410-MCC-UM

Course Instructor : Manish Chauhan

1 •INTRODUCTION TO INVENTORY

2 •INTRODUCTION TO WAREHOUSE
MANAGEMENT

3 •Inventory control and materials handling

4 •Technologies used in inventory and

forecasting

2
Source: Managing Inventory, Eitan Anders
Source: Managing Inventory, Eitan Anders
Source: Managing Inventory, Eitan Anders
Source: Managing Inventory, Eitan Anders
Source: Managing Inventory, Eitan Anders
 ❑ Discipline primarily about specifying the shape and
placement of stocked goods. It is required at
different locations within a facility or within many
locations of a supply network to precede the
regular and planned course of production and
stock of materials.
❑ The concept of inventory, stock or work-in-process
has been extended from manufacturing systems to
service businesses and projects, by generalizing
the definition to be "all work within the process of
production- all work that is or has occurred prior
to the completion of production."

Source: Wikipedia
Source: Managing Inventory, Eitan Anders
Source: Managing Inventory, Eitan Anders
 Stock Keeping Unit (SKU)
 An item may be stocked at many warehouses.

 An item at a particular geographic location is called

an SKU.
 For example, one item stocked at two plants and
four distribution centers would represent six SKUs.
In determining the classification of a material, all
the SKUs have to be included.

Source: Wikipedia
Most common Inventory Analysis methods
❑ Categorizing items in Stock into manageable
groups facilitates inventory control with the right
focus
Item Classification Criteria for Selection
A-B-C (Always Better Control) Annual Usage Value
H-M-L (High, Medium , Low) Unit Price of Item
F-S-N (Fast, slow, Non Moving) Consumption Rate
V-E-D (Vital, Essential, Desirable) Criticality of Item
S-D-E (Scarce, Difficult, Easy) Difficulties in
Procurement
XYZ Value of Items in Stores
 Enormous materials in the warehouse
 Managing all the materials in the same way?
◦ Important parts should be paid more attention to
◦ Sophisticated and precise approach for class A materials
◦ Simpler approach for class C materials
 This analysis categorizes items based on their
annual consumption value.
 Inventory control is exercised by controlling
individual Stock Keeping Units (SKUs).
 Sometimes, Inventory Managers can use Pareto’s
Principle for classification.
Source: UNIVERSITÄT D U I S B U R G E S S E N
Source: UNIVERSITÄT D U I S B U R G E S S E N
Source: efinancemanagement
 %
➢Class A: About 10% to 20% of the items account for
about 50% to 80% of the dollar usage,

➢Class B: About 20% to 30% of the items account for

about 15% to 20% of the dollar usage,

➢Class C: About 50% to 70% of the items account for

about 5% to 10% of the dollar usage

Source: UNIVERSITÄT D U I S B U R G E S S E N
Example
Solution
Treatment
 Treatment for Category A
❑ To follow strict inventory control and planning.
❑ Store these items in a highly secure area.
❑ These items need to be reordered regularly at set levels.
❑ The availability of these items helps to improve and better sales planning.
❑ Since these are essential items, a company must make sure that these items are never
out-of-stock.
 Treatment for Category B
❑ These are not as vital as those under A and not as insignificant as C.
❑ A regular robust inventory control system should be implemented for such items.
❑ A company must monitor these items for potential inclusion in the A category, or to
ensure they don’t fall to category C.
 Treatment for Category C
❑ These are low value and high volume items.
❑ These do not need the level of security and monitoring as A category items.
❑ Its availability is easy, and supplier dependency is also low.
❑ A routine level of inventory system should suffice for these items.
❑ To improve the inventory carrying cost and quality, management should explore
alternate suppliers.
Source: efinancemanagement
 Helps the management to make informed and
accurate inventory decisions.
 Helps in the optimum utilization of scarce
resources and guides the management to make the
best use of money, time, and space available.
 It helps to identify the “deadstock.” The management needs to invest only as
per the actual stay and consumption of that product and not make extra
purchases. Also, it can identify which item is not moving at all and dispose of
it at discounted rates.
 FSN analysis also helps in space management effectively. Slow-moving and
non-moving category of goods can be bought only in limited quantities to
avoid jamming of storage space. Also, fast-moving goods can be stored at
locations near to entry and exit points of warehouses that have clear access
all the time. It would help in saving time and labor.
 This analysis can be an excellent buying guide in the case of seasonal
products. The management will have a clear picture of the time of the year
when a product turns into a fast-moving one from a slow or non-moving
category. As a result, it can time its purchase accordingly.
 FSN analysis helps to effectively allocate monetary resources to items that
are fast-moving and beneficial for the organization. As a result, it helps to
avoid blocking money in the slow-moving or non-moving category of goods.
 Medical inventory in hospitals and their drug stores. Drugs
and related supplies comprise a significant portion of a
hospital’s budget. Moreover, maintaining the right quantity of
the right drugs is an extremely challenging task for
management. While a shortage of critical medicine can lead to
crises and even loss of lives, an abundance of non-important
medications can lead to blockage of money and space, both.
❑ VED analysis helps in dividing medicines into the three categories as per
their usage and importance. Therefore, medication in the vital group is to
be kept in stock compulsorily, as they would be critical for patients.
Medicines which are a bit less risky, or which can be obtained from other
sources too at short notice, become part of an essential category. Those
that are least critical and their shortage will not pose any danger to a
patient’s health, and lives get its place in the desired class. As a result, the
hospital’s management can wisely allocate resources on medical inventory
as per their respective VED categories.
 %

Source: UNIVERSITÄT D U I S B U R G E S S E N
 To test out all of these methods of Inventory
Analysis to determine which one the company
is most comfortable with.
 Likewise, certain businesses work better with
one type of method than the other.
 An Inventory Analysis helps Inventory Managers
decide on what steps to take in protecting
valuable assets. It also improves Inventory
Control policies. It also helps achieve a better
Return On Investment (ROI)
 There are more benefits when you make use of
an inventory analysis for your business such as
reducing lead time in acquiring sellable
items, proper item classification to improve cost
management, management of dormant inventory
(or Sleeping Inventory) items
 Trade - Without warehouse facilities it would be very difficult
to ship goods produced in Washington, such as agricultural
commodities, lumber and wood products, and aluminum, out
of the state. Warehouses are also essential to importers.
 Storage/Distribution of Goods - Warehouses are utilized by
retailers and wholesalers for the goods that they buy and sell.
Manufacturers use warehouses to store raw materials and
finished products.
 Expansion of Markets - By locating warehouse facilities in
different parts of the state, firms can expand beyond their
own local markets.
 Small Firms - The use of warehouse facilities gives small
firms the opportunity to grow without large capital
investments and one warehouse can service many small firms
Logistics:
➢ Detailed planning, organization, management, and
implementation of complex operations.
➢ Also extends to the flow of both physical goods
and information
Warehouse logistics:
❑ Encompasses all the varied, complex factors – organization,
movements, and management – involved in warehousing.
❑ This includes the flow (shipping and receiving) of physical
inventory, as well as that of more abstract goods, including
information and time.
❑ Also extend to anything from warehouse pest control, to
damaged goods handling, to safety policies, to human
resources management, to customer returns.

Warehouse logistics involves all the policies, procedures, and

organizational tools necessary to keep your warehouse operations
running smoothly.
❑ Organization: How can you achieve detailed
control over something as large as a
warehouse?
❑ Exact location of a specific item of
inventory, the pallet that carried a
purportedly expired food item, or the truck
that shipped an item damaged during ❑ Stock availability and Visibility Issues
❑ Increasing Complex Stock Handling
shipment. ❑ Goods Stock Traceability and Tracking needs
❑ These controls are paramount to smooth ❑ Space utilization in effective manner
❑ Picking optimization
operations and healthy revenues, and yet,
without expert tools, they are nearly
impossible to achieve. Enough flexibility to stay
competitive, while
❑ Run even deeper and extending
into inventory management, supply chain maintaining adequate
management, cost controls, human offerings to please
resources, risk management, and security, customers, while still
among other factors exercising sufficient
controls to protect your
revenues
Advanced warehouse management systems (WMS):
❑ Real-time insight into your warehouse, and equip you – and
all your employees – with the necessary tools to effectively,
efficiently and profitably manage your warehouse.
❑ More than an inventory control system, warehouse
management systems take control of all warehouse logistics,
from inventory control and management, to order
fulfillment.
❑ Mobile tools, consult the system on the go, via Smartphone.

Advanced WMS Improves overall logistics, from inventory receipt to

shipping.
 Ensure accurate, real-time inventory counts: Know how much inventory you
have – and its specific location within your warehouse.
 Decrease returns: An accurate look at your inventory means sending the
right item, the first time.
 Auto-replenish stock: Don’t wait until you’re out (or nearly out) of stock to
order more; let your WMS auto-replenish inventory when stock levels get
low.
 Maximize warehouse space: Some WMS automate warehouse routines (ex.
stock rotation and picking), which means you’ll need less floor space for
workers, which in turn means maximizing your warehouse space to store
more inventory.
 Other WMS benefits extend to better demand planning, improved visibility
and transparency, stock traceability, fewer picking errors, optimized
processes, efficient labor allocation, and improved customer services –
factors that boil down to reduced operational expenses and more revenue.

The benefit of controlled warehouse logistics is simple – increased

revenue.
 Automates all your entries automatically, minimize the paper works
and manual errors
 Allows you to upload the purchase order copy
 Automatic GRN process
 Auto Generates the barcode label which enables wireless picking
and receiving
 Multiple zone picking lots, serial number and expiry management
 Enables you carton splitting, multi location and internal site transfer
 Enables you quality rejection entry, purchase order return and issue
of goods in FIFO based storage
 Reduce warehouse carrying and labour cost
 Allows you the generate the MIS reports for the management

The benefit of controlled warehouse logistics is simple – increased

revenue.
 A warehouse management system (WMS) is a key part of logistics and supply
chain management system and primarily focuses to control the movement
and storage of materials and process associated transactions including
shipping, transporting, receiving, consume and picking.

https://mapolbs.com/warehouse-management-system
 Software tool, no matter how powerful, can only go so far as
human error.
 Warehouse managers and, to a certain extent, all involved
employees must be well trained in using your equipment and
WMS
 Your transportation, 3PL, and related contractors and
suppliers must coordinate with your logistics efforts.
 Any changes to your warehousing – new racking, updated
organization, etc. – must be accounted for in the system

Warehouse logistics are not static. Smooth operations hinge on

watchfulness, proper training, and evolving policies.
 Receive goods – the warehouse accepts goods from outside transportation or an
attached factory and accepts responsibility for them. This means that the warehouse
must check goods against an order and the bill of lading, check the quantities, check for
damage and fill out damage report if necessary and inspect goods if required.
 Identify the goods- items are identified with the appropriate stock-keeping unit (SKU)
number and the quantity received recorded.
 Dispatch goods to storage – where goods are sorted and stored away.
 Hold goods – where goods are kept in storage and under proper protection until needed.
 Pick goods – items required from stock must be selected from storage and brought to a
marshalling area.
 Marshal the shipment – where goods making up a single order are bought together and
checked for omissions or errors. Order records are updated.
 Dispatch the shipment – where the orders are packaged, shipping documents prepared
and goods loaded on the right vehicle.
 Operate an information system – a record must be maintained for each item in stock
showing the quantity on hand, quantity received, quantity issued and location in the
warehouse.
 ❑ Smart warehouse is becoming a reality, backed by ready-to-
purchase technologies that are changing the way warehouses
do business.
❑ The most popular products and processes:
➢ Automated Picking Tools:
➢ Voice automated order picking, Robotic order picking, and pick-to-light.
➢ These technologies also make use of cutting-edge bar-coding options that integrate seamlessly
with your chosen management software for the fastest, most accurate automated reporting
experiences.
➢ Automatic Guided Vehicles (AGVs):
➢ Ramping up storage and retrieval processes
➢ proven to be safer and yield a quicker ROI than manual labor
➢ Important functions include pallet, rack, and other container storage, and even functions that
control and automate The entire receiving process.
➢ Automated Inventory Control Platforms:
➢ Asset and inventory tags, automated inventory control platforms are implemented to take the
labor, guesswork, and extraneous time out of traditional inventory control
➢ most of these platforms are built to automatically count the inventory and synthesize the data
for fast, real-time, and ultra-accurate reporting that can be accessed remotely.

Source: camcode
 ❑ The most popular products and processes ( contd..):
➢ Warehouse Management Systems:
➢ A comprehensive software systems that wrangle all of the important data into one
platform that can be easily accessed by internal players as well as any chosen
members of your supply chain
➢ lightning-fast reporting which, when used tactfully, can mean uber-efficient
planning, even for the scenarios that you didn’t see coming.
➢ All in all, the use of warehouse management – or warehouse execution – systems
perfectly complements other automated elements.
➢ Internet of Things (IoT) Implementation:
➢ When IoT is utilized to control a plethora of moving parts, both automated and
manual, it can optimize all of your processes so that their data lives in one, easy-
to-access network.
➢ Helps to optimize a warehouse’s inventory control procedures, labor planning,
and, of course, its overall customer experience through more rapid fulfillment
rates.

Source: camcode
 ❑ The most popular products and processes ( contd..):
➢ Collaborative Robots (Cobots):
➢ This implementation requires sizable funds and infrastructure changes.
➢ Not always feasible for every warehouse to immediately embrace such technology
➢ More and more warehouses are embracing collaborative robots, or cobots, autonomous
elements that are built to work with the existing associates, not without them.
➢ Cobots allow warehouses to keep many of their processes and infrastructure design choices
intact while still benefiting from the optimized workflow that fully autonomous elements
provide.
➢ Automated Storage and Retrieval Systems (AS/RS):
➢ Automated storage and retrieval systems have been around for years
➢ Often been regarded as being expensive, clunky, and generally inflexible.
➢ today’s AS/RS’s are only getting sleeker and still tout all of their original benefits–reduced labor
costs/restraints, modular possibilities, and, of course, increased accuracy.

You don’t need to complete a comprehensive overhaul of your warehouse

to make it smarter and more efficient; instead, introduce the technologies
that make sense for your business and all of its processes first. Then, you
will see that any warehouse can become a “smart” warehouse.

Source: camcode