management 106

Chrejine M.MandingiadoReimond NiuBabylyn Hernandez Jennifer SalazarBon Juvicel Tabogon

WAREHOUSE ANDINVENTORY HANDLING

Warehousing Operations

• Storing or warehousing, is a major part ofdistribution management.

• Planned space for the storage and handlingof goods and material.

Warehouses

• Store inventory for a period of timestorageprotection

• Inventory may be turned over rapidlydistribution centercustomer service

THE ROLE OF THE WAREHOUSE INTHE LOGISTICS SYSTEM

• The warehouse is where the supplychain holds or stores goods.• Functions of warehousing include

Transportation consolidationProduct mixingDockingServiceProtection against contingencies

Functions of Warehouse

• Transportation consolidationFrom figure 1.1, warehouse consolidate

all incoming goods from different suppliers‘Less than Truck-load(LTL) and ship a FullTruck load (FTL) to a plant.

Functions of Warehouse

• Product mix - In a typical mixing operation, truck loadsof products are shipped from origin to the mixingwarehouse.

• Docking - is a practice in which materials areunloaded from an incoming semi-trailer truck orrailcars, with little or no storage in between

• Service - Warehouses can provide services thatenhance a firm's revenue growth.

• Protection against contingencies - Warehousingexists such as transportation delays, vendor stockouts, or strikes.

Some valid reasons for holding stockinclude the following.

• As a buffer/consolidation point between twoproduction processes

• suppliers' lead-time• To enable savings to be made through bulkpurchases or discounts

To cope with seasonal fluctuationsTo provide a variety of product in acentralized locationThe build up/holding of anticipation stocks(for example, before a new product launch)The build-up and holding of investment stocks

Purpose of a Warehouse

• Primary aim for a warehouses anddistribution centers is to facilitate the movementof goods from our suppliers to customers and,by doing so, meet customers' demand in atimely and cost-effective manner.

• The purpose of warehouse management hasexpanded. The days of a warehouse just“housing” goods and supplies are long gone.

• Basic aim must be to minimize the total costof the operation while providing the desiredlevel of service.

Types of warehouses

There are two basic types of warehouses:private and public. Facilities can be furtherdivided according to use as storage warehousesor distribution centers.

1. Private 2. Public

Private warehousesare owned by a single manufacturer,

wholesaler or retailer. Most are run by largefirms with continuous storage needs for massquantities.

Public warehousesare independently owned by operated.

They are also used by manufacturers who needmultiple storage locations to get products tomultiple markets.

Warehouse Policies & Procedures

Running a warehouse business can bechallenging. To be successful, you will need to setclear guidelines and expectations.

Put Safety FirstSafety should be your primary concern,

and it is vital that every member of the staffunderstands the importance of established safetyprocedures.

Equipment InstructionsMost working warehouses use many

different types of equipment such as pallet jacks,forklifts, presses and stackers. Although onlytrained operators should use that equipment,not every worker will have the same level oftraining and experience

Storage Warehousesprovide storage for extended periods.

Procedures of seasonal items, such agriculturalcorps, use this type of warehouse.

Distribution Centersprovide short-term storage of products

whose demand is both constant and high.Distribution centers are common in the groceryand food industry.

Warehouse Policies & Procedures

Post Hours and Rules - Signage is an important part of any

warehouse, and it is important that managementpost signs in conspicuous locations.

- Large signs should be used to communicateimportant information such as emergencyprocedures, worker expectations and hours ofoperation.

Ideal Facility for Pure Supplier Consolidation(Full Pallet Movement)

Warehouse Space Requirements

DESIGN CONSIDERATION

Use one-story facilities

Move goods in a straight line

Use efficient materials-handling

equipment

Use an effective storage plan

Minimize aisle space

Use maximum height of the

building

PRINCIPLES OF WAREHOUSE LAYOUT DESIGN

17Chapter 8 Management of Business Logistics, 7th Ed.

Warehouse Layout and Design

Layout and Design Principles:• Use one story facilitieswhere possible.• Move goods in a straight-line.• Use the most efficientmaterials handling equipment.• Minimize aisle space.• Use full building height.

18Chapter 8 Management of Business Logistics, 7th Ed.

Basic Warehouse Operations

MovementReceivingPut-awayOrder pickingShipping

StorageStock locationWarehouse ManagementSystem (WMS)

WAREHOUSE PROCESSPut-away

•Identify Product•Identify Product Location•Move Products•Update Records

Storage•Equipment•Stock Location– Popularity– Unit Size– Cube

Shipping Preparation•Packing•Labeling•Stacking

Order Picking•Information•Walk & Pick•Batch Picking

Shipping•Schedule Carrier•Load Vehicle•Bill of Loading•Record Update

RECEIVING•Schedule Carrier•Unload Vehicle•Inspect for damage

INPUT

OUTPUT

OBJECTIVES OF EFFICIENTWAREHOUSE OPERATIONS

• Provide timely customer service.• Keep track of items so they can be found readily& correctly.• Minimize the total physical effort & thus the costof moving goods into & out of storage.• Provide communication links with customers

Benefits of Warehouse ManagementProvide a place to store & protect inventoryReduce transportation costsImprove customer service levelsComplexity of warehouse operation

depends on the number of SKUs handled &

the number of orders received & filled.Most activity in a warehouse is material handling.

Increase Employee Efficiency & Productivity

Real-time data management enables you to viewthe exact levels of your inventory

Online access to information

COSTS OF OPERATING A WAREHOUSE

• Capital costs— Costs of space & materials handling equipment— Clerical costs of producing reports will be reducedbecause up-to-date information already exists in thedatabase and there are predefined reports.  As well,receiving discrepancies and inventory adjustments will be reduced by using handheld computers and barcodes.

• Operating costs— Cost of labor— Measure of labor productivity is the number of unitsthat an operator can move in a day

Warehouse Activities

In general , a typical warehouse can be seento be performing the following activities

• Receive goods• Identify goods• Dispatch goods to storage• Hold goods• Pick goods• Marshal the shipment• Dispatch the shipment• Operate an information system

Receive Goods

• Acceptance of goods from outside transportationor an attached factory

a. Check the goods against an order or bill of ladingb. Check the quantitiesc. Check for any transit damaged. Inspect goods if required

Identify the goods

• With appropriate stock keeping unit (SKU)

number

• With part number

• Indicate the quantity

• Quantity receive is recorded

Dispatch Goods to Storage

• Goods are sorted• Put away goods

recorded the location

Hold Goods

Holding Goods by keeping and preserving 

Storage is meant to protect the goodscoldheatedexplosive

Pick Goods

• Goods are picked from storagemust be accessiblelocation records

• Brought to marshalling area

Marshal the Shipment

• Marshalling the shipment such as goods making u a single order are brought together and checkedfor discrepancies. Order records are updated

• All goods for an order are brought togethercheck for missing itemscheck for correct itemschange order information if required

Dispatch the Shipment

• Orders are packaged, shipping documents areprepared.

• The order is prepared for shipment and loadedon the right vehicle

protective packaging for shipmentdocuments preparedloaded and secured

Operate an Information System

Items record must be maintained.Need to know what is in the warehouse

quantity on handquantity receivedquantity issuedlocation of goods

Computer based or manual system

Warehouse Management

Deals with receipt, storage and movementof goods, normally finished goods, tointermediate storage locations or to finalcustomer.

• Make maximum use of spacecapital cost of space is very high

• Make effective us of labor and equipmentmaterial handling equipment is the second largestcapital costneed best mix of equipment and laborall SKU’s should be easy to findmove goods efficiently

Warehouse Effectiveness

• Cube utilization and accessibility• Stock location• Order picking and assembly• Packaging

Cube utilization and accessibility

‒ Goods stored not just on the floor, but in the cubic

space of the warehouse; warehouse capacity

depends on how high goods can be stored

‒ Accessibility means being able to get at the goods

wanted with a minimum amount of work

‒ Space also required for:aisles officesreceiving order pickingshipping docks order assembly

Cube utilization and accessibility

Stock Location

• Objectives

– To provide the required customer service

– To keep track of where items are stored

– To minimize effort to receive, put away,

and retrieve items

• Basic Stock Locating Systems

– Group functionally related items together

– Group fast-moving items together

– Group physically similar items together

– Locate working stock and reserve stock separately

Stock Location

Fixed Location• SKU assigned a permanent location.• Fixed-location systems usually have poor cube utilization• Usually used in small warehouses; throughput is small, & thereare few SKUs

Floating (Random) Location• Goods stored wherever there is appropriate space

• Advantage is improved cube utilization

• It requires accurate and up-to-date information

• Warehouses using floating-location systems are usually

computer-based

Stock Location

Point-of-Use Storage

JIT and repetitive manufacturingmaterials are readily accessible to usersmaterial handling is reducedcentral storage costs are reducedmaterials are accessible at all times

Floor stocksmall ‘C’ itemsinventory is adjusted when stock isreplenished

Stock Location

Central Storage• All items are kept in one location• The opposite of point-of-use storage

ease of controlaccurate inventory control is easiermakes use of specialized storagereduces safety stock

Order Picking and Assembly

• When an order is received, items must be

obtained from the warehouse, grouped, &

prepared for shipment, systems used

– Area system - Used in small warehouses

– Zone system

– Multi-order system

Area System

• Used in small warehouses • Order picker circulates throughout warehouseselecting items on an order• The order picker moves through the warehouseand takes all the goods to shipping

self marshallingorder is complete when the picker is finished

Zone System

• Warehouse is divided into zones

• Order pickers work in their own area

deliver goods to the marshalling area

• Zones are established by related items

type of storage

type of material handling required

• Marshalling area then organizes orders for

shipment

Multi-order System

• Similar to zone system

• Multiple orders are picked together

• Marshalling area then sorts orders by

shipment

• Used where there are many items or many

small orders

PHYSICAL CONTROL & SECURITY - ELEMENTS

• Good part numbering system

• Simple, well-documented transaction system– Identify the item– Verify the quantity– Record the transaction– Physically execute the transaction

• Limited access– Inventory must be kept in a safe, secure(locked) place with limited general access

• Well-trained workforce

What Is Packaging?

• Consumer packagingMarketing managers primarily concerned withhow the package fits into the marketing mix.

• Industrial packagingLogistics managers primarily concerned withefficient shipping characteristics includingprotection, ability to withstand stacking whenon a pallet, cube, weight, shape and otherrelevant factors.

Packaging

• Interest in packaging is widespreadLogistics

WarehousingTransportationSize

MarketingProductionLegal

The Role of Packaging

• Identify product and provideinformation• Improve efficiency inhandling and distribution• Customer interface• Protect product

 Inventory

• Inventory is an idle stock of physical goodsthat contain economic value, and are held invarious forms by an organization in its custodyawaiting packing, processing, transformation,use or sale in a future point of time.

From the above definition the following pointsstand out with reference to inventory:• All organizations engaged in production. • Inventory can be in complete state or incompletestate.• Inventory is held to facilitate future consumption. • All inventoried resources have economic valueand can be considered as assets of the organization.

Managing Inventory Levels

It has been established that the role of inventorymanagement is to ensure that stock is available tomeet the needs of the beneficiaries as and whenrequired.

This is made up of the cost of the inventory itself, plusthe cost of transporting the goods, cost of managingthe goods.

In order to achieve this, the inventory manager mustensure a balance between supply and demand byestablishing minimum holding stocks to coverlead-times

Types of Inventories

Raw materials & purchased parts - are inventory

items that are used in the manufacturer's conversion

process to produce components, subassemblies, or

finished products. 

Partially completed goods called work in progress - (WIP) is made up of all thematerials, parts (components), assemblies, andsubassemblies that are being processed or arewaiting to be processed within the system. 

Finished-goods inventories

(manufacturing firms) or merchandise (retail stores)

Types of Inventories

Goods-in-transit to warehouses or customers Transit

inventories result from the need to transport items or

material from one location to another, and from the

fact that there is some transportation time involved in

getting from one location to another.

Effective Inventory Management

• A system to keep track of inventory

• A reliable forecast of demand

• Knowledge of lead times

• Reasonable estimates of

Holding costs

Ordering costs

Shortage costs

• A classification system

Key Inventory Terms

Lead time: time interval between orderingand receiving the order

Holding (carrying) costs: cost to carry anitem in inventory for a length of time,usually a year

Ordering costs: costs of ordering andreceiving inventoryShortage costs: costs when demandexceeds supply

Auditing Inventory Records

• Checking the accuracy of inventory records

• Periodic Inventoryusually an annual count

• Cycle Counting daily counts of items

Auditing Inventory Records

• To correct the on-hand balanceperiodic inventory

To find the reasons for errors andeliminate them

cycle counting

Periodic (Annual) Inventory

• Periodic inventory is a method bywhich any inventory sold is physicallycounted at the end of an accountingperiod.

• To satisfy financial auditors• Determine the value of theinventory• Financial auditors are concernedwith the total value• Planners are concerned with the• item detail

Cycle Counting

• A method of keeping track of inventoryby performing inventory counts constantly,or on a frequent and regular basis, insteadof once per year or once per quarter.

• Count inventory continually throughout the year• Predetermined schedule

some items counted frequentlydepending on valuepast history of problems

• Count some items every day

Inventory Counting Systems

Periodic SystemPhysical count of items made atperiodic intervals

Perpetual Inventory System System that keeps track of removals from inventory continuously, thus monitoringcurrent levels of each item

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Inventory Counting Systems

Two-Bin System - Two containers ofinventory; reorder when the first is empty

Universal Bar Code - Bar code printed on a label that hasinformation about the item to which it is attached

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