however with use of suitable equipment, the
activity speed and accuracy can be increased and cost
effective can be created.
Selecting Storage Equipment
The objectives of selecting storage equipment are:
 Reducing Handling Costs;
 Shorten Work Cycles;
 Reduce Storage Space;
 Facilitate Shipments And Deliveries;
 Simplify Flows (In Particular, Avoid Flow Crossing);
 Avoid Damages Due To Transportation And Handling;
 Optimize Safety Of Resources;
 Optimize workforce;
 Maximize resource utilization;
 Minimize the amount of energy required to operate
the storage system.
Storage method

Block storage (simplest form)

Racking system
Shelving system
Pallets
Containers
Automatic storage and retrieval system ( ASRS)
Bulk storage (silos)
Factors behind material storage decision

Cost implication
Distribution needs
Regulation & standard
Product characteristics
Throughput and type of material handling system
Hygiene and human safety
Storage Equipment
Using pallets to move heavy items/ lots is widespread. The
simplest way of storing pallets is to arrange them in lanes
on the floor. A single-deep rack is shown in Figure 11.8.
Figure 11.8 Single-deep rack
Pallets
Pallets are both basic and essential unit of material
handling. Its main job is to provide a base to hold
individual item together. It is available in different
material. Once the item is placed on pallet, the
whole pallet can be moves to new location by using
hand pallets or forklifts.
Types of pallets
Material durability repair ability Environmental impact
type
Wood Medium Yes Biodegradable &
Recyclable material

Pressed Medium Yes recyclable

wood fiber

Corrugated Low No Biodegradable &

fiberboard Recyclable

Plastic High No Recyclable

Metal High no Recyclable

Transportation Equipments Types
Transportation resources used in warehouses depend on
the type of products involved.
Conveyors : are mainly used for high-intensity item
flows.
Gravity conveyors: that is to say conveyors that do
not require energy, are favored when suitable, due to
the low investment and maintenance costs.
Transportation Equipments Types
Power conveyors : can be found in systems that
transport heavy items.
Belt conveyors can operate at inclines of thirty
degrees or more (depending on the volume and weight
of the items).
The two-wheeled trolley are operated by an
employee, is used to transport light cases on short
distances
Transportation Equipments Types
Putting Away Equipment: When items should be
lifted to reach shelves, users may select one of the
many resources available on the market such as forklift
truck or one of the similar devices like stacker or
overhead forklift crane (see Figure 11.4).
Fork lifters :

Its common features are

 Most commonly used equipment
 Versatility in moving goods from one location to other
 Not very expensive
 Can perform variety of task
 Individually powered
 Variety is available to serve in special circumstances like
extreme temperature or hazard material
Disadvantages are
 Requires skilled operator
 Forklift may become idle without operator
Selection criterion of forklifts
Lifting capacity
Lifting height
Power source (petrol or battery)
Aisle space
Speed
 Conveyors
Common features of conveyors are
Very popular
Helps to decrease operation cost
Increase productivity of workers
Can be automatic
Can save space by using on multiple level
Can integrate with scanners
 Its disadvantage includes
Lack of versatility
Capital intensive
Possibility of malfunction can lead to delay
Types of conveyors
Roller conveyors
Belt conveyors
Feature of roller conveyors is listed below
Uses gravity principal
Relatively at slow pace (pace is dependent on angle of
inclination)
Belts conveyors
Requires power arrangement
Move goods to same level or up to height
Cranes
There are two basic types ; Bridge cranes & Stacker or
wagon cranes
Bridges cranes are relatively more common and are
used for heavy items handling quickly and efficiently.
Stacker’s cranes are increasingly popular in narrow
aisle space. They also offer possibility of automation.
They are also capital intensive solution.
Factors to considered before equipment
selection
Variety and Physical attribute of product and
packaging Generally a firm produces variety of product
in long business run. Also there exists no similarity
between products made in two different industries.
If material is hazardous or demand special handling
procedure, these should be considered in equipment
finalization.
Factors to considered before
equipment selection
Characteristic of physical facility must be carefully
evaluated. If facility is new or under construction you
can enjoy liberty and can have many choices. If facility
is old , then you can have selected choice as existing
layout constraints may offer limitation in equipment
selection
Equipment must be able to serve or complete required
task in required time, accuracy and speed as
demanded by customers.
Location selection
Facility development –basic
considerations
What will be the location of warehouse?
What will be optimum number of warehousing?
What will be the layout of warehouse
Which equipment should be present to meet the
need?
Which level of technology should be used for
warehousing
What would be the Hierarchal relationship of
warehouse with others?
Selection Of Location Of Warehouse
Labor availability and level of productivity
Currency variation
Total cost
Political situation
Closeness to supplier
Closeness to market
Government incentive
Availability of transportation network
Corporate image
Environmental regulation
Closeness to competitor
Climate, culture and tax
Methods to find optimum solutions
There are many method s available which can be used
to find the optimum solution. Some of these are
Factor rating methods
Location break even analysis
Centre of gravity methods
Transportation model
Optimum Number Of Warehouses
Layout finalization
Layout Of Warehouse

Generally there are following four areas in warehouse

Storage area,
Office area,
 Docks for material receiving and dispatching and
Workshop area used for value addition working
Storage Area Function
Safe storage of material
Safe movement of staff
Safe transportation of material
Safe movement of material handling equipment
Flexibility in warehouse against variation in future
demand
Support in space utilization initiative
Offer resources utilization and cost effective operation
Parking area of equipment
Strong floor to bear the load.
Offers less utilization of energy
 Security of material
Office Area
This space serves to manage reception, locker, office
furniture, computer terminals, meeting space, filing
cabinets etc
Following point must be considered for designing of this
area.
Support in routine administrative activity.
Facilitate safe and convenient movement of employee
Support network connectivity
 Offers flexibility in activity.
Safety of employee (ergonomics guidelines compliance)
Security of equipment
Energy consumption
Docks for Material Receiving & Dispatching
This area serves as bridge between external
area and internal safe space.
 Following consideration must be given in
designing of layout.
Easy access to incoming vehicle
Easy operation of material handling
equipment
Separation of shipping and receiving
docks
Placement of security staff
Value Added Service Area

Safe value added operation

Safe storage of material consumed during value added
operation.
Safety of workers and management staff
Safe & convenient operation of equipment
 Performance
improvement program
Performance Parameter Of Warehousing
Timeliness
Delivery (order fulfillment rate)
Warehouse cost per unit handled
Occupancy rate of warehouse ( actual space/ available
space
 Inefficiency In Warehousing Functions
External reasons are Internal reasons are
Wrong quantity supply Poor location of warehousing
Wrong location supply Redundant or excessive
Late supply handling
Wrong item supply Poor utilization of space
Defective quality supply In-efficient equipment selection
Untrained or less motivated
staff
Improper ways of working or
SOP
Warehousing productivity improvement
Warehousing productivity can be improved by any of
following programs
Methods related programs
Equipment related programs
System related programs
 Training /motivation related programs
1-Methods Related program

Method related program includes all those initiatives in

which there is a focus on improvement in methods or
procedure or infrastructure. Following are example
Space utilization program
Warehouse lay-outing program
Procedure analysis
Standardized packing
1.1 Space utilization programs
aim is to enhance utilization of space in warehouse.
There are many methods available to enhance space.
The most common method is to utilize vertical space.
Here is the picture showing space utilization ideas
You can see following space saving in different layouts
50% space wastage in case of single deep lane
33.3% space wastage in case of two-deep lane.
25% space wastage in case of three- deep lane.
20% space wastage in case of four- deep lane.
1.2 Warehouse lay-outing program

This topic has already been covered in above section.

1.3 Procedure analysis

There are many ways by which organization can bring

improvement in ways of working. Some examples are
use of visual, display of work instructions, mark area
identification etc. Also material handling technique
can contribute to improvement.
1.4 Standardized packing improvement program
includes packing of item in standard size. benefits of
these program includes ease of transportation,
convenient handling and safe storage, Before selecting
standardized packing , attention must be paid to
packing material type.
 2. Equipment related program
 Use of equipments improves productivity in many
ways. In addition to traditional equipment, there is now
a trend of Barcode & RFID.
When bar codes or RFID systems are used, the
identification of the items can be done automatically,
thus avoiding worker input mistakes. Retrieving items
consists in finding the required items and transporting
them to the warehouse exit while modifying the virtual
inventory accordingly.
 2. Equipment related program
RFID is an automatic identification technology consists of
following two parts
 Tags these are incorporated into or attached to any kind of objects
 RFID reader this device reads the information saved in tag and send them to
processing device.

 RFID technology offers following benefits

 Data are not gathered manually
 RFID reader can retrieve the information from many sources simultaneously
 Scanning can be done at larger distance.
 RFID technology offers flexibility in reading tags and reliability in
environment polluted by moisture, noise and dirt.
 The constraints of tags positioning are weaker than those of bar codes.
 Tags can store more data
2. Equipment related program

Following industries or sector are enjoying benefits of

RFID.
Retail industry
Logistics
Pharmaceutical industry
Automotive industry
Security industry
Finance and banking
Waste management
Processed food industry
2. Equipment related program

Although return on investment cannot probably

achieved in short run, but dissemination of this
technology in daily life is inevitable. Companies
using RFID technology will surely get edge over
non users.
2. Equipment related program
Warehouse Management Systems (WMS)
 The aim of a warehouse-management
system is to furnish computer-aided
procedures dealing with the movements
of stock to and from their facilities.
They control the flows and slotting
activities within a storage facility and
processes the related transactions. One
advantage of WMS systems is that they
can optimize stock picking
3. Training/ Motivation related programs
One common factor in good organization is motivated
staff. In simplest term, motivation is that which makes
people put real efforts and energy into what they do.
Motivation directly contributes to higher productivity and
therefore it is need of all organization. Productivity
means rate of power to produce. In economic term,
productivity is the ratio of output to input. Common
form of motivation is incentive, job design, learning
opportunities etc. Some organization declare employee
of the month which sets bench mark for other employee.
4. System based improvement programs
This improvement program includes all those
programs which directly affect the way that different
component of logistics system interact. One of the
examples is setting hierarchical system which offers
optimized performance.
Hierarchical system tells us how a warehouse links or
interacts within a multiple layer organization.
Warehouse-location Models

Warehouse location is a strategic problem, as it has

long-term impacts on the profitability of the system.
Different location Models are given below
Single-level systems : where warehouses are not
connected to other warehouses.
Hierarchical systems : systems where warehouses
interact within a multiple layer configuration,. This can
be a single-flow 2- level structure( a warehouse feeds
only entities belonging to the next lower level) or 2-
level multi-flow system.
ADDITIONAL TOPICS
MATERIAL HANDLING GUIDELINES
Error In Warehouse Functions
• When the receipt of products is not automated, it is a
significant source of errors, in particular in the case of
missing items.
• When typing is used to introduce information in the
virtual inventory, different types of mistakes may
happen:
Error In Warehouse Functions
– Typing mistakes. Duplicate hand input or proof
reading is a (costly) solution to the problem.
– Delayed input. The tendency of employees is often to
postpone data feeding operation to the end of the
shift, or even to the next day. This can lead to a
discrepancy between the real and virtual inventories,
which would result in management errors.
Thank YOU