warehouse management

Welingkar’s Distance Learning Division

CHAPTER-5

Warehouse Management

We Learn – A Continuous Learning Forum


• Organizations choose their warehouses locations normally as near as possible to the points of consumption

• Similarly they locate their factories (Normally) as near as possible to the source of raw materials


In case of manufacturing , the selection of site may be dictated by

• Existing facility of the organization• Availability of resources e.g. labour• Tax advantages, concessions• Scope for further expansion• Overall cost of set up• Industrial climate• Records of other industries etc.


• How close it is to the area to be serviced• Apart from the cost of transportation, locating

the depot nearer to the point of consumption imparts the edge of being able to reduce the response time substantially

• Outside town limits, so that octroi is not paid

In case of warehouses , the selection of site may be dictated by


Warehouse

• Combination of two words ”ware” and “House” which means that it is a place to house or store/keep wares i.e. items/articles for sales


A functional warehouse should ensure that wares stored therein are

• In the best condition• Easily available• Properly accounted for• Rotated so that the older ones are moves out

first• secured /protected from losses and damages• Separately segregated between good and bad


Functions of warehouse

• Receipts of items• Storing the same properly• Dispatching products as per requirements• Preparing related documents• Maintaining records of transactions


Receipt of items

• The warehouse must check the materials received are as per the indent

• Condition of the materials must be checked for any damages, shortage

• Recording receipt should be prompts, and accurate

• Stock rotation can be properly enforced


Storage

• Materials to be stored properly, securely, and in a fashion that the operational efficiencies are maintained at a very high level.

• Stocks are liquid assets• Proper maintenance of quality in storage has

also to be taken care of


Types of stacking

Carton

Carton

Carton

Carton

Normal Stacking

Carton

CartonCarton

Cart

on

Honey Comb Staking


Honey Comb Stacking

• Cartons are stacked in a fashion whereby the arrangement ensures an open shaft like space is kept till the top of the stack that allow air circulation through the height of the stack enhancing the quality of storage

• Separate lots ensure that the movements are made form distinct lots so that FIFO is maintained


FIFO and OPFO

• FIFO– First In First Out– Material which is received earlier will be

dispatched first• OPFO– Oldest Pack First Out– Material which is having earlier date of

manufacturing will be dispatched first (Old Pack)


Pallet

• Palletisation is an option which can also be extended to utilization of stacks.

• The pallets made of 2 layers of wood has open space in between, which can enable forklift to lift pallet loads easily and move around


http://www.meshfactory.com/renders/pallet/pallet_01.jpg

Designing a Warehouse

• Elements of warehouse are interdependent and comprise– Land & building– Management and staff– Equipment– Computer and software– Operating methods & procedures


Constraints in designing a warehouse

• Existing land• Existing buildings• Existing equipments that may have to be used• Existing system software• Staff or union objections on automation• Government regulations on street access, space

restrictions, environment requirements


Data needs for warehouse

• How the goods are received , in what volume• How they are put away and stored• The physical characteristics of each SKU• What volume of stock needs to be stored in

each subgroup• What are typical order profile


Data needs for warehouse

• Must orders be checked and repacked• What will be the work content and physical volume

per tasks• Must goods be so arranged & physical volume per

tasks• What types of vehicles have to be accommodated• What effects do certain day of the week/month or

any other seasonal factor have on the pressures, and inventory levels


Data Collections & Analysis

• Product Quantity Analysis– Show the number of pallets, or units which have

to be stored in each line. It will show how dense or selective the storage system can be

• Product Movement Analysis– Show the rate at which each product line moves

through the warehouse with indications of whether they move out in cartoons or pallets


Split Case and Full Case Items

• Product can exist in several pack types. e.g. there may be large shippers, which contain a number of cartons, each of which may contain units in certain numbers. Thus within large cartons there can be small inner cartons. When such is the case it is important to identify the pack sizes and types in which the goods are sold.


Pareto’s Analysis

CASES

MOVED SKU s BY MOVEMENT

Top 10-20% SKU account for70-90% movement

Last 50% SKU account forLess than 5% movement

Last 25 % SKU account for 1% ofmovement


Perpetual Inventory Audit

• System involves continuos checking of inventory on an on going basis as against an annual stock checking at the year end

• Organization also conduct a packed stock reconciliation across the several storing points starting from the factory to check that all the goods brought into system have been accounted for


Dispatches

• Dispatching efficiency can be assessed on the basis of the period of time in which the customer orders are executed, like what percentage executed on same day etc.

• Reasons for non-execution can be– Non-availability of stock– Non-availability of credit limit– No-availability of blank cheques


Warehousing activities at different stages

• At procurement stage– Take care of inputs into the manufacturing operation

• Factory stage– Involves raw material, packing material, work in progress,

as well as finished goods.• Multiple manufacturing points– Often resort to a central warehouse

• Distribution centers are the final lot of sink in the supply chain


Activities of C & F A

• Timeliness of order execution• Quality of items sent• Information back up• Secondary transportation efficiency• Adherence to procedures such as cheque

deposits


Selection procedure for C & FA

• Performance assessment of C&FAs operating in the market

• Through advertisements• Even trying out absolutely new ones on the

bases of track records• Trying out employees separating from the

organization on superannuation


Resources required by C & FA

• Storage space of requisite specification• Special receiving facilities• Staff for the several functions• Handling arrangement• Communication facilities• Secondary transportation facilities


Remuneration package for C & FA

• A per unit remuneration• Percentage of sales• Fixed expenses at actual as per amounts

agreed


Layouts

• Layout should be such that activities are and can be carried out without any delay

• In order to facilitate FIFO or OPFO the layout should facilitate storage in separate easily identifiable lots, from which the stores in charge can pick properly

• Physical removal of goods should be possible


Summary

• Organizations choose their warehouses locations normally as near as possible to the points of consumption

• Combination of two words ”ware” and “House” which means that it is a place to house or store/keep wares i.e. items/articles for sales

• There are two types of stacking 1. normal 2. honey comb stacking.


Summary

• FIFO represents First In First Out method of inventory management and OPFO Oldest Pack First Out.

• C & FA plays major role in warehousing function.


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