warehousing

UNIT 3 LECTURE 1

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 WAREHOUSING

⚫ A warehouse may be defined as a place used for the

storage or accumulation of goods. The function of
storage can be carried out successful with the help of
warehouses used for storing the goods.
⚫ Warehousing can also be defined as assumption of
responsibility for the storage of goods. By storing the
goods throughout the year and releasing them as and
when they are needed, warehousing creates time
utility.

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⚫ Warehousing is the storing of physical goods before
they are sold. Warehouses safely and securely store
products in an organized way to track where items
are located, when they arrived, how long they have
been there, and the quantity on hand.

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⚫ Warehousing is a requirement for most businesses
that manufacture, import, export or transport goods.
⚫ It might seem to be an unnecessary expense but
enable smooth functioning
⚫ A warehouse gives you better control over your
inventory and ensures that customers will
receive their products on time, which
ultimately leads to higher profits.

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 Importance of warehouse

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⚫ Better Inventory Management
⚫ Approximately 8 percent of small businesses don't track
their inventory. About 24 percent don't have inventory at
all. This often leads to late shipments, delayed order
processing and poor customer experience.
⚫ Warehouses provide a centralized location for your
goods, making it easier to track and manage your
inventory. By investing in a warehouse, you'll store, ship
and distribute products more efficiently. If something is
out of stock, you'll know it right away and provide
customers with alternative options rather than leaving
them waiting for days or weeks

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⚫ More Efficient Packing and Processing
⚫ Most warehouses provide the equipment and
supplies you need to store, move, package and
process orders from customers.
⚫ Pallet racks, loading docks and packing materials .
⚫ This way, you'll have everything in one place, which
will save you time and money.

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⚫ Superior Customer Service
⚫ More than 63 percent of online customers expect to know the
estimated or guaranteed delivery time.
⚫ Approximately 88 percent would pay more for faster delivery.
⚫ In fact, delivery speed is one of the first things buyers take into
consideration when choosing a shipping carrier.
⚫ As a business owner, you want to keep your customer satisfied and
engaged. If you fail to deliver their orders on time, your reputation
will suffer. This can hurt your revenue and brand image.
⚫ Warehousing allows for timely delivery and optimized
distribution, leading to greater customer satisfaction.
⚫ It also helps reduce errors and damage in the order fulfillment
process. Plus, it prevents your goods from getting lost or stolen
during handling.

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⚫ Ensure Price Stabilization
⚫ The demand for goods and services varies from month to
month and year to year, depending on customers' income,
government policies, employment rates, climatic conditions
and other factors. A warehouse allows you to store your
products for a later date when the demand is high. This
helps ensure price stabilization and reduces revenue losses.

⚫ Warehouses reduce violent fluctuations in prices by storing

goods when their supply exceeds demand and by releasing
them when the demand is more than immediate
productions. Warehouses ensure a regular supply of goods
in the market. This matching of supply with
demand helps to stabilise prices.

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 Financing:
⚫ Warehouses provide a receipt to the owner of goods
for the goods kept in the warehouse. The owner can
borrow money against the security of goods by
making an endorsement on the warehouse receipt. In
some countries, warehouse authorities advance
money against the goods deposited in the warehouse.
By keeping the imported goods in a bonded
warehouse, a businessman can pay customs duty in
installments.

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⚫ Need for warehouse arises also because some goods
are produced only in a particular season but are
demanded throughout the year. Similarly certain
products are produced throughout the year but
demanded only during a particular season.
Warehousing facilitates production and distribution
on a large scale.

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⚫ Improved Risk Management
⚫ Warehousing not only protects against price fluctuations but
also provides safe storage of perishable products. Depending
on your needs and type of business, you can lease a warehouse
equipped with refrigerators, freezers and optimal temperature
control.
⚫ Plants, artwork, candles, food and medications are just a few
examples of goods that require cold storage. A warehouse that offers
this service will store your goods at the right temperature,
preventing spoilage and changes in color and texture. This also
helps extend the product’s shelf life and ensures customer
satisfaction.
⚫ Additionally, the products stored in warehouses are typically
insured. This means that you have higher chances to receive
compensation from your insurance company in case of damage,
fire or theft

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 Warehouse ownership arrangements

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 Warehouse Ownership Arrangements ▪

Warehouses are typically classified based on

ownership
1. Private Warehouse
2. Public Warehouse
3. Contract Warehouse
4. Bonded Warehouse
5.Consolidated Warehouse
6. Cooperative warehouse

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 Private Warehouse

⚫ Operated by the firm owning the product. ( Building

may be leased or owned)
⚫ The decision about ownership or leased is
essentially financial.
⚫ Sometimes it is not possible to get a warehouse for
lease which fits the firm’s purpose, so the only option
is to design and construct a new warehouse.
⚫ Major benefits are a. Control b. Flexibility

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⚫ Warehouses owned and managed by wholesalers and
retailers close to their selling centers.
⚫ Warehouses constructed by manufacturers near their
production units.
⚫ Warehouses taken on rent by retail stores.
⚫ Retailers may have several regional warehouses to cater
the needs of their stores.
⚫ Warehouses owned/leased by a wholesaler where it
stores and distributes.
⚫ Maintaining private warehouses involves fixed
as well as variable costs

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Control:
⚫ Offers substantial control since management has
authority to prioritize activities.
⚫ Such control facilitate integration of warehouse
operations with the balance of firm’s logistics operations.
b. Flexibility
⚫ It offers more flexibility since operating policies, hours
and procedures can be adjusted to meet the specific
customer and product requirements.
⚫ Firms with very specialized customer and products are
motivated to own and operate warehouses.

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 Public warehouse

Public Warehouses
⚫ Public warehouses are owned by governmental bodies
and made available to private sector companies.
⚫ Public warehouses can be lent for both business and
personal use.
⚫ If you’re an SMB owner and want to store your goods for
a short period of time, a public warehouse can be a great
option.
⚫ Although typically not that advanced technologically,
they’re generally the most affordable and accessible
option.

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⚫ For example, before festivals or before marriage
seasons, retailers may order extra merchandise to
avoid ‘out of stock’ situations.
⚫ These warehouses are typically regulated by the
government bodies.
⚫ Costs incurred by the private firms for the
use of public warehouses are considered as
variable.
⚫ These warehouses are mainly used by
manufacturers/producers, exporters and importers.

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 Types

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 Public Warehouse

a. General Merchandise
Handles packaged products such as electronics, paper,
food, small appliances and household supplies.
b. Refrigerated warehouse
Offers frozen or chilled capacity designed to protect
food, medical and chemical products requiring
special temperatures.

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▪ From a Financial perspective it may achieve lower
operating cost than private.

▪ They do not require capital investment on the part of their

customers

▪ Based on ROI judgment public warehouse can be an

attractive alternate
▪ It offers flexibility on size and number of warehouse thus
allow users to respond to suppliers, customer and
seasonal demands.

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Bonded warehouses
⚫ These warehouses are owned, managed and controlled by
government as well as private agencies.
⚫ Bonded warehouses are storage facility used to store imported
goods for which import duty is still to be paid.
⚫ The bonded warehouses run by private agencies have to obtain
license from the government.

In actual, this enables the government bodies to hold control

on private firms to pay their taxes on time. Without paying
duties, importers cannot take over or open the goods.
Globally, it has been seen that these warehouses are found
near the ports and are usually owned by dock authorities

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 Contract warehouse

⚫ It combines the characteristics of private and public

operations.
⚫ Long term contractual relationship will result in lower total
cost than a public warehouse.
⚫ It can provide benefits of expertise,flexibility,scalability and
economies of scale by sharing anagement,labor,equipment
and information resources across multiple clients.
⚫ Contract warehouse offers a range of logistical services such
as transportation management, inventory control, order
processing ,customer service and return merchandise
processing.
⚫ Contract logistics firms are typically called as integrated
service providers (ISPs) and are capable for providing total
logistical responsibility for an enterprise.

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 Distribution Centers

⚫ A distribution center is a storage space which is usually

built with specific requirements in mind.
⚫ The storage is used for temporary needs and items are
shifted quickly within the supply chain. A large inventory
is received and distributed to resellers and retailers
within a short period of time.
⚫ In the case of some food and perishable items,
distribution centers items are often distributed within a
day. Generally, distribution centers are affordable to rent
in and can vary greatly depending on what types of
products are being stored in them.

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Consolidated Warehouses
⚫ A consolidated warehouse is another type of
warehouse that takes small shipments from different
suppliers and groups them together into larger
shipments before distributing them to buyers.
⚫ The catch is that all the shipments are intended for
the same geographical location.

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 End

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 Warehousing

LECTURE 2

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 Warehouse Operations

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 Activities

⚫ INBOUND ACTIVITIES
⚫ PROCESS ACTIVITIES
⚫ OUTBOUND ACTIVITIES

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 INBOUND ACTIVITIES

1. RECEIVING
2. PUT-AWAY

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 1. RECEIVING

Unloading and checking the shipment.

⚫ The number of containers or package of materials unloaded from the
carrier's vehicle is checked against the carrier's manifest (freight bill
or delivery order) to ensure that all the full consignment or order
has been delivered.

Unpacking and inspecting the material.

⚫ A receiving clerk is held responsible for three verification. First, he
or she checks the material received against the supplier's packing
slip and against a copy of the firm's purchase order to verify that the
correct items have been shipped
⚫ Second, the quantity of the shipment is verified in the same manner
⚫ Finally, the clerk inspects the general condition of the material to
determine whether any external damage was incurred during
shipment.

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⚫ Completion of the receiving report.
⚫ When the receiving clerk has finished the inspection, he
or she completes the form by recording the quantities of
the items received, indicating those that are still open,
and noting any other useful information on the form.
Regardless of the system sed, four operating groups
generally require notification that the material has been
received: the requisitioner , the purchasing
department, the accounting department, and
the inspection department if technical inspection is
required.

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 2. PUT-AWAY

⚫ During put-away process the warehouse staff scans

the bar code from the pallet (carton) and according
to instructions moves it on given address.
⚫ The second put-away method enables to let the
selection of warehouse location on warehouse staff
who only by scanning the address from the rack
notifies the system where the goods has been stored.
Also in this case the defined rules for putaway are
checked.

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PRODUCT CATEGORY
• Product key
• Product code
• Size
• Weight
• Cost
• color

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 PROCESS ACTIVITIES

• ORDER PICKING
• REPLINISHMENT
• STOCK ROTATION

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 1. ORDER PICKING

⚫ Order picking is the process of pulling items from

inventory to fill a customer order. It is seen as the
most labour intensive activity within a warehouse.
⚫ • Different order picking methods:
⚫ • There are many order picking methods. These
include:
⚫ • Zone picking
⚫ • Batch picking
⚫ • Wave picking

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 METHODS OF ORDER PICKING

⚫ ZONE PICKING:
Each order picker is assigned a specific zone and will only
realise order picking within this zone.
⚫ BATCH PICKING:
An order picker is assigned and picks batch wise orders.
⚫ WAVE PICKING:
A variation of zone and batch picking. Rather than orders
moving from one zone to the next for picking, all zones are
picked at the same time and the items are later sorted and
consolidated into individual orders/shipments

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 REPLINISHMENT

⚫ • Replenishment is the movement of inventory from

upstream to downstream.
⚫ The purpose of replenishment is to keep inventory
flowing through the supply chain by maintaining
efficient order.
⚫ The process helps prevent costly inventory
overstocking.

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⚫ STOCK ROTATION
To rotate stock means to arrange the oldest units in
inventory so they are sold before the newer units.
⚫ For example, a grocery store will restock its shelves by
putting the oldest units in the front part of the shelves.
⚫ The newest units will be placed in the back of the
shelves.
⚫ The hope is that the customer will select the most
convenient (older) units from the front of the shelf.
⚫ It is important to rotate stock in all areas: retail display
area, warehouse, factory, etc.
⚫ The reason to rotate stock is to reduce the losses from
deterioration and obsolescence.

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FIFO - First In, First Out
LIFO - Last In, First Out
Bar Code OR Date Of Manufacture System
RFID Chip Inventory Systems
⚫ • Radio frequency identification (RFID) chips are the
newest technological innovation in inventory control.
RFID chips are tiny microchips embedded in a product
that send out a signal so the product can be tracked.
RFID chips offer real-time access to inventory data and
solve many of the deficiencies of bar code inventory
control systems, but they are still relatively expensive.

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 OUTBOUND ACTIVITIES

1. Packing
2. Shipping

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 Packing

⚫ The primary task for packing is to minimize damage that could occur
after an item has left the production line.
⚫ In the warehouse the item is subject to a variety of situations where
damage could occur.
⚫ •Forklifts can drop materials, they can fall from conveyor belts, or
⚫ fall from broken pallets.
⚫ In each of these instances, the packing has to be designed so that it
will protect the item from damage, but light enough so that is does
not increase the weight of the finished good so much that the
shipping costs are significantly increased.
⚫ In addition the packing must protect the item from environmental
damage, such as extreme temperature, water damage,
contamination with other goods, or damage from static, which is
important for electronic items.

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 shipping

⚫ • Confirmation
⚫ • Invoicing
⚫ • Sealing
⚫ • Staging
⚫ • Loading

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 Shipping

⚫ https://www.youtube.com/watch?v=8MoV7IuPHF
8

⚫ https://youtu.be/bn5jjVKhFUs

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 Watch it !

⚫ https://youtu.be/bn5jjVKhFUs

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 Warehouse decision

LECTURE 3

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⚫ Ownership
Public versus contract versus private
⚫ Centralized or Decentralized Warehousing
⚫ How many
⚫ Location
⚫ Size
⚫ Layout
⚫ What products where

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 Site Selection

⚫ Factors driving site selections are

▪ Service availability
▪ Cost
⚫ A warehouse need not be located in an industrial area.
⚫ Land cost is the most important factor.
⚫ Beyond procurement cost, setup and operating expenses
such as transport access, utility, insurance rates require
evaluation.
⚫ Site must also provide adequate room for expansion,
necessary utilities must be available, soil must be capable
of supporting the structure. Proper water drainage etc.

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 Design

Factors to warehouse design

1. Number of floors
⚫ Ideal warehouse design is one floored
⚫ Eliminates vertical product movement
⚫ Use of vertical handling device such as elevators,
conveyors require time, energy, and creates
bottleneck situation.
⚫ https://youtu.be/qRDNF1trc1E

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⚫ A cube utilization plan
Warehouses are designed with 20- 30 foot clear ceilings
although the handling equipment can use heights over
100 feet.(limited by the safe lifting capabilities of
handling device and fire safety regulation)
⚫ Product flow
⚫ Should facilitate continuous straight product flow
through the building
⚫ Received at one end of the building. Stored as necessary
in the middle and shipped from the other end.

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 product mix

⚫ Product should be analyzed in terms of annual sales,

demand, weight, cube and packaging.
⚫ Total size, cube and weight of the average order to be
processed through warehouse must be determined.
⚫ This data provide information for determining
warehouse space, design and layout, material
handling equipment, operating procedures and
controls.

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 End

HAMIA KHAN
 Material handling

LECTURE 4

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⚫ The Material Handling Industry group defines
material handling as the “movement, protection,
storage of materials and products throughout
manufacturing, warehousing, distribution,
consumption, and disposal”.

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 Process

⚫ Material handling is a far-reaching concept in supply chain

management. It’s a foundational process including several
types of equipment and activities that are either:
⚫ Manual: Workers use their hands to transport objects within
a warehouse or to a transportation vehicle. This includes
filling, lifting, carrying, and emptying.
⚫ Manual material handling poses serious workplace safety
risks.
⚫ Semi-Automatic/Automatic: Automatic machinery exists
to reduce the number of manual movements.
⚫ Nevertheless, most automatic machines fall into the category
of semi-automatic material handling as they require
employees to load and unload goods or to drive the
equipment.

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⚫ A warehouse has a lot of moving parts.
⚫ Poor material handling brings sweeping
consequences.
⚫ For better or for worse, it impacts production
flow, employee safety, and employee morale.
⚫ Understanding material handling systems and
implementing best practices significantly improves
the function of your warehouse.

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What Role Does Warehouse Layout Play in
Material Handling?

⚫ Your warehouse layout significantly influences your

material handling system. It can be the difference
between an efficient warehouse and a warehouse that
can’t keep it together.
⚫ A poor warehouse layout causes bottlenecks, increases
motion waste (moving more than necessary within the
warehouse), and raises the risk of injury due to manual
material handling.
⚫ A well-designed warehouse layout streamlines processes,
decreases worker movements, and positively impacts
employees’ physical and mental health.

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“Prioritize Flow, Accessibility, and
Space in Warehouse Design”

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⚫ Flow Keeps Ops Moving
⚫ Does your design enable the uninterrupted flow of goods
through your facility? Is machinery set next to the machines
workers subsequently use in a given process? Are materials for
each workstation nearby?
⚫ Optimize Accessibility to Increase Worker Speed
⚫ Are pallets stored in a way where workers can access goods
without moving other goods out of the way? Are racks safety
and readily accessible by forklifts and pallet jacks?
⚫ Use Space Efficiently
⚫ Have you accounted for all your warehouse needs,
storage-related or otherwise such as offices and washrooms?
Do you have space to store empty pallets or batteries?

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 Material Handling Equipment

⚫ There are different types of material handling

equipment. The types of equipment you order, and
how you organize them in your warehouse, impact
your material handling processes.
⚫ Storage and handling equipment: Stores goods
in the time between receiving and shipping.
Examples of such equipment are stacking frames,
racks, and shelves.

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⚫ Industrial trucks: Powered vehicles that move
materials around a warehouse. Examples of such
vehicles are forklifts, hand trucks, side loaders, and
pallet jacks.

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⚫ Bulk Material Handling
Equipment: Equipment that assists workers with
handling large loads. Examples of such equipment
include bucket elevators, stackers, and silos.
⚫ Engineered systems: Automated units that
efficiently move goods through a warehouse and
reduce the need for manual intervention. Examples
of such equipment are automated storage and
retrieval systems (AS/RS), robotic delivery systems,
automatic guided vehicles, and conveyor systems.

HAMIA KHAN
Automated storage and retrieval systems (AS/RS):
https://www.conveyco.com/technology/asrs/
AGV
https://youtu.be/9khWMih-a9I

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 PACKAGING

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⚫ Consumer packaging
⚪ Marketing managers primarily concerned with how the
package fits into the marketing mix.
⚫ Industrial packaging
⚫ Logistics managers primarily concerned with
efficient shipping characteristics including
protection, ability to withstand stacking
when on a pallet, cube, weight, shape and
other relevant factors.

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 Packaging Types

⚫ There are different types of packaging that are used for

finished goods; internal packaging, which the end
consumer sees, and external packaging, which is for
industrial use. The internal packaging is developed
usually to appeal to the consumer and has all the
information required by law.
⚫ The external packaging must be sufficient to protect the
internal packaging as well as the finished item. It must
also have enough information so that it identifies the
contents, in text and often with barcodes for use with RF
technology in the warehouse. The external packaging
should have dimensions that allow a suitable quantity to
be stored on a pallet most efficiently.

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 Packaging and Minimizing Damage

⚫ The primary task for packaging is to minimize the damage that

could occur after an item has left the production line. In the
warehouse, the item is subject to a variety of situations where
damage could occur. Forklifts can drop materials, they can
fall from conveyor belts, or fall from broken pallets.
⚫ In each of these instances, the packaging has to be designed so
that it will protect the item from damage, but light enough
so that it does not increase the weight of the finished
good so much that the shipping costs are significantly
increased.
⚫ In addition, the packaging must protect the item from
environmental damage, such as extreme temperature, water
damage, contamination with other goods, or damage from
static, which is important for electronic items.

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 Efficient Packaging

⚫ In turn, the packaging must be light so that the shipment of the

product can be as low as possible. When companies are developing
packaging solutions they often turn to the lightweight materials initially,
paperboard, aluminum, and plastic.
⚫ Paperboard and plastic are very lightweight and can protect finished
items quite well. In addition, the recycling aspect of paper, cardboard, and
some plastics can help reduce the amount of waste going into local landfills.
Aluminum containers are excellent for some food items as the material is
strong, but light, as well as recyclable.
⚫ Corrugated cardboard is a very popular product used for efficient
exterior packaging, mainly due to its strength, lightweight, and recyclability.
It can easily have information printed on it, as well as barcodes, and RFID
tags can easily be applied. The corrugated cardboard container usually
contains organic material, paper, and starch glue, and can be up to 80
percent recycled product. It is also 100 percent recyclable so there is no
need to dump the leftover packaging material in the landfill.

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 “Amazon material handling”
https://youtu.be/dAXdeqcHBp4

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 Read and watch

1. https://www.tradegecko.com/blog/supply-chain-
management/incredibly-successful-supply-chain-
management-walmart
⚫ https://cerasis.com/supply-chain-management/#:
~:text=Walmart's%20SCM%20process%20is%20no
t,chain%20and%20logistics%20consulting%20com
pany.

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