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WAREHOUSE MANAGEMENT

WORLD CLASS PRACTICES
MBA (Entrepreneurship – 2009-2011)

Submitted to:
Prof. Dr.J.P.Saxena
Senior lecturer (Operations management)
Amity Business School (Noida)

Submitted by:
Amit Kalwani
Harish Kumar
Harmeet Sehgal
Mukundan R
Nadeem Ahmed

Table of Contents

• Abstract
• Objective
• Literature Review
• Organization Structure Of Stores Division
• Warehousing – World Class Practices










Receipt and Inspection of Materials
Issue of Materials
Stock & Inventory Management
Material Storage & Handling
Material Handling Time
Storing the product in relation to flow/ rate of movement
Location & Layout of the Warehouse
Warehouse Design Criteria
Operational standards needed
Warehouse Safety and Security
Multitasking work force

• Warehouse Management Systems (WMS)
• Interpretation
• Conclusion
• Recommendation
• Bibliography

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packing and shipping. people. fill orders faster and more accurately. save space and reduce inventory. so we can conserve effort. • Time: Automate picking. the utilization of every component—space. track data on every unit utilizing the latest technologies. Production and Trade. to help improve your overall business performance. Warehouse Management: Warehouse Management provides the insight into your inventory and the warehouse management tools to help you increase customer satisfaction and reduce costs. Warehouse Management is used to optimize: • Inventory: With our complete inventory management capabilities. Warehouse Management enables us to analyze these components continually. plus integration with Yard Management. and minimize the number of moves per order 3 . Objective The Objective of the project is to understand the world class operations and procedures in the warehouse. reduce the need for warehouse space. Warehouse Management exchanges information with many other functional areas in the solution including Logistics. and how efficiently the warehouses are managed throughout the world.Abstract: Inside the walls of the warehouse. • Physical Space: Cross-docking and flow-through capabilities. inventory and equipment—will impact the bottom line in profound ways over time. Plan and balance workload and monitor activities with integration to Labor Management. • Labor: Make people more efficient by managing their tasks and improving their processes.

Literature Review: Warehouse: A warehouse is a planned space for the storage and handling of goods and material. Large-scale Production: In case of manufactured goods. So the finished products. Seasonal Demand: There are certain goods. which are produced on a large scale. Therefore. from where they can be supplied as and when required. 2. NEED FOR WAREHOUSES 1. like woolen garments in winters or umbrellas in the rainy season. which is more economical. So there is a need to store these goods in a warehouse to make them available at the time of need. need to be stored properly till they are cleared by sales. The production of these goods takes place throughout the year to meet the seasonal demand. there is a need for proper storage or warehousing for these commodities. 3. it will be supplied as fast as possible and reaches the customer in its original position. which are demanded seasonally. Manufacturers also produce goods in huge quantity to enjoy the benefits of large-scale production. Seasonal Production : The agricultural commodities are harvested during certain seasons. the production takes place to meet the existing as well as future demand of the products. but their consumption or use takes place throughout the year. Its main purpose is to keep the goods for the longer time and whenever there is a demand for the product. 4 .

So there is a need to keep sufficient quantity of stock of raw material in the warehouse to ensure continuous production. and  Market presence 5 . it is essential to stock these goods near the place of consumption. warehousing ensures price stabilization. so that without making any delay these goods are made available to the consumers at the time of their need. Again. 5. 6.  Production support. Continuous Production: Continuous production of goods in factories requires adequate supply of raw materials. Scarcity in supply of goods may increase their price in the market. Five basic service benefits are achieved through warehousing:  Spot stock.4. Therefore. Quick Supply: Both industrial as well as agricultural goods are produced at some specific places but consumed throughout the country.  Assortment. Price Stabilization: To maintain a reasonable level of the price of the goods in the market there is a need to keep sufficient stock in the warehouses. excess production and supply may also lead to fall in prices of the product. By maintaining a balance in the supply of goods.  Mixing.

Inventory Control Officer 1 Officer 2 Inventory Control & Stock Records Room (Warehouse 1) (Warehouse 2) 6 .ORGANISATION STRUCTURE OF STORES DIVISION Stores manager Engineer.

The delivery slip and the bill copy are filed in the warehouse for reference. They become a platform for the adaptation of the world class practices in the organization. 7 . picking and the dispatching of customer’s/ user’s orders. Using most efficient methods for controlling the product inventory and adopting outsourced techniques in order to control warehouse activities. Some of the points need to be kept in mind in relation to the world class practices. Old worn out truck tires are used to provide a cushioning effect while unloading heavy materials. storing. The materials are then Unloaded from the delivery trucks. The materials are then inspected for any defects against the required and standard specifications. The Storekeeper documents the accepted materials. The following procedures are adopted in a warehouse on receipt of materials. including receiving. This is done by inspection controller in large organizations. kitting. They are. • • • • • Receipt of material: The materials on receipt are taken to their allotted spaces in the warehouses. The original bill reaches the accounts department for the payment to be made.Inventory Control Inventory Controller 1 Inventory Controller 2 Records Warehouse A Inspection Stock Record Controller Store Keeper 1 Inspection Controller Material Clerk Store Keeper 2 Clerk/Typist Material Clerk Fork Lift Operator Clerk/Typist/Data Entry Operator Materials Inspectors Labour Labour Warehousing – World class Practices Using the best practices in managing the stocks of the industry becomes the part of world class practices. The materials are handled carefully while unloading. The quality controller also plays a vital role in material inspection. Receipt and Inspection of Materials: 1. assembling. The Control samples or standards are kept separately to check the materials to be inspected.

The procedure for the issue of stock items includes that the materials are to be issued. Stock control can only happen if a stock take has taken place. It is also known as Selective Inventory Control. From time to time it must be checked that how much of goods are with them and give the required information from time to time to the production department. we need to use tools. Stock taking is done by the Store Keeper. Stock & Inventory Management The biggest problem comes when we keep too much stock with us. Stock rotation must be put into use with stock control by using the oldest products before the newer products. They issue different colored slips to the different departments when a stock item is issued. The task of the operation manager is to make a proper flow of stock as when it is required. it will increase the price of the product. so we need a proper check on getting and sending the material.Issue of Materials 2. Pink Copy – User Green Copy – Finance Department Original (White) – Stores Division 3. • • Stock Control is used to evaluate how much stock is used. It is also used to know what is needed to be ordered. Periodic Stock Checking: There must be proper check over the stock. such as. so that none of the stock will remain stand still. to authorized persons only and upon presentation of completed and approved store requisition and issue note. Stock within the warehouse need to taken care which will surely increase the cost of the organization and finally. ABC analysis provides a mechanism for identifying items which will have a significant impact on overall inventory cost whilst also providing a mechanism for identifying different categories of stock that will require different management and controls 8 . In large organizations the distribution of issue notes is done by authorized persons. ABC (Or Pareto) Analysis ABC analysis is an inventory categorization technique often used in materials management system. To ensure a proper check on the product that is with us. it must be evaluated from time to time.

a number identifying an item 9 . To conduct efficient and accurate cycle counts. These bands are called ABC codes. provide an ongoing measure of inventory accuracy and procedure execution. It divides inventory into three classes based on annual cost volume Class A .low annual cost volume Cycle Counting A cycle count is an inventory management procedure where a small subset of inventory is counted on any given day. Cycle counts are less disruptive to daily operations. The software then transmits data to a database on a host system which can generate inventory reports.medium annual cost volume Class C . The results are then grouped typically into three bands. Product coding: Product code is a unique identifier. It enables easy method of tracking the product until it reaches the customer or end user. many organizations use some form of software to implement an inventory control system. assigned to each finished/manufactured product which is ready. inventory items are valued (item cost multiplied by quantity issued/consumed in period) with the results then ranked. These systems may include mobile computers with integrated barcode scanners that allow the operator to automatically identify items. The various Codes used are: • • • Universal Product Code. to be marketed or for sale. and can be tailored to focus on items with higher value or higher movement. and enter inventory counts via keypad.When carrying out an ABC analysis. common bar code used to identify products Electronic Product Code Serial number. which is part of a warehouse management system.high annual cost volume Class B .

• Inspection reports. Wheel Barrows. Equipments used for handling material include: Hydraulic jacks. Wooden Blocks. Hammers. goods and products throughout the process of manufacturing. • Descriptive reports. control and protection of materials. Slings and ropes. consumption and disposal. Pliers. The material handling industry manufactures and distributes the equipment and services required to implement material handling systems. storage. pallets (Wooden. • Quality reports. Spanners. 10 . mechanical equipment. These include • Procedures to be followed in handling material/stock • Detail specifications of every item. Forklift Truck (Diesel/ Battery operated ).Quality records are maintained for the materials/stock specification. Iron bars. • Details of approval period of retention of various documents. Material Storage & Handling: Handling the material is one the most important part of warehousing. The focus is on the methods. Material Handling is the movement. to complex convey or belt and Automated Storage add Retrieval Systems (AS/RS). form the top management down to the trucker working in the aisle of the plant. systems and related controls used to achieve these functions. distribution. Material handling systems range from simple pallet rack and shelving projects. Damaged tires used for providing cushion support for heavy materials during unloading. plastic) Effective Materials Handling • Good materials handling practice is the responsibility of all members of the manufacturing team. Trolleys. Dump trucks. Chain Pulley Blocks.

• Optimum effectiveness of materials handling procedures can only be attained if each individual recognizes and plays his part. If we are putting the product into the store and picking from store it will raise its handling time and will prove to be cost ejective for the firm. Determining measurements for effectiveness of materials handling that can become the yard – sticks for progress in this activity. Developing and conducting a preventive maintenance program for all the materials handling equipment. Conducting research in materials handling methods and equipment. 7. Determining all new methods for the handling of new materials or products and selecting the equipment to be utilized. storing. 2. In a world class warehouse the materials are inspected before they are shipped. etc will raise the expenses of the firm which is not acceptable in any form. If we are putting our men. Conducting education and training for all manufacturing personnel in good Material handling practices. whether in its transportation. Material Handling Time: Reducing handling increases the productivity and lowers costs. Initiating and conducting a continuing materials handling cost-reduction or cost improvement program. Establishing controls of current materials handling costs by analysis of costs and comparison to budgets of either unit or total materials handling costs. to ensure the quality and life of the product. 3. In world class warehouses the responsibilities assigned such a staff group may well include: 1. 6. material and money in sending the good to the customer again and again it will finally affects the overall expenses of the business concern. 4. Again and again putting the resources on a material. Education and training in materials handling are prerequisite to minimum materials handling costs. Storing the product in relation to flow/ rate of movement: 11 . packaging. 5.

• Each and every product must be identified very easily when it is required. discrepancy material. The Operations manager forecasts the demand and accordingly the stock and inventories are stocked in the warehouse. • Support your complex needs with multi-location inventory. storage location. Demand forecasting may be used in making pricing decisions. so as per this demand we need to maintain the flow of material within the warehouse. serialized inventory and specific costing. For whole of the year there will be variations in the demand and supply of the product. • We must prepare record of item quantity. Check inventory availability across all warehouses during order creation. status. matrix items. Demand forecasting is the way of estimating the quantity of a product or service that consumers will purchase. such as the use of historical sales data or current data from test markets. 12 . or part per million statistics. lot tracking.Demand will not remain same for all of the year. • Maintain Real-time information on the quantity. location. multiple units of measure. • They must be assigned with the numbers and sign marks in order to identify them easily and save time. there will be rise and fall in the demand from time to time. kits and assemblies. in assessing future capacity requirements. and history of every inventory item within the warehouse. and ultimate location. Demand forecasting involves techniques including both informal methods and quantitative methods. quantity balance. time and arrival location. Location & Layout of the Warehouse: • A proper zoning of the warehouse must be ensured. Provides real-time indicators of material received on status ok.

Warehouse locations have many synonyms including bins. or a larger bulk storage area. among many others. but in there must be a location is a specific storage area. zones and storage area. For warehouse picking purposes. A separate location classification can also be given to shipping and/or receiving locations. a location sequence number can be assigned to locations and will be used as an optional method when defining the order in which sales orders or production material is to be picked. 13 . which may constitute a rack/bin type of entry. The locations can also identify shop floor areas where inventory is held prior to “pull” type material issues. and there is no limit on the number of locations that may be defined within a warehouse.Warehouse Location: There is no limit on the number of warehouses that may be defined within an entity. Shop floor locations of this type are considered by the system to be a part of the warehouse.

the desirable strategy is to be able to open and close local facilities seasonally. • Outside the growing season.A location can also be used to track the inventory of vendor and/or customer distributors. • Provides storage space. • Converts units into cubic footage requirements. • Allows room for growth. • For example. • Thus. Warehouse layout includes: o Zones o Locations 14 . Warehouse Layout and Design: The Warehouse • Provides for the transportation interface. in-season demand for agricultural chemicals requires that warehouses be located near markets that allow customer pickup. both a default warehouse and a default location must be defined in the facilities parameters. • Allows adequate aisle space for materials handling equipment. • Public and contract warehouses offer the location flexibility to accomplish such requirements. A single location of the “distributor” type will be used to cover an entire customer distributor or vendor distributor inventory. • Determines each item’s order quantity. • Provides for order-picking space. office. • Provides recouping. these local warehouses are unnecessary. If the user does not wish to maintain location control in the inventory. and miscellaneous spaces. An entry of these two default values will indicate to the system that only the default location is to be used for all types of inventory transaction. Location Flexibility: • Location flexibility refers to the ability to quickly adjust warehouse location and number in accordance with seasonal or permanent demand changes. however.

or ship within a warehouse Stations: • A physical location that is used as a work space in order to perform a specific activity or a group of activities • A Station is unique for a Node • Used for: o Creating tasks 15 . • A Zone ID used to represent a group of locations that share common properties (refer zone. retrieved. stored. Bay 2. and shipped Example Locations: o “STOR1-01020401” = at Aisle 1. shipping zone. returns zone) • Used to manage product flows into and out of groups of locations • Used to determine users’ work assignments in the zone • May represent a physical area • A location can belong to only one Zone Locations: They are various physical areas inside a warehouse • A Location ID is given to a space in a location where inventory is placed for any length of time • Always associated with a zone and a location • Primary mechanism used for tracking and processing inventory as it is received. Level 4 Bin 1 o “RECEIVE-1” = Receiving Dock 1 o “V1-000001” = Value Added Services Station 1 Equipment: Equipment defines a vehicle or piece of machinery used to perform a processing activity such as receive. pack.o Equipment o Stations Zones: The zones are specific locations inside a warehouse that has common properties. move. pick.

and  Product flow. Three factors to be considered in the design process are:  the number of stories in the facility.o Recording location where work is being performed o Associating devices that may be used at the station level o Receiving Station o Ship/Sort Location o Value Added Services Station Examples: Warehouse Design Criteria Warehouse design criteria address physical facility characteristics and product movement.  The use of elevators to move product from one floor to the next requires time and energy.  height utilization. Number of stories in the facility  The ideal warehouse design is limited to a single story so that product does not have to be moved up and down.  The elevator is also often a bottleneck in product flow since many material handlers are usually competing for a limited number of elevators Height utilization 16 .

which demands for its best utilization. Projects need to be handled carefully. to save the goods or product from breakage or damage. A machine has to be checked from time to time for its smoothness of working. Regardless of facility size. resources are always scarce in nature.  Maximum effective warehouse height is limited by the safe lifting capabilities of material-handling equipment. 2. Every activity to be looked in a better way and should taken care. stored in the middle. care should be taken.  Straight-line product flow minimizes congestion and confusion. From lifting the material from the trucks to taking it to the store. Costs & utilization of Resources :Resources are always limited. Performance of activities :A number of activities are to be performed within the organization or the warehouse. Operational standards needed: 1. it should be possible to store products up to the building's ceiling. so we need to utilize them at the optimum level and make maximum benefit out of them.to 30-foot ceilings. such as forklifts Product flow  Warehouse design should also allow for straight product flow through the facility whether items are stored or not. Whether it men.  Most warehouses have 20.  In general. and then shipped from the other end. Whenever the resources are fully utilized. the cost will naturally come down. this means that product should be received at one end of the building. 17 . while planning and there execution. although modern automated and high-rise facilities can effectively use ceiling heights up to 100 feet. material or labor. the design should maximize the usage of the available cubic space by allowing for the greatest use of height on each floor.  Through the use of racking or other hardware.

Lead time for activities :The time taken from the receipt of order till the time of dispatching of goods is known as lead time. • Operations Manager should hold the warehouse keys at the closing of the warehouse. but it includes the time required to ship the product to the purchaser. • Issue of stock and inventory to authorized personnel. It is also possible for lead time to include the time it takes for a company to process and have the part ready for manufacturing once it has been received. Multitasking work force: 18 . With tight manufacturing constraints or when a company is using Just in Time manufacturing it is important for supply chain to know how long their own internal processes take. as the product is demanded. inspect it. • Entry to warehouse must be limited to authorize personnel.3. guidelines are forward to the production department and as per the specification goods are delivered. Whenever there is order for the product. Goods must be safely loaded and must be taken care when they are taken out of the vehicle until it reaches the store where it has to be kept. In the manufacturing environment. The shipping time is included because the manufacturing company needs to know when the parts will be available for Material requirements planning. The time it takes a company to unload a product from a truck. Lead Time has the same definition as that of Supply Chain Management. and move it into storage is non-trivial. Accuracy of activities :The orders that are to be given must be dispatched as per the guidelines and in a complete way. Warehouse Safety and Security: Warehouses deals with large amount of inventory that need to be kept under proper observation and must undertake the most efficient check system. • There should be adequate safety from fire and the materials are to be stored under their required storage conditions. 4.

These are the people who will be most affected by the change and involving them early and at all stages enables them to become most efficient. Certain things that need to be considered are as follows. Work force must be active in order to take the decisions as per their talent in difficult situations. who are able to perform several tasks within the warehouse. put away and picking. manage the stock within the facility and enable a seamless link to order processing and logistics management in order to pick. Warehouse management systems can be stand alone systems or modules of an ERP system or supply chain execution suite. The objective of a warehouse management system is to provide a set of computerized procedures to handle the receipt of stock and returns into a warehouse facility. there is either batch synchronization with.g. including shipping. 19 .getting the direct input of the warehouse team to your work at all stages is of paramount importance. racking etc). pack and ship product out of the facility. model and manage the logical representation of the physical storage facilities (e. Communication In warehousing a message is transferred from one person to another by the means of communication. which need to be taken care for accuracy. The systems also direct and optimize stock put away based on real-time information about the status of bin utilization. or a real-time wireless transmission to a central database. Managing Change To be successful with any change initiative . mobile computers.such as a warehouse reconfiguration. wireless LANs and potentially Radio-frequency identification (RFID) to efficiently monitor the flow of products. Once data has been collected. such as barcode scanners. Warehouse management systems often utilize Auto ID Data Capture (AIDC) technology.World class warehouses have multitasked work force. receiving. a change in processes or in ways of working . The database can then provide useful reports about the status of goods in the warehouse. Warehouse Management Systems (WMS) It is a key part of the supply chain and primarily aims to control the movement and storage of materials within a warehouse and process the associated transactions.

Warehouse Management monitors the progress of products through the warehouse. Warehouse design and process design within the warehouse is also part of warehouse management.The primary purpose of a WMS is to control the movement and storage of materials within a warehouse – you might even describe it as the legs at the end-of-the line which automates the store. IT applications & communication technology to be used are all related to warehouse management. tracking systems. and communication between product stations. The container storage. starting with the Central Warehouse(s). Warehouse management is part of Logistics and SCM. Inventory management. Efficient warehouse management gives a cutting edge to a retail chain distribution company. loading and unloading are also covered by warehouse management today. storage and movement of goods. Warehouse Management is not just managing within the boundaries of a warehouse today. normally finished goods. it is much wider and goes beyond the physical boundaries. there are levels of warehouses. In its simplest form. In the multi-echelon model for distribution. It involves the physical warehouse infrastructure. traffic and shipping management. the WMS can data track products during the production process and act as an interpreter and message buffer between existing ERP and WMS systems. 20 . cost management. inventory planning. Warehouse management does not just start with receipt of material but it actually starts with actual initial planning when container design is made for a product. to intermediate storage locations or to final customer. Even production management is to a great extent dependent on warehouse management. Warehouse management deals with receipt. regional warehouses services by the central warehouses and retail warehouses at the third level services by the regional warehouses and so on. The objective of warehousing management is to help in optimal cost of timely order fulfillment by managing the resources economically.

the greatest expenditure of effort is in the picking process. Companies with the most efficient warehouses have the most frequently picked items closest to the 21 . a number of best practices can be adopted to improve productivity and overall customer satisfaction. Although best practices vary from industry to industry and by the products shipped there is a number of best practices that can be applied to most companies. To gain efficiencies in picking the labor time to pick orders needs to be reduced and this can achieved in a number of ways.Interpretation: Companies are constantly trying to find ways to improve performance and warehouse operations is area where supply chain managers can focus to gain maximum efficiency for minimum cost. When considering the level of effort involved in warehouse operations. To get the most out of the operation.

Companies are typically using pick-to-light systems for their top 5 to 20% selling products. Each and everyday new technology is being evolved. product. By introducing this system companies can gain significant efficiencies as it is totally paperless and eliminates the errors caused by pick tickets. In a pick-to-light system. companies must develop processes to regularly monitor picking travel times and storage locations. However. Many world class warehouse operations have adopted voice picking to complement the pick-to-light systems in place for their fast moving products. there are a number of best practices that can be adopted to improve efficiency and reduce cost. so in warehousing with the help of these world class technological innovations. world class warehouse operations had adopted technology that is some of today’s most advanced systems. Warehouse layout is also important in achieve greater efficiencies. we can make it more technically competent and innovative. companies are introducing pickto-light and voice recognition technology. to achieve this increase in efficiency. Although many companies will not be able to afford new technologies for picking. It also needs to be involved in the strategic aspects of a business and this will involve being aware of the development of the business in terms of the future production. The system allows operators to perform pick operations without looking at a computer screen or to deal with paper pick tickets. Warehouse operations that still use hard copy pick tickets find that it is not very efficient and prone to human errors. 22 . Minimizing travel time between picking locations can greatly improve productivity. in all aspects of supply chain management. The pick instructions are sent via RF from the company’s ERP or order management software. thereby increasing the efficiency of the business operations.shipping areas to minimize picking time. Conclusion: Warehousing clearly has a critical part to play. an operator will scan a bar-coded label attached to a box. In addition to hand-held RF readers and printers. and all the associated product volumes and throughputs. To combat this and to maximize efficiency. These companies achieve their competitive advantage by constantly reviewing their sales data to ensure that the items are stored close to the shipping area are still the most frequently picked. customers. suppliers. A digital display located in front of the pick bin will inform the operator of the item and quantity that they need to pick. Voice picking systems inform the operator of pick instructions through a headset.

www.wikipedia.about. 3rd Print 3.org/wiki/Warehouse_management_system 8.P.com/best.com/od/supplychainsoftware/a/ImplementingWMS.Bibliography: 1.warehousingforum. Dr J. Vikas Publishing House Pvt Ltd. Warehouse management and inventory control. Macmillan India Limited.co. Excellence in Warehouse management 2. Stuart. http://logistics. http://en.htm 6.smthacker. http://logistics. Stores Management.htm 23 .Saxena. K. www. India.htm 7.com/od/tacticalsupplychain/a/wms_best_prac. S.uk/lean_supply_chains. Emmett.html 5. Mohan .about. 2nd Edition 4.